Public Disclosure Authorized
Document of
The World Bank
Public Disclosure Authorized
Report No: ICR00003416
IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-7807-BR)
ON A
Public Disclosure Authorized
Public Disclosure Authorized
LOAN IN THE AMOUNT OF US$ 44.0 MILLION (US$ 44.0 MILLION EQUIVALENT) TO THE MUNICIPALITY OF SANTOS FOR A SANTOS MUNICIPAL PROJECT
June 7, 2016
Urban Development Global Practice Brazil Country Department Latin America and Caribbean Region
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CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2015) Currency Unit = Brazilian Real BRL 1.00 = US$ 0.32 US$ 1.00 = 3.11 BRL FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS APL
Adaptable Program Lending
Empréstimo para Programas Adaptáveis
BMLP
Brazil Municipal Lending Program
Programa de Empréstimos Municipais
COHAB
Baixada Santista Housing Company
Companhia Metropolitana de Habitação
CPS
Country Partnership Strategy
Estratégia para o País
DO
Development Objective
Objetivo de Desenvolvimento
GIS
Geographic Information System
Sistema de Informação Geográfica
GSD
General Services Department
Departamento de Serviços Gerais
IBRD
International Bank for Reconstruction and Development
Banco Internacional para Reconstrução e Desenvolvimento (Banco Mundial)
ICR
Implementation Completion and Results Report
Relatório de Conclusão de Implementação
IOI
Indicator of Implementation
Indicadores de Implementação
IP
Implementation Performance
Desempenho da Implementação
ISR
Implementation Status Report
Relatório de Implementação
LED
Local Economic Development
Desenvolvimento Econômico Local
M&E
Monitoring & Evaluation
Avaliação e Monitoramento
NW
North West
Nordeste
O&M
Operation & Maintenance
Manutenção e Operação
OPRC
Operation Procurement Review Committee
Comitê de Revisão de Aquisições Operacionais
PAC
Growth Acceleration Program
Programa de Aceleração do Crescimento
PAD
Project Appraisal Document
Documento de Avaliação do Projeto
PDO
Project Development Objective
Objetivo de Desenvolvimento do Projeto
PMO
Project Management Office
Agência Implementadora
PMS
Santos Municipality
Prefeitura Municipal de Santos
PPF
Project Preparation Facility
Instrumento para Preparação de Projeto
QAG
Quality Assessment Group
Grupo de Avaliação de Qualidade
QEA
Quality at Entry Assessment
Avaliação de Qualidade Inicial
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QER
Quality Enhancement Review
Revisão para Melhoria da Qualidade
QSA
Quality of Supervision Assessment
Avaliação da Qualidade da Supervisão
TTL
Task Team Leader
Gerente do Projeto
UGP
Project Coordination Unit
Unidade de Gerenciamento do Programa
WSS
Water Supply and Sanitation
Sistema de Saneamento
Senior Global Practice Director:
Ede Jorge Ijjasz-Vasquez
Sector Manager:
Anna Wellenstein
Project Team Leader:
Juliana Menezes Garrido / Emanuela Monteiro
ICR Team Leader:
Juliana Menezes Garrido
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BRAZIL Santos Municipal Project Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph Executive Summary ........................................................................................................ 1 1. Project Context, Development Objectives, and Design .............................................. 3 2. Key Factors Affecting Implementation and Outcomes .............................................. 7 3. Assessment of Outcomes .......................................................................................... 19 4. Assessment of Risk to Development Outcome......................................................... 25 5. Assessment of Bank and Borrower Performance ..................................................... 25 6. Lessons Learned ....................................................................................................... 28 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 30 Annex 1. Project Costs and Financing .......................................................................... 31 Annex 2. Outputs by Component ................................................................................. 32 Annex 3. Economic and Financial Analysis ................................................................. 34 Annex 4. Social Safeguards .......................................................................................... 43 Annex 5. Bank Lending and Implementation Support/Supervision Processes ............ 46 Annex 7. Stakeholder Workshop Report and Results................................................... 50 Annex 8. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 51 Annex 9. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 63 Annex 10. List of Supporting Documents .................................................................... 64 Annex 11. The Results Chain Diagrams ..................................................................... 65 Annex 12. Macro-drainage Works Development ....................................................... 67
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Data Sheet A. Basic Information Country:
Brazil
Project Name:
Santos Municipality
Project ID:
P104995
L/C/TF Number(s):
IBRD-78070
ICR Date:
09/23/2015
ICR Type:
Core ICR
Lending Instrument:
APL
Borrower:
Municipality of Santos
Original Total Commitment:
USD 44.00M
Disbursed Amount:
USD 24.51M
Revised Amount:
NA
Environmental Category: A Implementing Agencies: Municipality of Santos Secretariat of Government Cofinanciers and Other External Partners: B. Key Dates Process
Original Date
Revised / Actual Date(s)
Concept Review: 04/30/2007
Effectiveness:
05/07/2010
04/19/2010
Appraisal:
12/01/2008
Restructuring(s):
06/01/2010
Approval:
11/24/2009
Mid-term Review: 12/10/2012
12/12/2012
Closing:
06/30/2015
Process
Date
06/30/2015
C. Ratings Summary C.1 Performance Rating by ICR Outcomes:
Unsatisfactory
Risk to Development Outcome:
Substantial
Bank Performance:
Moderately Unsatisfactory
Borrower Performance:
Unsatisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank
Ratings
Borrower
Ratings
Quality at Entry:
Unsatisfactory
Government:
Moderately Unsatisfactory
Quality of Supervision:
Moderately Satisfactory
Implementing Agency/Agencies:
Unsatisfactory
Overall Bank Performance:
Moderately Unsatisfactory
Overall Borrower Performance:
Unsatisfactory
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C.3 Quality at Entry and Implementation Performance Indicators Implementation Performance
Indicators
QAG Assessments (if any)
Rating
Potential Problem Project at any time (Yes/No):
No
Quality at Entry (QEA):
None
Problem Project at any time (Yes/No):
Yes
Quality of Supervision (QSA): None
DO rating before Closing/Inactive status: Unsatisfactory D. Sector and Theme Codes Original
Actual
General water, sanitation and flood protection sector
30
64
Other social services
10
5
Public administration- Information and communications
1
0
Sub-national government administration
59
31
Education for the knowledge economy
20
0
Land administration and management
20
5
Natural disaster management
20
0
Urban services and housing for the poor
40
95
Sector Code (as % of total Bank financing)
Theme Code (as % of total Bank financing)
E. Bank Staff Positions
At ICR
At Approval
Vice President:
Jorge Familiar Calderon
Pamela Cox
Country Director:
Martin Raiser
John Briscoe
Practice Manager
Anna Wellenstein
Guang Zhe Chen
Project Team Leader:
Juliana Menezes Garrido/Emanuela Monteiro
Paula Dias Pini
ICR Team Leader:
Juliana Menezes Garrido
ICR Primary Authors:
Joseph A. Gadek Augusto F. Mendonca
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F. Results Framework Analysis Project Development Objectives The objective of the project was to enhance the management capacity of the Santos Municipal Government for local economic development and to improve public services in the Northwest Zone of the Municipality of Santos. The key indicators of the project included: (i) initiation of a plan to address constraints to local economic development by 2011; (ii) provision of urban services to households in slum areas; and (iii) rehabilitation and improvement of the existing macro-drainage system in the Northwest Zone with sufficient capacity to handle 25-year flood levels. Revised Project Development Objectives (as approved by original approving authority) The Project Development Objectives were not revised. (a) PDO Indicator(s) Indicator
Baseline Value
Original Target Values Formally (from approval documents) Revised Target Values
Actual Value Achieved at Completion or Target Years
Indicator 1:
Commencement of implementation of plan to address constrains to local economic development by 2011.
Value quantitative No LED plan or Qualitative)
Strategy prepared and discussed with stakeholders and Master Plan adjustments made.
Partial
Date achieved
06/30/2015
06/30/2015
01/01/2010
Comments (incl. % Partially achieved. The Metropolitan Plan addressed part of the proposed Master Plan, achievement) but the Municipality did not initiate the implementation of the Metropolitan Plan to address constrains to local economic development. The Metropolitan Plan covered four key strategic issues for the development of the metropolitan region: housing, mobility, water supply & sanitation, and economic development. By evaluating ongoing/committed activities with the goals set forth for 2030, the Metropolitan Plan identified the gaps and proposed a number of investments that would need to be financed. As for the economic development strategy, the objective was to consolidate the potentials and attract new investments. This plan was different from the original proposed in the PAD. The Metropolitan Plan was supposed to formally replace the original Master Plan as part of the second restructuring, which never took place. Indicator 2:
Value quantitative or Qualitative)
At least 2,400 households in slum areas of the Northwest Zone are provided with a comprehensive package of municipal services (including water and sanitation, street paving, drainage, public lighting). 0
2,400 households
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800 households
Date achieved
01/01/2010
06/30/2015
06/30/2015
Comments (incl. % 33% achieved. A total of 712 households were resettled into new housing units achievement) connected to municipal services, as the existing housing stocks were not suited to continued habitation; and 88 households were improved and connected to water and sanitation services. Indicator 3:
Establishment of a macro-drainage system that will solve flooding problem in the Northwest Zone and that has sufficient capacity to handle 25-year flood levels.
Value quantitative 2-years flood or Qualitative) protection
25-year flood protection
Not Achieved.
Date achieved
06/30/2015
06/30/2015
01/01/2010
Comments (incl. % Not Achieved. Approximately 10% of the proposed civil works were constructed. achievement) Since the works were not finished, there are no tangible impacts on flood risk reduction.
(b) Intermediate Outcome Indicator(s) Indicator
Baseline Value
Original Target Values (from Formally approval documents) Revised Target Values
Actual Value Achieved at Completion or Target Years
Indicator 1:
Preparation of a consolidated regional economic development study.
Value (quantitative No regional Strategy prepared and or Qualitative) economic discussed with stakeholders development study
Partially achieved.
Date achieved
06/30/2015
01/01/2010
06/30/2015
Comments (incl. % Partially achieved. The Metropolitan Plan addressed part of the proposed Master Plan. achievement) The Metropolitan Plan covered four main items that were key for the strategic development of the metropolitan area: housing, mobility, WSS, and economic development. Indicator 2:
Preparation of a Plan to reduce environmental licensing time.
Value (quantitative No plan available Plan completed or qualitative)
Not Achieved.
Date achieved
06/30/2015
01/01/2010
06/30/2015
Comments (incl. % This activity was not implemented, and was going to be cancelled in the second achievement) restructuring that was never processed. Indicator 3:
Preparation of a modern land use plan based on best practices for city-port integration
Value (quantitative No land use plan or Qualitative) for city port integration exists
Land use plan completed
Achieved
Date achieved
06/30/2015
06/30/2015
01/01/2010
Comments (incl. % The City Port Revitalization Study was completed in 2012. It evaluates alternatives achievement) and feasibility for the rehabilitation and integration between the old port and the historical center. This activity was included in the first restructuring of the Project (see Section H).
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Indicator 4:
Design and installation of Infovia network in the Northwest Zone.
Value (quantitative No Infovia or Qualitative) network in Northwest Zone
Infovia network installed in Northwest Zone
Achieved
Date achieved
06/30/2015
06/30/2015
01/01/2010
Comments (incl. % The City installed 23.5 km of fiber optic cables in the Northwest Zone. achievement) Indicator 5:
Preparation of a plan to improve macro-processing routines for land cadaster
Value (quantitative No plan to improve Completed or Qualitative) macro processing routines for land cadaster exists
Achieved
Date achieved
01/01/2010
06/30/2015
06/30/2015
Comments (incl. % achievement)
The GIS system was implemented and is operational. The Decree was approved, and the committee contingency plan and monitoring has been carried out.
Indicator 6:
At least 2,400 additional households receiving 24-hour water supply services.
Value (quantitative or Qualitative)
0
2400
800
Date achieved
01/01/2010
06/30/2015
06/30/2015
Comments (incl. % achievement)
33% Achieved.
Indicator 7:
At least 2,400 additional households with sewage connections.
Value (quantitative 0 or Qualitative)
2400
800
Date achieved
01/01/2010
06/30/2015
06/30/2015
Comments (incl. % achievement)
33% Achieved.
Indicator 8:
Increased satisfaction of resettled population with municipal service delivery.
Value (quantitative Nonexistent data or Qualitative)
---
Date achieved
06/30/2015
01/01/2010
---
--06/30/2015
Comments (incl. % Not measured. The PAD did not define a baseline, nor monitoring criteria. This achievement) indicator would have been removed in the second restructuring. Indicator 9:
50% reduction in percent of Santos families living in flood-prone areas
Value (quantitative 90,000 or Qualitative)
45,000
2,960
Date achieved
06/30/2015
06/30/2015
01/01/2010
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Comments (incl. % 2,960 inhabitants were relocated from flood prone areas equivalent to around 3%. achievement) Indicator 10:
Floodgates completely repaired and operating effectively.
Value (quantitative 0 or Qualitative)
All floodgates
Not achieved.
Date achieved
06/30/2015
06/30/2015
01/01/2010
Comments (incl. % No floodgates were repaired as the civil works contract failed to deliver these outputs achievement) before June 30, 2015. Indicator 11:
50% reduction in percent of land area affected by recurrent flooding
Value (quantitative Original area or Qualitative) extension
50% baseline area
0%
Date achieved
06/30/2015
06/30/2015
01/01/2010
Comments (incl. % No macro-drainage services were completed in any of the Northwest zone sub-basins. achievement)
G. Ratings of Project Performance in ISRs No.
Date ISR Archived
DO
IP
Actual Disbursements (USD millions)
1
12/15/2009
Satisfactory
Satisfactory
0.00
2
05/03/2010
Satisfactory
Satisfactory
0.00
3
02/12/2011
Satisfactory
Satisfactory
0.00
4
07/17/2011
Satisfactory
Satisfactory
2.41
5
05/02/2012
Satisfactory
Moderately Satisfactory
4.65
6
11/17/2012
Satisfactory
Moderately Satisfactory
7.10
7
07/10/2013
Moderately Satisfactory
Moderately Unsatisfactory
8.90
8
02/18/2014
Moderately Satisfactory
Moderately Satisfactory
11.14
9
10/13/2014
Moderately Unsatisfactory
Moderately Unsatisfactory
22.42
10
04/07/2015
Unsatisfactory
Unsatisfactory
24.40
11
07/08/2015
Unsatisfactory
Unsatisfactory
24.40
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H. Restructuring ISR Ratings Amount Board at Restructuri Disbursed at Approved Restructuring Restructuring in ng Date(s) PDO Change USD millions DO IP
06/01/2012
N
S
MS
4.65
I. Disbursement Profile
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Reason for Restructuring & Key Changes Made
Changed Activity I.1.b – City-Port Revitalization Studies under Part I - Municipal Management Enhancement (US$ 0.88M) changed from counterpart to Bank loan financing. The loan amount remained USD 44.0 million.
Executive Summary i. The objective of the Project was to enhance the management capacity of the Santos Municipal Government for local economic development and to improve public services in the Northwest Zone of the Municipality of Santos. The key indicators of the Project included: (i) initiation of a plan to address constraints to local economic development by 2011; (ii) provision of urban services to households in slum areas; and (iii) rehabilitation and improvement of the existing macro-drainage system in the Northwest Zone with sufficient capacity to handle 25-year flood protection levels. ii. There were two primary outputs expected from the total investment of USD 88.0 million (with a 50/50 split between the Municipality of Santos and the Bank): the construction of the macro-drainage network in the Northwest Zone of the Municipality of Santos (to be carried out using loan resources); and the construction of 1,200 housing units to accommodate people displaced, due mainly to the drainage works (to be carried out using counterpart funds). The execution of the macro-drainage contract faced many problems (see Annex 12 for details) and only a minor portion of the works were carried out. About 50 percent of the housing stock was built during project implementation period, and 712 households were relocated to new units. iii. The Mid Term Review, in late 2012 and early 2013 (two missions), indicated the need of a second project restructuring, due to the low disbursement rate and key activities delays. At the time, the Municipality had not yet finalized the procurement of construction works. Among other things, the restructuring was to extend the closing date by 12 months, aiming to finalize the macro-drainage construction works, review and revise the project results framework and indicators. A proposal was submitted by the Municipality of Santos (the “Client”) for the Federal Government’s approval; and a draft restructuring paper and amendment letter were prepared. However, the restructuring process was halted in late 2014 when the Bank identified the macro-drainage construction problems. Eventually, the team concluded that a closing date extension was not appropriate, taking into consideration the identified macro-drainage design and construction limitations and serious challenges, and the low level of UGP capacity to rectify the problems. The second proposed restructuring was, therefore, not concluded. iv. Many problems with the macro-drainage contract were the result of poor geological investigations and designs prepared by the Engineering Consultant. In particular, as the Construction Consortium (the Contractor) commenced its works, it became clear that there were serious problems with the quality of the designs and errors in the bill of quantities, mainly associated with the foundations of the pumping stations, which would eventually lead to a substantial cost increase of the contract. As a result, in July 2014, i.e. one year before the project completion date, the Bank assessed alternatives with the Client to solve the cost overrun and engineering design deficiencies. The Client decided to continue the works (subject to the Bank’s no objection for the continuation of each macro-drainage construction sites, e.g. the EEC7 site), and tried to resolve the problems without formally terminating or suspending the Contractor contract. Therefore, the Client assumed full responsibility for resolving the contractual problems in order to continue the Contractor contract. v.
In July 2014, the Client decided to terminate the Engineering Consultant contract,
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considering that its performance was not technically sound and suited for properly carrying out the job. Individual consultants were then hired by the Client to support the civil works contract execution. The Contractor committed to the Client to revise the engineering designs. In October 2014, works resumed for the Haroldo de Camargo Avenue box culvert, as the quality of the designs and of construction methodologies relating to this location were reviewed and deemed satisfactory by the Bank (based on the information available at that point in time). The ensuing negotiations between the Client and the Contractor for the other bills, however, were stalled for nearly a year (for various reasons, including, inter alia, delayed preparation of revised engineering designs; substantial cost increases requests; and protracted negotiations for unit costs increases) leading up to the Project closure with no extension in time granted. vi. By the Project Closing Date of June 30, 2015, only about 10 percent of Phase 1 of the macro-drainage works had been completed and about 50 percent (712 units) of the necessary resettlement houses had been built. While overall Project implementation was rated Unsatisfactory, a number of activities were satisfactorily implemented and produced good results, including: (a) the Port Revitalization Study, (b) the installation of 24.5 km of fiber-optic cable network, and (c) the implementation of a Municipal-wide GIS system. These are described in more detail in the main text of the ICR. vii. In May 2015, the Bank carried out a number of missions to investigate inconsistencies between contract payments and macro-drainage works executed (e.g. advance payments for works not executed; drainage culverts that were not yet built; geotechnical inspections that were not fully executed). A number of identified problems were not clarified or lacked adequate justification to be eligible for loan financing under the Loan Agreement. As a result, an auditing firm was hired in September 2015 by the Bank to provide an independent technical and financial opinion on both the macro-drainage civil works Contractor and Engineering Consultant contracts, both of which were part of the original scope of the Project, and entirely financed by World Bank loan resources. viii. Auditors visited the Municipality of Santos and the related works sites; they interviewed key stakeholders and reviewed all documentation made available by the Bank and the Client. The auditing report was able to document a number of expenditures, but identified a number of expenses that were not eligible for loan financing due to lack of proper documentation or were not executed due to the early termination of the contract. These expenses will be returned to the Bank.
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1. Project Context, Development Objectives, and Design 1.1 Context at Appraisal Background 1. Positive indicators and challenges. At the time of project preparation and appraisal, the Municipality of Santos was assessed to: (i) have solid economic and social development indicators; (ii) have a diversifying city economic base; and (iii) occupy the center of economic growth in the Baixada Santista Metropolitan Region. Yet, despite these positive indicators, Santos faced significant challenges to fully realize its development potential and to address extreme poverty in its territory. Among these challenges were: (i) land scarcity and urban expansion; (ii) inter-governmental coordination; (iii) land use conflicts; (iv) downtown and Northwest Zone disinvestment, and (v) transportation network inadequacies. 2. Strategic vision. The Municipality of Santos developed a strategic vision for promoting its development opportunities and addressing obstacles to development. It included a comprehensive plan to maximize the benefits that the city can gain from regional economic development, in addition to addressing some important obstacles that hindered regional development. The city’s strategic vision included the transformation of the Port of Santos from a narrowly focused shipment of goods facility, to a broader, inter-related cluster of economic activities with a stronger linkage to Santos and neighboring cities. Within this cluster of activities would be a vibrant waterfront with a special port for cruise ships, hotels for tourists and business people, commercial offices, restaurants, a convention center, a port for passengers coming and going from Guarujá to Santos, and waterfront recreational activities. 3. Needs for the city. In attempting to realize this strategic vision for the city, it was recognized by the city administration that: (i) improved inter-governmental coordination was needed to overcome a number of constraints to economic development within the region; (ii) a city–port initiative and downtown historic center renewal would spur local economic development; (iii) the Municipality also planned to stimulate the local economy and attract private sector investment by improving information technology infrastructure; and (iv) significant investments in the Northwest Zone were needed to address poverty in the city, most importantly, drainage and flood control. Rationale for Bank Involvement 4. Brazil Municipal Lending Program (BMLP). Given the above context, under the umbrella of the Brazil Municipal Lending Program1, the Bank established a clear strategy for Brazilian cities and Santos fit into this Program. This broad program strategy provided
1 Under the BMLP, Santos was the fifth (and final) municipal-borrower financed under this Adaptable Program Lending instrument. The BMLP was a USD 240 million Program, of which USD 160 million was financed with IBRD loans. The Santos loan of USD 44.0 million was the largest of the five loans. The Teresina Project is still ongoing, additional financing is being negotiated. Evaluation of the overall Program implementation would be included in the Teresina ICR.
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the underpinnings of the development objective for the Santos Municipal Project, through a selective and strategic program of support to achieve the above stated goals of the Municipality. This investment project would provide assistance by demonstrating how policies, effectively implemented at the local level, would improve the lives of the urban poor, promote sound local governance, and lead to a more competitive local economy. 1.2 Original Project Development Objectives (PDO) and Key Indicators PDO 5. The project development objective was to enhance the management capacity of the Santos Municipal Government for local economic development and to improve public services in the Northwest Zone of the Municipality of Santos. Key Indicators 6. The key indicators of the Project included: (i) initiation of a plan to address constraints to local economic development; (ii) provision of urban services to households in slum areas; and (iii) rehabilitation and improvement of the existing macro-drainage system in the Northwest Zone with sufficient capacity to handle 25-year flood frequency levels. 1.3 Revised PDO and Key Indicators, and Reasons/Justification 7. There were no revisions to the PDO over the course of the project cycle. 1.4 Main Beneficiaries 8. The Santos Municipal Project consisted of a range of activities which benefited the population of the Municipality of Santos as a whole, but the bulk of investments in infrastructure was focused on improving the quality of life of the population living in the city’s Northwest Zone. These investments concentrated on the large majority of the lowincome population living in Santos. The majority of Santos’ slums are located in the Northwest Zone. Approximately 60% of the slums are composed of stilt houses over water surfaces – mainly the drainage network. In addition to the urban, social, and environmental constraints associated with the extremely unhealthy living conditions, the area is frequently affected by flooding caused by intense rains combined with sea high tides. 9. The Project included the upgrading of the slum areas on appropriate lands, thus allowing for investments in street paving, water, sanitation, drainage, recreational areas, housing improvements, and community equipment. Approximately 2,400 families live in those slums, of which, about 1,100 families living in stilt houses were expected to be resettled to new houses in a nearby housing complex. 10. The Project also included a comprehensive set of activities aimed at improving social conditions beyond the urban and housing improvements. This included broadly tested participatory mechanisms, environmental education programs, income generation activities, culture and leisure programs, and special assistance to youth groups.
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1.5 Original Components (as approved) 11. The project activities and investments were organized in two main components, and four sub-components2. The activities of the first component targeted the strengthening of technical capacity of the Municipality of Santos, while the activities of the second component aimed at promoting the revitalization of the Northwest Zone of Santos. The World Bank loan financed the City-Port Revitalization Initiative Studies and Project Management under Component 1, and Improving Public Services related to the Storm Drainage System Improvements under sub-component 2.2. All other activities under the Project were financed by the Municipality of Santos using a variety of sources of financing. COMPONENT 1: MUNICIPAL MANAGEMENT ENHANCEMENT (US$ 9.0 MILLION) 12. This component aimed to strengthen the technical capacity of the Municipality of Santos in local economic development. It included two subcomponents that would benefit all city residents. Sub-Component 1.1: Enhancing Municipal Management Capacity in Local Economic Development 13. Regional Economic Development Study: This activity included carrying out a study to address constraints to development within the Borrower’s territory and to provide guidance on alternatives for reducing the technical, financial, and timeframe efforts currently needed to prepare the environmental impact assessments for investments in the Baixada Santista Region. Such a study would include, inter alia: (i) the consolidation of a diagnosis of the environmental issues in the Baixada Santista Region; (ii) an impact assessment of conflicts of planned and ongoing investment proposals; (iii) an analysis of alternatives and compensatory and mitigation measures for development scenarios; and (iv) the preparation of an environmental management plan for the Santos Estuary. 14. City-Port Revitalization Initiative Studies: This activity included carrying out feasibility studies for the development of the City-Port Revitalization Initiative, including: (i) preparation of a detailed land use plan; (ii) preparation of an urban zoning plan; and (iii) design and modeling of the management arrangements for implementation of the City-Port Revitalization Initiative. 15. Information Technology Program: This activity included the development of the Borrower’s information technology program, including the expansion of the fiber-cable network in the Northwest Zone as part of the large-scale municipal effort to improve urban services and standards in such neighborhood. It is also included the development of an arrangement for increasing the municipal IT Program’s efficiency and its operation and maintenance capacity. This program was implemented by the Municipal Government Secretariat, which is in charge of the well-established municipal IT Program.
2 The components description is based on the PAD Section II-D, which differs slightly from the Project structure presented in the Results Framework, PAD Annex 3.
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Sub-Component 1.2: Enhancing Municipal Administrative Management Capacity 16. Municipal Land Planning and Control Mechanisms: This activity was designed to strengthen the Borrower’s capacity for land management by complementing the ongoing modernization process introduced in the land cadaster mechanisms, including detailed mapping of principal organizational and processing procedures, preparation of recommendations for improvements, and training of staff responsible for implementing the new procedures. It was also designed to be implemented by a joint group involving the municipal Planning, Government and Financing secretariats, through a signed framework agreement establishing a multi-sectoral task force to execute the project. The databases developed by the task force sit on a GIS-based software platform and are available via servers to senior level municipal staff and elected officials for their ability to better understand the development challenges of the Municipality. It is cutting-edge technology used by most modern cities around the world. 17. Project Management: This activity would support project management capacity, including monitoring and evaluation, auditing, financial management, procurement, and works supervision of the Project. The Municipal Government Secretariat executed this activity, which was responsible for the project coordination and management. COMPONENT 2: REVITALIZATION OF THE NORTHWEST ZONE AND ADJACENT HILLSIDE (US$ 79.0 MILLION) 18. This component focused on an integrated package of physical and social investments related to urban environmental improvements in the Northwest Zone of Santos, with direct benefits to the 90,000 residents of the Northwest Zone, including about 2,400 households that would benefit from better living conditions through urban upgrading and resettlement. This component included two subcomponents. Sub-Component 2.1: Addressing Social Inequalities 19. Slum Upgrading and Resettlement: This activity included (i) the provision of infrastructure in Villa Gilda in the Northwest Zone including, inter alia, construction of water and sanitation networks, drainage systems, street opening and paving, installation of public lighting and a gas pipes network, construction of bicycle paths and recreational and park areas, construction of facilities for local commerce and public daycare and community centers, and restoration of aquatic and riparian vegetation along the canal bordering Villa Gilda, and (ii) it would also finance the resettlement of families residing in stilt houses built over the canal adjacent to Villa Gilda and construction of housing units for the resettled families. This activity was carried out by the Municipality of Santos with the cooperation of the Baixada Santista Housing Company (COHAB). 20. Improvements to the Municipal Job Training Program for Low Income Families (LED): This activity included the rehabilitation of decentralized municipal facilities that offer professional training courses for low-income families. Sub-Component 2.2: Improving Public Services 21.
Storm Drainage System Improvements: This activity included the rehabilitation of 6
existing canals, purchase and installation of canal gates, pumping stations, and a centralized operational control system. Flooding in the area is a result of intense rain as well as the sea tide levels. The area’s flooding problems were to have been addressed through the implementation of a macro-drainage program that would increase flood protection from the current 2-year flood occurrence rate to a 25-year frequency in the Northwest Zone of Santos, directly impacting its 90,000 residents. The resulting decrease in incidents of flooding was expected to increase the availability of developable land for investment, as well as enhancing the flow of people and goods within the city. The Port’s activities are disrupted frequently by flooding which cuts off certain critical highways. 22. Preventing Risks of Landslides in the Hillside Adjacent to the Northwest Zone: This activity included preventive works, such as retaining walls and micro-drainage infrastructure, to avoid erosion caused by inadequate drainage in a hilly topography. It was also intended to finance the acquisition of vehicles to strengthen the monitoring of highrisk areas susceptible to unregulated occupation. 23. Increasing Urban Greening and Amenities: This activity included improvements to the Borrower’s Botanical Garden and planting of street trees in the Northwest Zone, both as a means to promote tourism opportunities, as well as increasing the urban spaces available for absorbing rainwater, and reducing the storm water flow. The Botanical Garden is the Northwest Zone’s main landmark, as it attracts visitors from other neighborhoods and municipalities and is the principal recreational space in the area. The increase in the number of street trees and green spaces would enhance the attractiveness of the urban area and further promote tourism opportunities in the region. 1.6 Revised Components 24.
The components were not revised during the execution of the Project.
1.7 Other Significant Changes 25. On June 6, 2012, the Project was restructured. The primary purpose of the amendment was to shift the financing of the Port Study consultancy from the Borrower to the World Bank. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry Project Preparation 26. Lessons learned incorporated to project preparation. As mentioned in Section 1, the Santos Municipal Project was the fifth project under the Brazil APL Municipal Lending Program. Lessons from the previous four projects under the BMLP were incorporated into the Santos Project to the extent known, given the early stage of implementation of the BLMP. These included: (i) the municipal governments implementing projects included in the APL have demonstrated a strong ownership and commitment in implementing the project following the objectives agreed with the Bank; (ii) decentralizing the responsibility of investments to the lowest level possible, such as municipalities, increases accountability
7
and typically improves service quality as a result, and (iii) the processing time for the individual municipal projects has been rather long due to unanticipated legal issues between the municipal governments and the federal government. 27. However, these first two lessons learned - as stated in the Santos Municipal Project Appraisal Document - were rather more general in nature, and not based on hard facts. Commitment alone from the municipalities, without sufficient professional capacity at that level to provide for proper engineering designs and procurement / contract management, did not allow for an adequate assessment of risks to the success of the Project. Based on the ICRs for two of the five BMLP projects, all three (with Santos now included) underestimated the risks to project implementation due to limited capacities at the municipal levels to properly implement somewhat complex projects and associated civil works and engineering consultancy contracts. Project Design 28. Project structure. The Project structure was standard and straightforward, with one compound PDO, three PDO indicators, two components and four sub-components. Overall, the four sub-components contributed to the Project Development Objectives of enhancing the management capacity of the Santos Municipal Government in local economic development and improving public services in the target area. The Results Chain Diagrams (Annex 11) illustrates the logical links between the four sub-component supported activities and the PDO. 29. Outputs and indicators. The Project had limitations regarding PDO and Intermediate Outcome Indicators, detailed in the Monitoring and Evaluation assessment section. The results framework missed key intermediate outcome indicators, such as indicators for the macro-drainage works and for the landslide prevention activities. Additionally, the results framework lacked causal links. Overall, the results framework did not provide an adequate tool for the project implementation monitoring. Despite that, the Project presented a good consistency of objectives, components, activities, and geographic focus within the Northwest Zone. Had the Project been implemented properly and the impacts realized, these limitations would have been noted in the ICR as only a minor issue. 30. Implementation arrangements. The implementation arrangements were very simple and straightforward. The Municipality created a Project Management Unit (UGP) reporting to the Municipal Secretariat of Government. The UGP had support from all municipal secretariats involved in project implementation, and a dedicated staff, including a coordinator and experts on engineering, procurement, financial management, and safeguard aspects. The Secretariat and UGP performed well in leading the project preparation phase with technical assistance from a consulting firm using a Japanese Policy and Human Resources Development Fund (PRHD) grant. Additionally, the Municipality secured a cooperation agreement with the Baixada Region Housing Company (COHAB) to oversee housing construction and the Vila Gilda population resettlement activities. 31. Project management, support, and supervision. Initially, the Municipality hired an Engineering Consultant to support the UGP in preparing the detailed design of the macro-
8
drainage civil works and pumping equipment. That contract was later amended to include the engineering supervision during construction. The UGP faced many problems during the implementation of the planned activities, particularly in overseeing the Engineering Consultants and the Contractor for the macro-drainage investments. The capacity of the UGP to supervise the engineering works, review the macro-drainage designs, and supervise the works, was overestimated during project preparation. This was recognized early on in project implementation, and agreement was reached to amend the Engineering Consultant contract to include a third function of project management. In retrospect, this was a mistake as the same Engineering Consultant that prepared the designs was providing technical support to the UGP to assess its own performance to supervise the contract. 32. Although the Municipal Administration showed strong support and commitment to the Project, the UGP did not have the necessary technical and management capacity. An Engineering Consultant was hired to support the UGP, but was itself weak and one of the main reasons the project failed to achieve its objectives. Unfortunately, the problems escalated during the implementation of the macro-drainage works contract, when poor designs and inconsistencies in the bill of quantities were not identified in advance, and required many rectifications that increased the costs of the contract considerably. 33. Macro-drainage sub-component. The macro-drainage sub-component was the largest single investment under the Project (planned to use 76%, actual 64% of loan funds). The original proposal during project preparation was to upgrade the entire macro-drainage network in the Northwest Zone of the city. Feasibility Study Reports (FSR) and Preliminary Engineering Designs (PED) were prepared during project preparation (financed by the PHRD grant). The Preliminary Engineering Designs for the entire Northwest Zone indicated that Bank financing was sufficient to finance the drainage needs in the Zone. The detailed designs showed that costs were substantially higher, indicating that the quality of PED was inadequate to estimate the costs within a reasonable expected range. 34. The macro-drainage system was designed to reduce flood risks in the Northwest Zone, with sufficient capacity to handle a 25-year flood frequency. The initial objective was to cover the entire Northwest Zone of the Municipality, but the scope was reduced to five out of nine sub-basins due to increasing costs, and limited funding. The Project, did however, fund the entire Northwest Zone macro-drainage system engineering designs (Phases 1, 2, and 3). Due to higher costs than originally estimated during project preparation, actual project financing for the construction works was sufficient for only three of the sub-basins (of the five planned under Phase 1 of the Project – see Figure 1, Annex 12). At the close of the Project, none of the sub-basin works was completed due to a combination of design, budgeting, contract management, and construction problems3. The most advanced works at the Haroldo de Camargo Avenue has helped improve the local urban environment4, but
3
Detailed in the Annex 12 - Macro-drainage Works. Approximately 600 meters of an open canal was converted to a culvert. The former canal area, highly degraded, was paved and vegetated.
4
9
the floodgates and pumping stations were not completed5. None of the existing canal floodgates were repaired. In summary, the Project did not complete macro-drainage infrastructure in any of the sub-basins, and failed to produce tangible results in terms of flood risk reduction, even though USD 24.7 million of the Bank loan was disbursed. 35. Detailed Engineering Design and its implications. The contract of the detailed engineering design was supplemented by additional contract scope elements for supervising the works and overall management of the Project by the same Engineering Consultant. The design element of the contact was a lump sum contract format, and other activities were standard time-based contract formats. The detailed engineering design portion of the contract provided detailed engineering designs, construction drawings, and bidding documents for a scope of work, which could - presumably - be contracted under the budget limits of the Project financing (Phase 1); and, a second set of designs for Phase 2 which had the financing for the construction of the works secured from the State and Federal resources. In summary, as stated in the above paragraphs, the Santos Municipal Project could not provide for the construction activities for the entire Northwest Zone in relation to the macro-drainage network because of its budget limits and inaccurate initial engineering costs estimates. The Project did, however, commit to providing the Municipality with the detailed engineering designs for Phases 1 and 2 of the Northwest zone drainage network (9 of the 15 sub-basins in the Northwest Zone). Assessment of Risks 36. Government’s commitment and procurement. The Project risk assessment identified the most relevant risks. The overall risk was rated as moderate. Notably, the Government’s Commitment to Efficient Project Implementation was rated as a low risk and the Ability to Handle Procurement was also rated as a low risk. Both risks proved to have been underestimated, especially related to the Procurement sub-category of contract management, based on the actual record of events during implementation. 37. Municipality capacity. The risk assessment raised concerns about the capacity of the municipality to review and evaluate complex engineering designs and manage large civil works contracts. To mitigate this risk, an Engineering Consultant was hired to help supervise the works and support the UGP in overall project management. However, the risk of the UGP not being able to properly supervise the consultant and ensure the consultant was delivering high quality services was not sufficiently acknowledged during project preparation. Quality at Entry 38. The project preparation team took appropriate actions into account, conducting a sound background analysis, and incorporating important lessons learned from analogous projects. The project components were simple, with all activities supporting the proposed development objectives. The risk assessment, however, underestimated key factors such as the quality of the Feasibility Study Report, Preliminary Engineering Design and the
5
Required to control effectively the flooding problems in the referred sub-basin.
10
associated estimated engineering costs, the Client’s procurement capacity, and the ability of the Client to supervise the Engineering Consultant responsible for the engineering designs and supervision. The Project also suffered from M&E design shortcomings, missing indicators, and disconnects between the PAD main text and the results framework. Considering these issues, the Quality at Entry is rated as Unsatisfactory. 2.2 Implementation Overall Implementation Assessment 39. General overview. The Project was under close supervision, as demonstrated in the eleven archived Implementation Status and Results Reports (ISRs). Despite that, the Project did not succeed to fully disburse the funds and complete key objectives and actions. Implementation was affected by a series of problems, largely related to the combination of a weak Engineering Consultant being supervised by an inexperienced PMO, which resulted in flawed designs, deficient execution, and poor communications with the Bank to resolve problems in a timely and transparent manner. 40. Assessment of progress ratings. The Project became effective in April 2010. Activities on the full range of the four sub-components commenced immediately. Review of the Aide Memoires and Implementation Status and Results Reports shows that the Bank supervision team by mid-2012 had identified the Implementation Progress as Moderately Satisfactory, mainly due to the delays in the contracting of the macro-drainage civil works. By mid-2013, the progress towards the achievement of the Development Objective rating was downgraded to Moderately Satisfactory as well, and the Implementation Progress further downgraded to Moderately Unsatisfactory, as disbursements continued to be very low and the drainage works had not yet started. In late 2014, the project triggered a “Problem Project” classification when the Implementation Progress rating was again rated Moderately Unsatisfactory, due to the poor quality of the works and supervision; as well as the substantial escalation of contract costs6. The two project ratings of DO and IP further declined to Unsatisfactory in the April 2015 ISR as the Project was closing. 41. Mid Term Review and Second Restructuring. The Mid Term Review, in late 2012 and early 2013 (two missions), indicated the need of a second project restructuring, due to the low disbursement and key activities delays. At the time, the Municipality had not yet finalized the procurement of construction works. The restructuring proposed to extend the closing date by 12 months, aiming to finalize the macro-drainage construction works, review and revise the project results framework and indicators, and replace the requirement of a Local Economic Plan with the macro Metropolitan Development Plan. The second restructuring process was halted in late 2014, when the Bank identified the macro-drainage construction problems. Eventually, the team concluded that a closing date extension was not appropriate, taking into consideration the identified macro-drainage design and construction limitations and serious challenges, and the low level of UGP capacity to rectify the problems.
6
Detailed in the Annex 12: Macro-drainage Works Development.
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42. Assessment of targets reached. Most sub-components did not meet the project impact targets as defined by the Project Outcome and Intermediate Outcome indicators outlined in the Results Framework (see Annex 2). Major Implementation Issues Affecting Project Outcomes 43. Overview of the macro-drainage-related contracting. The bidding process for the macro-drainage civil works contract was launched twice at the request of the Client, based on a complaint raised by one of the bidders during the first attempt. It was concluded in mid-2013 with an award of the contract in August 2013, cleared by OPRC in Washington. The Contractor finally commenced works in February 2014. Annex 12 provides a detailed explanation of the contract implementation including the cost increases issues. In December 2013, a contract amendment was processed for the Engineering Consultant to undertake construction supervision on behalf of the UGP. 44. Substantial cost increases and its impacts. In May 2014, only three months after the macro-drainage contractor was fully mobilized, the Contractor informed the Client that they could not implement the contract at the bid price. The Contractor proposed a 55% increase in costs and the Bank organized large missions in June and July 2014, the Bank to resolve this serious issue7. During the review, it became clear there was a serious mismatch between the construction drawings and the Bills of Quantity. Poor engineering designs led to inaccurate bidding documents and construction drawings. 8 As a result, the UGP formally terminated the services of the Engineering Consultant in accordance to the Conditions of Contract in September 2014. Since the consultant was also responsible for the supervision of works, the Project was left without any engineering supervision besides the UGP staff. Consequently, individual consultants were hired to support the UGP moving forward. 45. Alternative courses of action. During the July 2014 mission9, the team found that the design and contract problems could jeopardize the completion of works prior to the Project closing date. Three alternatives were discussed with the Municipal Government and UGP: (a) termination of the civil works contract, (b) suspension of the civil works contract, and (c) continuation of the civil works, subject to agreement on an action plan. Alternatives (a) and (b) would entail a Project closing date extension. The Client decided to continue the works, aiming to resolve the cost overruns issues without terminating or suspending the ongoing contract. The selected alternative also required the immediate formation of a Dispute Resolution Board (DRB), as specified in the FIDIC Conditions of Contract. This was put in place by the Client, but was never effectively utilized.
7
This was a 9-member team, consisting of Program Leader, TTL, co-TTL, two senior procurement specialists, two senior engineers, a senior project and contract management specialist, and an operations analyst. 8 Given the complex nature of the geology of the Santos region, a greater level of attention and technical investigations should have been given to the design of the foundations of the structures planned to be constructed under the project, so as to avoid the errors, which were done. 9 Supervision Mission July 21-25, 2014 Aide Memoire filed in the WBDocs.
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46. Results of the macro-drainage works. It was then agreed between the Municipal Government, Contractor, and the World Bank that the Contractor would be responsible for hiring a consultant to redesign the works and re-estimate the contract values and total costs in order to amend the contract and complete the drainage works. For nearly a year, a renegotiated contract could not be formalized between the parties. In addition, the Bank team found additional problems with the designs, and further cost underestimates and cost overruns related to the drainage works. At the close of the Project, a little less than 10 percent of the drainage works had been completed. The Bank team could not reconcile the executed works with the contract payments, resulting in the need for a complementary technical and financial audit. This audit was finalized in May 2016, and a number of expenditures were identified, while other expenses were found ineligible for loan financing and will have to be returned to the Bank. The overall Unsatisfactory ISR and ICR ratings are primarily the result of a failure of completing the drainage works and the Project achieving the impacts originally intended. 47. Results of other works. The number of housing units constructed did not achieve their targets either. If the Project would have been extended by 12 months, these targets would have likely been achieved. The planned civil works to stabilize the extreme slopes in some of the poorer neighborhoods of Santos were in a very early stage of implementation and not finalized at the closing of the Project. 48. Technical and financial audit of two contracts. Given the problems with the designs, bill of quantities, escalation of costs, and inconsistencies in payments involving both the Engineering Consultant and the Contractor for the macro-drainage civil works; the Bank decided to engage an audit firm to undertake an independent technical and financial audit of both contracts. An international firm specialized in the resolution of contracts’ claims was selected on a competitive basis and hired in September 2015. The report by the auditors was reviewed several times to take out inconsistencies and ensure all eligible and ineligible expenditures were properly documented. The final report was concluded in May 2016. All ineligible expenditures will have to be returned to the Bank. 2.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization 2.3.1 M&E Design 49. The M&E design had a series of shortcomings, including problems related to causal links, missing indicators, and component description inconsistences10. Overall, the results framework was marginally disconnected from the Project interventions and activities, and failed to provide an adequate tool for project implementation monitoring. Annex 11 represents the Project Results Chain, as presented in the PAD, revealing the lack of causal links and misplaced indicators. Annex 11 also presents an alternative results framework, deduced from the project description. The analysis indicates that the M&E design
10 The subcomponents titles listed in the Results Framework (PAD Annex 3) and in the Section II-D of the main text of the PAD are not the same. Additionally, the indicators listed in the Results Framework do not match entirely the indicators listed in the Arrangements for Results Monitoring in the PAD.
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problems are related mainly to logical framework representation, as well as the missing indicators related to macro-drainage and landslide prevention. 50. The Project had a compound PDO, three PDO indicators and eleven Intermediate Output Indicators (IOI). The compound PDO included two different objectives: enhancement of the management capacity of the Santos Municipal Government for local economic development, and public services improvement in the Northwest Zone of the Municipality of Santos improvement. 51. The first PDO indicator, “commencement of implementation of a plan to address constrains to local economic development by 2011”, was not independent from the outset, and did not measure properly the Project effects on the Municipal management capacity, i.e. the first PDO sub-objective. Despite that, the causal relationship between the outputs of Component 1, Municipal Management Enhancement and the first PDO sub-objective could be made, assuming that all supported plans and studies were focused on economic development. 52. For the Component 2 indicators, a clear link was missing between the second and third PDO indicators and the second PDO sub-objective, as illustrated in Annex 11. Additionally, the results framework had three IOIs that could have been used as PDO indicators as listed: “Increased satisfaction of resettled population with municipal service delivery, 50% reduction in percent of Santos families living in flood-prone areas, and 50% reduction in percent of land area affected by recurrent flooding.” 53. Moreover, the second and third PDO indicators, “At least 2,400 households in slum areas … provided with a comprehensive package of municipal services (including water and sanitation…)”, and “Establishment of a macro- drainage system that will solve flooding problem in the Northwest Zone” can be considered a summary of outputs, and do not measure the Project expected impacts. 54. As previously mentioned, the macro-drainage works represented roughly 80% of the Project investments, but there was only one IOI related to the macro-drainage 11 development, which was a part of the Project supported interventions. The Project could have, among other things, comprised indicators related to the construction work development, and flood control effective results. Moreover, the results framework did not include indicators related to landslide prevention, another important Project supported action. 55. The Bank Implementation Support Team tried to revise the Results Framework, proposing new indicators in the second restructuring negotiations following the MTR. However, the second restructuring was not concluded and the M&E design problems persisted throughout implementation, compromising the Project supervision.
11
Floodgates completely repaired and operating effectively.
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2.3.2 M&E Implementation 56. Quality of the supervision efforts. The ISRs and Aide Memoires indicate the Implementation Support Team was thorough and appropriately supervised the progress of the physical, financial, procurement, contract management, environmental and resettlement aspects which were all reported in detail on a minimum of a semi-annual basis. Once the weaknesses of the design and contract implementation became manifest, starting in May 2014, the Bank team had intense and very frequent interactions with the Client. Despite the Team’s efforts, the M&E design flaws made monitoring the Project progress difficult. In addition, the Team faced problems in collecting appropriate data, as the Client did not deliver progress reports on time and did not monitor the Project indicators as planned12. 57. MTR review of indicators. The Mid Term Review concluded that the Project would need a restructuring, and initiated a comprehensive results framework review, proposing modification of the first PDO indicator and revision of several IOIs. The revised framework included four new IOIs, and dropped the indicators related to resettled population satisfaction and reduction in area affected by recurrent flooding. As indicated previously, this never materialized because the Project closed before the second restructuring could be concluded. 58. M&E monitoring mismatch. While the second restructuring was not concluded, the ISRs issued after 2011 tracked the new IOIs in an effort to improve the Project monitoring. Despite this improvement, the Project final evaluation was based on the IOIs described in the PAD only, as new IOIs were not formally included. 59. The M&E implementation performance has been rated Moderately Unsatisfactory. Despite the team’s efforts to try to remediate the M&E problems during project implementation (especially after May 2014), and the attempt to adopt new indicators, albeit informally, to track important outcomes, these efforts did not generate the expected results.
12
Difficulty in obtaining project indicators data is mentioned in several ISRs, notably ISR 4 (May 2011), ISR 6 (October 2012), ISR 7 (July 2013), and ISR 8 (February 2014).
15
2.4 Safeguard and Fiduciary Compliance Safeguards Compliance - Moderately Unsatisfactory. Environmental 60. The Project had no major Environmental Safeguards compliance issues. ISRs throughout Project implementation rated Environmental Safeguards compliance consistently as Moderately Satisfactory. The Client had a dedicated staff for environmental issues, and observed the Project Environmental Management Plan requirements throughout its implementation. Initially there were some construction safety issues identified related to the macro-drainage civil works contract. Progressively, the works were constructed in accordance to the Environmental Construction Manual, and the Client responded properly to the Bank’s additional demands on health and safety procedures. Social 61. The project preparation took into consideration the involuntary resettlement of 1,100 families, most living in stilt houses built in slums (Vila Gilda), and dedicated special attention to the Project social aspects and the resettlement requirements. A Resettlement Policy Framework (RPF) was prepared, consulted, and disclosed by the Recipient during project preparation. 62. Immediately following project effectiveness, the Municipality informed the Bank of their intention of changing the original resettlement plan, and resettling 480 families from Vila Gilda to a new housing complex, financed by counterpart funds. The Bank asked the Municipality to prepare two Resettlement-related documents. The first detailed the existing RPF into a RAP (Resettlement Action Plan), incorporating new information on the project areas of interventions and affected population. The second was a Resettlement Report to address, specifically, the resettlement process and outcomes of the targeted 480 families. Both documents were formally approved by the Bank in May 2013, after lengthy negotiations with the Client. 63. Despite of the two complementary instruments, and close supervision, the Project experienced resettlement problems, as detailed in the Annex 4. In 2011, the Municipality identified additional 65 affected families, and moved them to other stilt houses, disregarding the existent RPF at the time and Bank Policies. Upon the Bank’s request, the 65 families13 were transferred to appropriate temporary housing, while waiting for the final resettlement. In 2015, the Bank requested an abbreviated RAP for around 30 families occupying some pumping station works sites, but the submitted instrument was not approved due to the lack of compliance with Bank Policies. The Project soon closed and the construction works were suspended. The Bank advised that, in case the construction works continues, the Client needs to follow Bank’s Safeguard Policies for these families.
13 By the ICR submission, 62 families have been resettled to Caneleira IV Housing Complex, and the Bank continued to follow-up the situation of the 3 remaining households.
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64. The Project succeeded to resettle 712 families, but, at Project closing, there were three pending expropriations authorizations affecting the site of the macro-drainage works. The Municipality did not present an appropriate abbreviated resettlement plan for these potentially affected families surrounding the EEC7 culvert construction and nearby the future pumping stations. Considering all above, the Project`s compliance with social safeguards is thus rated as Moderately Unsatisfactory. Fiduciary Compliance Financial Management 65. Financial management and procurement aspects of the Project were regularly reviewed and audited. Financial management arrangements were considered Satisfactory from the Project beginning to early 2015. At that point, the indications of possible inaccuracies in the tracking of the macro-drainage construction works and billing resulted in the financial management rating downgrade to Moderately Unsatisfactory. 66. Although the independent financial auditors consistently provided unqualified opinions on the project financial statements, the payments to contractors did not reflect actual physical progress on the ground. Once the inconsistencies were identified, the UGP failed to provide alternative arrangements and action plans to avoid and mitigate potential financial management risks. 67. In May 2015, financial management as well as technical auditing missions were carried out by the Bank team to assess the billing inconsistencies of the macro-drainage works contract. Payments followed separate criteria developed by the Client (“Critérios de Medição”) and which were not part of the payment clauses of the contract: e.g. payments for all construction sites, culverts that yet had to be delivered and installed, geotechnical surveys that were not fully executed. The information presented by the Client during these missions was not sufficient to clarify a number of the identified measuring and billing discrepancies. As a result, a technical and financial auditing firm was hired by the Bank in September 2015 to provide an independent technical and financial opinion on both the macro-drainage civil works contract and the design, supervision, and project management consulting services contract. Procurement 68. The Project suffered several significant procurement shortcomings. Overall, procurement took longer than expected due to the delays in concluding the terms of reference, engineering designs, and preparing the invitations for bids documentation. The two largest contracts – design, supervision, and project management consulting services and macro-drainage civil works – had procurement and execution problems. There were shortcomings in the Terms of Reference and the UGP did not properly supervise the execution of the referred contracts with detailed plans, monthly time sheets based and expected deliverables 14 . Additionally, the justifications for the contract amendments
14
The consulting contract supervision lacked personnel time sheets, essential for a time-based consulting contract. Additionally, the monthly reports were nearly absent of relevant information. The consulting firm consumed most of staff months much earlier than planned and the PIU could not present a well-documented justification for that fact. An Independent Procurement Review (IPR) was carried out to evaluate this contract before agreeing to its amendment.
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submitted to the Bank were inadequately prepared and substantiated. These issues were also addressed in the financial and technical audit. 69. For the civil works construction bidding process, only one Contractor (composed of two firms) submitted a bid. The bid price was 50 percent higher than the engineer’s cost estimate prepared by the Engineering Consultant. The UGP did not identify, in advance, the contract budget errors that resulted in this large contract cost overrun. Also, the conditions of contract were never fulfilled in full by the Contractor, e.g. the FIDIC clauses for insurance coverage for the works and equipment were not available after 8 months of the works commencement 15 As mentioned, there were also inconsistencies between measured physical progress and f measurement and billing inconsistencies and part of these “indications” were confirmed by the technical and financial audit. Additionally, the UGP took too long to finalize the selection documents therefore was not able to initiate the procurement of the macro-drainage system operations and maintenance procedures until project closure, a key activity for long-term sustainability of the works. 70.
Considering all of the above, Fiduciary Compliance was rated as Unsatisfactory.
2.5 Post-completion Operation/Next Phase 71. The housing units constructed under the project investments (counterpart financed) will be maintained by the Municipal Housing Department and by the owners of the housing units. This is a proven institutional and financial arrangement within the Municipality. The O&M of the 23 km of optic fiber network installed in the Northwest Zone of Santos will be maintained by the Municipality. Given the high demand for this high-speed connection by many businesses and households in the area, and given their demonstrated willingness-to-pay for the service, there is little risk of this investment not being sustainable. The Project investment in improving the municipal GIS platform has already changed the way the municipality does business in relation to overall city planning, land tax assessments, and payments, and services delivery. 72. The macro-drainage construction works continuity by the Municipality should take into consideration the design adjustments prepared after July 2014. The complementary geotechnical studies and the floodgates discharge impact evaluations by the Project resulted in a series of design modifications and construction methodology recommendations, aiming to avoid construction failures and protect the constructed facilities and surrounding occupants. There is also the need by the Municipality to comply with Brazilian Social Safeguard Policies related to the surrounding occupants of the facilities; the need to carefully review cost estimates; and to improve supervision arrangements and capacity of the UGP. 73. The Project financed civil works contract for Phase 1 of the macro-drainage network in the Northwestern Zone of the city was terminated as a result of the many problems described before. The Municipality is planning to use financing from the State Government
Guidance was provided to the UGP to improve the management of this contract. The construction work contract problems are further detailed in Annex 12. 15 A training session on managing FIDIC contracts was delivered in 2014; the targeted groups were key high-level officials from the UGP, Secretary of Works, and Legal staff of the Municipality.
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to conclude these works under a new contract. Financing has been secured from the Federal Government for the implementation of Phase 2 of the macro-drainage network. To complete the entire macro-drainage network, the Municipality will need to identify additional financial resources, which also should include resources for the sustainable operations and maintenance of the drainage facilities. 74. The Port Study recommended several options and opportunities for investments which would benefit greater Santos. Currently, the Municipality is waiting for decisions from the Federal Port Authority, which might assist the Municipality in attracting public and private investments to move these recommendations forward. The planned interventions in the hillsides, to stabilize the steeply sloping terrains have been designed and financing secured by the Municipality to commence the works. This is an important intervention to improve the living conditions of the lowest income populations of the Municipality. 3.
Assessment of Outcomes
3.1
Relevance of Objectives, Design, and Implementation
3.1.1
Relevance of Objectives Rating: Substantial
75. At the time of project approval, the Bank was developing the Brazil Municipal Lending Program (BMLP), a broad strategy, supporting the municipalities to improve the lives of the urban poor and enhance local governance. The Municipality of Santos was selected to participate due to its economic relevance at regional and national levels. The BMLP was not extended in the 2012-2015 CPS, but the two Project PDO sub-objectives, municipal government management capacity enhancement and public services improvement, remain relevant, taking into consideration the country’s current development priorities and the current Bank country partnership strategy. 76. The Brazil 2012-2015 CPS' first and second strategic objectives are to increase the efficiency of public and private investments and to improve the quality of public services for low-income households. The Project goal of enhancing the management capacity of the Santos Municipal Government is fully consistent with the first CPS strategic objective, contributing to the municipal government management and efficiency improvement. 77. The second PDO sub-objective, public services improvement is also well aligned. The Project was supposed to promote infrastructure development in the lowest income areas of the Municipality of Santos Municipality, benefiting directly low-income populations that lived in very precarious conditions, stilt houses situated over very polluted waters. It is important to mention that the current CPS has specific provisions for expanding affordable housing and improving living conditions for low-income and vulnerable groups, expanding access to improved basic sanitation, involving actions in the areas of urban development and upgrading, and poverty alleviation. Generally, the Project addressed the goals listed above. 78. The Project also matched diverse Government programs and priorities, as the PAC
19
Favelas, a large slum upgrading program, M i n h a C a s a M i n h a V i d a ( H o u s i n g P r o g r a m ) , Água para Todos, aimed at ultimately universalizing access to clean water and sewage services, among other ongoing federal government programs. Based on the above considerations, the Relevance of Objectives is rated as Substantial. 3.1.2
Relevance of Design Rating: Modest
79. A detailed description of the issues with the project design were presented in prior sections. As noted, the Project structure was fairly straightforward, with all subcomponents contributing to the Project PDOs. The risk assessment did not, however, succeed in adequately identifying some key risks, e.g. the competence of the UGP staff to oversee such technically complicated design and construction contracts. The results framework was deficient, as well, in that it did not adequately reflect the Project interventions and activities, and it was not possible to identify the clear casual links between all components, supported activities, and the outputs and PDO indicators. 80. The Results Chain (Annex 11) shows that the first PDO indicator had a causal relationship with Component 1 and the first PDO sub-objective. Nevertheless, the suitability of the other two PDO indicators was not so clear. Additionally, a major difficulty was the lack of appropriate indicators and the existence of ambitious targets related to the macro-drainage and landslide prevention works, which represented a significant part of the total investments. During the preparation and design stages, the engineering cost estimates of the macro-drainage works were far below the market rates, which were only realized during the bidding and contract implementation process, which would lead to limited results. The Bank Implementation Support Team attempted to modify and improve the Results Framework and IOIs through the proposed second restructuring of the Project to cater for the identified monitoring deficiencies. Ultimately, the proposed second Project restructuring did not materialize due to a lack of confidence that the macro-drainage challenges and local capacity limitations would improve with time. This negative assessment, in turn, led to a lack of justification for extending the Project closing date, denying the opportunity to affect the proposed second restructuring. 81. As a result of all the above, the Relevance of Design has been rated Modest, taking into consideration the M&E design limitations, the engineering design issues, and the incorrect assessment of the capacity of the project management unit, without proposing adequate mitigation measures. 3.2
Achievement of Project Development Objectives Rating: Negligible
82. The PDO sub-objective of enhancing management capacity of the Santos Municipal Government for local economic development was partially achieved. The feasibility studies for development of an initiative of City-Port revitalization was concluded in May 2013, the fiber-optic cable network was installed in the Northwest Zone (23.58 km), and the Municipality implemented a comprehensive GIS system. The Metropolitan Strategic Development Plan for the Baixada Santista was drafted and approved under the Project. It has assisted the Client in local economic development planning. The Municipality,
20
however, had not initiated the implementation of the plan to address constraints to the local economic development, as was originally envisaged. 83. Regarding the second PDO indicator, the Municipality did not fully achieve the goal of providing a comprehensive package of municipal services to 2,400 households in slum areas of the Northwest Zone. By the Project closing, 800 households - around one third of the goal - received improved sanitation under the Project. In fact, 712 families were resettled to new building complexes, (Canaleira IV, Quadras 1 and 35 and Pelé II), constructed by the Baixada Santista Housing Company - COHAB16 and 88 families have improved their living conditions by WSS services provision and adjustments to the housing conditions. The construction of additional new houses is underway, and the Municipality may achieve the Project goal in the coming year. 84. The goal of establishing a macro-drainage system that would mitigate flooding problems in the Northwest Zone, with sufficient capacity to handle 25-year flood frequency levels, was not achieved, despite the fact that most of the loan funds were allocated to this contract. The initial goal, as expressed in the PDO, addressed the entire Northwest Zone of the Municipality. During implementation, the Project area of influence was reduced to five sub-basins (only 1/3 of the original Zone area) due to increasing cost estimates and limited funding. The Project funded the entire Northwest Zone macro-drainage system engineering designs and initiated the construction work of only three sub-basins. However, the Project did not succeed to conclude the construction works in any of the sub-basins, due to a series of design, budgeting, contracts management, and construction problems17. The most advanced work site18 improved the local urban environment19, but did not finalize the floodgates and pumping stations as planned.20 Additionally, none of the existing canal floodgates were repaired. In summary, the project did not conclude macro-drainage infrastructure in any of the sub-basins, and failed to produce tangible results on flood control and, therefore, provides little or no flood protection even though BRL 36.2 million of the Bank financing was disbursed. 85. At closing, the Project completed two landslide prevention works, among the 28 originally planned interventions. All 28 interventions have been designed under the Project and the Municipality has identified a source of financing to proceed with the works. The Project succeeded to assist in the development of the Urban Greening Program and the rehabilitation of the Municipal Botanic Garden, which were within the sub-component 2.2 activities. 86. In conclusion, the Project accomplished part of the goals related to management capacity enhancement, aiming local economic development, and had tangible results on
16
A state public company responsible for the development of housing for the low-income populations. Detailed in the Annex 12 - Macro-drainage Works 18 Haroldo de Camargo Avenue box culvert (EEC7). 19 Approximately 600 meters of an open canal was converted to a culvert. The former canal area, highly degraded, was paved and vegetated. 20 Required to control effectively the flooding problems in the referred sub-basin. 17
21
housing, water, and sanitation services provision. However, the most significant and budgeted goal of solving flooding problems in the Northwest Zone was not achieved at all. Therefore, the Achievement of Local Economic Development and Improvement of Public Services Objectives are rated as Negligible. 3.3
Efficiency Rating: Negligible
87. An economic analysis was carried out to evaluate the Project. For this ICR, the evaluation was conducted using a cost benefit analysis as was done at project appraisal. Following the same method, the benefits were measured by assessing the appreciation in property values due to works implemented under the Project. Actual costs and benefits were included in this evaluation and transformed to 2008 prices to make them comparable with those foreseen at project appraisal. The same discount rate of 12 percent was used, as well as an assumed 20-year lifecycle of the works. 88. Costs. The costs of the works executed under the project were subject to constant fluctuation of exchange rate and inflation during the implementation period (2009-2015). The Brazilian Real (BRL) varied significantly: in the first three years, it appreciated 33 percent to the US dollar; yet in the following years, it depreciated 40 percent. On average, the Brazilian currency depreciated 20 percent during project implementation period. During the same time, inflation was 49 percent, affecting the Project negatively. 89. The evaluation for this ICR converted the costs to 2008 prices, in order to take out the effect of currency fluctuation. The costs included works already implemented and ongoing works that, according to the Municipality, would be ready by the end of 2016. The ongoing works are being financed by counterpart funds. Results show that actual cost per household which already benefited from interventions under sub-component 2.1 addressing social inequality, were 2.5 times higher than foreseen at appraisal. Only when ongoing works are completed and the associated beneficiaries are attained, the unit cost per household would be similar to what was expected at appraisal. The macro-drainage subcomponent would eventually benefit only 32 percent of the expected area (Northwest Zone), resulting in actual costs four times higher than expected at appraisal. 90. Benefits. For the subcomponent 2.1 addressing social inequality, which mainly focused on resettlement and urban upgrading, the evaluation at project appraisal included not only 2,400 households that would be direct beneficiaries to the Project, but also nine thousand additional households would benefit indirectly given the proximity of the areas they lived in to the areas to the intervention. The evaluation for this ICR did not include these indirect benefits, because the magnitude of the actual interventions did not affect the nearby areas. 91. Direct beneficiaries from interventions under the sub-component 2.1- addressing social inequalities -were expected to be 2,400 households. Actual beneficiaries would be 2,302 households when ongoing works are completed. To date, around 30 percent of these households are already enjoying the benefits (800 households). The drainage component was expected to benefit 90 thousand people, however no benefit was attained. 92. For this evaluation, benefits were estimated for direct beneficiaries using appreciation in property values due to the works. According to the ex-post evaluation, the appreciation
22
was about 13% at 2008 prices, 25 percent lower than expected at project appraisal. Results show that if benefits from ongoing works are included, total attained benefits would be BRL 36 million, 82 percent lower than the BRL 199 million expected at project appraisal. If only benefits already attained under the Project are included, total benefits would BRL 7 million, or just 3.5 percent of what was expected. 93. Benefits from the Project, when ongoing works are included, are significantly lower than the costs of the intervention, covering only 40 percent of the interventions implemented under the component 2.1 -addressing social inequalities. When drainage costs are included, the cost coverage reduces to 16 percent. 94. Project’s outcome impact. The investment proved to be inefficient, given that resources and inputs yielded negative returns as high as BRL 93 million. This is unfortunate and not expected at project appraisal when foreseen net benefits were estimated at BRL 28 million. 95. Fiscal Performance of the Municipality. At project appraisal, it was expected that Santos Municipality’s healthy fiscal situation would be maintained and the Municipality would be in capacity to finance most of the investment and meet its obligation under the Fiscal Responsibility Law. On the positive side, results from actual fiscal situation showed improvement during the implementation period, according to the Municipality. Tax revenues grew faster than inflation and efficiency from billing and collection improved greatly. The Municipality not only presented surplus of revenues over current expenditures, but also its debt level was far lower (6.7 percent of current revenue) than the ceiling established at the Fiscal Responsibility Law (120 percent of current revenue). This positive achievement by the Municipality is well noted within the contest of the ICR. 3.4
Justification of Overall Outcome Rating Rating: Unsatisfactory
96. Based on the combination of the above ratings (Relevance-Substantial; EfficacyNegligible, and Efficiency-Negligible), the Overall Outcome Rating of the Project is Unsatisfactory. This has been justified as follows:
Relevance was rated Substantial. The objectives of the loan were and continue to be very relevant for the city and its population. The Northwest Zone of the city is the poorest area of the city, and faces serious problems with deficient drainage and is vulnerable to frequent floods. The importance of the works is shown by the commitment of the municipality to continue the works on the macro-drainage systems using Federal funds. It is currently seeking additional financial support to complete the entire macro-drainage network.
Efficacy was rated Negligible. The Project did not succeed to achieve, in full, the first sub-objective: to enhance the management capacity of the Santos Municipal Government for local economic development. The impacts on the Northwest Zone public services, second sub-objective, were limited, as the Project failed to complete the flood control system.
Efficiency was rated Negligible. Results show that actual cost per household that benefited from interventions under sub-component 2.1 addressing social inequality
23
were 2.5 times higher than foreseen at project appraisal. The Macro-drainage subcomponent would benefit only 32 percent of the expected area, at actual costs four times higher than expected at project appraisal. Results show that if benefits from ongoing works are included, total attained benefits would be BRL 36 million, 82 percent lower than the BRL 199 million expected at project appraisal. If only benefits already attained are included, total benefits would be BRL 7 million, or just 3.5 percent of what was originally expected. The investment proved to be inefficient, given that resources and inputs yielded negative returns as high as BRL 93 million. This is unfortunate and not expected at project appraisal when foreseen net benefits were BRL 28 million. 3.5 97.
Overarching Themes, Other Outcomes, and Impacts The following other themes, outcomes and impacts of the Project are:
(a) Poverty Impacts, Gender Aspects, and Social Development The Project activities supported professional training activities in the Northwest Zone, benefiting mainly its vulnerable population. The activities related to resettlement and urban upgrading did not reach its original goals, but produced noticeable effects on poverty. By the end of the Project, 712 households had been resettled from precarious stilt houses, to apartment buildings. Additionally, 88 households in Vila Gilda received access to improved water and sanitation services. The expected impacts from urban upgrading (and flood control) were not achieved as planned. Direct beneficiaries were limited to a few hundreds, mainly in Vila Gilda and the Haroldo de Camargo Avenue surroundings. (b) Institutional Change/Strengthening The Project contributed, inter alia, to the development of an advanced land management system, SIG-Santos21. The system integrates GIS information with the Municipality management system, including land use control, health and education services, planning, and property tax estimates. SIG-Santos is expected to generate significant management efficiency improvements. (c) Other Unintended Outcomes and Impacts (positive or negative) The installation of approximately 24 km of optic fiber internet cable networks may produce diffuse positive impacts, favoring the Northwest Zone economic development. The Project termination, prior to the construction works conclusion, may cause a series of unintended negative impacts. There is a high risk of encroachment in the areas cleared for the drainage system construction at the planned pumping stations sites, which in turn may jeopardize the drainage system completion. Additionally, the failure to resolving the Northwest Zone recurring flooding problems will certainly compromise overall economic development in the area.
21
https://egov1.santos.sp.gov.br/sigsantosweb20/sigsantosweb/login.php
24
3.6
Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
98. The ex-post satisfaction assessment addressed only a part of the project potential beneficiaries, the Vila Gilda resettled population. It did not include the population in the NW Zone, that would gain from the improved drainage system construction. Despite of that, the post-occupation survey' results are relevant, confirming that the resettled population was really satisfied in being transferred from precarious and unhealthy habitations, to new housing complexes, with full urban infrastructure, including electricity, water supply, and wastewater system. 99. The post-occupation surveys were carried out by the COHAB-Santos social team, late 2015 and early 2016, in the three new building complexes that received the resettled population: Canaleira IV, Quadras 1 and 35 and Vila Pelé II. All surveys used the same methodology, in person interviews. Ninety-five percent of the interviewers in Caneleira IV considered the new houses better and much better than the former occupation. The results in Pelé Village II were similar, 94% of the interviewers considered the new houses better and much better than the former occupation. The results in Quadras 1 and 35 were slightly different, 64% of the interviewers considered the new houses better and much better than the former occupation, 28 % equal and 8% worst. 4.
Assessment of Risk to Development Outcome
100. There are certain aspects of the Project, such as the provision of the optic fiber network, construction of housing for households resettled, and the investment in the improvement of the GIS platform within the municipal offices, which contribute to the PDO and are assessed to have a low risk to the Development Outcome. These are assessed to be sustainable investments, as the Municipality has an incentive for their maintenance, given that they are revenue-generating service assets. 101. There are significant financial, technical, and management hurdles for the Municipality continuing the flood control and slope stability construction works. The Municipality’s financial constraints indicate that there is a possibility of significant investment reduction and the construction works suspension. Therefore, the risk of the drainage system not being concluded in the near term is high; resulting in a Significant Risk to the Project expected Development Outcome. 5. Assessment of Bank and Borrower Performance 5.1
Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Unsatisfactory
102. The Bank’s project preparation team took into consideration lessons from similar projects, and conducted an analysis to support the Project design; however, depending on the Feasibility Studies for the project cost estimates was a flaw in the analysis and project preparation process. Implementation arrangements were fairly straightforward, and addressed the key technical, financial and safeguards aspects. The risk assessment did not properly assess the construction works procurement and contracts management 25
complexity, and the M&E design did not succeed to provide an adequate tool for the project implementation monitoring. The cost estimates for the macro-drainage works were unrealistically low and therefore the scope of works were far too ambitious. Considering all the above, the Quality at Entry was rated as Unsatisfactory. (b)
Quality of Supervision Rating: Moderately Satisfactory
103. Review of the Aide Memoires, Management Letters, and Implementation Status and Results Reports over the five years of project implementation show a proactivity of the Bank Implementation Support Team to resolving management, technical, procurement, and safeguards issues. A list of the Bank implementation support efforts is contained in Annex 10. 104. The Bank Implementation Support Team faced an extremely difficult situation upon identifying inconsistencies in the engineering design / bills of quantities / engineering drawings in 2014. The problems were immediately brought to the attention of Bank management, and resulted in multiple actions attempting to resolve the problem between the Engineering Consultant, Contractor, and Client. Despite the Bank Implementation Support Team efforts22, over the course of the final year of the project implementation, no resolution was able to be reached. 105. The Bank Implementation Support Team was also quick and proactively responding to the demand for knowledge exchange regarding the Port Study, the study tour to the US; and quickly supporting the Client to find a solution for the emergency temporary resettlement of 65 families living in stilt houses. 106. The Bank Implementation Support Team initiated a second Project restructuring process and a comprehensive review of the outcome indicators. New indicators were incorporated as part as the progress monitoring reporting, despite the fact that the second restructuring was not formalized. It is important to acknowledge the Project Implementation Support Team’s proactivity in responding to the difficulties of the Project implementation, particularly the macro-drainage contract failure. Once the macro-drainage contract management and budget issues were identified in May 2014, there were six Bank implementation support missions fielded and several meetings in Brasilia to assist the Client in resolving the problems. The larger team that was assembled for the July 2014 mission consisted of nine team members composed of senior experienced procurement and technical specialists (out of which, four were core team members). Considering all the above, the Quality of Supervision was rated Moderately Satisfactory. 107. In response to the team’s assessment regarding weak contract management and oversight by the UGP of the Engineering Consultant and Contractor, the Bank Implementation Team proactively initiated a financial and technical audit using Bank funds
22 Including, inter alia, the engagement of four senior specialists, trying to solve the project problems; and carrying out capacity building events (FIDIC contracting) and delivered hands on training.
26
in order to verify if all claims made by the Contractor to the Client were in accordance with the conditions of the contracts. Draft audit reports were shared with the Municipality and new documents and explanations were provided and considered in the final report delivered in May 2016. A number of eligible expenditures were identified while others will have to be returned to the Bank by end of June 2016. c)
Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory
108. Given the ratings of the above for the project preparation and implementation, the rating of the Bank’s Overall Performance is Moderately Unsatisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory 109. The Municipal Secretariat of Government23 was the overall responsible government agency for the Project. They established the UGP as the implementing agency within the Municipality. The termination of the Engineering Consultant in August 2014 clearly indicated that the Secretariat of Government accepted that there were serious problems with the drainage contract. From that point forward, though extremely critical, the Municipality was not able to actively engage and resolve problem with the Contractor. 110. While the Government was committed to the Project during the preparation phase, and succeeded to conclude important tasks, such as the City-Port Integration Study and resettlement of 712 households, they were not effective in resolving the serious contractual issues faced from July 2014 up to the Project closing. The Government did provide the required counterpart funding, and issued the decree for improving land management. However, it did not implement the improved financial control mechanisms, including an internal control secretariat as agreed during the project preparation; and experienced a number of delays to deliver the housing units and to implement the hill landslide works. Specifically, the Secretariat of Construction Works was responsible 24 for the macrodrainage works supervision, and was ineffective in resolving this major Project issue, mentioned above. As a result, the Government performance was rated as Moderately Unsatisfactory.
23
Until 2012, the PIU’s head was the Secretary of Development and Strategic Aspects.
24
The UGP supervised the macro-drainage works jointly with the Secretariat of Construction Works. The final billing approval was due the Secretariat, but the UGP team was in charge of field supervision and works measuring activities, sharing the fiduciary responsibility regarding the construction works.
27
(b)
Implementing Agency Rating: Unsatisfactory
111. The Secretariat of Government and its appointed Project Implementation Unit (UGP) were directly responsible for the coordination and supervision of the Project activities, and responsible for procuring and managing contracts of all activities funded by the Project. In the case of macro-drainage works, it had the direct support from the Secretariat of Construction Works. The UGP had a dedicated staff for engineering supervision, procurement and contract related activities, financial management, safeguards, and construction works supervision of around 15 professionals. The Engineering Consultant responsible for the macro-drainage detailed engineering and BoQ preparation reported directly to the UGP. Consequently, the diverse engineering design limitations that resulted in the large cost overruns were the direct responsibility of the UGP. Although well-staffed and supported by an Engineering Consultant, the UGP did not have the technical capacity to properly supervise the different contracts and failed to monitor and communicate problems with the Bank in a timely and transparent manner. As a result, many problems arose with the procurement, financial management, and safeguards described in earlier sections. Especially regarding the macro-drainage contract, several meetings were held between the Bank team and the UGP to discuss alternative solutions to either terminate the contract or revise the designs and resume implementation. Unfortunately, no clear decision was taken on the contract, which finally had to be cancelled. Taking this all into consideration, the UGP’s performance was rated as Unsatisfactory. (c)
Justification of Rating for Overall Borrower Performance Rating: Unsatisfactory 112. The ICR team acknowledges that the Municipal Government and the UGP had slightly different performances. The Government performance on some activities was adequate, but the major shortcomings in procuring, and supervising properly the macrodrainage construction works compromised the borrower’s general performance. Taking into consideration the relevant technical, procurement, and financial limitations, and the failure to complete important tasks, the overall Borrower Performance is rated as Unsatisfactory. 6. Lessons Learned 113. The following are the main lessons learned from the project preparation and implementation: a) Appraising a large civil works project based on the Feasibility Study Report and Preliminary Engineering Designs (PED) only with associated very approximate cost estimates: While well-intentioned, using trust funds to help prepare projects allows the Bank-executed assistance to go only as far as the PED. Perceptions of conflict of interest in appraising the Detailed Engineering Designs (DED) are the rationale for these restrictions, i.e. not allowing the DED to be financed under the trust funds. This leaves the project preparation with a PED, which at best is within +/- 20 to 25% (usually) of the true cost of the works. Consequently, the funds earmarked in the PAD are not as accurate as one would ideally want to have in preparing a project. The implementation is then hurried in the first 12-18 months of
28
the Project to get the DED prepared and go out to bid for the civil works contracts. Given that Brazil does not allow for Project Preparation Advances, other options such as retroactive financing should be considered in the future as a part of the project preparation financing in order to avoid these inaccurate project cost estimates and significant delays in disbursements in the early months of a new project. This option comes with the downside of longer project preparation periods. b) Concentrating too many consultancy activities in one single contract holder may create a risk of implementation problems. The hiring of one consulting firm to perform the three functions of: (i) engineering design, (ii) supervision of the civil works, and (iii) project and contract management support to the UGP created some conditions of risk. It is common practice to combine the design and supervision of construction tasks under the same consultant firm. However, then adding the function of overall project management within the same contract does not allow for the dimension of an independent overseer to the project. In a case where there might be some levels of incompetence and / or fraud within the civil works contract(s), this lack of an independent overseer is a missed opportunity to prevent the incompetence / fraud, or identify it. c) Bidding processes whereby only one bidder submits should be reviewed very carefully and possibly re-launched with a different approach if appropriate. Thirtynine firms bought the bidding documents for the Project drainage works, but only one Contractor composed of two firms submitted a bid, which was of a much higher cost than the design engineering estimate, i.e. 50% higher. While OPRC reviewed and cleared the bid evaluation report and contract award, the red flag that would normally go up for such a circumstance, may have been overlooked in the effort of getting the works started. d) Bank projects need to be more candid in proposing the project implementation period. Having set the execution period for this Project to five years, coupled with lengthy procurement procedures, may have contributed to some of the project failures. Hiring one consulting firm to perform the three functions may have partially resulted from the perceived need by both the Bank and Borrower to rush the process to fit the project implementation into the five-year period. e) With large complicated civil works contracts, the Bank should include in the project design a position within the UGPs for a well-qualified engineer funded under the loan. The Project had serious structural and foundation engineering issues. It was unrealistic in the project design stages to assume that the Municipality would have engineering staff who could oversee an Engineering Consultant such as the one hired. The distinct advantage to designing such a position into the loan would be that the Bank has a review function and may elect to provide the no-objection to the person hired.
29
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners Borrower/implementing agencies 114. The first draft ICR was submitted by the Bank to the Borrower on March 24, 2016. An extensive set of comments from the Borrower were received by the Bank on May 2, 2016, mainly related to the language, proposed ratings, and more information on resettlement activities. The comments were reviewed and, to the extent possible, incorporated into the final version of the ICR.25 In addition, the Municipality sent a letter on May 3, 2016 to the Bank, with comments on the Project results and the quality of the ICR, which are reflected in Annex 8 (in Portuguese)26. (a) Cofinanciers
NA
(b) Other partners and stakeholders
25
NA
Comments are on Project files for reference.
26
A decision was made by management not to translate the letter to minimize inconsistencies in the language given the sensitivity of this document.
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Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Estimate (USD millions)
Components
Actual/Latest Estimate (USD millions)
Percentage of Appraisal
Component 1. Municipal Management Enhancement
7.00
9.08
129%
1.1. Enhancing municipal management in local economic development
1.50
1.76
117%
1.1.1. Regional economic development study
0.30
0
0%
1.1.2. City–port revitalization initiative
0.40
1.14
285%
1.1.3. Information Technology Program
0.80
0.61
76%
1.2. Enhancing municipal management capacity
0.20
0
0%
1.3 Project management
5.30
7.32
138%
Component 2. Revitalization of the Northwest Zone of Santos and Adjacent Hillside
75.50
53.18
70%
2.1. Addressing Social Inequality
33.90
37.75
111%
2.1.1. Slum upgrading and resettlement in Vila Gilda
33.60
37.75
112%
0.30
0
0%
2.2. Improving Public Services
41.60
15.42
37%
2.2.1. Storm drainage system improvement
33.60
14.84
44%
2.2.2. Reducing risk of landslides in the Hillside Adjacent to the Northwest Zone
6.40
0.05
0.7%
2.2.3. Increasing urban greening amenities
1.60
0.52
32%
82.50
62.26
75%
Physical Contingencies
3.80
0.00
0%
Price Contingencies
1.70
0.00
0%
Total Project Costs
88.00
62.26
70%
0.00
0.11
0.00%
88.00
62.37
70%
2.1.2. Improvements to the municipal job training program for low-income families
Total Baseline Cost
Front-end fee Total Financing Required
(b) Financing Source of Funds
Type of Cofinancing
Appraisal Estimate (USD m)
Actual/Latest Estimate (USD m)
Percentage of Appraisal
Borrower
44.00
38.95
88%
International Bank for Reconstruction and Development
44.00
23.42
53%
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Annex 2. Outputs by Component PDO To enhance the management capacity of the Santos Municipal Government in local economic development and to improve public services in the Northwest Zone of the Municipality of Santos.
Intermediate Outcomes
Project Outcome Indicators
Outputs / Outcomes
1. Commencement of implementation of plan to address constrains to local economic development by 2011;
1. The Metropolitan Strategic Development Plan for the Baixada Santista was drafted and approved under the Project and has assisted the Client in local economic development planning.
2. At least 2,400 households in slum areas of the Northwest Zone are provided with a comprehensive package of municipal services (including water and sanitation, street paving, drainage, public lightning, gas network, recreational areas, and social services);
2. Full construction of 2 groups of new housing units (Conj. Vila Pelé II and Quadra 1- Flor Horácio Cirilo), and partial construction of 3 groups of housing units (Conj. Caneleira IV and Quadra 35) partially concluded with a total of 712 families resettled. 88 families have received urban upgrading infrastructure. Overall, 712+88 =800 households and are receiving integrated infrastructure.
3. Establishment of a macrodrainage system that will solve flooding problem in the Northwest Zone and that has sufficient capacity to handle 25-year flood levels
3. Phase I Macro-drainage works contracted and in progress for just one canal. If finalized, works will have limited results (only when it rains and there is no sea level rise)
Intermediate Outcome Indicators
Outputs / Outcomes
1. Preparation of a regional economic development study;
1. Metropolitan Strategic Development Plan for the Baixada Santista complete.
2. Preparation of a plan to reduce environmental licensing time;
2. Not carried out.
3. Preparation of a modern land use plan based on best practices for city–port integration;
3. Feasibility studies for development of an initiative of City-Port Revitalization concluded in May 2013.
4. Design and installation of Infovia network in the Northwest Zone
4. Infovia network installed in Northwest Zone (23.58 km)
Sub-Component 1.2: Improved capacity for land management
1. Preparation of plan to improve macro-processing routines for land cadaster
1. GIS system implemented and operational. Decree approved; committee contingency plan and monitoring carried out.
COMPONENT 2 Sub-Component 2.1: Improved quality of life for inhabitants of the Northwest Zone
1. At least 2,400 additional households receiving 24-hour water supply services;
1. 800 households, around 2,960 people provided with access to Improved Water Sources under the project
2. At least 2,400 additional households with sewage connections;
2. 800 households, around 2,960 people provided with access to improved sanitation under the project
3. Increased satisfaction of resettled population with municipal service delivery.
3. A full survey was never carried out. A satisfaction survey was carried out by COHAB for the residents of Vila Pelé II in 2013 only.
COMPONENT 1 Sub-Component 1.1: Improved capacity to promote local economic development
32
Sub-Component 2.2: Improved urban environment for targeted areas of Santos
1. 50% reduction in percent of Santos families living in floodprone areas;
1. A total of 712 families have been resettled and 88 have received urban/housing upgrading interventions. However, none of the Phase I macro-drainage works, have been completed. As of Project closing, progress on macrodrainage works has remained minimal. None of the macro-drainage canals are complete as of the June 30, 2015 closing date, with continued slow progress on the only ongoing canal works due to technical issues (including high sea levels and soft soils) and poor performance of the construction company and works supervision. Many of these incomplete activities fall under Component 2 (Revitalization of the Northwest Zone of Santos and Adjacent Hillside) represented 92% of Project investments as estimated at appraisal. The Borrower has initially committed to continuing implementation of the macro-drainage works.
2. Floodgates completely repaired and operating effectively;
2. Not achieved.
3. 50% reduction in percent of land area affected by recurrent flooding
3. No reduction, no drainage.
Additionally, under the Project: - The Urban Greening Program was successfully developed; - the Botanic Garden for the municipality was rehabilitated; - Landslide Prevention Works have been initiated, 1 of 28 planned subprojects carried out and 1 under execution.
33
Annex 3. Economic and Financial Analysis 1. The objective of the Project was to enhance the management capacity of the Santos Municipal Government for local economic development to improve public services in the Northwest Zone of the Municipality of Santos. The project consisted of two components: a) municipal management enhancement; and b) revitalization of the Northwest zone and adjacent Hillside. The latter component consisted of an integrated package of physical and social investments related to urban environmental improvements in the Northwest zone of Santos. Specifically, the project aimed to provide urban services to households in slum areas, and rehabilitate and improve the existing macro-drainage system in the Northwest Zone with sufficient capacity to handle 25-year flood levels. 2. The project aimed to benefit 90,000 residents from storm drainage system improvements, and 2,400 households through upgrading and resettlement, improving their living conditions. The upgrading and resettlement included provision of water and sanitation, drainage, street opening and paving, public lighting, gas pipes network, bicycles path and recreational areas. The houses to resettle lived in stilt houses built over the canal adjacent to Villa Gilda. Methodology 3. At appraisal, the economic evaluation was conducted on the second component, yet included costs of component 1 given its importance for achieving the benefits. The evaluation was conducted using cost benefit analysis. The benefits identified as those generating higher and measurable results were: a) urban improvements and the provision of resettlement housing for low-income families living in slums; and b) improvements to drainage services and geotechnical risk prevention. The methodology adopted to capture these benefits was the Hedonic Price Model, using a sample of housing price data to assess the implied value of infrastructure and amenity improvements. Discount rate used was 12 percent. 4. At appraisal, the evaluation transformed financial costs into economic costs to eliminate market distortions caused by taxes, and subsidies, among others. Inputs were broken down by inputs and conversion factors were applied as follows: for unskilled labor: 0.27, skilled labor: 0.732, and for equipment: 0.887. 5. This evaluation was conducted using the same approach as at appraisal, measuring benefits through actual properties’ appreciation caused by works implemented under the project. Actual costs and benefits were used and transformed to 2008 prices to make them comparable with those foreseen at appraisal. Same discount rate of 12 percent was used. 6. The cost benefit analysis in this evaluation, as well as at appraisal, calculated the net benefit generated by each component on an incremental basis. The benefits of the interventions equal the difference between the incremental benefits and the incremental cost of two scenarios: “with” and “without” the project. The “with” project scenario included actual achievements from works. The “without” project scenario kept the situation unchanged. The activities were appraised measuring their flow of costs and benefits for the lifetime of the project, estimated at 20 years at appraisal.
34
Costs 7. Actual nominal costs were transformed to 2008 prices to make costs comparable to the ones foreseen at appraisal. The analysis included the schedule of payments and the currency used to pay. Disbursements from the loan were transformed to 2008 Brazilian Reais (BRL) using the exchange rate at appraisal. Counterpart funds were transformed to 2008 Brazilian Reais using the cumulative inflation estimated using the index from the time of appraisal to the date when funds were used. Fluctuation of both exchange rate and inflation impacted the project in different way: a) Depreciation of the Brazilian Real to US dollar helped the project as the Municipality received more money from the amount of loan disbursed; while appreciation of the Real did the contrary, and so it was disadvantageous for the project; in this case the municipality received less BRL per amount of US dollars disbursed; and b) inflation made the costs higher and the project was negatively affected. 8. During implementation period 2008-2015 the Brazilian Real fluctuated widely: from 2008 to 2011, it appreciated 33 percent and went from US$ 0.44 to 1 BRL to US$ 0.60 per 1 BRL; then it started a period of depreciation that has not stopped to date. From 2011 to 2015, the average loss of the Brazilian Real to the US$ was 40 percent; the exchange rate went from US$ 0.60 per 1 BRL to US$ 0.36 per 1 BRL. The tendency continued and by November 2015 the Real has lost an additional 27 percent, reaching BRL 3.80 per 1US$ or US$ 0.26per 1 BRL. During the implementation period the cumulative variation of the real against the US dollar showed depreciation of 20 percent. Table 1. Exchange Rate Fluctuation and Cumulative Inflation 2008-2015 Average Exchange Rate at time of disbursement
Appreciation (Depreciation) % Annual
Cumulative
CPI index
Year
BRL/US$
US$/BRL
2008=100
2008
2.22
0.45
2009
1.78
0.56
25%
25%
1.06
2010
1.78
0.56
0%
25%
1.10
2011
1.67
0.60
6%
33%
1.17
2012
1.87
0.54
-10%
19%
1.25
2013
2.11
0.47
-12%
5%
1.32
2014
2.31
0.43
-8%
-4%
1.40
2015
2.79
0.36
-17%
-20%
1.49
1.00
9. Inflation at the same time was 49 percent. The schedule of payments and variation of exchange rate and inflation is shown in the figure below.
35
Figure 1. Actual costs of works already implemented, exchange rate and inflation
10. Annual payments were transformed to 2008 prices. The estimation included cost of works already implemented and costs of the works contracted and expected to be finalized by the end of 2016. The works to be implemented under subcomponent 2.1 addressing social inequality and sub subcomponent 2.2 improving public services would be 100 percent financed by counterpart funds; except for the activity 2.2.1. Storm drainage system improvement that would be 100 percent financed by the loan until project closure and later on by counterpart financing. Table 2. Comparison of Expected and Actual costs of interventions (BRL million) 2008 prices
Actual Costs PAD
Nominal Prices ImpleTotal mented implement
Component 1.
15.5
17.2
2.1 Addressing social inequality
75.3
2.2 Improving Public services
92.4
Total Component2
2008 Prices Total
ImpleTotal mented implement
/PAD Total
%
14.1
85%
0.5
17.6
13.7
0.3
75.7
27.7
103.4
60.6
18.7
79.3
99%
35.9
128.4
164.3
28.7
86.9
115.6
117%
167.6
111.5
156.1
267.6
89.3
105.7
195.0
109%
Total baseline cost
183.2
128.7
156.6
285.2
103.1
106.0
209.1
107%
Contingencies
12.2
-
-
-
-
-
-
0%
Total project cost
195.4
128.7
156.6
285.2
103.1
106.0
209.1
107%
Component 2.
For the comparison of expected to actual costs, contingencies were included in the expected costs proportionally in all components.
11. If all works were completed, results show that actual costs at 2008 prices were 20 percent lower than at nominal prices. For the works to be finished the difference was about 30 percent lower in 2008 prices. Total costs of the works (both implemented as well as under implementation) were 7 percent higher than expected at appraisal. The results varied by component: Component 1 showed costs 15 percent lower; subcomponent 2.1 -addressing social inequality- was similar to what was expected with just 1
36
percent difference; however, the costs of drainage works surpassed 17 percent of what it was expected. Total difference was 7 percent higher costs than expected. 12. This comparison is not accurate if the costs are not related to actual attained targets compared to expected targets and associated costs. Intervention already finished, in the subcomponent 2.1 of addressing social inequality, showed unit cost per beneficiary 2.5 higher than expected. If all ongoing works were completed the unit cost would be similar to what was expected. Table 3. Beneficiaries and Unit Cost for Sub-Component 2.1- Addressing Social Inequality Beneficiaries
Unit cost (BRL/hh)
Actual PAD
Actual 2008 prices
Already attained
Total (incl. in progress)
Households resettled
712
612
Household upgraded
88
890
800
1,502
Total
2,400
Expected
Already attained
Total (incl in progress)
33,448
87,062
34,453
13. Regarding drainage in subcomponent 2.2 results were even more discouraging, as only 32 percent of the area expected at appraisal would benefit from drainage works (already finished and on-going works). The actual resulting cost is four times higher than expected. Economic Costs 14. Same as at appraisal, this evaluation transformed the financial costs at 2008 prices into economic costs to eliminate market distortions caused by market irregularities, such as taxes and subsidies. Conversion factors for different inputs were used as they were included at appraisal. Works per component were broken down by inputs and the following conversion factors were used: for unskilled labor: 0.27, skilled labor: 0.732, and for equipment: 0.887. Benefits. Expected Beneficiaries 15. Resettlement and urban upgrading Intervention designed under the project aimed to benefit households that lived in stilt houses, with pathways in poor and unstable condition. Unsafe electricity connections made illegally by owners. No water or sanitation services were available in the area. About half of the houses were over the water body. The area was characterized by violence, unemployment, youth with no schools to attend; and lack of health centers. At appraisal it was expected that: i) 2,400 households in slum areas would be provided of urban services that included water, sanitation, street paving, drainage, public lighting. About 9,000 additional households living in areas nearby were identified at appraisal as indirect beneficiaries 16. Drainage works. The project aimed to benefit about 100 thousand people from macro-drainage works to prevent flooding of 25-year recurrence period.
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Actual Beneficiaries 17. The works implemented under the project have benefited approximately 800 households and by the end of 2016 it is expected that 1,600 additional households would benefit from resettlement and urban upgrading. The drainage component has not seen any benefit to date. Table 4. Expected and actual Beneficiaries Targets at Appraisal (PAD 2009)
Expected
1. Households in slum areas are provided with a comprehensive package of municipal services (water, sanitation, street paving, drainage, public lighting) 2. Macro-drainage system that will solve flooding problems in the NW zone with capacity to handle 25-year flood levels
Actual Implemented
In process
Total
2,400
800
1,502
2,302
25-year flood
0
0
*The economic evaluation identified 8,700 additional beneficiaries with the intervention due to proximity to the area.
Benefits included at appraisal 18. The benefits were measured at appraisal using hedonic price approach, measuring the properties’ appreciation with improvement to achieve from the project. Results of the hedonic price study, which were based on data obtained in control areas, showed that increase of property’s value caused by urban upgrading would range from 8% to 45% depending on the area and characteristics of the dwelling. Increase due to drainage works would go from 3% to 5% depending on the affectation. Increase from resettlement would be BRL 28 thousand per dwelling. Table 5. Results of the Hedonic price function at Appraisal Upgrading Indirect influence Direct influence River bank area Informal settlement Drainage Partially affected Total affected
Area of the house m2
BRL/m2 2008
Value appreciation %
114 109 126 45
718 622 621 505
7.93% 18.32% 27.52% 45.10%
104 121
654 736
3.32% 5.90% Appreciation per house BRL 2008 28,571
Resettlement
19. The evaluation at appraisal included not only direct beneficiaries living in slums but also included households living in nearby areas. Total beneficiaries of urban upgrading were estimated to be almost 10 thousand, of which 67 percent lived in areas nearby, and 33 percent corresponded to households living in areas to intervene which consisted of slums and informal settlements. For drainage evaluation, beneficiaries included those households whose property was totally affected by flooding (4,600
38
households) and those partially affected (7,200 households). Beneficiaries of resettlement were expected to be 1,121 households. 20. At appraisal, total expected benefit from the project was BRL199 million, of which, 56 percent from urban upgrading, 24 percent from drainage, and 16 percent from resettlement. The expected properties’ appreciation value from urban upgrading was 17 percent in average. Table 6. Number of beneficiaries included at appraisal and total benefits expected Number of households – beneficiaries
Total Expected Benefits Appreciation of properties (000 BRL)
Indirect influence
3,422
22,165
Direct influence
3,106
38,661
River bank area
2,172
46,725
Informal settlement
1,111
11,396
Total upgrading
9,811
118,947
Partially affected
4,627
10,428
Whole affectation
7,273
38,096
Total Drainage
11,900
48,525
1,121
32,029
Information at appraisal Upgrading
Drainage
Resettlement Total Benefits
199,501
21. Results at appraisal showed that drainage benefits were not enough to cover the costs and so this sub-component was economically not viable with foreseen net loss of BRL 22 million. Urban upgrading and resettlement on the other hand showed expected net benefits of BRL 51 million and 45 percent return. When added both interventions the project total expected net benefits were BRL 28 million and expected return equal to 20.8 percent. Expected benefits surpassed 30 percent the total foreseen cost of the project. Table 7. Expected Results of the economic evaluation at Appraisal Present value of flows Thousand BRL
Expected results at appraisal Costs
Benefits
Net benefits
ERR
B/C
Upgrading & Resettlement
44,829
95,948
51,119
44.8%
2.1
Drainage
50,474
27,534
(22,940)
-15.4%
0.55
Total
95,303
123,482
28,179
20.8%
1.30
Actual Benefits 22. According to the ex-post evaluation conducted by the municipality of Santos, the works in the Northwest zone of Santos indeed helped to increase properties’ values. The ex-post evaluation shows that even though all properties increased their values, those located in the Northwest zone appreciated 11%
39
more than the rest. These results are obtained when comparing properties’ market prices at nominal prices. For this evaluation the market prices were transformed to 2008 prices to make them comparable to those evaluated at appraisal, results show that the real properties’ appreciation was 13 percent at 2008 prices. 23. The appreciation of 13 percent was 25 percent lower than the 17.5 percent expected in average at appraisal. The actual appreciation of 13 percent was used to evaluate the urban upgrading intervention for this ICR. Table 8. Properties’ market price in Northwest zone and the Municipality of Santos. 2010 and 2015. Nominal prices and 2008 prices. 2010 million BRL
2015 million BRL
Increase
Difference Real appreciation
Northwest zone
1,715
6,102
256%
11.1%
Municipality
22,320
73,708
230%
Northwest zone
1,556
4,151
167%
Municipality
20,248
50,141
148%
Market Prices expressed at nominal prices
Market Prices expressed at 2008 prices 13.0%
Source: Market prices at nominal prices: Municipality of Santos Ex-post evaluation. Real 2008 prices were estimated based on the average inflation rate published by the Banco Central of Brazil
24. According to the ex-post evaluation conducted by the municipality, the interventions would benefit directly 2,302 households (1,32427 from resettlement, and 978 from urban upgrading). 25. The evaluation for this ICR analyzes results under two situations: a) including works already implemented and associated benefits; and b) including also expected benefits from ongoing works being financed with counterpart funds. For the first situation only 712 beneficiaries are included; for the second situation 2,302 are included. 26. This evaluation did not estimate benefits from drainage as the works were incomplete and benefits were not attained. Table 9. Expected and actual direct beneficiaries Direct Beneficiaries (number of households) Expected
Actual Implemented
In process
Total
1. Resettlement
1,121
712
612
1,324
2. Urban upgrading
1,279
88
890
978
25-year flood
0
0
0
800
1,502
2,302
3. Drainage Total Beneficiaries
27 This estimate seems to include resettlement conducted after the EOP and to be conducted in the near future.
40
27. Actual Benefits were estimated using the same approach as at appraisal, that is through properties’ appreciation. According to the hedonic price function used at appraisal, the expected benefits per household resettled would be BRL 28,571, and for upgrading the expected appreciation would be 17.5 percent. As explained, the municipality found that real properties’ appreciation was 25 percent lower than expected, and so the estimated benefits in this evaluation applied actual properties’ appreciation, which equal to BRL 7,700 per household benefited from urban upgrading, and $21,400 per household benefited from resettlement (both expressed at 2008 prices). 28. This evaluation did not estimate benefits of households located in nearby areas as the intervention did not show any impact in neighboring areas and so no additional benefits were attained. This is the major difference with the evaluation conducted at appraisal, in which 90 percent of the benefits from urban upgrading came from indirect beneficiaries living in nearby communities. 29. To date, actual Benefits from the intervention are about BRL 15 million. When ongoing works were completed additional BRL 21 million would be obtained, both will generate total benefit of BRL 36 million. At appraisal BRL 199 million were expected, which means that only 18 percent was attained. If ongoing works were not finished only 7 percent of expected benefits would be achieved. Table 10. Actual Total Benefits (000 BRL) Actual Benefits (000 BRL) Already achieved
In process to achieve
Total
14,914
13,457
28,371
2. Urban upgrading
-
7,532
7,532
3. Drainage
-
-
-
14,914
20,989
35,903
1. Resettlement
Total actual Benefits Total expected Benefits
199,501
Actual benefits/expected benefits
18%
Results. 30. The economic evaluation of sub-component 2.1, which did urban upgrading and resettlement shows negative returns for both situations: a) when only beneficiaries and costs already attained are included, the net loss is BRL 25M, with benefits covering only 21 percent of actual costs; b) when all beneficiaries and costs of ongoing works are included, the net loss increases to BRL 27 million and benefits cover 40 percent of costs. 31. Drainage works did not show any benefits, and present value of cost was BRL 67 million. Total loss generated by the works implemented under the project is as high as BRL 92.7 million.
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Table 11. Expected Results of the economic evaluation at Appraisal Present value of flows Thousand BRL
Actual results Costs
Benefits
Net benefits
ERR
B/C
Works already implemented
35,354
7,556
(27,798)
N/A
0.21
Total works (including ongoing works)
42,280
17,050
(25,230)
N/A
0.40
Drainage
67,472
-
(67,472)
N/A
-
Total (including ongoing works)
109,752
17,050
(92,702)
N/A
0.16
Upgrading & Resettlement
32. The evaluation shows unsatisfactory results far below the expected returns. Instead of yielding benefits, the project showed losses of BRL 92.7 million compared with expected benefit of BRL 28 million. Table 12. Comparison of actual and expected returns Expected Returns Upgrading & Resettlement Drainage Total
Actual Returns
Net benefit
IRR
Net benefit
IRR
51,119
44.8%
(25,230)
N/A
(67,472)
N/A
(92,702)
N/A
(22,940) 28,179
20.8%
Fiscal Performance of the Municipality of Santos 33. Fiscal Performance of the Municipality. At appraisal it was expected that Santos’ healthy fiscal situation would be maintained and the municipality would be in capacity to finance most of the investment and meet its obligation under the Fiscal Responsibility Law. 34. Actual Fiscal Performance. According to the Municipality, its fiscal situation showed improvement during implementation period. Tax revenues grew faster than inflation and efficiency from billing and collection improved greatly. The municipality not only presented surplus of revenues over current expenditures, but also its debt level was far lower (6.7 percent of current revenue) than the ceiling established at the Fiscal Responsibility Law (120 percent of current revenue). The Municipality also reports that the level of investment executed has increased from 6 percent of budgeted investment to 14 percent. The Municipality is applying some mitigation measures to face the economic crisis at federal level. Some of these measures are: a) reduction of operating costs, b) search of new financing sources like refinancing its debt in better conditions and revenue from legal funds, and recent agreement with SABESP from a concession contract.
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Annex 4. Social Safeguards 1. The Project preparation took into consideration the involuntary resettlement of 1,100 families, most living in stilt houses built in slums (Vila Gilda), and deprived of any public services. During preparation, the Municipality prepared a Resettlement Action Plan (RAP), in compliance with the Bank's OP 4.12. The instrument described in detail the procedures to resettle the families, including compensatory alternatives to, significantly, improve their living conditions. However, despite of the preparation efforts and strict social safeguards supervision, the Project faced numerous hurdles to implement the involuntary resettlement activities. 2. The objectives for the resettlement were to improve the general quality of life of the resettled population, and to allow Vila Gilda to be transformed into a regular neighborhood with quality urban services. The alternatives originally offered for resettlement were (i) 920 residential apartments located in a neighborhood known as Tancredo Neves, and (ii) 188 apartments to be built within the part of the slum area, associated to urban infrastructure development. The Secretariat of Government with support from COHAB28-Santos (through a specific agreement) assumed the resettlement institutional responsibilities. COHAB-Santos became the executing agency for planning, slum urbanization activities and resettlement of the population. All resettlement-related activities were to be fully financed using counterpart funds. 3. Upon the Project effectiveness, the Client requested to change the original RAP, and to include the resettlement of 480 families from Vila Gilda to a new housing complex, Vila Pele II, fully financed by counterpart funds and with works under way (at the time). The Bank had no objection to the proposal, but asked the Municipality to prepare a new separated RAP29, addressing the process for the resettlement of these 480 families to Vila Pele II. 4. In addition, the Bank Team required the Municipality to update the original RAP, aiming to incorporate new information on the project areas of interventions and affected population and including, specifically, the 480 families to be resettled to Vila Pele II. The Municipality submitted the two new RAPs in 2011, but it took around two years to get the final approval (in May, 2013), due to the need of numerous adjustments. The Municipality informed, in October 2011, that it had identified additional 65 affected families, living in the project intervention area. The Municipality agreed with the Bank to provide financial support, (temporary housing), for the referred families, up to their definite resettlement to new houses, planned, at the time, for 2013. However, during the May 2012 supervision mission, the Bank team verified that the referred families had been moved to other stilt houses (constructed by the Municipality), disregarding the RAP terms and the Bank Policies. 5. The Bank team requested immediate action, and the Municipality transferred the families to “temporary housing” (paying housing allowances), as defined in the RAP. As there were delays in the production of new housing units, by the end of the project, the 65 families, referred above,
28 “COHAB” means the Companhia de Habitação da Baixada Santista – COHAB -Santista, the housing corporation established by the municipalities of Santos, SãoVicente, Cubatão and Guarujá, and operating under the COHAB By-Laws 29 The process for finalizing this separated RAP took longer than expected and concluded after the resettlement had been carried out. By the time it was finished, it was then called “Resettlement Report”.
43
had not been properly resettled. The Bank notified30 the Municipality that all families had to be moved to a new housing complex, in accordance to the approved RAP terms, and continued to follow up the situation of these families. Late 2015, around 40 families from that group were resettled to Caneleira IV (Phase 1), and in May 2016, the Municipality confirmed that 23 additional families had been finally resettled to Caneleira IV housing complex (2nd phase). The Municipality informed the goal of moving the three last households to new houses, along the second half of 2016. The Bank continues to follow up the situation of the pending resettlement. 6. The construction works progress allowed a detailed inspection of the intervention sites, resulting in the identification of more potentially affected families, than originally estimated. The Bank team verified that new stilt houses were being built in the Bugres River31, close to the pumping stations, notably EEC7. The Bank required the preparation of a complementary study32 to access the storm water discharge potential impacts on the stilt houses. The study was concluded after the project closing, October 2015, recommending the Municipality to remove the stilt houses located within 50 meters from the EEC7, and 20 meters within the other pumping stations. The precise number of affected families around the pumping stations have not been estimated yet, by the Client. 7. Additionally, the geotechnical experts observed that excavation works for part of the EEC7 culvert construction could result in structural damages to nearby buildings. The Bank required an abbreviated RAP for the potentially affected families around the EEC7 culvert construction33 and the pumping stations. The Bank did not approve the abbreviated RAP draft submitted by the Municipality due to the lack of compliance with the Bank’s policy. If the Client continues the works implementation, the referred abbreviated RAP will be needed, to keep the compliance with the Bank’s safeguards. 8. The construction of the macro-drainage system and the new housing complexes demanded the occupation of approximately 35 sites. Fortunately, most land belonged to the Federal Government and to the County, demanding simple administrative agreements. By the EOP, the Municipality had not accessed three sites. Part of the Caneleira Housing Complex area34 expropriation was still in progress. The Municipality was waiting for a Court’s decision to resettle an occupant residing in the EE5 area, Federal Land. The most complex case, was the agreement with the MRS Railroad Company, Federal Concession, to construct a box culvert crossing a railroad yard. 9. In sum, the Project succeeded to resettle 712 families (54 percent of the estimated in the RAP): 480 families to Vila Pelé II, 160 families to Caneleira IV (Phase 1), and 72 families to Quadras 1 and 35 (Vila Gilda), in accordance with the referred RAPs. However, by the Project closing, there were three pending expropriations authorizations for advancing the macro-drainage
30 Last supervision mission and a message dated of January 2016, filed in the WBDocs. 31 Connected to the São Vicente Municipality margin. 32 Avaliação Do Impacto Do Projeto De Macrodrenagem No Escoamento No Rio Dos Bugres, Visando Definir Medidas Mitigadoras Para Evitar Impactos Às Moradias/Palafitas Existentes No Leito Do Rio. (CSANEO, 2015). 33 100 meters section close to the EEC7 pumping station. 34 Located in private land.
44
works at the time of the Project closing. Moreover, the Municipality did not present an appropriate abbreviated RAP for the potentially affected families surrounding the EEC7 culvert construction and nearby the future pumping stations. Considering all above, the Project`s compliance with social safeguards is thus rated as Moderately Unsatisfactory. 10. The Bank has informed the Client the need to resolve all pending resettlement and expropriation aspects following the RAP and the Bank’s safeguard policy in order to continue with any of the macro-drainage works (Phases 1 to 3). The table below summarizes the project resettlement activities. Santos Novos Tempos Resettlement Summary Housing Complex
Number of Units
Resettlement by the EOP
Resettlement after EOP
Housing Complex Vila Pelé II
480
480
0
Families resettled in 2012
Housing Complex Caneleira IV (1st Phase)
160
160
0
Families resettled in 2014
Status at EOP
Under construction: 320 Units (120 to be concluded by December/2015 and 200 Units to be concluded by April/2016. (1)
Housing Complex Caneleira IV (2nd Phase)
520
0
520
Quadra 01 – Flor Horácio Cirilo Street
56
56
0
Families resettled in 2014
Quadra 35 a 16
88
16
72
Families resettled in 2014
Santos 0
20
0
20
Works under the coordination of CDHU, scheduled for delivery in April 2015.
TOTAL 1324 712 612 (1) Twenty-three families from Caminho São José (that were receiving rent allowance by EOP) were resettled at Canaleira IV (2nd Phase) in the first half of 2016. The remaining 3 families are supposed to be resettled along the 2nd half of 2016.
45
Annex 5. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Title
Unit
Responsibility/ Specialty
Sr. Urban Specialist
LCSUW
Consultant
Garo Batmanian
Sr. Environmental Specialist
LCSEN
Peer Reviewer
Gerald Paul Ollivier
Sr. Infrastructure Specialist
ECSSD
Peer Reviewer
Jonas Simas
Lead W. Resources Engineer
LCSUW
Jose Barbero
Lead Transport Specialist
LCSTR
Jose Guilherme Reis
Program Leader
LCSPF
Peer Reviewer
LCSUW
Consultant
Names Lending Catherine Lynch
Julia Tierney Luciano Wuerzius
Procurement Specialist
LCSPT
Maria Isabel Braga
Sr. Environmental Specialist
LCSDE
Marta E. Morales-Halberg Lead Counsel
LEGLA
Menahem Libhaber
Lead Water Engineer
LCSUW
Miguel Santiago Oliveira
Sr. Finance Officer
LOAFC
Mila Freire Ming Zhang
MEU Senior Urban Specialist
LCSUW
Nicolas Drossos
Financial Specialist
LCSUW
Paula Dias Pini
Sr. Urban Specialist
LCSUW
Perla Castillo
Team Assistant
LCSUW
Natalie Giannelli
LCSUW
Tova Solo
Peer Reviewer Junior Professional Associate TTL
LCSUW
Peer Reviewer Consultant
Supervision/ICR Adauto Santos
Infrastructure Engineering
GSURR
Alexandre Takahashi
Operations Analyst
GSURR
Anna Wellenstein
Program Manager
GSURR
Augusto Mendonça
Technical Assistance / ICR Author
GSURR
Bernice K. Van Bronkhorst Practice Manager
Consultant
GSURR
Carlos E. Morelli Tucci
Drainage Mgmt. and Infrastructure GWADR Engineering
Catherine Lynch
Sr Urban Spec.
Consultant
GSURR
Clarisse Dall Acqua
Senior Environmental Spec.
GENDR
Environment Safeguards
Efraim Jimenez
Procurement Specialist
GGO02
Consultant
Emanuela Monteiro
Urban Specialist
GSURR
Co-TTL
LCSWS
Consultant
Eri Watanabe Etel Bereslawski
Senior Procurement Specialist
GGODR
Flavio Chaves
Technical Expert
GSURR
Guang Zhe Chen
Country Director
AFCE3
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Consultant
Jose C. Janeiro
Senior Finance Officer
WFALA
Joseph Gadek
ICR Main Author
GSURR
Juliana Garrido
Sr. Water and Sanitation Specialist GWADR
Luciano Wuerzius
Senior Procurement Specialist
GGODR
Luis R. Prada Villalobos
Senior Procurement Specialist
GGODR
Luz Maria
Economic and Financial Analysis
GED04
Consultant
Menahem Libhaber
Macro and Micro Drainage Works GSURR
Consultant
Michele Martins
Program Assistant
LCC5C
Monica Amorim
Local Economic Develop.
GSURR
Consultant
Nicolas Drossos
Financial Specialist
GSPDR
Consultant
Oscar Alvarado
Sr. Water and Sanitation Specialist GWADR
Paul Kriss
Practice Manager
LCC5C
Paulo Fantini
Infrastructure Engineering
GSURR
Consultant
Pedro Almeida
Housing Infrastructure Engineering GSURR
Consultant
Sameh Naguib Wahba
Practice Manager
GSURR
Task Team Leader
Soraya Melgaço
Sustainable Development Safeguards
GSURR
Consultant
Susana Amaral
Financial Management Spec.
GGODR
Willow Latham
Junior Professional Associate
LCC5C
Consultant Task Team Leader
co-TTL
(b) Staff Time and Cost Stage of Project Cycle
Staff Time and Cost (Bank Budget Only) USD Thousands (including No. of staff weeks travel and consultant costs)
Lending FY07 FY08 FY09 FY10 Subtotal: Supervision/ICR FY10 FY11 FY12 FY13 FY14 FY15 FY16 Subtotal: TOTAL:
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4.66 21.28 8.62 5.80 40.36
17.66 132.08 53.49 42.11 245.34
5.48 8.70 7.11 10.85 17.70 38.10 9.35 97.29 137.65
40.45 51.60 52.60 65.22 110.00 192.70 75.81 588.38 891.89
Annex 6. Beneficiary Survey Results 1. The ex-post satisfaction assessment addressed only a part of the project potential beneficiaries, the Vila Gilda resettled population. It did not address the population in the NW Zone, that would gain from the improved drainage system construction. 2. The COHAB social team conducted late 2015 and early 2016 post-occupation satisfaction surveys to evaluate the resettled population situation and satisfaction with the new houses. The surveys were carried out in three new building complexes: Canaleira IV, Quadras 1 and 35 and Pelé II Village. The same methodology was used in the three sites, in person interviews, addressing socio economic characterization, besides the evaluation of numerous attributes of the new houses, as public services quality in the surrounding areas. The results confirmed that the great majority of the resettled population was very satisfied with the moving. 3. The Caneleira IV resettled population follow-up was initiated in December 2014, just after the transfer. The post occupation survey was conducted in March 2016, with 48 households’ interviews, (30% of the resettled families). Almost 2/3 of the interviewers were women, all came from slums, 37% were unemployed at the time, and all had a household income smaller than 3 minimum wages. This site had a peculiarity, 92% of the families were transferred from different neighborhoods, compromising former social relations. The graph bellow shows that 95% of the interviewers considered the new houses better and much better than the former occupation.
Satisfaction in Relation to the Former Habitation - Caneleira IV 1% 4% Worst 33%
Equal Better
62%
Much Better
4. The Quadras 1 and 35 resettled post occupation survey was conducted in October 2015, with 17 households’ interviews, (30% of the resettled families). Two thirds of the interviewers were women, all came from slums, 45% were unemployed at the time, and all had a household income smaller than 3 minimum wages. This site is close by the project intervention area, and the transfer did not impact the former social relations and public services condition. In this case, only 64% of the interviewers considered the new houses better and much better than the former occupation. Twenty-eight percent considered the new houses equal to the former ones, and 8% worst. 48
5. The Pelé II Village was concluded in 2011, and since then, COHAB has followed up the occupants’ condition, as subsidizing the complex maintenance. The post occupation survey was conducted in October 2015, with 144 households’ interviews, (30% of the resettled families). Seventy-three percent the interviewers were women, all came from slums, 49% were unemployed at the time, and all had a household income smaller than 3 minimum wages, analogous to the other complexes. The Vila Pelé is located close by the project intervention area, and the population remained in the same neighborhoods, without change in public services quality or social relations loss. The survey showed that 94% of the interviewers considered the new houses better and much better than the former occupation. 6. The beneficiary survey results are not comprehensive, missing the perception of a very important potential beneficiary group, the NW Zone population, that would gain from the improved drainage system construction. Despite of that, the post-occupation surveys results are relevant, confirming that the resettled population was satisfied with the new condition. The project supported the transfer of 712 families, by EOP, from precarious and unhealthy habitations, to new housing complexes, with full urban infrastructure, including electricity, water supply, and wastewater piping, as presented in the pictures bellow.
Picture 1: Former Stilt Houses
Picture 2: New Housing Complexes
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Annex 7. Stakeholder Workshop Report and Results No Stakeholder Workshop Conducted.
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Annex 8. Summary of Borrower's ICR and/or Comments on Draft ICR Borrower’s comments on Draft ICR35:
G ABINETE DO P REFEITO Ofício n.
/2016 GPM-E
Santos, 3 de maio de 2016
Ilmo. Sr.
Martin Raiser Diretor do Banco Mundial no Brasil Ref.: LN 78070-BR Programa Santos Novos Tempos Manifestação sobre Relatório de Encerramento ICR do Banco Mundial
Senhor Diretor: Cumprimentando V.Sa., manifestamos o posicionamento da Prefeitura de Santos sobre o Relatório de Encerramento ICR, elaborado pelo Banco Mundial, relativo à execução do Programa Santos Novos Tempos. Temos ciência que este Relatório foi elaborado com base em metodologia de análise objetiva normatizada pelo Banco Mundial, restringindo a análise aos itens e indicadores que compõem formalmente o referido Programa. Assim, os resultados que extrapolam estes itens e indicadores não foram considerados na avaliação e na classificação dos resultados. Temos ciência também que a não formalização da segunda reestruturação do Acordo de Empréstimo que estava em curso em 2014 impede considerar os indicadores com os quais as equipes já trabalhavam, reduzindo o registro de sucesso efetivamente alcançado. Neste sentido, é fundamental destacar que o Programa Santos Novos Tempos é mais abrangente que o conjunto de componentes e subcomponentes apoiados pelo Acordo de Empréstimo em referência. Especialmente no início dos trabalhos, em 2006, o Banco discutia com os municípios de Cubatão, Guarujá, Santos e São Vicente1, o desenvolvimento de operações para apoiar a melhoria dos serviços públicos e da infraestrutura básica, visando ao processo de desenvolvimento socioeconômico sustentável da Baixada Santista. Os planos e projetos estruturantes regionais, respectivos entraves e soluções, encontravam-se dispersos em órgãos e entidades, não havendo agenda comum regional e entre esferas que, reconhecendo as reais oportunidades, eliminasse os entraves e viabilizasse o desenvolvimento com criação de serviços e empregos. Em decorrência, foi elaborada a Avaliação da Dinâmica do Desenvolvimento da Baixada Santista – Problemas, Estratégias para Equacionamento, com o apoio do Banco Mundial via Doação Japonesa para a Prefeitura de Cubatão, pela Fundação SEADE, com metodologia de planejamento situacional2
35
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coordenada pelos quatro municípios mencionados, entrevistando mais de cem stakeholders dos três setores da economia e três esferas de atuação. Este trabalho foi adotado como protoplano estratégico de desenvolvimento regional entre 2006 e 2014. Exemplos de bons resultados: a transferência do trem de carga da orla de Santos-São Vicente para o terceiro trilho Cubatão-Santos; a implementação em conclusão do Sistema Integrado de Transportes Metropolitanos com o Uso de Veículos Leves sobre Trilhos -VLT; a implementação do Aeroporto Civil na Base Aérea de Santos; a institucionalização do Parque Tecnológico de Santos; o Projeto Porto Valongo etc. É imprescindível registrar que, desde a preparação até a execução, o Banco destacou equipes de especialistas e consultores para orientar, acompanhar e supervisionar todos os passos, procedimentos, licitações e contratos do Programa. Por sua vez, o Município designou equipes de acordo com modelo organizacional discutido com o time de supervisão do Banco Mundial. Ao invés de contratar novos colaboradores que desconhecessem o funcionamento da Prefeitura de Santos, buscou-se aperfeiçoar servidores públicos de carreira, com pequena equipe dedicada e estrutura matricial atuando no Programa em compatibilidade com as respectivas atribuições diárias na Prefeitura de Santos, estabelecidas por decretos. Assim, o controle econômico-financeiro foi desempenhado por equipe da Secretaria de Economia e Finanças. A aquisição e os contratos pela equipe do Departamento de Licitações da Secretaria de Gestão. A execução das moradias, que eram contrapartida, e o cumprimento das salvaguardas sociais foi co-executado pela Companhia de Habitação da Baixada Santista – Cohab-st. A contribuição técnica das áreas de Meio Ambiente, Desenvolvimento Urbano, Portos ocorreu por equipe técnico-social das pastas afins. A contratação, gestão do contrato de obras, comando da equipe de supervisão, ordenamento das despesas/dotações orçamentárias e o cumprimento das salvaguardas ambientais foi da Secretaria Municipal de Infraestrutura e Edificações. A importância do Programa, conferida pela Administração Municipal pode ser verificada pela atenção com a evolução da estrutura da Unidade de Gerenciamento do Programa UGP, conforme Decretos números 4.916, de 09/10/2007; 5.113, de 25/06/2008; 5.575, de 03/05/2010; 5.576, de 05/05/2010; 6.300, de 28/12/2012; 6.358, de 08/03/2013; 6.400, de 06/05/20133. O Programa Santos Novos Tempos foi organizado em dois componentes, englobando dez itens subcomponentes, objeto do Acordo de Empréstimo LN 78070-BR, assinado em 10/02/2010 e encerrado em 30/06/2015, objeto do presente Relatório de Encerramento – ICR. O primeiro componente, Melhoria da Gestão Municipal, obteve sucesso nas cinco ações. A ação I.1.a Estudo de Desenvolvimento Econômico Local registrou a elaboração da Avaliação Ambiental Estratégica sobre Porto-Indústria, Naval e Offshore (PINO)4. Os resultados foram além do previsto: (i) elaborado o Plano Metropolitano de Desenvolvimento Estratégico (previsto na segunda reestruturação não formalizada); (ii) O PINO embasou a edição do Zoneamento Ecológico-Econômico da Baixada Santista5, do novo Plano Diretor de Desenvolvimento e Expansão Urbana de Santos6 e revisão da Lei de Uso e Ocupação do Solo da Área Insular do Município de Santos7. O Plano Metropolitano englobou quatro questões-chave estratégicas para o desenvolvimento regional: habitação, mobilidade, saneamento e desenvolvimento econômico, definindo projetos estruturantes e metas para 2030. Os instrumentos encontram-se implantados. A ação I.1.b Estudos de Iniciativa de Revitalização Cidade-Porto resultou na elaboração dos Estudos de Viabilidade Técnica, Econômica, Ambiental e Social do Porto Valongo; Estudo de Mobilidade para a Região Central e de Operações Urbanas para o Valongo e Paquetá, contratados e elaborados pela Consultora Ove Arup, de atuação global. Como resultado prático, podemos destacar a definição do traçado das linhas troncais com o uso de Veículos Leves sobre Trilhos no Centro, obras em licitação e trecho já em funcionamento; na implementação do Parque Tecnológico de Santos, na implementação/construção de campi da Universidade Federal de São Paulo – UNIFESP e da Universidade de São Paulo – USP.
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A ação I.1.c Programa de Tecnologia da Informação resultou na expansão da rede de fibra ótica da Prefeitura para a Zona Noroeste (23 km), interligando as unidades de serviço público municipal, e na implantação de radiobases para difusão de sinal de internet sem fio gratuito naqueles bairros, em funcionamento. A ação I.2.a Mecanismo de Ordenamento e Controle do Território resultou no aprimoramento do Sistema de Informações Geográficas Municipais – SigSantos – sistema de geoprocessamento de terceira geração, que se configurou em sistema de apoio ao planejamento/monitoramento da gestão, com mais de duzentas camadas de informações, permitindo a elaboração em tempo real de relatórios, gráficos, mapas, telas de Business Intellingence – B.I., disponibilizando informações gerenciais para a Alta Administração do Município e incluindo Santos na rede mundial de Smart Cities. O Controle de uso e ocupação do solo baseia-se na nova Lei de Uso e Ocupação do Solo e no Grupo Técnico de Controle de Ocupações Irregulares8, em atuação. Na ação I.2.b Gestão do Projeto, decidiu-se, entre as equipes da Prefeitura de Santos e do Banco Mundial, selecionar de uma vez o conjunto de serviços de consultoria de apoio à Assistência Técnica, elaboração de Projetos Executivos e Supervisão de Obras, tendo sido contratado o Consórcio Procesl/MC Consulting (Contrato n.º 372/11). A concepção do sistema de macrodrenagem foi amplamente discutida durante o projeto básico que foi elaborado em 2009 e durante a elaboração do edital para a contratação dos projetos executivos, com equipe de especialistas do Banco Mundial com larga experiência em todo o mundo11. As obras visam complementar o sistema de canais e diques construídos pelo Departamento Nacional de Obras de Saneamento na década de 509 e aproveitam a experiência em programas de macrodrenagem, com a construção/operação dos canais na Zona Leste da Cidade (1905-1930) por Saturnino de Brito10. Na Zona Noroeste, como os bairros estão abaixo do nível máximo das marés, são necessárias Estações Elevatórias com Comportas para sucção e recalque das águas de chuvas fortes quando em marés altas. Os projetos executivos, elaborados e entregues até 2012, compõem-se de 1.875 desenhos, 357 memoriais descritivos, em total de mais de 5 mil documentos, nas disciplinas Localização, Hidráulicocivil, Estrutural, Elétrica e Automação, Elétrica e Instrumentação, Elétrica de Segurança, Arquitetura/Paisagismo e Geotecnia/Fundações. A UGP analisou e verificou a qualidade dos projetos, concentrando-se na conferência do atendimento aos Termos de Referência, especialmente às premissas de compatibilidade entre as disciplinas e os projetos de urbanismo, sistema viário, habitação, em base cadastral do SigSantos; concepção do traçado de sucção e recalque entre os canais/galerias e os reservatórios de retenção/comportas/rios/estuário; solução para a alimentação das bombas com diesel viabilizando técnica e economicamente o empreendimento; compatibilidade entre os desenhos e memoriais. Destaque-se a confirmação de que a localização das Estações Elevatórias com Comportas e estruturas associadas respeitou o Plano Urbanístico aprovado no licenciamento de engenharia/ambiental/arqueológico, ou seja, além da avenida Beira Rio. Conforme praxe, esta conferência não incluiu o recálculo dos projetos hidráulico-civil, elétrico e estrutural, nem refez os quantitativos das planilhas orçamentárias, já que a projetista contratada responsável técnica pelos projetos com Anotação de Responsabilidade Técnica ART válida e detalhada é certificada com ISO 9001 (2008) e 14001 (2004) – sendo pressupostos e necessários processos internos de dupla verificação11. Em decorrência de superveniências imprevisíveis durante as obras, relatadas nas mensagens eletrônicas ao Banco Mundial, os desenhos e memoriais descritivos de geotecnia/fundações foram revisados pela projetista, durante a vigência do Contrato n.º 372/11, quanto ao embasamento e escoramento provisório das galerias e à espessura da areia de aterros das estações elevatórias com comportas. As atividades de assistência técnica consistiram na elaboração de todos os relatórios de Aquisições/Contratos, Controle Econômico-Financeiro e verificação/análise/atendimento às sete salvaguardas acionadas pelo Programa classificado como Categoria A, todos encaminhados para/de conhecimento pelas equipes do Banco Mundial.
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As atividades de supervisão de obras reportaram-se diretamente à equipe da SIEDI componente da UGP, conforme tendo sido realizadas diligentemente, discutindo os desafios e as superveniências verificadas, solicitando revisões de projeto, acompanhando as obras, realizando dezoito reuniões intersetoriais e vinte e quatro reuniões de fiscalização de obras entre os membros das diversas secretarias componentes da UGP e o Consórcio Executor, visando a realização das obras em conformidade com o contrato.12 Foram elaborados Critérios de Medição pela equipe de planejamento de obras componente do apoio à supervisão, regulamentando cláusula do contrato. Documentos de medição, faturamento e pagamento estão compatíveis entre si, tendo sido auditados sem ressalvas em seis exercícios13 e com Contas aprovadas no Tribunal de Contas do Estado de São Paulo14. Auditoria independente contratada pelo Banco Mundial verificou a execução do contrato, estando em finalização a apresentação dos últimos esclarecimentos solicitados. Estas atividades foram realizadas para/com a Prefeitura de Santos conjuntamente com o processo de formação em serviço, resultando em aperfeiçoamento profissional das equipes matriciais que compõem a UGP e na melhoria dos processos administrativos da municipalidade. Em março de 2014, foram constatados, pela Prefeitura de Santos e comunicados ao Banco Mundial, erros de quantitativos em itens de fundações especialmente Colunas de Jet Grouting tipo CCP, nas planilhas de quantidades dos projetos executivos de Geotecnia/Fundações. A Prefeitura adotou a penalidade de rescisão do Contrato n.º 372/11 em 04/10/2014. As providências quanto ao gerenciamento das obras de macrodrenagem serão detalhadas adiante. No segundo componente, Revitalização da Zona Noroeste e Morros adjacentes, obteve-se sucesso em duas ações e parcialmente em outras três. A ação II.1.b Melhoria de formação profissional para famílias de baixa renda resultou na criação de Comitê Governo-Sociedade de Qualificação Profissional, organizando as iniciativas de qualificação profissional na Cidade em função das reais oportunidades do mercado de trabalho. O Centro Público de Emprego, Trabalho e Renda de Santos foi aperfeiçoado e estendeu sua atuação às Administrações Regionais. Oito mil trabalhadores realizaram cursos e cinco mil tiveram acesso a emprego no período do Programa. A ação II.2.c Aumento de vegetação urbana e amenidades, uma das contrapartidas financeiras da Prefeitura de Santos no Programa, promoveu reforma das instalações do Jardim Botânico Chico Mendes e o plantio de 2.255 árvores de espécimes da Mata Atlântica nas vias da Zona Noroeste, alcançando as metas do Programa. A ação II.2.b viabilizou a construção de dois dispositivos para drenagem em encostas dentre as intervenções projetadas. Aguarda-se nova seleção vantajosa à Prefeitura de Santos para prosseguimento das intervenções. A ação II.1.a Urbanização de Favelas e Reassentamentos, cujo investimento completava as contrapartidas da Prefeitura de Santos no Programa, construção de novas unidades habitacionais e a preparação e o reassentamento de 712 famílias, nos Conjuntos Pelé II, Flor Horácio Ciryllo e Caneleira IV. A qualidade construtiva foi sendo aperfeiçoada nos sucessivos conjuntos habitacionais construídos: no Conjunto Caneleira IV, as esquadrias são de alumínio, há piso cerâmico em todos os ambientes e nas paredes úmidas, medidores de água e gás por família; revestimento plástico para permitir manutenção da rede de água/esgoto sem quebras; tubulação preparatória para ar condicionado split embutida; e interruptores para as duas fases elétricas (220V). Não houve registro de reclamações sobre reassentamento. A satisfação da comunidade foi manifestada em pesquisa em junho de 201515, quanto aos seguintes itens: (i) em relação à moradia anterior, 96% consideram melhor ou muito melhor; (ii) infraestrutura urbana e serviços públicos: 77% consideram ótimo, bom ou razoável; (iii) segurança em
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áreas comuns e entorno: 64% consideram ótimo, bom ou razoável; (iv) qualidade do apartamento: 96,9% consideram ótimo, bom ou razoável; (v) aparência do apartamento e do conjunto habitacional: 97,5% consideram ótimo, bom ou razoável; (vi) privacidade: 80% consideram ótimo, bom ou razoável. A ação II.2.a Melhoria do sistema de drenagem consiste na construção da Fase I das obras de macrodrenagem composta de cinco Estações Elevatórias com Comportas – EEC3, EEC4, EEC6, EEC7, EEC10 e uma Comporta, C1 e estruturas associadas. Foi realizada Licitação Internacional ICB 001/13 da qual trinta e nove empresas retiraram o edital, sendo selecionada uma, pelo valor de R$ 137,5 milhões16. Superveniências relatadas ao Banco Mundial e nos processos administrativos da Prefeitura de Santos resultaram na necessidade de variações de quantidades e itens, exigindo revisões dos projetos de Geotecnia/Fundações, no embasamento e escoramento provisório de galerias e na espessura de areia dos aterros das Estações Elevatórias com Comportas, realizadas pela projetista na vigência do respectivo contrato. Foi justificado, formalizado, encaminhado ao Banco Mundial para ciência e registro o Primeiro Termo de Aditamento ao Contrato, no percentual de 14,7% resultando em novo valor vigente de R$ 157,8 milhões, em conformidade com as diretrizes do Banco Mundial e a lei brasileira de licitações. Como relatado acima, em março de 2014 a Prefeitura de Santos constatou e prontamente informou ao Banco Mundial que havia erro nos quantitativos das planilhas de quantidade do projeto e do contrato. Alguns itens de fundações das Estações Elevatórias com Comportas especialmente Colunas de Jet Grouting tipo CCP constavam a menor nas planilhas que a real quantidade definida em desenhos e memoriais descritivos. O Banco Mundial mobilizou equipe adicional, sugerindo três alternativas. A Prefeitura de Santos decidiu: (i) rescindir o Contrato n.º 372/11 com a Procesl/MC Consulting efetivado em 04/10/2014; (ii) transferir a responsabilidade ao Consórcio Executor das Obras, de prosseguir as obras de construção da galeria da EEC7 Haroldo de Camargo e elaborar projetos alternativos de fundações para as Estações Elevatórias, contra uma relação de cinco exigências, o que foi pactuado entre Prefeitura, Consórcio e Banco Mundial, em 28/08/2014. Com esta opção de encaminhamento, o efeito do erro de planilha seria neutralizado e o sucesso da execução das obras ficou dependendo dos cinco passos, com documentos remetidos ao Banco Mundial: (i) a reprogramação de preços de itens cujas quantidades variariam foi aprovada pelo Banco em 10/10/2014 para uso futuro nos projetos alternativos; (ii) Plano de Revisão do Projeto Alternativo revisão 6 remetido ao Banco em 06/10/2014; (iii) Plano de Controle de Qualidade das Obras remetido em 04/10/2014; (iv) projeto alternativo da EEC10 remetido em 10/10/2014 e não aprovado pela nova equipe técnica convocada pelo Banco para apoiar a solução do projeto alternativo pactuado, porém adotando posicionamento excessivamente conservador que não contribuiu com o prosseguimento das obras; (v) contratação de novos consultores de engenharia e fiscalização – segundo semestre de 2014 até fevereiro de 2015. A Prefeitura de Santos destaca que as equipes que atuaram na Unidade de Gerenciamento do Programa buscaram atender às boas práticas de engenharia, à legislação brasileira, às diretrizes e às orientações recebidas da equipe de supervisão e consultores do Banco Mundial em 14 Missões de Supervisão. Diante de superveniências e desafios de um complexo Programa, dedicaram-se buscando legalidade, impessoalidade, moralidade, publicidade e eficiência na gestão, com fulcro no interesse público. A Prefeitura afirma que falhas em procedimentos e na elaboração da planilha de orçamento são de responsabilidade direta da consultora contratada justamente para dar suporte à municipalidade, inclusive com Anotações de Responsabilidade Técnica. Assim, são indevidas as afirmações atribuídas à equipe da Prefeitura: no item 37, pois atuaram com dedicação e assertividade; 39 e 68 pois superveniências e falhas não foram iniciativa das equipes municipais; 66 pois o avanço financeiro equivale ao físico; 67 pois justificativas foram dadas aos Auditores; 79 pois expertise seria suprida contratando consultoria; 111 pois descabida a forma de manifestação sobre equipe do mutuário17. A comprovar a assertividade da gestão, destaque-se que: (i) encontram-se vigentes as 31 licenças de engenharia/ambientais/arqueológicas do Programa para todas as obras de macrodrenagem, programa habitacional, urbanização/sistema viário e obras arqueológicas; (ii) não há registro de ressalvas ao
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cumprimento das sete salvaguardas acionadas por Programa de Categoria A; (iii) os indicadores de investimento em consultoria de engenharia estão abaixo dos valores praticados no mercado: em projetos executivos foram investidos R$ 5 mi correspondendo a 0,6% do valor total das obras macrodrenagem Fases I, II e III (no mercado = 5%); em assistência técnica investiu-se R$ 5,5 mi, correspondendo a 4,1% do valor realizado do contrato de empréstimo (valor desembolsado mais valor da contrapartida executados); em supervisão de obras investiu-se R$ 2,5 mi correspondendo a 7% do valor pago nas obras executadas (no mercado = 10%); (iv) os projetos executivos das oito disciplinas da Fase II encontram-se analisados e aprovados pela Caixa e Ministério das Cidades, estando 95% da dragagem concluída, autorizada a licitação para disposição final em aterro sanitário e licitação para a primeira obra de drenagem; tudo com 100% de recursos federais até o momento via TC 351.020/11-52 vigente, com repasse de recursos de R$ 180 milhões auditado pelo Tribunal de Contas da União; (v) o Programa Santos Novos Tempos foi objeto de auditorias independentes nos anos 2010, 2011, 2012, 2013, 2014 e 2015 sem ressalvas; (vi) as Contas da Prefeitura de Santos encontram-se aprovadas pelo Tribunal de Contas do Estado até 2013, em aguardo da aprovação dos anos 2014 e 2015; (vii) encontramse concluídos os aterros das Estações Elevatórias EEC6, EEC7, EEC10 e Comporta C1 e construção parcial das galerias EEC7 e C1, com valor de R$ 36,2 milhões, correspondendo a cerca de 23% de avanço físico e financeiro sobre o valor total do Contrato n.º 299/13 após o Primeiro Termo de Aditamento18, ou seja do valor total vigente do contrato de R$ 157,7 milhões; (viii) encontram-se estabilizados os aterros das Estações Elevatórias com Comportas possibilitando a execução das obras de construção utilizando o projeto original de Geotecnia/Fundações otimizado com recursos a fundo perdido; (ix) a contrapartida da Prefeitura em obras de habitação de interesse social, conforme o Plano de Reassentamento Involuntário – PRI –, totalizou R$ 80,3 milhões19. Considerando a ação integrada no planejamento e na implementação do Programa, entre a Prefeitura de Santos e o Banco Mundial, entende-se que a classificação dela deve ser MODERADAMENTE SATISFATÓRIA para toda a organização administrativa. Na oportunidade, reafirmamos o compromisso do Governo de Santos prosseguir as obras de macrodrenagem conforme mencionados projetos executivos após licitações, atendendo às salvaguardas incidentes, visando à melhoria da infraestrutura e desenvolvimento socioeconômico sustentável da Zona Noroeste de Santos. Atenciosamente,
Márcio Antônio Rodrigues De Lara Coordenador Geral da UGP Santos Novos Tempos
Rogério Pereira Dos Santos Secretário-Chefe de Gabinete e Coordenador Geral do Programa Santos Novos Tempos
Palácio José Bonifácio - Praça Mauá, s/nº - Centro Histórico Santos/SP, CEP 11.010-900 Tel.: (13) 3201-5050 Email:
[email protected]
1 Localizados na Baixada Santista, litoral do Estado de São Paulo, região estratégica para o desenvolvimento nacional. 2 Planejamento Estratégico Situacional: metodologia desenvolvida pelo economista Carlos Matus (1931-1978) 2
Disponíveis em https://egov.santos.sp.gov.br/legis/document/?code=1838&tid=32, ttps://egov.santos.sp.gov.br/legis/document/?code=2214&tid=58, https://egov.santos.sp.gov.br/legis/document/?code=2963&tid=66, https://egov.santos.sp.gov.br/legis/document/?code=2964&tid=66, https://egov.santos.sp.gov.br/legis/document/?code=4153&tid=80, https://egov.santos.sp.gov.br/legis/document/?code=4252&tid=88 e https://egov.santos.sp.gov.br/legis/document/?code=4307&tid=88. Acessados em 04/05/2016. 4 Alcançados os Indicadores de Objetivo de Desenvolvimento do Projeto DOP “a.1”. e “a.3”. Disponível em:
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5 Decreto Estadual nº 58.996, de 25/03/13. Disponível em: http://www.ambiente.sp.gov.br/cpla/files/2011/05/ZEE_PUBLICACAO.pdf. Acessado em 02/05/2016. 6 Lei Complementar Municipal n.º 821, de 27/12/2013. Disponível em: http://egov.santos.sp.gov.br/legis/document/?code=4657&tid=90. Acessado em 03/05/2016. 7 Lei Complementar Municipal n.º 730, de 11/07/2011 Disponível em: http://egov.santos.sp.gov.br/legis/document/?code=3538&tid=72. Acessado em 03/05/2016. 8 Decreto Municipal n.º 6.549, de 07/10/2013 – Disponível em: http://egov.santos.sp.gov.br/legis/document/?code=4493&tid=88. Acessado em 03/05/2016. 9 Resultantes do Plano de Saneamento e Aproveitamento Econômico da Baixada Santista, estabelecido pela Lei Federal n.º 2.334, de 19/04/1954, composto de estudos, planos, projetos e obras para os anos de 1955 a 1959 com investimentos de Cr$ 40 milhões. Disponível em: http://www2.camara.leg.br/legin/fed/lei/1950-1959/lei-2234-16-maio-1954-361007-publicacaooriginal-1-pl.html. Acessado em 03/05/2016. 10 Francisco Saturnino Rodrigues de Brito (1864-1929) é o patrono da engenharia sanitária brasileira. Em Santos, coordenou a Comissão Estadual de Saneamento, desenvolveu a tecnologia e dirigiu as obras do sistema separador absoluto de esgotos com estações elevatórias e de rede de canais com comportas. 11 São indevidas as afirmações generalizadas sobre má qualidade de projetos que constavam da versão original dos itens 39, 44, 68 e 79, uma vez que falhas restringem-se a planilha de quantidades. Projetos de Geotecnia/Fundações foram revisados devido a superveniências. 12 Ensejando a solicitação de ajuste nos itens: Sumário “iv”, 32, 39 e 68, por mensagem eletrônica em 03/05/2016. 13 Auditorias independentes de controle econômico-financeiro dos exercícios de 2010, 2011, 2012, 2013, 2014 e 2015 verificaram a documentação do Contrato n.º 299 e o relatório não apresenta ressalvas, de conhecimento do Banco Mundial. 14 A Prefeitura de Santos é considerada pelo Tribunal de Contas como modelo de transparência. Possui Contas aprovadas até 2013 e aguarda a aprovação das Contas dos exercícios de 2014 e 2015. 15 Ensejando a solicitação de retificação do item 99 do Relatório de Satisfação contemplando dados remetidos em 29/10/2015. 16 Licitação e Contrato n.º 299/13 foram analisados pelo Tribunal de Contas do Estado, que emitiu o Acórdão TC-27.970/026/13, de 16/03/2016, aprovando-os por unanimidade. 17 A Prefeitura de Santos estranha que, respeitadas as diferentes atribuições no Acordo de Empréstimo, as conclusões de classificação do Relatório de Encerramento, conferiram sentença de responsabilização generalizada e indevida, pelo organismo de fomento ao respectivo mutuário; menosprezando os pontos fortes e valorizando os pontos fracos; desconsiderando o caráter de permanente parceria nas análises, decisões e ações; classificando mais brandamente a atuação do Banco e severamente a atuação da Prefeitura. 18 Justifica a retificação solicitada por mensagem eletrônica de 03/05/2016, no comentário do Indicador DOP n.º 3 e nos itens: Sumário executivo “ii”, “vi”, 46, 67, 84 do Relatório de Encerramento. 19 Justifica a retificação solicitada por mensagem eletrônica de 03/05/2016 no Sumário “iv” e nos itens 37, 39, 48, 66, 68, 69, 79, 84, 111 e Notas 14 e 16 do Relatório de Encerramento.
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The Borrower’s full ICR was delivered to the Bank and archived on Project files. The Executive Summary to that report is included here.
IBRD 78070-BR SANTOS NOVOS TEMPOS PROJECT IMPLEMENTATION COMPLETION REPORT EXECUTIVE SUMMARY PREPARED BY THE SANTOS MUNICIPAL GOVERNMENT 1. OVERALL PROJECT TIMELINE Project prepared: 2006 Preliminary engineering designs prepared using a grant from the Government of Japan: 2009
31 environmental and heritage waivers/licenses/permits/expressions obtained for all phases and components in 27 work sites, all of them effective and with all conditions met: 20072015 Macro-drainage Works - Phase 1 (financed by the World Bank): o PAD Project Appraisal Document issued by the World Bank: 2009 o Loan approved by the Municipal Chamber: 2009 o Loan approved by the Federal Government and Senate: 2009 o Loan Agreement signed with the World Bank: 2010 o Detailed engineering designs prepared for the 3 macro-drainage works phases: 20112013 o International Competitive Bidding (ICB) conducted for Macro-drainage Phase 1: 2012-2013 o Technical Assistance/Projects/Works Supervision Contract terminated due to quantitative error. Work plan: Alternative five-step plan to have an alternative solution for the projected foundations submitted to the Bank. First alternative solution proposed was rejected: 2014-2015.
Macro-drainage Works - Phase 2 (financed by the Federal Government. Not part of the Project financing): o PAC Drainage Letter of Commitment signed for Phase 2: TC 351.020/2011-52: R$ 180,000,001.00 transferred: 2011 o Dredging performed in the São Jorge River: September 2013 o Phase 2 engineering designs approved by Caixa Economica Federal (National Bank); o Phase 2 bidding process authorized: March 2016 Involuntary resettlement required to open work fronts; families removed to new housing units: o Monitored relocation of 480 families to Pelé II: 2011 58
o Monitored relocation of 56 families to Flor Horácio: 09/2012 o Monitored relocation of 16 families to Quadra 35 (Stage 1): 2012 o Monitored relocation of 16036 families to Caneleira IV: 2014 Water and Sewage Concession Agreement signed with SABESP: close to R$ 130 million earmarked for the implementation of the Macro-drainage Works Phase 1. Since quantitative errors were found in the foundations projected, a five-step work plan had to be submitted before continuing the macro-drainage works. However, progress in the works was delayed due to a lack of consensus on the alternative designs proposed for the foundations and the Loan Agreement was not extended.
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Item
2. BOX-SUMMARIZED PROGRESS IN COMPONENTS AND SUBCOMPONENTS
I 1 a
b
c 2 a
b
II 1 a
b 2 a b c
Financing Component/Subcompo Lead Challenges nent/Action/Activity IBRD Site Municipal Management Enhancement Enhancing Municipal Management Capacity in Local Economic Development Local Economic 100% GPM Institutional Development Study
Results
Dynamic Appraisal of Development in Baixada Santista (2006), Strategic Environmental Assessment of the Port, Naval Industry, Offshore PINO (2010), Regional Strategic Metropolitan Development Plan (2014) City-Port Revitalization 100% Seport Management between the Technical, Economic, Environmental and Social Feasibility Studies; and Mobility Initiative different levels of Study for the Port of Valongo Project (waterfront ) and Historical Center; Valongo government and Paquetá Urban Renovation Study (2013) lnformation 100% SEGES Technological and infoway Networked Community Program Fiber optic network (23.6 km) and radio bases with Technology Program deployment wireless internet in the Northwest Zone Enhancing Municipal Administrative Management Capacity Municipal land 100% SEDURB Technical, legal, Expansion of the SigSantos Geographic Information System (over 200 information planning and control administrative and social layers, several used in controlling land use) Intersectoral Technical Group to Control mechanisms Unregulated Land Occupation Project Management 100% GPM Project complexity Executive projects revised - 3 macrodrainage phases (value: 0.60% of total project cost). 7 out of 10 World Bank safeguards implemented (Category A). Technical assistance (value: 4.21% of program investment) and works supervision (value: 2.22% of amount spent on works): knowledge, processes and technology transferred to Municipal Government staff Contract terminated: quantitative error Revitalization of the Northwest Zone of Santos and Adjacent Hillside Addressing social inequalities Slum upgrading and 100% Cohab Institutional, land tenure, 480 HU built and delivered at Pelé II, 160 at Caneleira IV, 56 at Quadra 1, and 16 at resettlement legal, technical, social, Quadra 35. Another 88 households received water and sanitation services improvements. environmental Training - low income 100% SEDES Social Coordinating Committee for Professional Development, 5 thousand workers trained and 8 thousand jobs supported Improving public services Storm drainage system 100% SIEDI Technical, environmental, Landfills built for the pumping stations/gates EEC7, EEC10, C1, EEC6; 451 m / 630 m improvements land tenure, social, of the Haroldo de Camargo culvert and connections to microdrainage system; 47 m / Preventing risks of 100% SIEDI contingencies, quantitative 70 m of the culvert for the C1 gate. Foundation projects restructured. Pact to landslides error in foundations, continue the works with five-step plan. 1st alternative foundation project delivered Increasing urban green 100% SEMAM 2,255 trees planted in the Northwest Zone (2013 and 2014); Chico Mendes Botanic spaces and amenities Garden reformed
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Status in
100%
100%
100%
100%
100%
30.23%
100%
20% 15.4% 100%
3. LESSONS LEARNED As to lessons learned while managing the Santos Novos Tempos Project, we suggest for the World Bank to analyze the possibility of including the following requirements in the respective guidelines: In the "Guidelines: Procurement under IBRD Loans and IDA Credits": a course on (i) procurement and contracts (when signing the Loan Agreement) and on (ii) the FIDIC Standard Contract for large engineering works (while preparing the ICB documents), to be offered by the World Bank to all Borrower’s staff members involved and at the borrower’s site.
In the "Guidelines: Selection and Employment of Consultants by World Bank Borrowers”": o Adopting the PMBok Guide (Project Management Book of Knowledge) in works supervision activities; and as an eligible expenditure under the Loan Agreement. o In more complex works: the contracting of project management, engineering designs preparation and works supervision services should be separately. o In large works: hiring a specific consultant to provide "owner's engineering" services (guaranteeing the quality of engineering designs) as a mandatory requirement and an eligible expenditure under the Loan Agreement.
Having the World Bank team edit the FIDIC Standard Contract translation to incorporate the terminology used by engineering professionals in works in Brazil. For example: changing 'Variações' to 'Alterações', 'Certificado de Posse de Obra' to 'Certificado de Recebimento de Obra', etc.
4. CONCLUSION As shown above, the Santos Novos Tempos Project was successful in seven of its ten subcomponents. It contributed to the Santos Municipal Government's institutional development by providing standard actions, guidelines, norms, procedures and even failures. In that sense, the municipality is certainly more capable and willing to face the current challenges, with a renewed commitment to advance the macro-drainage works in a strategic part of its territory, thereby fostering sustainable socioeconomic development. Supported and assisted by competent and dedicated World Bank staff, especially until July 2014, the Santos Novos Tempos Project provided relevant and sound solutions that led to large-scale support from the technical and political community and the population at large, which calls for a guarantee that the works will continue at a fast pace and with high quality. During the period of 2010-2015, the municipality's credibility was particularly enhanced by the community's awareness of the project components being implemented and their trust in the macro-drainage system being built. This led the community and private sector to invest heavily in the Northwest Zone, as shown in Table 1, below.
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Table 1 - Number of formally registered companies
Description Northwest Zone Municipality
2010 1,605 32,856
2015 2,074 38,531
(%) 29.2% 17.3%
Source: ISSQN Registry - Santos Municipal Secretariat of Economy and Finance, 27 October 2015.
Hence, the number of companies formally registered during the period in the Northwest Zone rose by 29.2% against the average 17.3% in the municipality of Santos (a 68.7% increase). Investments in civil works construction were also consistent in the Northwest Zone. Countless new housing units were launched and built to higher construction standards, with results defined by the total property value through a Property Value Map prepared and updated by a specialized company pursuant to the ABNT methodology and the standards of the Brazilian Institute of Appraisals and Expert Engineering Reports (Instituto Brasileiro de Avaliações e Perícias de Engenharia – IBAPE). This evolution is shown in Table 2 below. Table 2 - Market Value - Property Value Map
Description Northwest Zone Municipality
2010 R$ 1,715,245,935.06 R$ 22,320,442,083.98
2015 R$ 6,101,599,892.13 R$ 73,708,368,439.48
(%) 255.7% 230.2%
Source: Santos Municipal Secretariat of Economy and Finance, 27 October 2015.
Phase 2 (already authorized by the Ministry of the Cities) will use tested engineering designs and deploy strategic works to reduce flooding in the road system that provides access to the Port of Santos and downtown Santos. A bidding process is also programmed to conclude the works initiated in Phase 1 and build the pumping station and sluice gate (EEC7) with a restructured engineering design. Social housing works are advancing at the Caneleira IV and Tancredo Neves housing units and the Involuntary Resettlement Plan is expected to be completed. The Santos Municipal Government remains committed to implementing the World Bank safeguards, ensuring the quality and sustainability of interventions. Santos, March 2016. Santos Novos Tempos Project Steering Committee Santos Novos Tempos Project Management Unit
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Annex 9. Comments of Cofinanciers and Other Partners/Stakeholders No comments received.
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Annex 10. List of Supporting Documents ISRs
ISR: 15-Dec-2009 ISR: 03-May-2010 ISR: 12-Feb-2011 ISR: 17-Jul-2011 ISR: 02-May-2012 ISR: 17-Nov-2012 ISR: 10-Jul-2013 ISR: 18-Feb-2014 ISR: 13-Oct-2014 ISR: 07-Apr-2015 ISR: 08-Jul-2015
Aide-Memoires
March 29-30, 2010 Supervision Mission June 9-10, 2010 Supervision Mission Oct. 4-6, 2010 Supervision Mission Oct. 23-26, 2011 Supervision Mission April 12-13, 2012 Supervision Mission Dec. 10-12, 2012 Supervision Mission Feb. 18-20, 2013 Supervision Mission March 2014 Supervision Mission May 25-29, 2014 Supervision Mission June 2014 Engineering Mission July 2014 Supervision Mission Oct. 29-30, Nov. 3 2014, and Nov. 4-7 2014 Supervision Mission Dec 2-4 2014 Supervision Mission March 11-12, 2015 Supervision Mission May 25-29, 2015 Supervision Mission
Bank Documents
Restructuring Paper: May 8, 2012 Minutes: Sept. 27 2014 Meeting Minutes: Jan. 29, 2015 Meeting March 2015 Management Letter May 2015 Engineering Technical Report
Borrower Contracts/Documents Bidding Process (Works) ICB 001-2012 Revised Unit Costs Alternative Designs (Completed as of March 2015) Second Works Contract Amendment Independent Technical and Financial Audit
Technical and Financial Audit of Two Contracts, May 2016 Hill International Brasil Consultoria e Gestão de Riscos em Construção Ltda
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Annex 11. The Results Chain Diagrams
SANTOS NOVOS TEMPOS Results Framework Analysis
As Designed
IOI
Preparation of a modem land use plan based on best practices for cityport integration
PDO 1. Commencement of implementation of plan to address constrains to local economic development by 2011;
To improve public services in the Northwest Zone of the Municipality of Santos.
2. At least 2,400 households in slum areas of the Northwest Zone are provided with a comprehensive package of municipal services
At least 2, 400 additional households with sewage connections
Increased satisfaction of resettled population with municipal service delivery
50% reduction in percent of Santos families living in floodprone areas
Floodgates completely . repaired and operating effectively 50% reduction in percent of land area affected by recurrent flooding
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Component 2.2 - Improved urban environment for targeted areas of Santos
3. Establishment of a macrodrainage system that will solve flooding problem in the Northwest Zone and that has sufficient capacity to handle 25-year flood levels.
Component 2: Revitalization of the Northwest Zone and Adjacent Hillside (US$79 million)
At least 2, 400 additional households receiving 24- . hour water supply services
and
(US$9 million)
Preparation of plan to improve macroprocessing routines for land cadastre
Component 2.1 - Improved quality of life Component 1.2 - Improved capacity for land management for inhabitants of the Northwest Zone
To enhance the management capacity of the Santos Municipal Government in local economic development
Design and installation of Infovia network in the Northwest Zone
Component 1: Municipal Management Enhancement
Preparation of a plan to reduce environmental licensing time
Component 1.1 - Improved capacity to promote local economic development
Preparation of a regional economic development study
PDO INDICATORS
SANTOS NOVOS TEMPOS Results Framework Analysis
PDO INDICATORS
Preparation of a regional economic development study Preparation of a plan to reduce environmental licensing time Preparation of a modem land use plan based on best practices for city-port integration
PDO 1. Commencement of implementation of plan to address constrains to local economic development by 2011;
To enhance the management capacity of the Santos Municipal Government in local economic development
Preparation of plan to improve macro-processing routines for land cadastre
At least 2, 400 additional households with sewage connections At least 2,400 households in slum areas of the Northwest Zone are provided with a comprehensive package of municipal services (including water and sanitation, street paving, drainage, public lightning, gas network, recreational areas and social Number of Floodgates completely repaired and operating effectively
Reduction in percent of Santos families (NW Zone) living in landslide risk areas
(*) Number of sub-basins (or area ha.) effectively drained (Culverts, canals, pumping stations, and floodgates concluded and comissioned) (*) Number of landslide prevention works (walls, stormwater canals, ..)
(*) Possible additional output indicators
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Component 2.2 - Macro Drainage and Landslide Prevention
50% reduction of Santos families living in flood-prone areas / 50% reduction of land area affected by recurrent flooding
Component 2: Revitalization of the Northwest Zone and Adjacent Hillside (US$79 million)
Increased satisfaction of resettled population with municipal service delivery
Component 2.1 - Improve public services in the Northwest Zone of the Municipality of Santos
At least 2, 400 additional households receiving 24- . hour water supply services
and
Improved quality of life for inhabitants of the Northwest Zone & Improved urban environment for targeted areas of Santos
Design and installation of Infovia network in the Northwest Zone
Component 1: Municipal Management Enhancement (US$9 million)
IOI Component 1.1 - Improved capacity to promote Component 1.2 - Improved local economic development capacity for land management
New interpretation based on the PAD
Annex 12. Macro-drainage Works Development 1. By the Project closing, less than 10% of the planned drainage system construction works had been completed, due to a conjunction of engineering design, procurement and implementation problems. This annex aims to provide additional information on the subject, looking to assess the causes for the Project failure to construct the drainage system, as trying to bring lessons learned for future operations. 2. The Annex addresses the engineering design preparation, construction works procurement, institutional arrangements, engineering design and construction development problems, cost overruns, reasons for requiring the construction works suspension and the Detailed Engineering Design (DED) review, and the Bank motives for contracting the final compliance audit. This analysis is supported by ample documentation filed in the WBDocs. Feasibility Study and Engineering Design 3. The Project original goal was to develop a comprehensive storm water drainage system for city’s Northwest (NW) Zone. Thus, the hydrology studies, conceptual engineering, Feasibility Study Report (FSR) and Preliminary Engineering Design (PED) encompassed the entire zone. However, the FSR found that the total cost would be in the range of BRL 1.2 billion, surpassing by far the loan amount. The DED were prepared for the entire Northwest Zone, however, the Bank financing was sufficient to fund the 1st Phase, encompassing six work fronts and five pumping stations. Noteworthy mentioning that the drainage sub-component accounted for roughly 80% of the World Bank financing. The following table lists the project’s supported interventions, and the figure illustrates the NW Zone drainage system. Table 1: Phase 1 – Storm Water Drainage Work Fronts Work Front C1 EEC10 EEC3 EEC4 EEC6 EEC7
Section C1 Gate and Culvert Canal/ Culvert Pumping Station Canal Pumping Station Canal Pumping Station Canal Culvert Saboó Pumping Station Culvert Pumping Station
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Figure 1: General Overview of the NW Zone Macro-drainage Project 4. The macro-drainage preliminary engineering design was elaborated during the Project preparation, aiming to allow the construction works procurement37 in the Project's first year. However, upon the Project effectiveness, the Municipality decided to prepare the Detailed Engineering Design (DED), before the works procurement. The contract for the DED elaboration was included as part of a broad consultancy contract for managing the project and supervising the construction works. The Engineering Consultant finalized the DED in 2011, and the total cost for Phase 1 construction works was estimated in BRL 91,950,043. Construction Works Procurement 5. The first invitations for bids were issued in 2012, however, the UGP had to cancel it due to a request from the State Accounting Court. It was demanded to incorporate all the clarifications and adjustments informed in responses to the bidders in the bidding documents. The second invitations for bids were published in 2013, and over thirty construction companies applied for the bidding documents. However, only one
37
The Brazilian regulations allow construction works procurement based on preliminary engineering design (Projeto Básico), a common practice in the Country.
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construction consortium (two companies) submitted a proposal, with a final price of BRL 137,474,739.60. 6. The Engineering Consultant endorsed the cost increase, alleging that Santos had peculiarities that justified the cost increase of several items. Based on the cost increase justification presented by the Municipality, the Bank gave the Non Objection (with OPCS approval) for hiring the construction consortium (hereafter referred to as “the Contractor”) and initiating the construction works. First Cost Overrun 7. The construction contract was signed in August 2013, but significant construction activities were initiated, in fact, in January 2014. In May 2014, the Municipality informed the Bank Team that that the Contractor had identified a mistake in the original cost estimate, and that the construction works total cost would increase 55% in relation to the original Contract price, reaching BRL 211,316,021.34, as detailed in Table 2. Table 2: 2014 Cost Estimate Comparative Analysis Work Front C1
Section
C1 Gate and Culvert Canal EEC10 Pumping station Canal EEC3 Pumping station Canal EEC4 Pumping station Canal EEC6 Culvert Saboo Pumping Station Culvert EEC7 Pumping station Equipment Labor Miscellaneous Material Parts SOMAS PROVISÓRIAS Total
Original Revised Estimate Contract Values (New Quantities)
Cost Increase Cost (R$) Increase (%)
2,152,140.27 4,358,404.93 11,762,582.18 903,291.74 12,344,202.41 191,566.40 7,405,094.31 7,805,562.62 19,028,631.82 42,539,700.76 9,758,168.60 15,472,104.03 392,407.86 250,864.60 532,249.38 2,078,767.80 499,000.00 137,474,739.68
1,131,913.68 2,184,662.78 4,705,962.66 2,977,394.54 292,106.51 40,727,434.75 7,278,140.29 14,543,666.44 73,841,281.66
3,284,053.94 4,358,404.93 13,947,244.96 903,291.74 17,050,165.08 191,566.40 10,382,488.86 8,097,669.13 59,756,066.57 49,817,841.05 9,758,168.60 30,015,770.47 392,407.86 250,864.60 532,249.38 2,078,767.80 499,000.00 211,316,021.34
53% 0% 19% 0% 38% 0% 40% 4% 214% 17% 0% 94% 0% 0% 0% 0% 0% 54%
8. In July 2014, the Bank fielded a large implementation support and contract diagnostics team to assess the problem. The team found that the cost increase was due to errors in DED Bill of Quantities (BoQ). There was a serious mismatch between the design construction drawings and the Bills of Quantity, in addition to poor engineering designs, which eventually led to inaccurate bidding documents and construction drawings. Foundations items, especially the CCP piles and cement quantities, were significantly miscalculated, resulting in a cost difference of BRL 16,235,129. The Bank Team also found that some unit prices in the Contractor’s Bid (BRL 137.5 million) were significant higher than in the Engineering Consultant’s original cost estimate (BRL 92 million). For example, the Contractor’s prices for CCP and cement were 48% and 40% higher, respectively, in relation to the Engineering Consultant’s estimate. Important to note that at the same time, the Contractor offered the Municipality an alternative constructive methodology for 69
executing the works, which would, presumably, reduce the total cost for BRL 164,595,463.17.38 9. Upon the problem identification, the Bank assessed three alternatives with the Municipality of Santos (the “Client”) to solve the cost overrun and engineer design deficiencies: (1) Termination of the works contract, comprehensive redesign of the drainage system and works rebidding; (2) Suspension of the works contract to conduct a comprehensive engineering and cost review; and (3) Continuation of the works, subject to an action plan to be agreed with the Bank. 10. The Client decided to continue the works (subject to the Bank's no objection for the continuation of each macro-drainage works front), and tried to solve the problems. Formally terminating or suspending the Construction Consortium contract were alternatives not accepted by the Client. It was then the responsibility of the Client to resolve the contractual problems in order to get the Construction Consortium contract to continue. Its goal was to revise the DED and renegotiate some unit prices, simultaneously to the works development. 11. The Client also made the decision to terminate the Engineering Consultant’s contract, considering that its performance was not technically sound and suited for properly carrying out the job. Individual consultants were then hired to support the Client using loan funds; and the Construction Consortium committed to revise the engineering designs. Later on, in October 2014, works resumed just for the Haroldo de Camargo avenue box culvert, as quality of the designs and of construction methodologies relating to such location were reviewed and deemed satisfactory by the Bank (based on the information available at that point in time). 12. The Client’s action plan was not satisfactorily accomplished. The ensuing negotiations between the Client and the Construction Consortium for the other bills, however, were stalled for nearly a year for various reasons (including, inter alia, revised engineering designs took long to be prepared; substantial cost increases were requested; negotiations of unit costs for increased items took too long) leading up to the Project closure. The Municipality did not establish a Dispute Resolution Board (DBR), as specified in the FIDIC contract, and did not deliver, in time, all revised engineering designs. Moreover, the new supervising Engineer was contracted only in December 2015. 13. A follow-up comprehensive supervision mission, November 2014, assessed the Project overall progress, and reviewed in detail the macro-drainage works status. It found that the action plan to review the engineering designs was well behind schedule, compromising the conclusion of all construction works before June 2015, end of Project date. The Team recommended the Municipality to focus and advance the macro-drainage works with better cost benefit ratio and with shorter timeframe for implementation, as the box culverts and drainage canals, notably the Haroldo de Camargo Avenue (EEC7), the EEC10 and the EEC6 box culverts. The goal was concluding them before the Project’s closure. Important to note, though, that despite the efforts, the EEC6 and EEC10 revised designs and cost estimates did not receive no objection from the Bank due to limitation in
38 The contractor proposed a new construction technology, noting that the alleged saving could entail a compensation of 50% of the savings, i.e. 50% of (BRL 211 - 164 million), based on the FIDIC contract terms.
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quality of the design and budgeting, and were not resumed during the Project implementation period. Second Cost Overrun 14. In January 2015, the Bank verified that there was another significant cost overrun in three culvert construction fronts: EEC7, EEC10 and Martins Fontes. Up to that point, cost overruns were limited to the pumping stations, as identified in May 2014. The Bank was informed of the new cost overrun, after 8 months of close technical work and multiple Bank requests for revised cost estimates and work schedules. The cost increase in the EEC7 culvert would be in the order of 90%, in the EEC10 would pass 100%, and in the Martins Fontes Avenue could reach 200%. The cost increases were due to the need of changing the sheet piles specifications and depths, besides changes in quantity of some key items: excavation, loading/unloading, dewatering, among others. Analogous to the first cost overrun, it was possible to verify that the BoQ had underestimated the quantity of key items, associated to contract unit prices over market benchmarks. 15. The Bank Team started, therefore, a detailed construction costs evaluation, requesting the Municipality to submit comprehensive information on all works billing, quantity increases, and unit prices changes. The team found additional problems in the designs, and further cost overruns related to the drainage works. Additionally, the Bank team could not confirm the previous disbursement compliance. The Bank requested the Municipality to present additional explanations on diverse issues, such as the divergence of the value of measured works vs. disbursements, construction camps billing values and procedures, divergence of the measured works vs. design specifications, precast box culvert measuring procedures, construction works record documentation inconsistencies, geotechnical instrumentation billing vs. executed services inconsistencies, among other questions. 16. The Municipality and the Contractor signed the construction contract’s first amendment in March 2015, modifying the bill of quantities of four work fronts and a series of unit prices. The construction cost was augmented to BRL 157.786.385, 14.77% higher than the initial value. The first Amendment also extended the construction period in six months, despite the lack of a No Objection (NO) from the Bank. A few days after that, the Municipality submitted a NO request for a second construction contract amendment, increasing the construction cost to BRL 169.478.424,50, 23,28% higher than the original cost. However, the Bank never gave the NO for the second contract amendment. Construction Works Final Audit 17. The Municipality’s response did not elucidate the team’s doubts, resulting in the decision to hire an independent audit company to review all construction works and consulting services disbursement compliance. The independent technical and financial audit was initiated in September 2015, addressing payments against inputs and deliverables, opinion on the value for money of the two contracts, opinion on the financial management performance of the Client, and an opinion on the causes of the possible inconsistency between the values of measured works vs. disbursement. The Auditor identified all expenditures paid under both contracts, linking these to the actual outputs on site. A number of ineligible expenditures were identified under the macro-drainage works contract and these will have to be reimbursed to the Bank by June 2016. 71
Construction Works Quality Problems 18. Sufficient documentation demonstrates that the Contractor did not follow, in full, the engineering design and specifications set out in the contract. The construction of the pumping stations EEC10 and EEC6 earth overburden did not follow the DED technical specifications, contributing to the referred overburdens partial ruptures. Additionally, the Contractor did not install, in time, the overburdens geotechnical instrumentation, and did not conduct the settling monitoring, as specified in the contract. The two earth overburdens failure were considered as clear indications of the construction works quality shortcomings. 19. Bank supervision also found quality deficiencies in the EEC7 culvert construction that resulted in the Bank request, July 2014, to suspend activities in the referred work front. The EEC7 culvert construction was resumed in October 2014, after the Municipality submitting detailed construction methodology guidance, and an updated geotechnical specification. No other macro-drainage works front had the Bank’s no objection for continuation. Geotechnical Specifications 20. Santos geotechnical characteristics are notoriously problematic, and it is incomprehensible the Engineering Consultant’s limited attention to this critical aspect of the DED. Despite of that, it is important to note that the BoQ quantity estimates mistakes cannot be justified by the deficient geotechnical investigation. The main reason for the cost estimate errors, foundation quantities underestimations, was the BoQ preparation, which failed to appraise the foundation quantities, as expressed in the engineering drawings. 21. The geotechnical investigation limitations created, however, other construction execution problems, that resulted in the need of complementary geotechnical studies, design and specifications changes. The technical notes prepared by the Municipality geotechnical consultant and the Contractor’s technical team addressed the EEC7 culvert foundation construction methodology review, the culverts, (EEC7, EEC10, and Martins Fontes), excavation and sheet piles updated specification, as the pumping stations foundation redesign. The need to increase the sheet piles depth was one of the main causes of the culverts construction cost increases. Conclusions 22. By the end of the Project, it became clear that the initial cause for the identified problems was the poor DED, notably the BoQ preparation, foundation design and culvert’s construction specifications. Additionally, the engineering concept, locating the pumping stations in the middle of the marshes, without a detail location alternative analysis, cannot be easily justified. The design and BoQ limitations created the conditions for an inaccurate construction works bid and contract value that resulted in the cost overruns. These combined with deficient supervision by the Client and by the Engineering Consultant resulted in the failure of the project. 23. The constructions works’ quality problems were caused in part due to the engineering design limitations, such as the lack of detailed specifications for the culvert’s foundations execution. However, the disregard to the construction specification of the earth overburdens, the lack of geotechnical instrumentation, and the works billing problems referred above, were essentially poor construction works quality combined with supervision shortages. 72
24. It is important to register that a few construction items, notably the pumping stations foundations quantities and the culverts sheet piles depth, caused the cost overrun. Moreover, the contract prices of the “underestimated items” were significantly above market benchmarks. Unexpectedly, neither the Engineering Consultant, nor the UGP identified these quantity miscalculations and unit prices divergences in the contractor’s bid. Additionally, they endorsed the constructor bid price of BRL 137,4 million, (60% higher than the original estimate), alleging Santos particularities and the construction sites’ risk. 25. The UGP institutional deficiencies were identified during the project preparation, and the Bank agreed to fund a consulting firm to support the UGP, supervising engineering services, including the macro DED, as overseeing the construction works. In this case, the institutional strengthening measures did not produce the expected results, despite the project’s considerable amount, in the order of USD 6 million, disbursed with engineering design, construction supervision and the UGP support. 26. A possible cause for the identified problems was the decision to concentrate engineering design elaboration, overall engineering supervision, bidding documentation preparation and procurement process support, as the construction works supervision in one contract. This arrangement could have improved the project implementation efficiency, however, in this case, it may have compromised the engineering design’s review and validation, resulting in the problems referred above. Finally, matter to register the responsibility laid on the Municipality that acknowledged not evaluating in detail all items in the BoQ used for the works bid, but only through a “sampling procedure.”
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MAP – Santos Novos Tempos Project
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