Integrating post evaluation into project cycle management for road infrastructure projects in vietnam

Integrating Post-Evaluation into Project Cycle Management for Road Infrastructure Projects in Vietnam Nguyen Van CUONG Graduate Student Graduate School of Civil Engineering, Hanoi Univ

Integrating Post-Evaluation into Project Cycle Management for Road

Infrastructure Projects in Vietnam

Nguyen Van CUONG

Graduate Student

Graduate School of Civil Engineering,

Hanoi University of Civil Engineering

55, Giaiphong str.,

Hanoi, Vietnam

Fax: +84-4-3869-1684

E-mail: cuongksxd@gmail.com

Dinh Van HIEP

Senior Lecturer, Graduate School of Civil Engineering, Hanoi University of Civil Engineering

55, Giaiphong str., Hanoi, Vietnam Fax: +84-4-3628-5578 E-mail: hiep.dinhv@gmail.com

Abstract: In Vietnam, project cycle management (PCM) of road investment projects consists

of investment preparation, implementation, construction, and operation processes The post-evaluation of projects during operation has not yet been considered through PCM in a systematic and effective manner This paper discussed project management issues of road infrastructure projects in Vietnam Then the paper introduced the post-evaluation process for integrating into Vietnam’s PCM using the PCM methodology developed by Foundation for Advanced Studies on International Development (FASID) The National Highway No.5 Improvement Project was used as a case study for demonstrating applicability of the proposed procedure

Key Words: project cycle management, post-evaluation, road infrastructure, Vietnam

1 INTRODUCTION

Road network plays an important role in the economic development in Vietnam The road system has recently being invested and improved to foster the socio-economic development,

to accelerate the economic integration with regional/international areas and to meet the country’s requirements at present and in future (Hiep and Tsunokawa, 2007) However, road investment projects only stop at the stages of investment implementation, construction and operation The evaluation of relevance with the proposed goals/purposes, investment effectiveness, impact to environment and society, and sustainability of the projects during operation stages has not yet been examined in a systematic and effective manner in Vietnam ( Minh, 2008; Tuyet, 2008; Hien, 2009; Hung, 2009; Cuong and Hiep, 2010) In addition, due

to not implementing the post-evaluation, management agencies and investors have not yet indentified necessary adjustments for operating effectively the projects and to gain experienced lessons for future projects (Cuong and Hiep, 2011) The Foundation for Advanced Studies on International Development (FASID) has introduced a standard project cycle management methodology (called PCM-FASID) (FASID, 2004), which has been used being used popularly widely in both developed and developing countries for evaluation and monitoring of projects (JICA, 2007; Tsunokawa and Yoo, 2007; Tsunokawa and Yoo, 2008;

Kim et al 2008) Moreover, many international development organizations have widely

adopted this methodology for evaluating and monitoring investment effectiveness of projects

to make a decision for effectively funding such as the World Bank (2007), JBIC (2008), and ADB (2008) Due to the shortcomings in the project cycle management (PCM) for road infrastructure in Vietnam, it is necessary to consider the post-evaluation and monitoring in the management procedure

The present paper firstly introduces an overview of present project management procedure in Vietnam, analyses and discusses outstanding related matters Then basing on the PCM-FASID, methodology the authors proposes a PCM procedure integrated with post-evaluation and monitoring processes for road infrastructure projects in Vietnam A case study of the National Highway No.5 (NH-5) Improvement Project is demonstrated for the applicability of the proposed procedure In addition, the paper presents preliminarily lessons and recommendations for development and management of road infrastructure systems in Vietnam through the case study

2 PROJECT MANAGEMENT PROCEDURE IN VIET NAM

2.1 Project Management Procedure

In Vietnam, the project life-cycle consists of four stages, i.e., formation, preparation, implementation, and finishing stages as shown in Figure 1

X Formation stage: Form initial thoughts, define scale and goal, and evaluate benefits

and feasibility of the project Define the factors and project implementation basis

X Preparation stage: Prepare an implementation plan, manpower and financial plan, call

for investors, define quality requirements, and gain project approval

X Implementation stage: implement the detailed design1, design approval, construction tender, construction, management and monitoring during the implementation process

to achieve the proposed purposes and adjust the project (if necessary)

X Finishing stage: complete construction works, as-built document, hand-over the

construction works for usage, periodically maintain construction works as planned until the end of the project life-cycle

Project cycle management

1

4

3

2

Acceptance &

handover

Implementation

& Monitoring

Deployment details

Project planning

Preparation

Formation

Finishing

Implementation

Figure 1 Project cycle management in Vietnam 2.2 Outstanding matters in project management

As stated above, the PCM in Vietnam is divided into four stages; it only stops at the stages of investment completion The monitoring and post-evaluation of project has not yet been carried out during the operation stage Thus, the present project management procedure is not

1

Technical design and construction drawing design as per the regulations of Vietnam’s construction law in 2003 (Clause 54)

in a cycle as shown in Figure 2 The project management process is stopped after handing-over project for operation Some main shortcomings are addressed as follows:

X Have not focused on analysis and evaluation of overall project based on the satisfaction of overall goal and project purposes, only put an emphasis on the executed work quantity acceptance

X Have not carried out analysis and evaluation work of economic effectiveness after finishing and operating projects

X Have not carried out any studies/research to evaluate the investment effectiveness to obtain relevant lessons/recommendation for current and future road infrastructure projects

Figure 2 Shortcomings of PCM in Vietnam

3 INTRODUCTION OF PCM-FASID

PCM-FASID methodology is used for planning, monitoring, and evaluation of investment projects PCM-FASID is based on a project cycle to ensure that all project aspects such as overall goal, project purposes, output results and input data are intensively reviewed during the project life cycle with five (5) main criteria, i.e relevance, efficiency, effectiveness, impact and sustainability as shown in Table 1 Figure 3 shows a project cycle used in PCM-FASID which consisting of project identification, formation, appraisal, implementation including monitoring/feedback, and post-evaluation for recommendation/lessons learned

Table 1 Five evaluation criteria used in PCM-FASID

Relevance Efficiency Effectiveness Impact Sustainability Overall

goal

Project

purpose

Are the “project

purpose” and

“overall goal”

still meaningful

as objectives at

the time of

evaluation?

What positive and negative effects, either direct or indirect, has the implementation

of the project had?

Outputs

Whether the

“project purpose”

has been achieved, and how much contribution did

“outputs” make?

Inputs

To what extent have “inputs”

been converted

to “outputs”?

To what extent will the recipient country’s organizations be able to retain the positive effects of the project after the withdrawal of cooperation?

Source: FASID (2004)

Source: FASID (2004)

Figure 3 Project cycle of PCM-FASID

4 INTERGRATED PROJECT MANAGEMENT PROCEDURE FOR VIETNAM 4.1 Project Management Procedure

Based on the PCM-FASID methodology, the authors propose the project management procedure integrated post-evaluation process for road infrastructure projects in Vietnam including the following stages: (1) formation; (2) development and implementation in construction preparation stage; (3) implementation in construction stage, monitoring during the implementation process, summary and plan revision (if any); (4) completion and handover for usage; and (5) monitoring and post-evaluation during the operation stage for obtaining recommendation and lessons as shown in Figure 4

Figure 4 Proposal on project cycle applied FASID method

4.2 Post-evaluation Process

Post-evaluation process is implemented through following major steps as shown in Figure 5

Figure 5 Implementation project cycle post-evaluation

Step 1: Preparation

Post-evaluation is conducted by independent evaluation experts, normally within 2 to 5 years after investment completion with key consideration on relevance, efficiency, effectiveness, impact and sustainability Each project consists of the following main aspects: overall goal, project purpose, output results, activities and input data To evaluate the project, we need to collect information related to project aspects as shown in Table 2

4 Table 2 Template framework for factors to be evaluated

Overall

goal

o Promote economic development in the region, improvement of living standards

of people

Project

purpose

o Improve the road network to meet the demand for transportation goods and passengers

Outputs

o Reduction in traffic congestion, increase in traffic volume, increase service level

o Speed up economic development Shorten the distance of transport, reduce transport costs

o Increase in travel speed, reduction in travel time

Inputs o Sources of investment capital, project implementation plan, the personnel

involved in the project

Step 2: Establishing of evaluation factors

The evaluating factors and investigation questionnaires as well as survey plan are established basing on five (5) criteria as follows

- Relevance: review the relationship between project purpose and overall goal Thus,

evaluation questions asked are based on the following factors: Are project purposes consistent with the development policy of State and localities where the project is located? Is it suitable with the transport need in the area and transport network development process nationwide?

- Efficiency: review the relationship between output results and input data Thus,

evaluation questionnaires are based on the following factors: Are input factors used to produce the output results? Are input factors not used? Do the used factors not contribute to the project results? Can it produce the same output results with smaller input cost? How about cost and project implementation period?

- Effectiveness: review the relationship between project purpose and output results Thus, evaluation questionnaires are based on the following criteria groups: Economic criteria: Net present value (NPV), internal rate of return (IRR), Benefit and cost ratio

(B/C), and vehicle operation cost (VOC) Transport criteria: Time and distance of

passengers and goods transport, travel speed and vehicle speed; Reduction in traffic congestion, increase in traffic volume; Approach, mobility, and service level of road

- Impact: review the relationship between project purpose and overall goal Thus,

evaluation questionnaires are based on the following factors: What are positive and negative impacts? Are the changes in the quality of living environment/society surrounding the project area?

- Sustainability: review generally project’s component parts Thus, evaluation

questionnaires are based on the following factors: whether project purposes continue

to be implemented after handing over for operation or not? Are overall goal achieved

in the future? Is the project quality maintained to ensure the implementation of goal?

4.2.3 Data collection and evaluation analysis: Collecting available data and carrying out site

surveys and investigation using questionnaires, then implementing evaluation analysis

4.2.4 Conclusions, recommendations and lessons learned: Drawing recommendations for the

current project in order to operate it effectively and gain lessons for development and management of future road infrastructure projects

5 A CASE STUDY FOR NATIONAL HIGHWAY NO.5 IMPROVEMENT PROJECT

The National Highway No.5 (NH-5) Improvement Project is used as a case study for demonstration of the applicability of the proposed procedure Data used in the case study are collected by authors at site surveys, through management agencies, and from reports carried

by the Vietnam government, JICA, and other organization Note that although the case study here is not an official study for the NH-5, it just presents preliminarily lessons and recommendations for development and management of road infrastructure systems in Vietnam in general

5.1 Background

The National Highway No.5 (NH-5) links the capital

city of Hanoi with the international ports of Haiphong

in the east with a length of 106km The highway plays

the most important role in the road transportation

system of northern Vietnam as a socio-economic

artery joining the two cities and surrounding cities

along the highway With the economic growth that

started in the 1990s as a result of the reform, it was

estimated that both cargo and passenger traffic

volumes on the NH-5 would significantly increase in

the near future Along NH-5, there are some crossing roads such as NH-1A (KM0), NH-3 (KM59) and NH-10 (KM77) for connecting with other provinces/cities

5.2 Summary of evaluation factors

Data collection for project on aspects of overall goal, purpose, output and input are shown in Table 3

Table 3 Summary of evaluation factors

Overall

goal

o Improvement accessibility and speed up economic development

o Improvement of living standards of people in the project area?

Project

purpose

o Meeting the needs of the growing traffic in the area

o Traffic in the area is convenient and more efficient traffic flow in passenger and cargo transport

Outputs

o Reduction in travel time, increase in travel speed and reduction in transport costs

o Speed up economic development;

o Attracted a large amount of capital investment

o Increase in traffic volume, reduction in traffic congestion The National Highway No.5 Improvement as Class I based on the Vietnamese Highway Standard (TCVN 4054-85)

o Consulting services (engineering and management)

Inputs

o As planned, the project implemented during a period of 53 months (1/1994 - 6/1998)

o As planned, the project invested total 27,379 million JPY

o The participation of experts, the project management unit (PMU) staffs, the consulting unit and construction contractors

Note: Reference of JICA (2007)

5.3 Details of evaluation criteria

Details of evaluation according to five major criteria (relevance, efficiency, effectiveness, impact and sustainability) for post-evaluation of road infrastructure project are shown in

Table 4

Table 4 Details of evaluation criteria

Relevance o Suitable with development policy

o Suitable with traffic needs of the locality and area

Efficiency

o Project implementation cost

o Degree to complete the project output results

o Project implementation period

Effectiveness

satisfaction,

Impact - Positive impacts: Speed up economic development

Sustainability

o Maintenance activities situation

o Overloaded vehicle management

o Road corridor management

5.4 Analysis and evaluation of the project

5.4.1 Relevance

The project purposes are under Vietnam’s social economic development strategy as well as the road transport development strategy as stated in Decision No.1327/QD-TTg (2009) In other words, NH-5 improvement project meets the traffic demand of NH-5 as well as of the country in general as shown in Figure 6 Therefore, the investment of NH-5 improvement project complies with the development policy and traffic needs of the studied areas In conclusion, the relevance of the project is very high

Source: GSO (2007-2009)

Figure 6 Goods and passengers carried in the country and through NH-5

5.4.2 Efficiency

As initially planned, the project will be implemented during a period of 53 months (1/1994 - 6/1998) with total cost of JPY 27,379 million While actual output result is completed as per the initial plan during the construction period of 97 months (1/1994 - 1/2002) exceeding 83 percent compared to the planned duration while the cost is JPY 22.343 million which is 18 percent lower than the initial cost estimate Therefore, the efficiency of the project is at average level

Cargo

0

10

20

30

40

50

60

2000 2001 2002 2003 2004 2005 2006 2007 2008

Ha Noi Hung Yen Hai Duong Hai Phong

100

200

300

400

500

2000 2001 2002 2003 2004 2005 2006 2007 2008

Country

Passenger

0 10 20 30

2000 2001 2002 2003 2004 2005 2006 2007 2008

Hung Yen Hai Duong Hai Phong

0 500 1000 1500

2000 2001 2002 2003 2004 2005 2006 2007 2008

Country

Ha Noi

5.4.3 Effectiveness

Actual traffic flow on NH-5 in 2008 converted into passenger car unit (PCU) I as shown in Figure 7 using Vietnamese Highway Standard (TCVN 4054-2005) Based on this, we found that actual traffic flow in 2008 was 27.954 PCU/day, exceeding by 45 percent compared to the objective which was estimated for 2008 (19.204 PCU/day) In addition, there are 66,407 motorbikes per day (equivalent to 19.922 PCU/day) Therefore, the traffic flow doubles against the initial forecast because of the high speed of economic development in surrounding areas of NH-5, especially industrial development via Haiphong ports2 Increasing traffic flow leads to traffic jam in peak hours due to higher demand than the support of NH-5, while there

is no reserved land for the expanding highway Given this, it is necessary to construct a new road3 to meet the traffic requirement in order to achieve both effectiveness and sustainability for the development and management of transport network

Source: * Reference of JICA (2007), ** Regional Road Management Unit 2 (RRMU 2)

Note: As the actual traffic counts on the same location as the baseline and the target (Km28) were not available, the available counts on the nearest location (Km12) were used Both locations are on the section of Hanoi - Hungyen

Figure 7 Traffic volumes on NH-5

According to investigation data, it takes 2 hours to travel from Hanoi to Haiphong (with the length of 106 km) Since the road corridor management is not good, residents encroached on the corridors at two roadsides to live and formed the residential and urban areas As a result, management agencies need to install speed-limit sign from 40 ~ 80 km/h for various vehicles

on NH-5 at the sections going through densely populated areas (at the count there is one-third

of the length having installed speed-limit sign from 40-50 km/h), thus the vehicles must not exceed the regulated speed The time for travel can be reduced to 1.5 hours at night as drivers

do not abide by the speed-limit regulation The mobility of NH-5 is limited and does not meet the highway performance and cause reducing the socio-economic effectiveness However, the statistical result of interview investigation made by authors’ shows that people living along NH-5 are highly satisfied with the project due to the economic development as shown in Figure 8 (91 percent give answers with “very satisfied” or “satisfied”)

2 See item of 5.4.4 for actual figures of goods quantities via Haiphong Ports

3

A new road as the Expressway Hanoi - Haiphong is under the construction implementation

0 5,000 10,000 15,000 20,000 25,000 30,000

Baseline 1993 (km28)*

Target 2008 (km28)*

Actual 2008 (km12)**

Truck Bus Van Car

Target for 2008

Source: The survey on NH-5 carried out by the authors on NH-5

Figure 8 People’s satisfaction along NH-5

5.4.4 Impact

The Vietnam economy is now in the second growth stage4 The economic development speed

of the provinces along NH-5 after project completion in the first years of the 21st century is indicated through the following data: (1) GDP growth of these provinces is faster than others

in the entire country, especially in the industrial field as shown in Table 5; (2) The quantity of enterprises increased five (5) times within 8 years from 2000-2008 as indicated in Table 6; (3) Foreign Direct Investment (FDI) also increased together with the development of industrial zones as illustrated in Figure 9; 4) Goods quantities via Haiphong Port increased quickly as explained in Table 7

Table 5 Annual GDP growth rate 2003-2006 (in 1994 constant price)

Whole Country Ha Noi Hung Yen Hai Duong Hai Phong

Source: GSO (2007-2009), Reference of JICA (2007)

Note: Figure for Hungyen is annual average growth of 2001-2005; figures for Hanoi are annual growth of 2004-2007

Table 6 The quantity of enterprises

rate (%)

Source: GSO (2007-2009)

Table 7 Transport goods quantities via Haiphong Ports

Unit: 1000 tones

Total 4.515 12.733 13.207 14.043 17.207 24.041 28.572 32.925 Export 493 1.399 1.543 1.993 2.698 4.184 5.344 4.988

Source: GSO (2007-2009)

4

The first growth stage after innovation in the early 1990s

63%

44%

25%

48%

13%

8%

Female (n=8) Male (n=25)

Very satisfied Somehow satisfied Not much satisfied

Total (n=33)

49%

42%

9%