Beijing Tianjin Tanggu expressway project
 Report No: ; Type: Report/Evaluation Memorandum ; Country: China; Region: East Asia And Pacific; Sector: Highways; Major Sector: Transportation;
                                                             ProjectID: P003448




         The Beijing-Tianjin-Tanggu Expressway Project, supported by Loan 2811/Credit 1792-CHA for US$150 million
equivalent, was approved in FY87. The Loan and Credit were closed in FY96 fully disbursed, three years later. The
Implementation Completion Report (ICR) was prepared by the East Asia and Pacific Regional Office. The Borrower's
report is included as an appendix.
             The objectives of the project were: (i) to expand road transport capacity in one of the most
   important corridors in China, and (ii) to increase the efficiency and cost-effectiveness of road transport through
   development of a road financing system, improved road planning, and modernized design, construction and materials
   specifications and contract documentation. To achieve these objectives, the project included a 142-km, four-lane
   controlled-access tolled expressway connecting Beijing, Tianjin and Tanggu; maintenance and operation equipment
   for the expressway; technical assistance to develop a computerized road data bank for the Beijing municipality;
   studies on road financing, maintenance of the expressway and the potential for using local bitumen for road
   pavements; and training.

            The construction of the expressway was completed nearly two years behind schedule and associated
   electronic, electrical and mechanical works were completed over four years behind schedule. Delays were due to: (i)
   an overoptimistic time schedule for completion of the expressway and other works made at the time of appraisal; (ii) a
   late start for the preparation of electronic and other works; (iii) design deficiencies requiring changes in design during
   construction of the expressway; and (iv) inexperience of the contractors and supervising consultants. The latter
   resulted in a continuing problem with poor quality construction work throughout the project but, as supervision of the
   expressway construction contract improved, quality problems were identified and rectified and the road was finally
   completed to a satisfactory standard. The construction of the expressway provided an excellent opportunity for a large
   number of highway engineers and technicians to acquire technical and managerial experience. A separate corporation
   was established to operate the tolled expressway and is functioning efficiently: the financial rate of return on the
   expressway investment is estimated at 5.2 percent. The reevaluated economic rate of return is 16 percent, about one
   percent higher than estimated at appraisal. Other project components were implemented as planned, except for the
   development of a road data bank for the Beijing municipality which had already been developed by the time the
   project began. The outcome of the road financing study was disappointing as the main recommendation to generate
   revenues for roads from taxes on fuel proved unacceptable to Government.

           The Operations Evaluation Department (OED) rates project outcome as satisfactory, sustainability as likely
   and institutional development impact as modest. Bank performance is rated as satisfactory. These ratings are
   consistent with those in the ICR.

            The major lessons from the project are: (i) experienced international consultants should be involved in the
   detailed engineering preparation phase of projects which require complex engineering, such as expressways, and with
   which the borrower has little previous experience; (ii) a considerable margin for error should be built into estimates of
   project implementation schedules where projects involve complex engineering contracts and relatively inexperienced
   borrowers; and (iii) contracting parties and supervising consultants should be separate and independent entities in
   order to achieve effective supervision of contracts: the creation of an independent construction supervision industry in
   China is still a high priority.

             The ICR is highly satisfactory. No audit is planned.