Need for comprehensive due diligence in safeguards and technical aspects. The cost overrun had two major causes: (i) an insufficient safeguard assessment during appraisal, and (ii) an inaccurate cost estimate. A comprehensive safeguards impact assessment during appraisal could have avoided the later realignment. Detailed analysis of alternative alignments and their associated potential safeguards impacts, both of environmental and social, should have been conducted as well. The original alignment was to be located in the vicinity of the protected wetland area, which should have been examined together with the cost for environmental mitigation measures to be implemented. Several factors contributed to the inaccurate cost estimate, including market volatility. The estimates were prepared in 2009, when global construction activity was low. ADB has discussed with the government the need to minimize the risk of estimation errors or design changes in future projects. As a first step, the government and ADB agreed to plan robustly and execute preparatory work with more attention to detail, especially with regards to engineering designs, safeguards, procurement and cost estimation. The government will also explore value-engineering and non-traditional project delivery methods such as design-build to mitigate the risks the project encountered during implementation. Furthermore, the critical cost factors and the technical parameters of roads to be improved in future projects should be examined, with allowance for price and quantity adjustments for uncertainty, and including adequate contingencies to minimize the risk of cost overruns.
Road Corridor Investment Program - Project 2