National Highway Corridor (Sector) I Project

Underestimation of costs. The project encountered a significant cost overrun due to underestimation of costs at the time of processing of the original loan. To enable quality completion of the project, ADB approved a supplementary loan and the government provided additional counterpart funds. For future projects using the sector loan modality, consideration may be given to setting appropriate level of cost contingencies, taking into account the uncertainties caused by (i) the unavailability of designs and detailed estimates, and (ii) higher price escalation due to a longer gap between the processing of the loan and the actual time of subproject appraisal, approval, and contract award.