General information of the WINRIP project, ie the total cost of the project,

Monthly Progress Report May 2014 Western I ndonesia National Roads I mprovement Project 68 • Currency Fluctuation • Current Estimated Situation No risk was detected until preparation of this report, however CTC prepared revised cost estimates in anticipation of future cost claims to cover contract price escalations and variation orders. A factor of 10 for both additional cost components is applied on the original cost.

6.9.3 Risks Related to Quality

The quality of work is inherently tied to the competence of the Contractors and the diligence of the Supervision Teams. The competence or otherwise of contractors shall be considered at the time of bid evaluation and prior to the award of any contract. The quality of supervision however is influenced by the following factors: • Ensuring that supervision staff levels are fully manned with competent, honest, qualified and experienced personnel. • The provision of properly equipped laboratories with properly trained operators for each package. Package supervision comes under the responsibilities of the immediate supervision teams and the relevant DSC but the Quality Assurance Engineer from CTC. To date, CTC have not received any report on quality assurance from DSC. 7 ISSUES and RECOMMENDATIONS

7.1 Current Situation

The main issues during this month of May 2014 are as follows: a The slow progress of procurement proceedings b Provisions for additional funds to cover claims for contract escalations and expected variation orders c The finalization of the Project Management Manual PMM and Quality Assurance Manual QAM d The considerable negative slippage behind schedule of two 2 on-going construction sub-projects

7.2 Action Required

a The main cause of the delay in procurement is attributed to the flow of communication between POKJA, PMU, CTC and the World Bank in finalizing the procurement documents. To minimize or totally eliminate the delays in securing Bank’s concurrence and issuance of No Objection Letter NOL, special meeting shall be held among all concerned to discuss each comments and suggestions which are to be incorporated in any documents prior to formally submitting to the Bank.