Project Risks and Mitigation Measures

Monthly Progress Report November 2014 Western I ndonesia National Roads I mprovement Project 79 7 ISSUES and RECOMMENDATIONS

7.1 Current Situation

The main issues during this month of November 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 official approval of the Revised Project Management Manual PMM. d The big negative slippage behind schedule of three 3 on-going construction sub- projects. e Finalization of Bid Evaluation Report BER for Package No.5 Sp. Rampa Poriaha in line with Bank s required additional justifications to award the contract to the 2 nd lowest bidder instead of the 1 st lowest bidder.. f Delayed land acquisition and compensation payments of Project Affected People PAP in two 2 sub-projects. There are 2,564 affected people in Package 13 Sp. Rukis Tj.Kemuning and in Package 17 Sp. Gunung Kemala Pugung Tampak 1,885 persons are affected. These two 2 sub-projects have already been tendered. g Delayed action in processing the justification of the Field Engineering Survey result for the four 4 on-going construction packages Packages 1, 2, 3 and 4

7.2 Actions 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 regularly among all concerned to discuss each comments and suggestions which are to be incorporated in any documents prior to formally submitting to the Bank. b As the budgets for the price escalation and expected variation orders were not included in the original cost estimates, PMU shall discuss this matter with the higher authorities to request fund allocation to cover the additional cost. c As there are now four 4 on-going civil works contract packages under construction and sooner another four 4 civil works contracts will be awarded, the Revised Project Management Manual PMM shall be formally approved. Although the Revised PMM has been already disseminated to all concerned parties, official approval is needed prior to furnishing copy to the World Bank. d Three 3 of the four 4 on-going construction packages were on critical stage due to big negative slippages. To be on schedule or reduce the negative slippage to a manageable level, Design Supervision Consultant DSC shall initiate and schedule a high level meeting to be attended by no other than the Contractor s principal and other concerned authorities. The situation is too alarming due to the huge value of remaining works that are still to be done with just only 50 of the contract time left. Contractors shall be required to submit realistic action and workable plans and catch-up Monthly Progress Report November 2014 Western I ndonesia National Roads I mprovement Project 80 schedule to be implemented, if possible, on a two 2 shifts per day work schedule. e Procurement Committee Medan have to provide additional justifications and supporting back-up documents in justifying that the 1 st lowest bidder failed to comply with the required minimum amount of financial resources. f Concerned authorities in the acquisition of the road right of way shall expedite the process with the intervention of DGH to accelerate the LARAP implementation. g DSC and Contractors shall constantly follow-up with the authorities concerned the early approval of the Field Engineering. 8 CORRESPONDENCES During the period the CTC received and issued letters. Lists of letters received and issued are shown in Appendix J. Western I ndonesia National Roads I mprovement Project ANNEXES Annex P-1 : Package No. 1 Annex P-2 : Package No. 2 Annex P-3 : Package No. 3 Annex P-4 : Package No. 4