Project Risks and Mitigation Measures

Monthly Progress Report January 2015 Western Indonesia National Roads Improvement Project 68 7 ISSUES and RECOMMENDATIONS

7.1 Current Situation

The main issues during this month of January 2015 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 documentations document by POKJA for the award and contract signing of agreement between Government of Indonesia and the winner bidder for Package No.5 Sp. Rampa – Poriaha. 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 with signing of the contract. 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 i i ize or totally eli i ate the delays i securi g Ba k’s co curre ce 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 or request the World Bank that the funds to cover the additional cost will be charged against the unallocated funds of the original loan amount. 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 implemented, 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 e atte ded y o other tha the Co tractor’s pri cipal a d other co cer ed authorities. In the middle of December 2014, a high level management meeting attended by high officials of DGH and top management of the Contractors was held in Padang to discuss Monthly Progress Report January 2015 Western Indonesia National Roads Improvement Project 69 the problems of delayed progress. 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 schedule to be implemented, if possible, on a two 2 shifts per day work schedule. e Procurement Committee Medan have to expedite the processing of the documents to avoid further extension of the bid validity period. 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. To date, no even one 1 Field Engineering had been finalized and approved. 8 CORRESPONDENCES During the period the CTC received and issued letters. Lists of letters received and issued are shown in Appendix J. Western Indonesia National Roads Improvement Project ABBREVIATIONS AND ACRONYMS ACAP : Anti Corruption Action Plan AER : Application Evaluation Report AIP : Australian Indonesia Partnership AMDAL : Environmental Management Analisis Mengenai Dampak Lingkungan ANDAS : Analisis Dampak Sosial AWPs : Annual Work Programs Balai : Regional Office for National Roads Implementation BAPPENAS : Badan Perencanaan Pembangunan Nasional National Development Planning Agency of GOI Bappedalda : Regional Environmental Impact Agencies BBPJN : Balai Besar Pelaksanaan Jalan Nasional Regional Office for National Roads Implementation BER : Bid Evaluation Report BLH : Badan Lingkungan Hidup BPK : Badan Pemeriksaan Keuangan Audit Board of the Government of Indonesia CAD : Computer Aided Design CHS : Complaint Handling System CTC : Core Team Consultant CHU : Complaint Handling Unit CRO : Community Representative Observer = WPM DIA : Directorate of Implementing Affairs DOP : Directorate of Planning DGH : Directorate General of Highways DMS : Document Management System DTA : Directorate of Technical Affairs DMS : Document Management System DSC : Design and Supervision Consultants EA : Executing Agency EINRIP : Eastern Indonesian National Roads Improvement Project EIRTP-1 : Eastern Indonesia Regional Transport Project First Project ESAMP : Environmental and Social Assessment Plan ESS : Environmental and Social Safeguards FMIS : Financial Management Information System FIDIC : Federation Internationale des Ingenieur Conseils