Microenterprise-based routine road maintenance Adapting the Latin American model

1. Microenterprise-based routine road maintenanceAdapting the Latin American model Serge Cartier The World Bank Guiyang – June 26, 2007

2. Overview

3. Routine maintenance 0 1 2 3 4 5 6 78 Very good Periodic maintenance Good Without maintenance Fair Corrective maintenance Poor Very poor Routine Maintenance Microenterprises - Routine Maintenance - • Preventative maintenance • Delays the need for other complementary (and more costly) conservation measures

4. Routine Maintenance Microenterprises - Routine Maintenance - • Combination of routine and periodic maintenance most cost-effective option 15,000 km under routine maintenance – US$ 150 million savings every 5 years

5. Routine Maintenance Microenterprises- Microenterprises - • Associative or cooperative form • 10-15 people, generally from the vicinity of the road (except in the case of former road agency staff) • Paid a fixed monthly sum (approx. US$ 1,000/km) (performance-based contract) • Responsible for basic maintenance activities in a 15-50 km stretch of road • Trained and supervised by contracting agency • Complemented by other conservation activities

6. Routine Maintenance Microenterprises- Microenterprises -

7. Routine Maintenance Microenterprises- Results - • Improved road conditions (transport costs, travel times, economic activities) • Cost savings (50% of force account, less need for more costly measures) • Impact local economies and incomes/employment (direct employment, indirect employment – consumption, other activities, etc.) • Local capacity building (contracting, entrepreneurial, leadership skills, productive activities) • Replication (other countries or areas, by national and subnational governments)

8. Overview

9. Main aspects- Introducing routine maintenance microenterprises - • Organisational modality • Microenterprise formation • Contracting modality • Tools and equipment • Maintenance activities • Performance indicators • Productivity rates and maintenance costs • Financing mechanisms • Training and accompaniment • Supervision

10. Main aspects - 1. Organisational modality - • Microenterprise better performance than lengthmen • Associative or cooperative form (All owners are workers, all workers are owners; better performance than single-owner) • Inexpensive and swift constitution (non-profit modalities rather than enterprise modalities, simplified procedures) • Change of members over time (non-profit modalities, profit as an incentive for better performance) • Adaptation of existing legal modalities (enterprise modalities) • Rotation of temporary workers

11. Main aspects - 2. Microenterprise formation - • Communities in vicinity of the road (promotional team, different in case of former road agency staff) • Community involvement (better cohesion and acceptance by community, more efficient and effective) • Selection criteria – sustainability and acceptability (eligibility criteria: poverty, unemployment, household head, close to road ranking criteria: basic reading/writing, construction/maintenance experience) • Female participation (<3% to 25-30%) (stereotypes and prejudices, mixed microenterprises better performance) • Rotation of members and temporary workers (community resentment, core group of members + temporary workers, training)

13. Main aspects - 3. Contracting modality - • Direct contracting (contract sum, private or public procedures with multiple bidders) • Bank norms, subsequently national regulations (adaptation of legislation, training of staff and microenterprises) • Performance-based contract (payment for output, not for input) • Guarantees and securities (bid security, advance, satisfactory execution – size and modality) • Simple documents (terms of reference, contract, report format)

14. Main aspects - 4. Tools & equipment - • Handtools (machetes, wheelbarrows, pickaxes, shovels, axes, (sledge)hammers, rakes, hoes, garden scissors, brooms, earth rammers, crowbars, ropes, buckets, trowels, files, chisels, bow saws, paintbrushes, measuring tape) • Supplies (sandpaper, paint, wooden planks, trash bags, cement) • Safety equipment (first aid kit, safety vests, cones, signs, markers or chalk) • Clothing (rubber boots, work boots, trousers, shirts, ponchos, masks, hats, gloves) • Provision by road agency or advance

15. Main aspects - 5. Maintenance activities - • Road surface (Clearing the road surface, removing minor landslides, repairing and sealing cracks, joints, rills and ruts, patching potholes in pavement and shoulders)

17. Main aspects - 5. Maintenance activities - • Road surface (Clearing the road surface, removing minor landslides, repairing and sealing cracks, joints, rills and ruts, patching potholes in pavement and shoulders) • Right-of-way (Clearing the right-of-way, cutting grass and brush, trimming, cutting and removal of trees, removing loose material from slopes, stabilising slopes)

19. Main aspects - 5. Maintenance activities - • Road surface (Clearing the road surface, removing minor landslides, repairing and sealing cracks, joints, rills and ruts, patching potholes in pavement and shoulders) • Right-of-way (Clearing the right-of-way, cutting grass and brush, trimming, cutting and removal of trees, removing loose material from slopes, stabilising slopes) • Drainage system (Clearing and repairing culverts and inlets, clearing and repairing side drains, channels and other surface drainage structures, clearing small waterways)

21. Main aspects - 5. Maintenance activities - • Road surface (Clearing the road surface, removing minor landslides, repairing and sealing cracks, joints, rills and ruts, patching potholes in pavement and shoulders) • Right-of-way (Clearing the right-of-way, cutting grass and brush, trimming, cutting and removal of trees, removing loose material from slopes, stabilising slopes) • Drainage system (Clearing and repairing culverts and inlets, clearing and repairing side drains, channels and other surface drainage structures, clearing small waterways) • Road works (Repairing retaining walls, cleaning and repairing bridge structures) • Road signalling and safety measures (Cleaning, painting and maintaining traffic signs, road markers, guardrails and bridge railings, removing obstacles in the right-of-way)

23. Main aspects - 5. Maintenance activities - • Road surface (Clearing the road surface, removing minor landslides, repairing and sealing cracks, joints, rills and ruts, patching potholes in pavement and shoulders) • Right-of-way (Clearing the right-of-way, cutting grass and brush, trimming, cutting and removal of trees, removing loose material from slopes, stabilising slopes) • Drainage system (Clearing and repairing culverts and inlets, clearing and repairing side drains, channels and other surface drainage structures, clearing small waterways) • Road works (Repairing retaining walls, cleaning and repairing bridge structures) • Road signalling and safety measures (Cleaning, painting and maintaining traffic signs, road markers, guardrails and bridge railings, removing obstacles in the right-of-way) • Tasks set for each activity to ensure proper execution

24. Main aspects - 6. Performance indicators - • Objective, inexpensive and easily measurable Road pavement and right-of-way • Road surface and right-of-way should be free from obstructions, litter, debris and road kill • Potholes should be non-existent or their amount and size should be below a certain minimum • Vegetation in the right-of-way should not exceed a specified height • No trees should obstruct traffic or visibility or pose a safety hazard • Slopes should be free from loose material and should be stabilised using vegetative measures Drainage system • Culverts free from debris and sediment or up to a maximum percentage of the cross section • Surface drainage structures correct cross section and sediment or up to a maximum percentage • Riverbeds should be clear for a certain distance from the edges of the road Road works • Retaining walls should be structurally sound • Bridge structures should be structurally sound and free from litter and debris Road signalling and safety measures • Traffic signs, road signs and road markers should be complete, clean and clearly visible • Guardrails and bridge railings should be clean, painted and clearly visible

25. Main aspects - 7.Productivity rates and maintenance costs - • Determine daily productivity rates for activities • Determine work quantities per kilometre based on road characteristics • Classify roads according to road characteristics (category, traffic, vegetation, topography, roadworks) • Determine general productivity rates by road class (km/worker)

26. Main aspects - 7.Productivity rates and maintenance costs - • Determine standard maintenance costs per km • Mainly labour – wages and general productivity rates (worker/km) • Tools & equipment, transport, insurances & pensions, administration, contingencies and profit

27. Main aspects - 8. Financing mechanisms - • Sufficient and timely financing (survival of ME, execution of maintenance) • External funding at start – national resources (responsible entity, financial capacity, budget priorities, legal restrictions) • Secure allocation of financial resources (predictable financing, road funds or earmarking, taxes and tolls) • Efficient payment procedures (delays maximum of 20 days, ME desertion)

28. Main aspects - 9. Training and accompaniment - • Entrepreneurial training (how to work together + basic enterprise management, social promoter) • Technical training (road elements + inventory, maintenance activities and performance indicators, technical promoter / training institute) • Technical accompaniment (6 months-1 year) (assist in planning activities, assessing performance, consultants / university graduates / road management agencies) • Entrepreneurial accompaniment (6 months-1 year) (enterprise management, accounting, taxes, consultants / university graduates) • Other training (basic education, health issues, etc.)

30. Main aspects - 10. Supervision - • Planned and informal visits (monthly – every few months, road users) • Check performance indicators (general inspection, detailed inspection in sample stretch) • Penalties (daily fine, deduction of monthly payment, continued failure - termination of contract, not always applied)

31. Main aspects - Example Peru rural roads - • Since 1995, 14,251 km (total 46,909 km), over 600 ME • 6000 permanent jobs, 49,000 indirect jobs, 10x productive investments • Associations (some initial companies) • Community involvement, female participation (2%-23%), 60% rotation system, 60% departure after 6 years (better job, internal conflicts) • Direct contracting limits, private contracting 3 bidders, 25% ME in 2006 • Performance indicators, grass < 45cm, potholes < 10/km, 20-30% sedimentation • Productivity rates 2-5 km/worker, depending on road class (6 classes) • Initially US$1,200/km, now US$510-US$1,200 • 80% wages; tools, transport, general, investments (no social security) • Lack of resources municipalities, Provincial Road Institutes, earmarking • Technical training SENCICO, university graduates for accompaniment • Supervision by consultants

32. Main aspects - Example Ecuador rural roads - • Since 2001 (1998 ILO), 420 km, 36 ME • Lengthy procedures (1 year ILO), Civil Association, adaptation by ministerial decree, alternative of cooperative is closed modality • Each entity can fix ceiling for direct contracting – US$35,000 (problem for paved network) • Complicated contract documents • US$800 – US$1,200 per kilometre per year • 60% labour (US$160 minimum wage), 20% investments; rest tools, and administration (paved network insurance) • 1st year 70% UCV, 2nd 30%, 3rd subnational governments fully responsible, but lack of funding • Provincial engineer determines workplan, also carries out monthly supervision, ME feel like employees

33. Main aspects - Example Colombia paved roads - • Since 1984 (ILO, UNDP), 14,157 km, 318 ME, 11,823 members • Competitive bidding in some cases, due to sufficient bidders • All ME members have to be accredited by SENA, which provides the technical training • Patching material supplied by INVIAS • Penalties 5%, 10%, 15% payment deducted, then contract terminated • 3 classification criteria: drainage works (1:<5, 2:6-9, 3:>10), vegetation (1:<1.5, 2:1.5-5, 3:>5), type of terrain (1: flat, 2: hilly, 3: mountainous). Multiply for road class:(I:1-3, II:4-8, III:9-27, IV: critical road). • Productivity rates 2.5 - 5 km/worker, US$ 885 - US$ 1,770/km per year • Monthly training (technical, entrepreneurial and other subjects) • Road administrators carry out technical accompaniment and supervision, as well as complementary road management activities (200km)

34. Overview

35. Adapting the Latin American model- Design steps - 1. Organisational modality • Non-profit – enterprise modality (associative form)? • Closed – open (temporary workers)? • Existing legal modalities ? • Administrative procedures? 2. Microenterprise formation • Selection criteria? • Promotional team? • Gender aspects? • Rotation and temporary workers?

36. Adapting the Latin American model- Design steps - 3. Contracting modality • Possibilities for direct contracting? • Required guarantees (sizes and accepted forms)? • Appropriate contract documents 4. Tools & equipment • Requirements and local availability? • Estimated costs? • Contract advances or provision by road agency?

37. Adapting the Latin American model- Design steps - 5. Maintenance activities • Which activities are to be included (budget, type of road)? • Description of tasks • Complementary conservation measures? 6. Performance indicators • Appropriate indicators (maintenance activities, budget)? • Penalties to be applied?

38. Adapting the Latin American model- Design steps - 7. Productivity norms and maintenance costs • Local daily productivity rates by activity (?) • Main road characteristics and their influence on work quantities? • Road classes and classification criteria? • General productivity rates by road class (km/worker)? • Wage rates and additional costs & allowances? • Standard costs by road class? 8. Financing mechanisms • Appropriate financing entity? • Availability and secure allocation of financial resources? • Payment procedures?

39. Adapting the Latin American model- Design steps - 9. Training and accompaniment • Training material • Who will execute training and accompaniment activities? • Training of trainers • Accompaniment – Supervision? 10. Supervision • Who is responsible for (supervising) the roads? • Supervisors?

40. Initial Questions • Which entity is the contracting agency? (Promotion, Contracting, Financing, Training, Supervision) • What are the main road characteristics? (surface, categories, traffic, topography, vegetation, road works) • Is there sustainable and secure funding? Thank You!