1. PROPOSED PILOT PROGRAM FOR IMPROVING
PROVINCIAL ROAD MAINTENANCE (PRIM)
Program Design
08 November 2012

2. Background
• Roads are the predominant mode of transport in Indonesia
• Sub-national roads comprise 91% of the primary road network
in Indonesia
• Provincial road 10.2% and Kabupaten/Kota road 80.7%
• Investment and maintenance have not kept up with demand
– Typically only 51% of sub-national network is in stable condition
• Priority tends to be given to new construction/rehabilitation,
not (more cost-effective) to maintenance
– But more effective asset management is one of 5 key DGH objectives
for 2010-2014
• Road Traffic and Transport Law 2009 provides for:
– Road Preservation Units/Funds
– Road Traffic & Transport Forums (RTTFs)
– Clarification of asset management responsibilities
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3. Lessons Learned from International
Experience
• Maintenance problem is not unique to Indonesia
• Trend to improve accountability and ensure sound road
management
• Move from force account to maintenance by contract
• Move towards results based arrangements for
implementation
– Output based-will be implemented by PRIM
– Performance based
• Introduce incentives into funding mechanisms
3

4. Lessons Learned from National Experience
1. EIRTP-2 (World Bank Project 2006-2011)
 13 Provinces and 35 Kabupaten using contestibility
 20% Routine maintenance per year doesn’t succeed
 Low Fiscal Capacity grant/matching fund (90/10); Medium (60/40); High
(30/70)
 Reimbursement by contract/MC
 Reduce financial gap but not sustainable
 13 Indicators and 8 indicators have failed to achieved
2. Local Government Decentralized Project /LGDP (WB Project
2011-2013)
 6 Provinces and 66 Kabupaten/Kota
 Road, Irrigation and water
 Verification of Output
 Contract and swakelola
 RUC too generic
3. EINRIP (AusAID 2008-2013)
 Only National Roads
 Technical and Financial Audit
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5. Proposed Pilot Program Objectives
• Develop and test a pilot grant program using results
based disbursements to improve the condition and
connectivity of provincial roads
• Sustain and improve the condition and connectivity of
provincial roads, with emphasis on better value for
money;
• Strengthen the existing governance arrangements to
promote the adoption of more sustainable and efficient
maintenance practices;
• Build demand for better governance; and
• Demonstrate replicability and sustainability of the
proposed approach
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6. Program Design Document
• Provide additional funding for maintenance
• Focus on results and greater accountability
• Outside oversight by the Donor will be reduced,
• Establish a program safeguards and clear criteria for
success, fostering trust and efficiency.
• Financial incentives for good performance
• Coordination between agencies and consultation with
the public will be improved through the RTTF, under
Road Traffic and Transport Law 22/2009 and PP 37/2011.
• Application of recent regulations relating to road
maintenance, road design and procurement.
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7. Why Pilot Provincial Roads? Why NTB?
• Key connectivity links between national roads and district
roads
– 10% of network length and 19% of vehicle-km
• Provinces have better institutional capacity than districts
– Stronger likelihood of successful implementation
• NTB has demonstrated strong support and commitment
– Budget support
– Adoption of Multi years contract
– Institutional support and the role of the RTTF
– Demonstrated understanding of output-based concepts
• Subsequent program extension:
– Extend to other provinces when lessons are learned and
mechanism is demonstrated to be effective in the pilot program
– Consider possible involvement of additional selected LG
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8. Justification for NTB
1 - Weak (major deficiencies and outcomes likely)
2 - Moderate (some qualifications)
3 - Strong (few or no qualifications)
Kupang
NTT
Tabanan
Overall
Bali Execution
Preparation
KLT Planning
KLB
NTB
0 1 2 3
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9. Program Description
• Component 1a: Payment of an incentive (approximately
A$ 52 million) after verified maintenance of provincial
roads.
• Routine maintenance (through swakelola- force account
and contracts)
• Periodic maintenance by overlays or regravelling
• Rehabilitation of pavements and structures
• All programs to include repair or reconstruction of
shoulders, roadside and drainage systems
• Costs are preliminary and are presently being revised by
interim support consultants
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10. Program Description(cont’d)
• Component 1b: Payment of an Institutional
development incentive (approximately A$ 2.6 million) for
adopting PPBP and improvement RTTF
• Component 2: Institutional strengthening, program
management support, monitoring and evaluation, and
verification of results ($12 million).
• Institutional Strengthening
₋ Training of personnel in provincial government road offices
₋ Capacity to plan, program, budget and implement
maintenance works;
₋ Improvements to the swakelola system and mentoring of
personnel;
₋ Other Training based on Training Need Analyses Study will be
carryout by Implementation Consultant
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11. Program Description(cont’d)
• Implementation support (assisted by IndII consultant)
₋ Technical team to be created by DGH
₋ Project Implementation Unit (PIU) to be created in pilot
province
• Technical verification of maintenance works as a
condition for disbursement
• Incentive for adopting and implementing adequate
PPBP and effective RTTF
• Monitoring and evaluation of the pilot program during
implementation and for 3 years afterwards
• Note: design and supervision is to be the responsibility
of the Province, after improvement of skills (design)
and remuneration (supervision)
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12. COST OF PILOT PROGRAM IN NTB
• Maintenance Works-5 years program: $143 million: $52
million incentive from AusAID.
• Maintenance Works – 2 years (May 2013 to June 2015):
$36.96 million: $13.44 million incentive from AusAID
and $23.52 million Prov. contribution
• Technical Assistance: $12 million from AusAID (five
years) of which $5 million will be incurred 2013 up to
June 2015
• Cost of Design and Supervision estimated $ 4 million is
assumed to be met by NTB
• Total Cost: $159 million; AusAID: $64 million
• Incentive for PPBP/RTTF: 5% of works: $2.6 million
• Total Potential Contribution from AusAID: $66.6 million
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13. Estimated Program and Flow of Grant
disbursements under Component 1a
Total Program and Grant Disbursements
(A$)million Net Grant Net Province
Fiscal Year Contribution Contribution
Program Implemen.
APBD (A$) million (A$) million
Disb. Disb.
2013/2 11.25 1.23 0.40 1.63 11.65
2014 19.28 2.15 4.97 7.51 11.77
2015/1 6.04 0.66 4.04 4.70 1.34
Sum 1 36.96 4.03 9.41 13.44 23.52
2015/2 17.67 1.93 0.00 1.93 15.75
2016 35.35 3.86 9.00 12.85 22.49
2017 35.35 3.86 9.00 12.85 22.49
2018/1 17.67 1.93 9.00 10.93 6.75
Sum 2 106.04 11.57 26.99 38.56 67.48
Works 130.00 15.60 36.40 52.00 78.00
+ VAT 13.00 0 0 0 13.00
Total 143.00 15.60 36.40 52.00 91.00
Notes: 2015/1 means Semester 1 (January – June) of 2015, the completion
date of Phase 1 of the Grant
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14. Budget allocation & grant disbursement
• Program value
• 2013- June 2015
• July 2015-2018
• Grant contribution
• 40% contribution to total program
• 60% APBD value
• Cash flow
• Budget provision (APBD) -Prefinancing 100% until
verification and reimbursement is approved
• Reimbursement
o Advance payment on annual work program value – 30%
o Approved work to Verification point (less advance)
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15. Additional notes
1. Assumes 30% advance on total agreed annual program
2. Advance deducted in proportion to the amount of
annual work program approved.
3. Two disbursement dates per year, in May and October
4. For programming purposes base year of 2012 and
allowance for 5% physical contingency and 5% per
annum price contingency, and a 5% provision for
mobilisation etc.
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16. Program composition 2013- June 2015
• Routine Maintenance contracts
 Length 387 Km and Cost A$ 2.73 million
• Routine Maintenance Swakelola
 Length 696 Km and Cost A$ 16.31 million
• Periodic Maintenance
 Length 42 Km and Cost A$ 3.13 million
• Rehabilitation
 Length 43 Km and Cost A$ 14.79 million
• TOTAL PROGRAM A$ 36.96 million
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17. Program of 7 Contracts for 2013-June 2015
Routine Maintenance Periodic Maintenance Rehabilitation
No.of
Package Name Road Cost Work Work Cost
links Cost (A$m)
length (A$m) length length (A$m)
Rembiga -
3 80 0.57 14 0.87 - 0.49
Bayan
Lb Lombok -
2 53 0.22 1 0.15 1 0.55
Biluk
Praya - Kruak 1 21 0.17 12 0.79 - 0.08
Sb Pengatap -
2 59 0.54 - 0.15 12 4.46
Kuta -Penunjak
Sumbawa
3 71 0.46 5 0.38 - 0.49
Besar
Sb Kempo - Sp
1 18 0.16 5 0.31 8 1.81
Kore
Tawali -
2 84 0.60 5 0.47 22 6.91
Karumbu
Totals 14 387 2.73 42 3.13 43 14.79
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18. Swakelola Program for 2013- June 2015
Routine Maintenance
PPK Group
Road length Cost (A$m)
Lombok Utara 5 km 0.08
Lombok Barat 95 km 2.14
Lombok Tengah 37 km 0.95
Lombok Timur 105 km 1.91
Sumbawa Barat 3 km 0.04
Sumbawa Timur 111 km 2.16
Bima/Dompu 340 km 9.04
Totals 696 km 16.31
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19. Program composition July 2015-June 2018
• Routine Maintenance contracts
 Length 771 Km and Cost A$ 8.31 million
• Routine Maintenance Swakelola
 Length 489 Km and Cost A$ 4.81 million
• Periodic Maintenance
 Length 273 Km and Cost A$ 14.95 million
• Rehabilitation
 Length 173 Km and Cost A$ 77.96 million
• TOTAL PROGRAM FOR 2015-2018 A$ 106.04 million
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20. Combined Works Programs, 2015 – 2018
Routine Maintenance Periodic Maintenance Rehabilitation
No.of links Road Work Cost
Cost (A$m) Work length Cost (A$m)
length length (A$m)
31 771 km 8.31 273 km 14.95 173 km 77.96
Routine Maintenance, 2015 – 2018
Contracts and Swakelola
Routine Maintenance
No.of links
Road length Cost (A$m)
23 489 km 4.81
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21. Identification of the PRIM Network In NTB
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22. Recommended Treatments 2013 – 2015
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23. Recommended Treatments 2015 – 2018
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24. Verification of Results and Disbursement
• Output eligibility criteria
₋ Compliance with Program Verification
₋ Compliance with national procurement law and regulations
₋ Compliance with technical specifications
₋ Compliance with environmental and social safeguards
• Reference Unit Cost/prices-calculated by specific link, condition,
treatment (initial and annual) and length (RUC vs contract price)
• Technical Team DGH, Ministry of Public Works undertakes
Technical Verification supported by a Verification Consultant
• Disbursement:
 Advance Payment Disbursement (30% of annual Program)
 Implementation Disbursement
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25. Compliance With Program Verification
• Proposed works are entered into the provincial Budget
or have a formal Cost Analysis (RAB); the date of
approval of all budget documents is noted;
• The maintenance budget is announced on a website,
including location of works;
• The procurement documents for Supervision
Consultants specify remuneration at INKINDO rates, as
well as the personnel’s minimum salary component.
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26. Compliance With National Procurement Law
and Regulations
• Presence of Integrity Pact
• Availability of Minutes of Pre Bid Meeting
• Availability of Bid Evaluation Report
• Name of the Winner in an official announcement
• Any objections are resolved
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27. Compliance With Technical Specifications
• Quality of Routine Maintenance Plan
• Visual Assessment
• assessment of Routine Maintenance Works
• Road pavement thickness, length and width is consistent
with contracts
• Quality of surface condition and presence defects at
visual assessment
• Quality and quantity of asphalt and aggregate base/sub
base; soil; road shoulders
• Bridge repair works consistent with contracts
• Physical progress after 25% and 50% of contract time has
elapsed
• How about non compliance works??
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28. Compliance With Environmental and Social
Safeguards
• Acceptance of Environmental and Social Safeguard
Framework
• Fulfilment of environmental monitoring procedure
• Implementation of disability provisions in the designs, if
applicable
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29. Risks
• Timely availability of annual budget in agreed amounts, where
Province has to pre-finance maintenance works
• Weak capacity of provincial works department and ineffective
coordination
• Election year 2013 for Governor
• Verification of results
• Excess ‘Swakelola’ staff
• Capacity of local contractors and consultants
• Corruption
• Other Risks
₋ Number of Pilot Provinces
₋ Size of Grant
₋ Uncertainity regarding extension of current funding authorisation for IndII
and AIIG beyond June 30, 2015
₋ Availability of additional sources of funding for scaling program
₋ Appointment and funding of design and supervision consultants
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30. Organisation Chart for Provincial Road Improvement Maintenance/PRIM
Australian-Indonesia Infrastructure Initiative/IndII
30

31. Implementation Schedule for PRIM until June
2015
2012 2013 2014 2015
Jan - Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb March April May June July August Sept Oct Nov Dec Jan Feb March April May June July August Sept Oct Nov Dec Jan Feb March April May June
DFA
PMM NPPH
SPPH
1st Output MoF 1st MoF 2nd 3rd Output MoF 3rd 4th Output MoF 4th
2nd Output Verification
Payment Payment Verification Payment Verification Payment
Grant
Verification
Subsidiary Grant Preparation incl. LG
APBN +
Agreement Proposal
DIPA
(AusAID & (IndII, Bappenas, MoF, Tech.
(MoF)
MoF) Ministry & LG)
RKUD RKUD RKUD RKUD
(LG) (LG) (LG) (LG)
Plan APBD 2013
(LG)
Perda for Road Maintenance
Program 2013 - 2018
(incl. PRIM)
Establish Tech. Team in
DGH
DGH Technical Team Support
ADD/TOR
& Procure Interim Support Consultant
Establish PIU DPU Program Implementation Unit (PIU)
PRIM Swakelola (Force Account) Routine Maintenance
Concept Note
Detailed
Design & Bid
Technical Assistance (TA) & LG Activities
Document
for Multi-
years
Procure
Contractor
PRIM Construction
Procure
Supervision PRIM Supervision Consultant
Consultant
Road Traffic & Transport Forum (RTTF)
PIU Consultant
Monitoring & Evaluation
ADD / TOR Procure
Technical and Financial Assessment Consultant (TFAC)
Training & Institutional Strenghtening
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32. Critical Path
Activity By Deadline
Grant Preparation including LG Proposal IndII, Bappenas, MoF, DGH & LG 15 Nov 2012
DIPA for APBN MoF 31 Dec 2012
DPA for APBD 2013 LG 31 Dec 2012
Activity Design Document /ToR IndII & AusAID 30 Nov 2012
Procurement and mobilisation of IndII
IndII 28 Feb 2013
Consultant
Survey, Prepare Design and Bid Documents
IndII Consultant 30 April 2013
for Multi-year Contracts 2013-2015
Procure Contractors LG 30 June 2013
Program Management Manual DGH MPW 30 Nov 2012
Direct Funding Agreement AusAID & DGDM MoF 31 March 2013
Prepare and Issue SPPH (Surat Penetapan
DGFB MoF 31 March 2013
Penerusan Hibah)
Prepare and Sign PPH (PerjanjianPenerusan
DGFB MoF and LG 31 May 2013
Hibah)
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33. Next Steps
• Socialization to NTB for on grant condition 14 Nov 2012
• Establish TT in DGH and PIU in DPU NTB: November 2012
• Program Management Manual Nov 2012
• Statement Letter from Governor of NTB concerning 100%
Prefinancing prior reimbursement, PERDA Accelleration 2/PRIM,
APBD Budget 2013: Nov 2012
• PERDA Accelleration 2/PRIM: Nov 2012-April 2013
• Procure Preparation and Implementation Project Consultant:
December 2012-February 2013
• Prepare project implementation: March-June 2013
• Start Improved Swakelola: May 2013
• Procurement 7 Packages A$ 20.65 million May-June 2013
• Finalize direct funding agreement, grant channeling decree/SPPH:
Jan - March 2013
• On Granting Agreement /PPH: April-May 2013
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