|Project Rationale and Linkage to Country/Regional Strategy
The ongoing Padma Multipurpose Bridge Design Project is to develop the detailed design for the Padma bridge, which is one of the Bangladesh Government's top priority projects. The original TA loan for the Project was approved in Dec 2007 for Special Drawing Rights 11,179,000 ($17.6m equivalent). Apart from the initial delay to engage the design consultants, project implementation has been smooth with strong support from the Government and other development partners.
The ensuing investment project to construct the Padma bridge is included in the 2009-2011 country operations business plan for Bangladesh as a firm loan. Four major potential cofinanciers (ADB, IsDB, JICA, and WB) are involved in reviewing the Project's progress and developing the ensuing project.
The Project's cost overrun is mainly due to underestimation of the cost of the design consultant's inputs, including remuneration and cost of field surveys and studies.
The initial cost of the design consultant, arrived at by strictly following ADB's quality-based selection, was $2.3m higher than the estimate.
Since its mobilization in Feb 2009, the design consultant has carried out, as part of its terms of reference, a fresh assessment of the requirements for field surveys and studies to develop the detailed design. The original budget allocation under the design consultant's contract for these cost items is now considered to be grossly insufficient with a fund shortage of about $6.4m. Though the cost increase is significant, these surveys and studies are essential for preparing an engineering design with due consideration to economy, effectiveness, constructability, functionality, ease in operation and maintenance, and sustainability of the ensuing project.
The cost overrun, under the design consultant's contract, has been ongoing since January 2009. The Government requests that ADB continue to finance the cost overrun for the following reasons: (i) switching funding sources of an ongoing contract would disrupt the design consultant's activities, and may result in significant delay in completion of the detailed design; (ii) the Government does not have readily available funding to accommodate the identified cost increase; and (iii) without external financiers' involvement, lack of proper guidance in the appointment of specialized subconsultants to carry out the surveys and studies and the use of funds by the subconsultants could compromise the quality of these surveys and studies.