Armenia : Project Management Support to the Ministry of Transport and Communication

Transport / Transport policies and institutional development

The government has been encountering contractual difficulties since the start of the project. In 2010, the PIU staff did not have sufficient experience procuring and administering high value contracts. The consultants and the contractors were unfamiliar with certain government procedures. The contract packages were changed after the first round of bidding, and even though the PIU recruited a project management consulting firm, high staff turnover particularly the consultant's team leader and resident engineer reduced the degree of oversight.

The contractor was slow in mobilizing, and since then failed periodically to fully comply with the specifications. Cracks and other defects are now visible on some works completed in 2014. There is disagreement at present between the supervision consultant, the PIU, and the contractor on the acceptability of about 30% of the completed works in approximately

70 km of the project road. Project delivery is late. The road sections financed from Tranche 1, which were scheduled for completion on 24 July 2013 was opened to traffic in 2016.

The Tranche 2 financed section, originally scheduled for completion on 13 June 2016, is now likely to be delivered mid 2018.

The government attributes the delays and quality issues partly to lack of supervision and others to the contractor's inexperience-although some delay is attributable to late granting of site access by the government. The disagreements between the supervision consultant and the contractor are mainly about specifications and construction methods. The government agency that audits public projects together with the PIU's engineers had noted several non-compliances during the early stages of the projects. The government believes that they were not corrected. Consequently, certain payments to the contractor are not approved by the supervision consultant until all the defects are remedied and supporting documents are submitted. However, the contractor believes that they have fulfilled all requirements, and in January 2015 it suspended the works citing payment delays.

Between September 2013 and February 2015, ADB provided intermittent services of three staff consultants to help the government identify the causes of the delays and the defects, and find corrective measures from technical and contractual standpoints. These consultants have helped the government to better understand its position on the actions that can be taken to get quality works and services from the contractor and the consultants. They have also provided separate action plans for the government to consider.

The government is aware that failure to immediately implement some of these action plans may turn the current disagreements into disputes, which will require costly legal teams to resolve and delay project completion even further. It is determined to avoid repetitions of the events in Tranches 1 and 2 when implementing Tranche 3 and future civil works, and is ready to implement two of the actions suggested by the staff consultants: (i) resolving the outstanding claims from and against the contractor; and (ii) streamlining monitoring and reporting based on the draft supervision manual produced by the supervision team of Tranches 1 and 2, but not yet tested. In response to the first suggestion and also train the PIU staff on managing claims, the PIU will recruit an international contract and claims management expert. It has requested ADB's assistance to implement the second suggestion and train the PIU staff to implement some of the other actions suggested by the staff consultants.

1. Increased understanding of the causes of noncompliance with specifications and defects

2. Increased awareness of the responsibilities and the best practices in inspection and assessment of nonconformity with contract specifications

Results of the measurements and tests to assess the quality of completed parts of works and compliance with specifications are complete. Report of quality of construction is complete.

Preparation of safeguards documentation (Due Diligence Reports [DDRs] and/or Corrective Action Plans [CAPs]) ongoing.

CWTC recruited the following experts according to the individual consultant selection method in the Guidelines on The Use of Consultants by Asian Development Bank and Its Borrowers (March 2013, amended from time to time):

- International quality review specialist;

- International technical advisor;

- National quality review specialist;

- National coordinator; and

- National social safeguard and resettlement consultant.