“Serbian Railways”: Technical Assistance to the PIU

PRESENTATION

(5’ FZ – MOKRA GORA 27Apr 2013)

1.  PREFACE

2.  THE CONSORTIUM AND THE NEEDS OF THE PROJECT

3.  Assignment, approach & methodology

4.  summary

1.  PREFACE

The Consultant is the Consortium SAFEGE (France) - Ardanuy (Spain) signed on 3 November 2011 the Contract for the Technical Assistance to the Project Implementation Units of] Serbian Railways [SR, dealing with the Railway Rehabilitation Projects and the relevant loans, from both the European Investment Bank and the European Bank for Reconstruction and Development.

Serbian Railways intends to use the loans financial means in the implementation of Reconstruction and modernization of the network, especially Corridor 10 lines, actually focusing on:

·  EIB: Gilje – Cuprija – Paracin section of the Belgrade – Nis line;

·  EBRD: renewal of the section Beograd - Rakovica - Resnik and rehabilitation of sections along Corridor 10 – still under decision.

The Consultant have to provides TA services to the PIU which is in charge for the implementation of the corresponding projects.

2.  THE CONSORTIUM AND THE NEEDS OF THE PROJECT

The composition of the Consortium is ensuring that international best practice can be tailored to meet local needs and circumstances.

Members of the Consortium bring complementary skills and experience to the Project and are capable of providing the wide range of services required under the Terms of Reference of the assignment.

In particular, the Consortium provides the adequate technical expertise and assistance in the realization of the following assignments of project:

  • Overall project management and procurement plan;
  • Ensure that international standards of project management and reporting are adopted;
  • Review of the detailed design and specifications and prepare and finalise the tender documents;
  • In accordance with the Banks’ procurement rules, assist in the tendering procedure and in the tender evaluation process with participation in Evaluation Committees;
  • Monitor the execution of the Works and assist in the treatment of all contractual issues under the procured contracts;
  • Establish appropriate systems for quality management, progress planning and cost control;
  • Prepare progress reports pursuant to the loan contracts with the Banks and advise SR on the preparation of any other report as required.
  • Take a pro-active approach in problem solving, in all aspects of relationship SR and the Banks, helping to detect and immediately address early-warning signals of the factors that could jeopardise project implementation.

Established in 1919, SAFEGE is a leading French consultancy firm, part of the SUEZ Group, specialised in delivering institutional building, technical studies, works supervision and management of projects in the transport infrastructure sector – including railways.

With a turnover of more than €100M per annum and 1,200+ full-time staff, SAFEGE brings financial stability, strong technical skills and solid project management know-how to the project.

SAFEGE has considerable experience in the Balkan region. The company has a particular interest in further developing its presence in South-East Europe, especially in Serbia, where SAFEGE has operated a representative office since 2004, becoming a fully established legal entity – SAFEGE D.O.O. – in 2007.

Also the associate company have adequate capacity and quality to improve with sound experience the successful accomplishment of the assignment

Ardanuy Ingeniería, S.A. is an engineering and architecture consulting company specialised in studies, projects, work management and technical support for railways, undergrounds, trams, construction, electro-mechanic systems and the energy field: electrical engineering, telecommunications, environment, waste management.

The company was founded in 1992 and currently employs a permanent team of 100 fully qualified engineers and architects. Other experts also act as consultants to Ardanuy's staff in specific projects. Turnover in 2009 exceeded €7.5M. Since its creation, the company has implemented more than 750 projects worldwide including in Eastern Europe.

3.  Assignments, approach & methodology

The Overall Objective of the Project

The overall objective of the assignment is to contribute to the renewal of the railway sector, regarding both the passenger and freight traffic, in order to restore the efficiency which has been lost due to the insufficient maintenance, primarily through the assistance in the realization of the priority projects financed by the international financial institutions.

These projects concern the priority sections of the national railway network in Serbia, in compliance with the strategic documents adopted by the Government of the Republic of Serbia, the preparation of which is financed from the grant funds of the European Union.

The Project Specific Objectives

The specific objectives of the Consultant are the following:

  • the assistance to SR, in cooperation with the SR PIU, for successful completion of the realization of the Railway Rehabilitation Project II, in compliance with the financing agreement concluded with the EIB and with the EIB Instructions for Procurements applied by the Bank. According to the said Agreement, the SR PIU is in charge of the coordination of the Project;
  • the assistance to SR to successfully realize, in cooperation with the PIUs for the specific projects, the above mentioned Projects which are planned to be realized in the forthcoming period;
  • the provision of the adequate training for the management staff of SR, on the job;


Approach

Project Management

A good project management plays a major role in the efficient administration and successful delivery of the project results.

Consequently, the key persons involved require not only the appropriate professional experience to address all of the issues and technical problems that may arise but they must also possess sound personnel management qualities and leadership skills.

Timeliness and Absorption

One of the keys to the success of any project is that the inputs and results are delivered on time and in full and that the recipients are able to absorb the assistance efficiently.

This is a dual responsibility: the Consultant must provide a large number of high quality, long-term and short-term technical inputs in a short space of time and the beneficiaries, partner institutions and stakeholders must be able to absorb that assistance and utilise the results effectively.

Ownership

The principle of ownership is often stated and frequently forgotten.

We are committed to the fundamental principle of technical assistance, namely that its purpose is to make itself redundant not only by transferring skills and experience but by transferring ownership.

It is important to the success and sustainability of this project that the beneficiary and the PIU develop a sense of ownership from the outset.

It is clearly understood that these structures will have to stand alone in the medium term, without the support of external technical assistance.

Developing “ownership” is not therefore some abstract concept it is a genuine practical need. The entire focus of our activities, therefore, will be upon transferring ownership to the beneficiaries.

Procurement cycle
Transparency

Although much of our efforts will be targeted at assisting the PIU to carry out its day-to-day tasks with respect to tendering and contracting assistance, we believe that there is a core objective that must be achieved under this component.

In order to increase the present and future credibility and fundability of public institutions in Serbia and to ensure that the International Financial Institutions and the private sector banks categorise Serbia as a low lending risk, it is imperative that the present funding agreements with the EBRD and the EIB are managed in a transparent and professional manner.

This will be essential if Serbia is to access the level of financing necessary to implement its transport policy.

The selection of projects, the appointment of designers or agencies to prepare technical specifications, the tendering and award of contracts, the monitoring of works progress and the payment of invoices should be done according to the highest standards of international public procurement.

We believe, therefore, that one of our primary responsibilities under this project is to reinforce a culture of transparency in the procurement and management of public works.

Compliance with national standards and regulations

We understand that the Serbian authorities have their own building standards and regulations covering design and construction and environmental regulations.

We recognise that one of the key actions under this Component must be to ensure that the designs and technical specifications are absolutely in conformity with the national legislation, regulations and standards and that subsequently during the supervision of the works special attention must be paid to ensuring that the construction works and any associated technical (mechanical, electrical etc) works are done in accordance with these requirements.

Quality Assurance

In major construction projects the costs of non-quality can be extremely high.

It is of paramount importance that the project designs, drawing, technical specifications, bills of quantity and terms of reference included in tender dossiers are of the highest quality.

If they are not there is a risk of major delays in contracting the works, supplies and technical assistance.

Significant delays in implementing the Railway Rehabilitation Project will throw into doubt the internal rate of return calculations for the investments and may imperil the Beneficiary’s capacity to service its borrowings.

Institutional and human resource capacity building of the PIU

It follows from the above that if the Project is to fulfil its objectives, there must be a conscious effort to establish modern financial management and administrative systems and a significant transfer of skills and experience from the Technical Assistance Team to the staff of the SR-PIU, to the point where by project closure the SR-PIU is self-sustainable.

This entails that staff are involved in all aspects of project preparation, tendering, implementation, and monitoring and conversely that the Technical Assistance Team does not attempt to do things “on their behalf”. Rather it should be a process of close co-operation, on-the-job mentoring rather than formal training.

Sustainability

A key element of the Consultant’s strategy must be to ensure sustainability of the project results. In our experience the sustainability of project results and objectives may be measured in five ways: policy, legal, institutional, technical and financial sustainability.

Given the nature of the assistance being provided, policy and legal sustainability do not concern the Consultant in this project.

Institutional sustainability

In our view, there is a tendency to view institutional capacity-building and sustainability in the narrow sense of human resource development (training): human resource development reinforces but is not synonymous with institutional capacity building and does not of itself guarantee the sustainability of project outcomes. Institutional capacity building involves more than simply transferring skills and knowledge. In our experience if one wishes to build sustainable institutional capacity it is important to:

  • ensure that modern technical and financial management and administrative systems are in place,
  • define and codify administrative practises,
  • develop simple, transparent and accurate monitoring and internal auditing systems,
  • define clear channels of communication, division of responsibilities, systems of consultation,
  • use information technologies creatively to replace paper streams,
  • document procedures and ensure compliance.

One of the major threats to the sustainability of project results is likely to be staff turnover. It is important, therefore, that the Technical Assistance Team supports the creation of a stable and professional working environment for the staff and creates a “learning environment” into which new staff can be inducted easily and efficiently. Modern theories of capacity building focus not on training individuals [they have a tendency to leave for better paid jobs] but on training the institution so that it has the capacity to reproduce itself. This is achieved by ensuring that modern administrative and financial management systems are installed, proper procedures and technical manuals drafted, job descriptions prepared and codes of conduct elaborated. The systems themselves then “train” new employees.

Technical sustainability

Technical sustainability involves ensuring that the local counterparts possess the technical knowledge and skills to sustain project results. One of our primary concerns will be to ensure that the necessary skills and knowledge are transferred to the Beneficiaries. In our view, this means quite simply that these structures will be sufficiently skilled and equipped to perform their duties independent of foreign technical assistance by the conclusion of the Project. The training programme will not only involve formal workshops, seminars, conferences, study tour etc. We will emphasize in-service training. However, we do not subscribe to the view that the in-service transfer of skills and experience takes place through a process of ‘osmosis’: we believe that in-service training should also be structured, take place frequently and be codified into a work-book in order to roll-out or reproduce the learning at a future stage.

During the Initial Phase, the Experts will carry out a training needs analysis of their respective beneficiaries. The results of the training needs analysis will be collated and a comprehensive in-service and formal training programme will be drafted. The draft programme will be submitted to the Beneficiary and the PIU for comment and approval.

Financial Sustainability

The Project represents a major opportunity for the national authorities to stimulate environmentally sustainable socio-economic development through investment in the railway infrastructure. The beneficiaries must be assured therefore that the planned investments represent good value for money and will yield satisfactory rates of return. The funds available from the IFI’s must be allocated and disbursed wisely and more particularly the Beneficiary and the PIU must be able to demonstrate a rate of return upon investment, measured in terms of financial and non-financial returns – internal and external trade, health and safety data and wider socio-economic impact.

During our training and advisory activities we will assist the Beneficiary and the PIU to apply the principles of “value engineering” to their projects. Value engineering is designed to obtain optimum value for money for the Client: it proposes alternatives to the existing brief, design or construction method in order to ensure that the most cost effective solutions are followed. We will also examine very closely the draft budgets for operational and maintenance costs. Designers frequently understate the longer-term costs of projects and this can have a severe impact upon rates of return, the capacity of the client to service borrowings or meet day-to-day cash flow.

Establishing a Monitoring and Evaluation Culture

In parallel with our institutional and human resource capacity building efforts, we will assist the PIU to establish a monitoring and evaluation culture. The existence of a monitoring culture within any institution is an important element of good governance. Modern administrations have developed extensive systems of internal auditing and monitoring to ensure that resources are used efficiently and effectively. It is our opinion that the project team should assist the PIU to establish such a culture. It is of paramount importance that effective use is made of scarce resources and that each investment project yields the maximum return on investment. The PIU needs to install continuous financial and technical monitoring systems, in line with the best practise in the Cohesion and Structural Funds and in accordance with the Commission Services Results Oriented Monitoring system.