Restructuring Existing Road Agencies
A lot of restructuring is currently going on. It varies from the kind of mild restructuring going on in Australia and Zambia, to the kind of radical restructuring which has taken place in Colombia, Finland, Namibia, New Zealand, South Africa, Sweden, Ghana and Malawi. The objective is nearly always the same. To introduce a more commercial approach to management of roads, by creating: (i) more autonomous and accountable management; (ii) a more market-based approach to setting priorities; (iii) better staff incentives; (iv) a more flexible staffing structure; and (v) better accounting systems combined with tighter financial discipline. Examples of legislation establishing an autonomous road authority or agency.
Management boards are becoming increasingly common. The best examples have independent chairmen and include members representing road users and the business community. In some cases, there are independent chairmen and members. The board may perform an advisory role ( as with the Japan Road Council and the Highways Agency Advisory Board in England), or they may be non-executive boards having full "control of the management, property, business, funds and any other matters relating to the [highway authority]" (as in New Zealand, Finland, South Africa and Ghana). Learn more about the difference between advisory, non-executive and executive roads boards. The boards normally delegate day-to-day management of the road agency to a Chief Executive, who is assisted by several line managers responsible for functions such as maintenance, development, finance, and administration. Some examples of the membership and functions of some road management boards.
The road agency still reports to a parent ministry, as do other transport enterprises (the airline, railways, etc.). The relationship between the board and the ministry can often be a source of conflict, particularly when someone from the ministry is chairman of the board. The best arrangements appear to be where the chairman of the board is independent, the road agency prepares a rolling corporate plan and then uses that to negotiate an annual performance contract with the parent ministry (the Minister). Transit New Zealand, the UK Highways Agency and the Ghana Highway Authority all do this.
Other reforms tend to focus on reducing staff by contracting out most design, supervision and implementation work, improving terms and conditions of employment, strengthening other staff incentives (for example, through payment of bonuses, provision of training, etc.), and permitting the board to hire and fire staff on a normal competitive basis. Redundant staff are offered redundancy packages, and generally receive other forms of support to help them become small-scale contractors.
Complementary reforms generally focus on financing arrangements, introduction of modern management information systems, commercial accounting systems (including a balance sheet to record assets), and independent technical and financial auditing. Examples of the restructuring as it has taken place in England, Sweden, Norway, South Africa, Colombia, Ghana and New Zealand.
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Centralizing Management of Small Road Networks
Small towns and rural districts often have quite small road networks which cannot support an effective road agency. In such cases, government often takes back the responsibility for roads and assigns it to a central government agency which manages the road networks on behalf of the small urban and rural districts. There are two general cases: (i) responsibility is assigned to an existing ministry, usually the Ministry of Works or Local Government; or (ii) responsibility is assigned to a newly formed special-purpose department within an existing road agency, or ministry.
The first case is often associated with donor-financed projects. Donors wish to finance construction and rehabilitation of rural roads, they cannot find any competent local-level road agencies, so they agree to channel their funds through a central government ministry which appears to have some responsibility for local roads. Although such arrangements ensure that donor funds get disbursed, they do so at the expense of long-term sustainability. The central government is normally happy to handle the donor-financed program, but fails to: (i) adequately consult local communities on priorities; (ii) makes little or no effort to persuade the local communities to accept responsibility for maintenance; and (iii) often makes no effort to legally classify the roads and have them assigned to a competent road agency. Since the local highway authority is by-passed, the above arrangement further weaken its capacity. When the donor program comes to an end, the roads are simply abandoned. It is no surprise that about a third of the road networks in many developing countries have no legal owners. They are unclaimed and unmaintained; they belong to no one. This strategy should be avoided.
The second case is better, but still represents an interim or short-term solution. It is used extensively in Ghana where they have created two special purpose departments within the Ministry of Roads & Highways. One (Department of Urban Roads, DUR) manages urban roads on behalf of municipalities, while the other (Department of Feeder Roads, DFR) manages the rural road network on behalf of the rural district councils. DUR was created in 1988 to take over management of 2,801 km of urban roads in Accra (partly), Tema, Secondi/Takoradi and Kumasi. The intention is to transfer responsibility back to the urban municipalities as soon as they have developed the capacity to manage their own networks. The arrangement is reasonably satisfactory, although there is a lot of friction between DUR and the municipalities. DFR is often held up as an example of best practice for managing feeder roads. Bangladesh also manages its rural road network through a similar central government agency. Learn more about special purpose agencies for managing rural road networks.
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Contracting Out Planning and Management of Roads
This is an increasingly popular option. It is being done by existing road agencies who are contracting out planning and management of selected roads to consultants and contractors, is being done for entire road networks, and is also being done for donor-financed small infrastructure projects (through the so-called AGETIP model).
The first model is being used in UK, Argentina, Australia and New Zealand. In the UK, the process started in 1986 when the UK Department of Transport decided to package parts of the motorway network into commissions and then invited bids from consultants to take on the responsibility for maintaining all roads and related structures within the commission to a prescribed standard. The winning consultant then organizes a competitive Term Contract between the owner (Department of Transport) and the contractor who then carries out all work on instruction from the consultant. In one of the largest commissions (West Yorkshire, with 330 lane-km, 305 bridges, 420 km of drains, 950 road signs and 3,400 lighting columns) costs fell by well over 15 percent, 29 of the 34 DOT staff who were made redundant were taken on by the consultant (one moved to another job and 4 took early retirement), and quality and flexibility of the maintenance regime increased.
The second model involves contracting out the management function for the whole network under the jurisdiction of a selected road agency. In industrialized countries this is generally being done to increase efficiency and as part of the redefinition of the role of government. In developing countries, it is mainly being done to ensure that small urban and district roads are managed by a competent body which remains answerable to the local district council. This model is being used in some small municipalities in the US at the County Council and District level in UK (where it is called externalization), and, in some other cases, is also being used for both urban and rural district councils. These arrangements offer great potential for dealing with small road networks.
The third model is being used extensively in francophone Africa. The AGETIP is a contract executing agency (like a private sector project implementation unit), set up to execute donor-financed infrastructure projects. The agency generally has a board composed of well known figures (which does not include government representatives), a general manager appointed by the board, other line managers (administrative & financial manager, and technical manager), and staff hired under private sector terms & conditions of service who are paid competitive salaries. The agency is set up as a private, non-profit association and pays no taxes. The agency works on behalf of local authorities who delegate certain functions to the agency. The local government usually reserves the right to select the projects and the agency then: (i) recruits consultants to carry out detailed engineering; (ii) invites bids and awards contracts for supervision and works, manages the contracts, and pays the contractors directly from a special account opened in its own name. The agency is subject to bi-monthly management and financial audits, and an annual technical audit. The overhead cost of the AGETIP in Senegal (excluding the fees paid to consultants for designing and supervising works) has worked out to be about 5 percent on a turnover of $55 million (330 projects).
The advantages of the AGETIP are that it: (i) gets around cumbersome government procurement regulations; (ii) streamlines payment procedures; and (iii) pays high salaries and therefore attracts well motivated, high quality staff. The disadvantages are that: (i) the arrangement is not subject to competitive bidding; (ii) it is almost entirely dependent on continued donor funding; and (iii) it probably hampers development of the local consulting industry (by creaming off staff and monopolizing all contract execution work for itself under a tax-free operating environment). AGETIP nevertheless has a role, particularly as an interim solution in economies where the local consulting industry is relatively undeveloped, but should eventually evolve towards a contractual arrangement awarded on the basis of competitive bidding.
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Dealing With Undesignated Roads
The main objective in the case of undesignated roads is to persuade people - either individuals, villages, or groups of villages - to take over responsibility for managing their own roads, or as many of these roads as possible. This usually requires three things: (i) an incentive system to persuade them to adopt selected roads; (ii) access to advice and technical assistance to help them carry out the road management function effectively; and (iii) a technical and financial oversight mechanism to provide accountability for use of public (or road fund) resources.
The incentives usually take the form of cost-sharing arrangements. Government, or the road fund, pays part of the costs of construction and maintenance, and the adoptive owners of the road agree to pay the balance. However, to participate in the cost-sharing agreement, the individual or group must formally apply to join the agreement and to abide by its rules. In Finland, they do so by forming themselves into a road cooperative, in Ontario they form themselves into a local roads board, in Zambia under the Social Recovery Project, communities form road maintenance committees to get access to donor and road fund cost sharing funding (75 percent for construction from the former, 25 percent for maintenance from the latter), while in Lesotho they form a Village Development Committee. The cost-sharing agreements with these groups usually use different cost-sharing formulas for new roads, upgrading, and maintenance, and will usually differentiate between roads which serve a limited number of people and those which serve local communities.
In developing countries, local communities - particularly those in rural areas - need to be able to pay their contributions in kind. Most rural communities are at the fringe of the market economy and do not earn enough money income to make cash payments feasible. The payment in kind could either take the form of volunteer labor or provision of local materials. However, it is best to avoid asking for contributions of free labor, since local villagers do not always appreciate the impact of deferred maintenance, particularly on drainage structures. It is generally better to either: (i) pay the laborers a proportion of the wage - perhaps 25 to 50 percent - to provide them with an appropriate incentive, and to treat the remainder of the wage as the community's contribution in kind; or (ii) the community could alternatively be paid to carry out certain essential tasks (e.g., clearing drains), in return for undertaking other tasks on a voluntary basis (e.g., grass cutting); or (iii) the available funds could be used to pay a full-time supervisor (all other labor being provided on a voluntary basis) and to cover miscellaneous expenses (either purchase of tools or food for the voluntary workers).
There is an obvious need for advice and technical assistance at the local level. Local villagers need advice on planning matters, training in how to undertake road works, and advice on how to deal with unexpected problems during implementation. This is usually provided through a local level planning agency and through the agency responsible for managing rural district roads. For example, in Lesotho, villagers acquire planning skills by attending courses at the office of rural development which teach them how to prepare and prioritize road projects and other local infrastructure. Skills needed to implement road works are provided through on-the-job training while working with the agency responsible for rural district roads.
Finally, there is the question of oversight. There is a need to ensure that road works are carried out to an agreed standard, particularly when the agency responsible for district roads may eventually have to take over the road. There is also a need to ensure that funds provided by the government, the road fund, or the local authority are properly accounted for. Technical supervision is usually provided by the agency responsible for district roads. There is generally no need for financial oversight when the local contribution takes the form of volunteer labor. When cash is involved, as might be the case with some urban district roads, there needs to be an oversight arrangement like the one used in Finland (each cooperative must appoint a trustee to manage the funds and the accounts must be audited every year). The system used in Finland is quite well developed and might be used as the basis for developing a model for use in developing countries.
The remaining undesignated roads in Finland and Ontario are regarded as private roads. They receive no public funds for construction or maintenance, and are simply left in the care of the adjoining land owners who are expected to maintain the roads from their own resources. They receive no public funds and have no access to the advice and technical assistance available from an established road agency.