Institutional Development and Good Governance in The Highway Sector - Learning From Gujarat

INSTITUTIONAL DEVELOPMENT AND
GOOD GOVERNANCE IN THE HIGHWAY

SECTOR - LEARNING FROM GUJARAT
Arnab Bandyopadhyay
Natalya Stankevich
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Cover picture: Courtesy Road and Building Department, Government of

Gujarat, India
INSTITUTIONAL DEVELOPMENT
AND GOOD GOVERNANCE IN THE
HIGHWAY SECTOR - LEARNING
FROM GUJARAT
The Transport Research Support program is a joint World Bank/ DFID initiative
focusing on emerging issues in the transport sector. Its goal is to generate
knowledge in high priority areas of the transport sector and to disseminate to
practitioners and decision-makers in developing countries.
CONTENTS
1 C ONTENTS
CONTENTS ............................................................................................. I
ACKNOWLEDGEMENTS ....................................................................... IV
EXECUTIVE SUMMARY .......................................................................... 1
1 INTRODUCTION ............................................................................. 15
1.1 BACKGROUND...................................................................................................15
1.2 THE STUDY OBJECTIVE ...................................................................................... 16
1.3 TARGET AUDIENCE ........................................................................................... 16
2 THE STATE CONTEXT ..................................................................... 17
3 GUJARAT ROAD SECTOR PRE-REFORM DAYS................................. 19
3.1 CURRENT SITUATION: ROAD NETWORK IN GUJARAT .............................................. 19

3.2 BEFORE THE REFORM ........................................................................................ 20
3.3 R&BD’S ORGANIZATIONAL STRUCTURE .............................................................. 21
3.4 KEY SECTORAL ISSUES ...................................................................................... 21
4 KEY INSTITUTIONAL REFORMS IN THE ROAD SECTOR ................... 23
4.1 DRIVERS OF REFORMS ....................................................................................... 23

4.1.1 Vision ............................................................................................................ 23
4.1.2 Necessity ....................................................................................................... 24
4.1.3 Exposure to International Best Practices ......................................................... 25
4.2 KEY REFORMS ACHIEVED DURING 1997-2007 ....................................................... 26
4.2.1 Move from “Provider” to “Manager” of Road Infrastructure.............................. 26
4.2.2 Separation of certain functions from R&BD ..................................................... 28
4.2.3 Strengthening Governance ..............................................................................33
4.2.4 Selectivity in Network Management ............................................................... 34
4.2.5 Creation of more conducive environment for contractors ................................. 34
4.2.6 Strong emphasis on professional staff development in R&BD ...........................35
4.2.7 Reforms in social and environmental safeguards management of road projects 36
4.3 AREAS WHERE THE REFORMS HAD LIMITED IMPACT .................................................. 37
4.3.1 Road Financing Reforms/Road Fund ................................................................ 37
4.3.2 Road Safety Management .............................................................................. 38
4.3.3 Functioning of Policy and Planning Unit .......................................................... 38
4.3.4 Quality Control .............................................................................................. 39
4.3.5 Strengthening legal management capability through appointment of Legal
Adviser .......................................................................................................... 39
5 GUJARAT ROAD SECTOR POST REFORM ........................................ 41
5.1 R&BD ............................................................................................................ 41

5.2 MAJOR OUTCOMES OF THE REFORMS IN THE GUJARAT ROAD SECTOR ...................... 41
6 KEY ENABLING FACTORS FOR THE REFORM .................................. 45
6.1 STRONG POLITICAL WILL ................................................................................... 45

6.2 CONTINUITY OF LEADERSHIP IN THE R&BD .......................................................... 45
i
6.3 DEVELOPMENT OF SUPPLY-SIDE CAPACITY THROUGH GSHP .................................. 45
6.4 OPPORTUNITY FOR SETTING GOOD PRACTICE EXAMPLES THROUGH GSHP ............... 46
6.5 CULTURE OF RESOLVING ISSUES BY INVOLVING THE PUBLIC .................................... 46
6.6 E-GOVERNANCE AT STATE LEVEL ....................................................................... 46
6.7 HIGH DEGREE OF AWARENESS, TRAINING AND INNOVATIVE METHODS OF GOVERNANCE
AT STATE LEVEL ............................................................................................... 47
7 INTERNATIONAL EXPERIENCE AND ITS RELEVANCE IN THE
CURRENT CONTEXT............................................................................. 49
7.1 PHASES OF INSTITUTIONAL REFORMS IN THE ROAD SECTOR .................................... 49

7.2 WHERE GUJARAT HIGHWAYS SECTOR STANDS IN ITS INSTITUTIONAL REFORMS ........... 50
7.3 INTERNATIONAL COMPARISON ............................................................................51
7.3.1 Institutional development in Brazil’s Highways Sector ......................................51
7.3.2 Institutional development in State of Sao Paulo’s Highways Sector ................. 52
7.3.3 Institutional development in UK’s Highways Sector ......................................... 52
7.3.4 Institutional development in New Zealand’s Highways Sector ......................... 54
7.3.5 Gujarat’s key achievements compared to international practices ..................... 55
7.4 FURTHER POSSIBLE INITIATIVES FOR GUJARAT ...................................................... 55
8 RECOMMENDATIONS FOR REPLICATION OF GUJARAT ROAD
SECTOR REFORMS ............................................................................... 57
APPENDIX 1: TERMS OF REFERENCE ................................................... 60
APPENDIX 2: INSTITUTIONAL DEVELOPMENT UNDER GSHP .............. 65
APPENDIX 3: GUJARAT ROAD MANAGEMENT SYSTEM ....................... 75
APPENDIX 4: GUJARAT ECONOMIC & POLITICAL BACKDROP ............... 78
APPENDIX 5: ROAD DEVELOPMENT IN GUJARAT ................................ 81
APPENDIX 6: INTERNATIONAL EXPERIENCE IN ROAD SECTOR

REFORM .............................................................................................. 85
APPENDIX 7: GSRDC PROJECTS UNDERTAKEN UNDER BOT/PPP ....... 100
REFERENCES ..................................................................................... 103
LIST OF ABBREVIATIONS ................................................................... 104
LIST OF TABLES
Table 1: Road Network in Gujarat and Other Comparative States .......................................................... 19
Table 2: Length of Gujarat R&BD’s Road Network, before and after the Reform .................................... 21
Table 3: R & BD Staffing 1198-2008 ........................................................................................................ 41
Table 4: Annual provision of funds to R&BD in 1998-99 and 2008-09, Rs. ............................................... 42
Table 5: Unit construction cost comparison between appraisal and completion of GSHP ....................... 43
Table 6: Institutional strengthening action plan from IDS report ............................................................ 69
Table 7: Brief comments on IDS action plan.............................................................................................70
ii
Table 8: Gujarat GSDP (Rs crore) ............................................................................................................ 78
Table 9: Annual provision of funds to R&BD, 1998-99 and 2008-09, Rs crore ......................................... 81
Table 10: Road lengths by cross section and surface type, 1998 and 2008 .............................................. 82
LIST OF FIGURES
Figure 1: Sources of funding for the investment plan of the road sector – Vision-2010 ............................ 24
Figure 2: Annual road maintenance expenditure in Gujarat and comparator states during 2001-2005,
US$/km ......................................................................................................................................... 42
Figure 3: The Pragatipath Yojana road network ...................................................................................... 83
Figure 4: Land transport management process ...................................................................................... 96
LIST OF BOXES
Box 1: Toll policy .................................................................................................................................... 32
Box 2: Key Lessons in Visions and Values linking with Business Planning “network challenges” as safety
and reliability of travel time. ...........................................................................................................53
Box 3: UK Highway Agency’s objectives ..................................................................................................53
Box 4: Vibrant Gujarat Global Investors' Summit 2009 ........................................................................... 80
iii
ACKNOWLEDGEMENTS
The “Institutional Development and Good Governance in the Highway Sector -

Learning From Gujarat” has been prepared for the World Bank Transport
Anchor group (TWITR) in Washington which administers and manages the
Transport Research Support Program, TRSP, a financing of DFID, the
Department for International Development of the United Kingdom
Government.
The task team would like to acknowledge the timely support, help and
guidance from Mr. Michel Audigé, the Sector Manager, Transport, South Asia
Region, Mr. Jean-Noel Guillossou, Lead Transport Specialist, and Mr. Ben L .J.
Eijbergen, Lead Transport Specialist, South Asia Region, providing useful
insight and direction on a large number of issues when needed. Special thank-
you goes to Mr. Cesar A. Queiroz, former World Bank Highways Adviser in
2005-06, for sharing the international experience and in particular experience
of the Brazil highways sector. Valuable and expert contributions have been
received from Messrs. Ke Fang, Ronald Allan, Ajit Pawar, Ernst Huning and
Krishnan Srinivasan as members of the extended task team. Mr. Rajesh B. S.
Dongol and Ms. Ritu Sharma provided excellent administrative, editorial and
logistic support during the preparation and finalization of this report.
Quality and peer reviews were done both at the concept stage and final report
stage by Messrs. Binyam Reja, Senior Transport Economist, Ben Gericke, Lead
Transport Specialist, and Clell Harral, former World Bank Roads Adviser. The
task team also wishes to acknowledge the authors of the various reports which
have been referred to in the study.
The work done by the consultants and the study recommendations were
shared with key stakeholders from various road agencies in India during a
workshop held on December 15, 2010. Comments and views expressed by the
stakeholders during the workshop and the Gujarat Government officials and
private sector representatives during data collection and interview phase is
gratefully acknowledged by the team.
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Institutional Development and Good Governance in the Highway Sector - Learning From Gujarat
EXECUTIVE SUMMARY
1.1 P R E A M B LE
The World Bank financed the Gujarat State Highway Project (GSHP) during 2001-
07. The Project Development Objective was to enhance the capacity of the
Government of Gujarat (GOG) for effective and efficient planning and
management of road infrastructure, while concurrently maximizing existing road
infrastructure asset productivity through priority investments and increased
maintenance funding. The Project not only achieved its objective and targets
successfully, but also was implemented with a significant cost reduction (about
23%). The GSHP resulted in a reduction in the backlog of major maintenance and
an improved network to meet rapidly growing transport demand in the state. The
project had the unique distinction of no contract disputes, a rarity among the
highway development projects in India. The project also set best practices in
developing and managing a very comprehensive asset management system, state
of the art quality assurance framework and a very comprehensive training and
capacity building program.
The Implementation Completion Report (ICR) for GSHP identified several internal
factors, in particular, organizational reforms that took place during the preparation
and implementation of the subject project. As a result of these reforms and
institutional development, the Roads & Building Department significantly
transformed its functions from the traditional Public Works Department (PWD)
orientation of focusing on execution of civil works towards that of a modernized
road agency focusing on road network management, planning and policy. The
current plan road network size of 74,111 km is among the highest in terms of
network density per sq km in India’s states and is among the best managed
networks among all the Indian states. The annual road sector allocation has grown
from USD 30 million in 1995-1996 to an impressive USD 610 million in 2010-11,
currently the second largest among all the Indian states.
There is considerable interest among the road sector professionals in the India to
learn more about the Gujarat road sector reform story. This study attempts to
identify the key elements of the Gujarat road sector reforms and explores whether
and, if so, how such reforms can be replicated across other Indian states and
possibly even in other countries in the region.
1.2 T H E S T AT E C O NT E XT
Gujarat is an industrially advanced state in India and is considered to be both a high
growth state and a leader in pursuing economic reforms. The state’s GDP grew at
10.2 per cent per annum in the plan period 2002–2007 and the Planning
Commission set it a target of reaching 11.2 per cent in the current plan period.
Gujarat has been quite effective in pursuing economic reforms across many
sectors: power reforms, fiscal reforms, some limited but notable education
reforms, and private sector participation in infrastructural development particularly
ports and roads. Four sets of factors have been of particular importance to the
state’s economic success:
1
 Gujarat was blessed with advantageous structural conditions prior to

commencement of the reforms: a strong industrial base, private sector
interest, and basic state capabilities, which were crucial to the path and
speed of reform. The state also has the geographical advantage of a 1,600
km long coast line and its unique situation halfway in the transport
corridors linking the two prime growth centers in the country, Mumbai
and Delhi.
 Strong state policy leadership has sought and succeeded in incorporating
private sector interests into the policy process. Successive Chief Ministers
and heads of major departments such as industry and finance played
crucial leadership roles. Particularly noteworthy was their ability to see
and respond to the problems of the long term with broad and innovative
vision.
 Private sector pressure, both implicit and explicit, also played crucial roles
in shaping the reforms. The state development policies implemented in
Gujarat, since the mid-1990s, were closely attuned to the requirements of
private capital and the possible role of private sector in major road
infrastructure development far earlier than most other Indian states.
These early developments ploughed the way to the current model of
private sector participation.
 Gujarat has repeatedly converted crisis into opportunity. The state faced
an acute fiscal crisis in the early 1990s and major economic difficulties in
2001 following the Bhuj earthquake. However, Gujarat turned crisis to its
advantage by streamlining and modernizing the state’s administration
and strengthening state-level governance mechanisms, which played a
key role in eventually accelerating the pace of growth in the state.
Strong collaboration of private and public leadership led Gujarat to take a proactive
approach to development of infrastructure in support of business development,
particularly since 1999 when the ‘Gujarat Infrastructure Agenda: Vision 2010’ was
announced. A highly successful decade of implementation followed, and in 2009
the ‘Vibrant Gujarat Global Investors' Summit’ was held to point to the subsequent
follow-up. To attract investment, the Chief Minister has steadily maintained his
commitment to undertake the public investments needed to support private
investment. The rapid upgrading of Gujarat’s network of state and national
highways is one evidence of this. Further evidence is the fact that Gujarat has the
highest geographical area (27,125 hectares) designated for Special Economic
Zones (SEZs) and claims to be the first state to formulate an SEZ policy, which
includes flexible labor laws and exit options for investors.
2
1.3 G U J AR AT R O AD S E C T O R – P R E -R E F O R M D AY S
During the last 25 years, the State road network expanded in length from around
50,000 km to about 74,000 km and the paved part increased from about 66% to
91% of the total length. Due to the high growth in vehicle ownership in Gujarat),
motor vehicle density per 100 km of paved road has reached a level of about 40%
above the National average.
In the mid 1980s the structure of the R&BD was similar to that of other Public
Works Departments (PWD) in India. It was responsible for the operation and
maintenance of all state-owned roads and buildings. The departmental structure
consisted of seven major units: Roads and Buildings (State), National Highways,
Capital Projects & Arbitration, Expressways, Roads and Buildings (Rural), Quality
Control, and Engineering Staff Training College. It employed about 31,000 people,
of which about 11,000 were staff and about 20,000 were laborers. While some
works were let out on contracts to the private sector, a considerable proportion of
the civil works were executed using the force account.
Before the reforms, R&BD saw itself as the arm of government that directly
maintained and developed the state road network to the best of its ability using the
funds and human resources made available to it. Since funds were not enough to
provide quality roads over all the state, money was allocated to roads where the
need was most pressing or political pressure was high. In such circumstances
allocating funds based on scientific (systematic, rationally-based) planning seemed
superfluous. In such a setting, asset preservation, particularly timely maintenance
of pavements and drains, took a back seat to road network improvements that won
public support. Lack of spending on maintenance resulted in some road assets
being lost, necessitating expensive reconstruction of pavements.
1.4 K E Y I NS T IT UT IO N AL R E F O R M S IN T H E R O AD S E C T O R
1.4.1 Move from Provider to Manager of Road Infrastructure
During 1997 – 2007, the major reform which affected the way of doing business in
R&BD was the move from the role of “provider” to “manager” of road
infrastructure. It enabled R&BD to embrace a ‘whole-of-network’ approach to
planning and managing the road network development and maintenance, and to
take a more integrated approach in the budgeting and funding processes for
different road categories in the State, previously managed separately. As part of
this reform, the following actions were undertaken.
Creation of a Policy & Planning Unit. The GOG's ‘road asset management’ and
‘governance’ capacities were substantially improved through the Policy and
Planning initiative. The Policy & Planning Unit (PPU) set up in the R&BD was
assigned a responsibility to prepare annual budget plans for the department by
using a computer-based Gujarat Road Management System (GRMS).
Use of Gujarat Road Management System. Now operational for approximately

20,000 km of the state’s highest priority major roads, the GRMS has helped the
R&BD address maintenance funding issues which are typically difficult for most
PWDs in India or road agencies in other countries ). It has facilitated a more
effective dialogue with the Finance Department about maintenance funding.
Enhancement of Quality Control. Since 2006, the GOG has supported a better
resourced and more advanced quality control framework centered on Gujarat
3
Engineering Research Institute (GERI) and its field units, which has helped to
improve the overall quality assurance culture in the state and helped to further
raise public confidence in road construction quality in the state.
1.4.2 Separation of Planning, management and oversight role from PWD
In parallel with the Bank-funded GSHP, the GOG took an early action to set up the
Gujarat Infrastructure Development Board (GIDB) to streamline clearance of
infrastructure projects implemented under PPP, as well as the Gujarat State Roads
Development Corporation (GSRDC) and various special-purpose toll road
development and management bodies separate from the previous R&BD-centred
approach to roads development.
GIDB itself does not develop infrastructure but acts as a catalyst for infrastructure
development and focuses on overall planning of infrastructure projects and
preparing the framework for execution through:
 preparing projects by conducting prefeasibility and feasibility studies

using consultants;
 preparing concession agreements which define risk-sharing in a public-
private partnership;
 overseeing competitive bidding process;
 advising Departments on financial structuring;
 coordination between various sector specific departments;
 monitoring progress of projects; and
 building the capacity of Departments in the infrastructure sector and
bringing in international experience and best practices.
GSRDC was incorporated in 1999 as a limited company for development of road

infrastructure on a privatization/BOT basis. Its primary objectives are:
 to cater for development of bridges and roads

 to raise funds from banks, institutions, mutual funds, individuals, etc
 to commercially develop and exploit land alongside the roads/bridges
 to draw up plans for project preparation and undertake feasibility studies.
Special purpose toll road development and management bodies e.g. Gujarat Road
and Infrastructure Company Ltd (GRICL) were incorporated in 1999. GRICL was
subsequently absorbed in Gujarat Toll Road Investment Company Ltd, for
investment in two toll-road special purpose vehicles (SPVs), Vadodara-Halol Toll
Road Ltd and Ahmedabad-Mehsana Toll Road Ltd. These SPVs were launched by
GoG and Infrastructure Leasing and Financial Services (IL&FS) on 30-year
concessions and were a pioneering SPV-based PPP effort among all states.
1.4.3 Strengthening Governance
Gujarat has been a pioneer in strengthening governmental policies, institutions and

procedures for better governance. It has been increasingly using information and
communication technologies to offer citizen based services to improve their
accessibility, make them more transparent and reduce response time. Gujarat also
ranks first in the country to have made E-Governance functional in all its
municipalities and municipal Corporations.
 One of these initiatives that will go a long way in reducing time and cost
overruns in the highway sector is the e-Dhara initiative which is aimed at
4
complete computerization of land records across the state, eliminating

the bureaucratic and cumbersome process of manual record-keeping. This
has ensured better transparency, minimal errors, reduced chances of fraud
and made sure that R&R benefits and paymentsare actually received by
the intended beneficiaries.
 There is a centralized, functioning e-procurement system in the state. In
accordance with the GOG e-procurement provisions, the R&BD uses e-
procurement for all works valued more than Rs. 1 million (approx $0.025
million), irrespective of source of funding. According to the Gujarat
Vigilance Commission, procurement-related complaints have decreased
significantly with the advent of e-procurement.
 Another measure of accountability in the government is the State-wide
Attention on Grievances through Application of Technology (SWAGAT)
Online project. Through a video-conference held on every fourth Thursday
of the month in the presence of Chief Minister, all the department heads
and district representatives, public grievances are addressed and suitable
solutions are provided online immediately. The success rate claimed for
this system is extraordinarily high (about 92%) since its implementation--
although the criterion for success is not entirely clear, SWAGAT is widely
thought to provide an effective instrument for citizens to redress their
grievances, while contributing to improvements in delivery of government
services.
 Gujarat has also implemented an Integrated Workflow and Document
Management System (IWDMS) for automating the government functions
and processes at all levels of the administrative hierarchy in all
departments including the R&BD. It provides for better record-keeping,
information retrieval and knowledge management and fosters a
collaborative environment between government departments for faster
decision-making. This is particularly useful in the R&BD context, for
expediting pre-construction activities such as utility shifting, tree-cutting,
and forest/environmental clearances for projects.
1.4.4 Selectivity in Network Management
Gujarat was one of the first states in India to develop a strategic or core road
network by applying the 80/20 rule i.e. 80% of the traffic was carried by 20% of the
road network and that part of the network should be prioritized for further
development and asset management. The concept was first formulated in 2001,
and further crystallized under the Bank funded Gujarat State Highway Project.
Gujarat’s flagship programs like Pragati Path, Vikash Path, Kisan Path and Pravasi
Path have actually centered around the strategic road network concept, which has
enabled the state to manage these investments more effectively.
1.4.5 Creation of more conducive environment for contractors
In addition to creation of GIDB and GSRDC to facilitate public-private partnerships

in road infrastructure financing/development, GOG made a substantial effort to
improve the dispute resolution system and inculcate a culture of cooperation
among the three contractual parties.
Key changes/improvements effected in the ways of cooperation between the three

contractual parties were:
Mandatory Monthly Meetings with the Contractor and the Engineer
5
Timely payments to the Contractors, and
Timely redress of contract disputes including active encouragement of dispute

prevention and ‘across-the table’ resolution culture.
1.4.6 Strong emphasis on professional staff development in R&BD
In a series of steps, with the support and resources of the GSHP, as well as in
response to the impetus of increasingly proactive GOG policies on public sector
administration and governance, the R&BD:
 established a Vision 2010-based HRD Policy

 began implementation of an annually-updated ‘3-year rolling Training
Program’
 took progressive action to refurbish and strengthen the Staff Training
College (STC) in terms of physical and professional resources
 enhanced the focus, scope and contents of the STC suite of training
programs and courses
 appointed an external HRD professional on a fixed-term as HRD Manager
to assist the STC on embracing innovations in syllabus, ‘faculty’ resources
and ‘delivery’ modalities
 introduced a (still ongoing) Computer/IT Training program
 initiated the first rounds of a multi-phase Manager Development Program
aimed at enhancing the managerial skills of middle-level R&BD staff for
new and evolving responsibilities in the Gujarat road sector environment.
The main focus of the HRD/staff training program enhancements and delivered
activities have been contract management / procurement, monitoring &
evaluation, environmental and social ‘safeguards’ functions and management,
project management, planning, finance, quality control/management, and (more
recently) e-procurement/e-governance.
Overall, the strengthened and modernized HRD planning, implementation

capacity and results achieved by the R&BD during the GSHP period and since then,
particularly via the enhancement of the STC and its capabilities, have significantly
helped to improve the effectiveness and quality of human resources and overall
governance in the Gujarat roads sector.
1.4.7 Reforms in social and environmental safeguards management of road

projects
Pioneering reforms in social safeguards management were demonstrated in first

generation BOT toll projects in the state. The ‘National Social Management’ policy
was the basis for state guidelines established for this ‘safeguards’ aspect for the
BOT toll projects. For Environmental Management, a compilation of good
practices from elsewhere has been done as the basis for an eventual state wide
Environmental Management (sector) policy for application (inter alia) to
investment projects applied by R&BD.
Good practices in resettlement were demonstrated in the Ahmedabad-Mehsana

and Vadodara-Halol BOT-Toll highway projects during the 1990s. By using
replacement cost, the SPV deviated from the prevailing standard approach to
compensation for land and houses. The resulting valuations were 4-6 times higher
than the compensation paid by the government under the Land Acquisition Act.
The SPV also introduced incentive-based income-generation schemes as part of
the rehabilitation assistance. Eligible families who purchased assets needed for
6
self-employment were given assurance of reimbursement in two stages: 50% of

asset value at the end of eighteen months; and 50% at the end of the three years
contingent upon the PAPs continuing with the activities and earning the targeted
incomes. During this three year period, beneficiaries were offered maintenance
allowance in the first year and insurance of the asset against theft, disease, etc, as
appropriate thereafter.
Several specific innovative measures were pioneering and noteworthy:
 Special measures for vulnerable families

 Old age pension to all above 60 years of age in urban areas.
 Support for income generating activities given to an additional family
member for families with older members in a rural setting.
 Repayment of outstanding debts on lost assets (as a grant).
Some of these best practices have been mainstreamed in subsequent BOT projects
managed by the state.
1.5 G U J AR AT R O AD S E C T O R – K E Y D R IV E R S OF REFORM
There were three main drivers of reforms in the Gujarat Road Sector: vision,
necessity, and exposure to international best practices.
The Vision originated at the highest political level and it was embedded first in
Gujarat Road Development Plan, 1981-2001, and later in Gujarat Infrastructure
Agenda: Vision 2010.
GOG prepared a state-specific road development master plan (Gujarat Road

Development Plan, 1981-2001), part of which was funded with the World Bank
assistance. The first World Bank financed state-specific road sector operation in
Gujarat was the Gujarat Rural Roads Project, which focused on the expansion and
improvement of the village road network. In 1996, to better define and update the
objectives of the Road Development Plan, GOG issued a cabinet-endorsed "State
Road Policy" with key objectives of improved connectivity, efficient land transport
system and use of improved technology in construction and maintenance. In 1999,
the GOG took a more proactive approach to state development and made
infrastructure development as its main thrust with the launch of its ‘Gujarat
Infrastructure Agenda: Vision 2010’ document. It laid out a prioritized list of
projects to attract private participation for infrastructure development in the state
and identified the policy initiatives needed by the state to facilitate the same. This
clearly articulated Vision gave a strong impetus to R&BD to review the way it was
doing its business and initiate the necessary reforms to promote implementation
of the Vision in the road sector.
Necessity arose because downsizing including a ban on further employment of

labour was imposed on R&BD from 1986. The resulting shrinkage in the R&BD
“force account” labour pool necessitated contracting out even some routine
maintenance works. Notwithstanding occasional special GOG approval for some
ad hoc recruitment of new engineers, this sustained GOG-wide process of
downsizing induced more discipline and a culture of streamlined program
administration in R & BD. On 26 January 2001, Gujarat’s people, government and
economy were also traumatically affected by a major earthquake disaster,
involving (inter alia) widespread and costly damage to infrastructure and housing.
The R&BD needed to play a major role in the GOG response, particularly in its key
responsibilities for public housing and the state’s road network. The urgent and
daunting responsibilities then impinging on the R&BD (as well as other key GOG
7
agencies) again underscored the importance of modernization towards more

efficient organizational arrangements, management and implementation.
Exposure to best practices was provided through the World Bank funded GSHP.
The WB-funded project was prepared in parallel with the 1999 launch of the
Gujarat Vision 2010 and provided a myriad of opportunities for the state to learn
about international road sector experience (e.g., international construction
methods and FIDIC contracts). The project design and strategy supported the
newly-embarked Vision through promoting state-level reforms in the road
infrastructure sector, improving strategic planning and maintenance effectiveness,
mobilizing increased outlays for investment and maintenance of road
infrastructure, and facilitating private sector involvement in engineering,
construction and maintenance. Its design addressed a number of critical sector
issues, such as: (i) strengthening the institutional capacity of the R&BD to better
manage the State road network, (ii) improving the capacity and structural quality
of key segments of the core state road network, and (iii) reducing the maintenance
backlog.
1.6 G U J AR AT R O AD S E C T O R – P O S T R E F O R M
The reforms undertaken in the Gujarat road sector during the late 1990s-mid 2000s
had a major impact on a number of critical areas, in particular, administrative costs,
maintenance backlog, maintenance funding, and efficiency of service delivery.
Reduction in administrative costs. The share of administrative cost in the capital

and maintenance budget was reduced by almost half - from 30% to 15.7% during
2000-2007.
Reduction in maintenance backlog. During 2000-2007, the maintenance backlog

was reduced from 10,000 km at the baseline to 5,000 km, which was an impressive
50% reduction. That included over 1,800 km reduction contributed by the Bank-
funded GSHP.
Significant Increase in Plan Budget Allocation. The Annual Plan Budget for the
road sector (construction and maintenance) underwent a steady and significant
growth from Rs. 130 Crores in 1995-96 to Rs. 1292 Crores in 2007-08. The increase
has been sustained and even accelerated beyond 2007-08 and the plan allocation
for road sector in 2010-11 was Rs. 2747 Crores. In relation to SDP (state Domestic
Product) at constant prices, the road sector allocation increased from 0.3% of SDP
in 1995-96 to 0.54% in 2002-03 growing further to 0.6% in 2005-06. The
percentage allocation for roads in the overall annual plan in the state thus grew
from 4.9% in 1995-96 to 8% in 2007-08 and 9.3% in 2008-09. Such significant
increase in the financing share reflects the R & BD’s ability to create the requisite
credentials and trust with the Finance Department and corroborates the political
commitment for the road sector.
Increase in maintenance funding. Investment in new roads increased 6 times

compared to the pre-reform times. Funding for routine and periodic maintenance
which typically receives less attention and support from politicians also increased,
though to a less extent, but still doubled by 2008-09 compared to 1998-99.
Comparative statistics on annual road maintenance expenditure in select states
during 2001-2005 shows that Gujarat paid more attention to maintenance than any
other state in India. It spent US$884 per km, which is over 15 percent more than
the second highest spending on maintenance by any Indian state (Kerala), and this
8
despite the fact that a higher percentage of Gujarat’s roads were relatively new,
when maintenance demands are normally at their lowest level.
Steady decline in staffing. It is noteworthy that the number of both professional

workers and casual labourers in R &BD have steadily declined over years in spite of
the network size and budget significantly growing. The casual labourers declined
from 14203 in 1988 to 10621 in 2000 and further to 8338 in 2010. Similarly the
professional workers declined from 11075 in 2004 to 10250 in 2008 and further to
9381 in 2010.
1.7 K E Y E N AB L ING F AC T O R S F O R REFORM

1.7.1 Strong Political Will
Gujarat has been lucky to have reform-minded government exhibiting strong

political will and clear vision of its ambitious goals for the development and
prosperity of the State. The political commitment to implementation of the
Infrastructure Vision is also demonstrated through (a) close politico-bureaucracy
relationship and exemplary inter-departmental coordination (resulting in efficient
project delivery in terms of minimal time and cost overrun and disputes); (b)
creation of enabling legal environment, which included enactment of the Gujarat
Infrastructure Development Act, 1999, and Toll Policy. Gujarat was the first state
in India to have a law governing Build Own and Transfer (BOT) transactions and
such other arrangements along with private participation in infrastructure projects.
1.7.2 Continuity of Leadership in the R&BD
Two important factors playing a key role in the successful reform of Gujarat R&BD
were strong, leadership by a competent, committed technocrat at the top and
depth and continuity of leadership through to the middle levels of management.
First, R&BD was headed by a technical Principal Secretary, at least in part because
there was widespread support among stakeholders for a technocrat as Principal
Secretary of R&BD. A capable technocrat who has risen from the ranks “owns” his
department and knows it inside out. He knows the persons surrounding him well,
understands their strengths and weaknesses, and is in a good position to run the
department and to transform it. Second, R&BD had continuity of leadership
involving the same ‘age-group’ of officers for a considerable period of time in
contrast to many road authorities in India.
1.7.3 Development of Supply-side Capacity through GSHP
GSHP helped contractors to develop and grow and fostered adoption of good
international practices from elsewhere. The Contractors learned the merits of
FIDIC contract conditions and thrived in an environment where transparency and
integrity were valued and prompt contract payments were made. The three parties
(Employer, Contractor, Engineer) interacted in good spirit. Packaging of works in
variable sizes also helped developing industry capacity by providing opportunities
to all categories of contractors, including local contractors, and enabling
contractors to ‘graduate’ to larger contracts from satisfactory execution of smaller
ones.
1.7.4 Opportunity for Setting Good Practice Examples through GSHP
9
The works executed under GSHP demonstrated the contemporary best practices
and standards in the sector, resulting in raised public expectations. The public
demanded that other departmental road works were carried out to the same
standard. This promoted a positive and constructive work culture throughout
R&BD.
1.7.5 Culture of Resolving Issues by Involving the Public
Gujarat has a long standing history of public participation in decision making. This
culture permeates through all public service delivery organisations in the state.
1.7.6 E-Governance at State Level
Gujarat established a separate information technology division, under the General

Administration Department. Subsequently, the government set up a separate
Department of Science & Technology. The state’s e-governance programme has
implemented the Gujarat State Wide Area Network (GSWAN) which is thought to
be the world’s second-largest IP-based WAN connecting over 2800 government
offices. Moreover, the IWDMS (as described earlier) has streamlined
documentation in government offices. To the extent possible, files are electronic;
transmission is instantaneous. This has helped to increase accountability and deter
rent-seeking behaviour.
1.7.7 High Degree of awareness, training and innovative methods of

Governance at state level
Recognizing that governance is only as good as the human resources employed,

the GoG has institutionalized a Vibrant Governance (V-Governance) training
initiative. The program aims to bring about an attitudinal change in the work
culture and foster result-oriented governance in the state. The program is for all
staff (at all levels) in all departments.
1.8 I N T E R N AT IO NA L E XPE R I E NC E A ND IT S R E LE V A N C E IN T H E
C U R R E N T C O N T E XT
The scope of this Study included comparison of the Gujarat reform experiences
with relevant international examples of similar reform processes and their
outcomes. The objective of this Chapter is to determine where the Gujarat
highways sector stands in terms of institutional reform among other countries. In
addition, it is intended to identify other possible initiatives that Gujarat may want
to consider to become even more efficient.
The most relevant fields of road agency reform and modernization for these
comparisons are:
 Promotion of integrated land transport strategy

 Performance measurement and management
 Road asset management
 Road safety reform.
While comparing the reform process in Gujarat road sector with international best
practices, it became quite evident that Gujarat did well in formulating the Vision
and Values and linking it with the Business Planning. The infrastructure vision was
business driven and fully embedded in its political ambition, vision and culture and
the business plan was well grounded in that long term vision. Nevertheless, in
formulating the reform strategy and its implementation, Gujarat should have
10
perhaps focussed more on inter-modal integration and mode neutrality to promote

an integrated land transport strategy rather than focussing so strongly on road
based transport. The state is conscious of this shortcoming and the GIDB anchored
Infrastructure Vision 2020 strives to deal with the port-road-rail interconnectivity
aspect in a more strategic and comprehensive manner. In performance
measurement and management, Gujarat is leading among the states of India. The
R& BD’s flagship GRMS and home grown initiative in developing an IT-based
Monitoring and Evaluation System are testimonials to this performance
measurement and management culture.
By comparison, the R&BD still needs to embrace performance / output based

maintenance contracting in its way of business more extensively On the road
safety strategy front, the reforms were unfortunately subdued largely due to lack
of political and bureaucratic championship. While the state boasts of one of the
most modern accident and emergency response systems the upstream
intervention measures of safety engineering, enforcement and awareness were not
given due attention. Gujarat has a long way to develop a safe transport system
comparable with the international best practices.
1.9 R E C O M M E ND AT IO NS
Gujarat’s unique business culture, its investment climate and strategic
geographical position are not replicable elsewhere. However, Gujarat’s approach to
a long-term-vision-based set of reforms, developing a business plan well grounded
in that long term vision, and creating an enabling framework to deliver the
business plan can be well replicated across boundaries to support more efficient
and effective governance in the transport sector in other states and countries.
The pre-requisite for reforms is setting a Long-Term Vision, to which the top
leadership of the state—in both government and the private sector-- is
committed and seriously determined to pursue. The Vision Statement sets out
the goals for the infrastructure and the service standards which a road agency
aspires to achieve by a target year. The Vision Statement for the agency should be
supportive of the broader strategic goals of the state or the country, consistent
with its resource potentials, and reflect the ambition and priority of its primary
clients. For Gujarat the seed for the Road Agency’s Vision Statement was sown in
people’s aspiration expressed through the Chief Minister’s vision that it should be
possible to travel by road between any two locations within the state in six to seven
hours. This was interpreted as a goal to provide a robust highway network in the
state where average travel speeds of at least 80km/h could be maintained.
A Business Plan needs to be developed to implement the Vision. The Business Plan
would depend on the specifics of individual cases and the aspirations of the state as
set out in the Vision Statement. At a minimum, the business plan should include (i)
the policy framework, including identification of existing legal authorities and any
necessary legal and regulatory developments, (ii) organisational changes, with a
clear delineation of the new structures, (iii) physical work plan, and (iv) associated
budget requirements. The Business Plan cannot be implemented by PWDs/R&BDs
in isolation. The “Team Gujarat” aspirations have typically been supported by an
MoU across the various governmental stakeholders (e.g. road department, revenue
department, forest department, utility agencies and finance department) for each
project which sets forth realistic work plan targets for each of the parties. Ideally,
the Business Plan should be agreed at the highest level of the Government and
involve all the key government stakeholders, e.g. Ministry / Department of
11
Finance, Home Affairs (Police), Traffic, Revenue, Forests, Environment, and Social
Affairs.
Strategic Collaboration on Budgetary Programming. Close and systematic

interactions between the roads agency and the central agencies of government
responsible for economic planning and financial management (e.g., the Finance
Department) can build mutual confidence in medium-to-longer term budget
planning, particularly when the roads agency shows that it has the data, tools and
skills to readily demonstrate sound ‘service delivery’, administrative transparency,
effectiveness in management, and capacity to absorb more significant budget
allocations efficiently and with low operational risk factors. This was amply
demonstrated in Gujarat’s case through the quantum leap in the road sector
budget allocation and utilisation thereof during 1995-2005 and onwards—and the
commensurate leap in physical works accomplished.
Partnership with the Supply Side. A liaison with the contracting industry through
their authorised forums/associations to understand and address their concerns in
advance can be most beneficial. Regular interaction with the prospective bidders
from the stage when the technical parameters of the project are under finalisation
and thereafter when the draft tender documents are under preparation (without in
any way sharing the financial aspects of the project), can go a long way in
minimising anomalies in the technical provisions of the project and in the tender
documents. Moreover, the culture of true partnership among all the contractual
parties and across-the table-resolution of disputes, as amply demonstrated in
Gujarat, goes a long way in helping to ensure smooth and efficient project delivery.
Governance and Accountability, respecting the rule of law. It is well known that
good governance is a precursor for economic growth, which is amply
demonstrated in the case of Gujarat. Strong and transparent institutions, policies,
procedures and human resources are crucial ingredients for sustained growth.
With specific reference to the road sector, some of the key governance challenges
across the country and how the initiatives in Gujarat can help address these are
now considered.
 Avoiding project delays and rent seeking behaviour. Avoidable delays to

road projects arise when government agencies fail to cooperate. Much too
often, each agency sticks rigidly to its own set of rules. Unfortunately, the
potential to withhold supervisory approvals to impose costly delays on
contractors also creates a serious moral hazard, particularly where the
bureaucratic cadres responsible for supervising works and enforcing the
multiplicity of regulations are poorly paid relative to the earnings of their
counterparts in private employment, as in many states in India (and other
countries). Use of this leverage to obtain financial payoffs or other favours
(such as educational support for dependents of supervisory staff) is often
too great a temptation, with not infrequent disruptions to work progress
where contractors are reluctant to comply. Such practices have been a
common albatross about the throat of PWDs, other infrastructure
authorities, and their contractors, throughout the various states of India
for very many years. The interest of the project is sacrificed, ostensibly on
the altar of bureaucratic procedures, but the real issue is often the rent-
seeking behaviour of the responsible supervisory staff.
 These practices have been mitigated in Gujarat, first, by the
demonstrated commitment from the highest state leaders to the
problem-solving attitudes of the “Team Gujarat” culture, carried down
12
through the ranks of government staff, and extending across to the

partnership with contractors. The system is in place to identify, prevent,
and reduce or eliminate avoidable delays through timely dialogue and
agreed procedures.
 Adherence to this ‘can do’ culture has been strongly supported by the
introduction of key instruments of modern management that provide
the essential mechanisms for accountability and control. Well designed
e-governance systems for procurement, including the Integrated
Workflow and Document Management System, provide accessible,
transparent information on the state of progress, and enable quick
pinpointing of any sources of delay. Similarly, the e-Dhara initiative,
aimed at complete computerization of land records across the state, is
eliminating the bureaucratic and cumbersome process of manual record-
keeping, ensuring greater transparency, minimal errors, reduced chances
of fraud, and also helping to ensure that R&R benefits and payments are
received by the actually entitled beneficiaries. Inter-departmental peer
reviews, enhanced disclosure of information (as in the portal of GoG’s
Home Department) and facilitation of citizen inputs in the government’s
functioning as practiced in Gujarat can be replicated in other states to
support better monitoring, public scrutiny and participation. The
SWAGAT online initiative in handling complaints is also instructive to
other states (although most states have some variation of this already in
place).
Balancing HRD and stability in HRM. While there is a certain value of Vision-
based HRD and training strategies in the professional and technical development
of roads agency staff, this needs to be taken up in a context of policy-based staffing
stability. As evidenced by Gujarat, at all major staff levels, stability in staff tenure
in their respective positions is vital for improving the roads agency’s capabilities
over time. The GOG policy of generally limiting HR movements across
professional, technical and administrative positions to a three-year minimum cycle
is a positive HRM factor worthy of emulation in other Indian states.
13
1 INTRODUCTION
1.1 B ACK GROUND
Gujarat is an industrially advanced state in India and is considered to be both a high
growth state and a leader in pursuing economic reforms. The state’s GDP grew at
10.2 per cent per annum in the plan period 2002–2007 and the Planning
Commission set it a target of reaching 11.2 per cent in the current plan period.
Gujarat has been quite effective in pursuing economic reforms across many
sectors: power reforms, fiscal reforms, some limited but notable education
reforms, and private sector participation in infrastructural development particularly
ports and roads.
Over the past decade the state has made significant investments in road
infrastructure and developed a good road network providing fast and efficient
travel across most of the state, with connections to almost all villages mostly via
all-weather roads. The current plan road network size of 74,111 km is among the
highest in terms of network density per sq.km in India’s states and is among the
best managed network among all the Indian states. The annual road sector
allocation has grown from USD 30 million in 1995-1996 to an impressive USD 610
million in 2010-11, currently the second largest among all Indian states.
Stakeholders  road users, commercial and industrial concerns, and road
construction industry express a high level of satisfaction with the road network
and the way in which it is managed by the Roads and Buildings Department
(R&BD).
The World Bank financed the Gujarat State Highway Project (GSHP) which was
successfully completed in 2007. The Project Development Objective was to
enhance the capacity of the Government of Gujarat (GOG) for effective and
efficient planning and management of road infrastructure, while concurrently
maximizing existing road infrastructure asset utilization through priority
investments and increased maintenance funding. The Project not only achieved its
objective and targets, but also was implemented with a significant cost reduction
1
(about 23%). The GSHP resulted in a reduction in the backlog of major
maintenance and an improved network to meet rapidly growing transport demand.
The project had the unique distinction of no time and cost overrun for individual
contracts and virtually no contract disputes, a rarity among the highway
development projects in India. The project also set best practices in developing and
managing a very comprehensive asset management system, state of the art quality
assurance framework and a very comprehensive training and capacity building
program.
The Implementation Completion Report (ICR) for GSHP identified several internal
factors, in particular, organizational reforms that took place during the preparation
and implementation of the subject project. As a result of these reforms and
institutional development, the Roads & Building Department significantly
transformed its roads sector functions from the traditional Public Works
Department (PWD) orientation of focusing on execution of civil works towards that
of a modernized road agency focusing on road network management, planning
1
As determined by a comparison of per-km project cost at appraisal with that at completion.
15
and policy. It was a major innovation in the PWD context in India, and has had
strong implications for good governance in the highway sector.
There is considerable interest among the road sector professionals in the India to
learn more about the Gujarat road sector reform story. This study attempts to
unravel the Gujarat road sector reform story and explores whether and how such
reforms can be replicated across other Indian states and even in other countries in
the region.
1.2 T HE S TUDY O BJECTI VE

The ICR for the GSHP has clearly brought out that institutional and organizational
reforms during mid 1990s to mid 2000s converted a conventional PWD-style Roads
and Building Department (R & BD) in Gujarat executing civil works, into a more
modern road agency with enhanced focus on road network management, planning
and policy. It was a major innovation in the context of how the road agencies in
India are managed and has had strong significance for good governance in the
highway sector. This is a strategic change that other Indian states and other
countries in the region have expressed interest in and may wish to emulate.
To assist such change, the World Bank has initiated this study to identify factors
underpinning the success of the institutional reforms undertaken by Gujarat R&BD
and how such conditions could be replicated across other Indian states and
countries in the region. The terms of reference are found in the Appendix 1 are
summarised as follows:
 Review of institutional reforms in the highway sector in Gujarat and

compare the achievements and failures with other lead highway agencies
across the World, as applicable;
 Identify the critical policy, regulatory, institutional factors which
facilitated and enabled the reforms;
 Analyze what did and did not work and identify the opportunities and
constraints;
 Recommend whether and how such reforms can be replicated across
other Indian states and other countries in the region
The study aimed to analyze these issues in a systematic manner starting with
understanding the state context, analysing the pre- and post-reform situation in
the Gujarat road sector, the key drivers and the enabling factors for such reform,
comparing with international best practices and exploring the possible replication
of such reforms in other Indian states and countries in the region. This study was
funded by the Transport Research Program, which is a four-year program designed
to support Transport research work at the World Bank and financed by the UK
Department for International Development (DFID).
1.3 T ARGET A UDIENCE

The target audience for this study is the national and state road agencies across
India and in the South Asia region. The policy research community and academia
associated with transport sector might also find the study findings and
recommendations valuable. It is also expected that this study will be extensively
used for internal learning within the Bank.
16
2 THE STATE CONTEXT

Gujarat has long been a prosperous state with a high level of industrialization. It
has a progressive government that actively seeks private investment, worldwide.
(See the Appendix 4).
As a proportion of India’s output Gujarat accounts for:
 39% of industrial output

 10% of mineral production
 25% of its textile production
 40% of pharmaceutical products
 67% of petrochemical production, and
 20% of exports.
With only 5% of India’s total population and 6% of India’s total geographical area,
this is indeed a commendable achievement for Gujarat. Gujarat has enjoyed high
sustained economic growth averaging 9.2% pa in real terms from 1999-00 to 2006-
07 and 10.2% per annum during 2002-07.
Firstly, Gujarat is blessed with advantageous initial structural conditions: a strong

industrial base, private sector interest, and basic state capabilities, which are
crucial to the trajectory of reform. The state also has the geographical advantage
of a 1,600 km long coast line and its unique situation halfway in the transport
corridors linking the two prime growth centers in the country, Mumbai and Delhi.
Second, two primary variables, working in a complementary tandem are the

principal levers of reform success. Strong state policy capacity and leadership, and
private sector incorporation into the policy process played a major role. Successive
Chief Ministers and heads of crucial departments such as industry and finance
played crucial leadership roles. Particularly noteworthy was their ability to see and
respond to the problems of the long term and vision. Yet institutional variables of
monitoring and feedback mechanisms (for example, the creation of overlapping
institutions) ensured that a large sprawling bureaucracy worked effectively across
diverse policy domains (for example, privatization, ports, power, and education).
Third, the private sector pressure, both implicit and explicit, played crucial roles in
shaping up the reforms. The state development policies implemented in Gujarat,
since the mid-1990s, have been closely attuned to the requirements of capital and
the possible role of private sector in major road infrastructure development in a
way that may be unimaginable in most other Indian states. Gujarat is fortuitous in
benefiting from strong path dependence and historical experiences of reform, for
example, the joint sector idea that allows it to implement the current model of
private sector participation much more easily and without much conflict.
Economic reforms gave a renewed legitimacy to such interactions and imperatives.
Many policies—port and privatization especially—were shaped and energized by
private sector needs and initiatives.
Fourth, Gujarat has converted a crisis into an opportunity. The state faced an acute
fiscal crisis in the early 1990s and major economic difficulties in 2001, following the
Bhuj earthquake. However, Gujarat turned the crisis to its advantage by
streamlining and modernizing the state’s administration and strengthening state-
level governance mechanisms, which played a key role in eventually accelerating
the pace of growth in the state.
17
In development of infrastructure, Gujarat has taken a proactive approach to state

development. In 1999 it announced ‘Gujarat Infrastructure Agenda: Vision 2010’.
Gujarat remains proactive in seeking development, as evidenced by the 2009
‘Vibrant Gujarat Global Investors' Summit’. To attract investment, the Chief
Minister has stated his commitment to undertake the public investments needed
to support private investment. Gujarat has the highest geographical area (27,125
hectares) designated for Special Economic Zones (SEZs) and claims to be the first
state to formulate an SEZ policy, which includes flexible labour laws and exit
options for investors.
To exploit its geographical advantage, the importance of good roads is recognized

and there is political will to develop Gujarat’s roads and keep them in good
condition to attract investment. Road works included in the state budget under the
head ‘Pragati Path’ and ‘Vikas Path’ are evidence of political will. These corridors
are being developed by the Government from its own resources to ensure good
road connectivity of adequate capacity from one corner of the state to the other
(around 500 km) in six to seven hours, as promised by the Chief Minister several
years ago (A more detailed account of road development can be found in the
Appendix 5).
18
3 GUJARAT ROAD SECTOR PRE-REFORM DAYS

3.1 C URRENT S ITUATI ON : R OAD N ETWORK I N G UJARAT
Gujarat has one of the most extensive and traffic intensive road networks in the
country. The road (plan roads only) density in the state stands at around 38 km per
100 sq km and 146 km per 100,000 persons. These figures are broadly comparable
to 43 km and 126 km for India. However, it needs to be realized that approximately
91% of Gujarat’s roads are paved which is significantly more than the country’s
average and significantly higher than in other advanced states, e.g., Andhra
Pradesh, Karnataka and Punjab (Table 1).
Table 1: Road Network in Gujarat and Other Comparative States
T ABLE 1: R OAD N ETWORK IN G UJARAT AND O THER C OMPARATIVE S TATES
Road
3
Network , Paved Paved Highway network
2
States Population km Roads, km Roads, % (NH+SH)
Gujarat 50,596,992 137,617 124,295 90% 21,624
Andhra Pradesh 75,727,541 195,188 118,983 61% 12,239
Bihar 82,878,796 75,776 32,139 42% 7,594
Karnataka 52,733,958 148,350 101,120 68% 13,399
Kerala 31,838,619 150,851 50,164 33% 5,289
Orissa 36,706,920 237,034 52,245 22% 7,351
Punjab 24,289,296 70,163 56,857 81% 3,719
Tamil Nadu 62,110,839 164,514 124,344 76% 10,936
Uttar Pradesh 166,052,859 243,673 161,851 66% 14,040
West Bengal 80,221,171 91,761 49,255 54% 5,484
India Total 1,094,583,040 2,430,343 1,405,100 58% 195,823
2
As of India Census of 2001. Source: http://www.indiastat.com
3
It includes NHs, SHs, major and other district roads, municipal roads, rural roads, forest roads
and other minor roads. Source: http://www.indiastat.com,
19
T ABLE 2: R OAD N ETWORK UNDER R&BD, KM
Category of road Multilane Standard Single-lane Total

Double-lane
National Highway (NHs) 1012 1930 287 3229
State Highways (SH) 962 6521 11073 18556
Major District Roads (MDRs) 9 554 20078 20641
Other District Roads (ODRs) 0 59 10434 10493
Village Roads (VRs) 20 32 21067 21119
Total 2003 9096 62939 74038
Source: R&BD.
At present, the R&BD is in charge of around 74,000 km of roads (Error! Reference

ource not found.), including a large number of bridges and besides its
responsibilities for public buildings in the state. National Highways (NHs) are
owned and financed by the Government of India’s Ministry of Shipping, Road
Transport & Highways (MoRTH), and the R&BD supervises works executed on NHs
on behalf of MoRTH. All other categories of roads in the state are owned and
financed by the GOG, albeit with external funding assistance in some cases (e.g., in
the case of PMGSY funding for rural road improvements).
3.2 B EFORE THE RE FORM

Gujarat’s Road Network in 1990s
In mid 1980s Gujarat's road infrastructure consisted of 1,570 km of NHs, 19,655 km

of SHs, 20,364 km of Major District Roads (MDR), 10,355 km of Other District
Roads (ODR), and 18,665 km of Village Roads (VR). During the last 15 years, the
State road network expanded in length from around 50,000 km to about 74,000 km
and the paved part increased from about 66% to 91% of the total length. However,
most growth in the length of the State road network occurred on the VR category,
which carried a very small percentage (less than 10%) of the State road traffic. Due
to the high growth in vehicle ownership in Gujarat (14% per year growth during the
last 15 years), motor vehicle density per 100 km of paved road was 44% above the
National average.
20
T ABLE 2: L ENGTH OF G UJARAT R&BD’ S R OAD N ETWORK , BEFORE AND AFTER THE R EFORM
Category of road 1998-99 2008-09 Change, %
NHs 1,570 3,229 106%
SHs 19,655 18,556 -6%
MDRs 20,364 20,641 1%
ODRs 10,355 10,493 1%
VRs 18,665 21,119 13%
Total 70,609 74,038 5%
3.3 R&BD’ S O RGANIZATIONAL S TRUCTURE

After establishment of the State of Gujarat in 1960, the Public Works Department
(PWD) was responsible for planning, construction and maintenance of public
infrastructure assets including buildings, roads, bridges, dams, irrigation canals,
water and sewerage system. Later, the PWD was split into three departments,
namely Buildings and Communication Department, Irrigation Department, and
Water Supply and Sewerage department. From January 01, 1984 the name of
Buildings and Communication Department was changed to Roads and Buildings
Department (R&BD).
In the 1990s the structure of the R&BD was similar to that of other Public Works
Departments (PWD) in India and it was responsible for the operation and
maintenance of all State-owned roads and buildings. It had an agency agreement
with the (then) Ministry of Surface Transport (MOST) for the maintenance of NHs
in Gujarat. The departmental structure consisted of seven major units: Roads and
Buildings (State), National Highways, Capital Projects & Arbitration, Expressways,
Roads and Buildings (Rural), Quality Control and Engineering Staff Training
College. It employed about 31,000 people, of which about 11,000 were staff and
about 20,000 were laborers. While some works were contracted out to the private
sector, a considerable proportion of the civil works under R&BD charge were
executed using the force account.
3.4 K EY S ECTORAL I SSUES

Before the reforms, R&BD saw itself as the arm of government that directly
maintained and developed the state road network to the best of its ability using the
funds and human resources made available to it. Since funds were not enough to
provide quality roads over all the state, money was allocated to roads where the
need was most pressing or political pressure was high. In such circumstances
allocating funds based on scientific (systematic, rationally-based) planning seemed
superfluous. In such a setting, asset preservation, particularly timely maintenance
of pavements and drains, took a back seat to road network improvements that win
public support. Lack of spending on maintenance resulted in some road assets
being lost, necessitating expensive reconstruction of pavements.
21
4 KEY INSTITUTIONAL REFORMS IN THE ROAD SECTOR
4.1 D RIVERS OF R EFORM S

There were three main drivers of reforms in the Gujarat Road Sector: vision,
necessity, and exposure to international best practices. The Vision originated at the
highest political level and it was embedded first in Gujarat Road Development
Plan, 1981-2001, and later in Gujarat Infrastructure Agenda: Vision 2010. Necessity
arose because downsizing including a ban on further employment of labour was
imposed on R&BD from 1986. Exposure to methods used elsewhere was provided
through the World Bank funded GSHP.
4.1.1 V IS IO N
Gujarat Road Development Plan, 1981-2001. GOG prepared a State-specific road
development master plan (Gujarat Road Development Plan, 1981-2001), part of
which was funded with the World Bank assistance. The first World Bank financed
State-specific road sector operation in Gujarat was the Gujarat Rural Roads
Project, which focused on the expansion and improvement of the village road
network. In 1996, to better define and update the objectives of the Road
Development Plan, GOG issued a cabinet-endorsed "State Road Policy" which
declared the following objectives: (a) provide connectivity to all villages by all
weather roads; (b) provide an adequate and efficient road system encompassing all
transportation needs to ensure smooth and uninterrupted flow for intra and inter-
State goods and passenger traffic; (c) upgrade technology by introducing superior
and quicker construction and maintenance methods; (d) induct more scientific
principles in resource allocation for maintenance and new construction programs;
and (e) set high standards of road safety and travel comfort. To help achieve the
above objectives, GOG also significantly increased the allocations for the road
sector during the ninth State Plan (1997-2001) compared to the eighth Plan.
Gujarat Infrastructure Agenda: Vision 2010. In 1999, the GOG took a more proactive
approach to state development and made infrastructure development as its main
thrust with the launch of its ‘Gujarat Infrastructure Agenda: Vision 2010’ document.
It laid out a prioritized list of projects to attract private participation for
infrastructure development in the state and identified the policy initiatives needed
by the state to facilitate the same. The entire plan encompassed 383 projects in
sectors as diverse as: power, ports, industrial parks, roads, railways, water supply &
sanitation, urban transport, airport, gas grid, information infrastructure etc. The
overall investment plan was estimated at about US$29 billion (Rs. 116993 Crore),
with 17 percent (US$4.6 billion) planned for the road sector. The plan not only
highlighted the funding requirements but also identified potential sources of
funding (see Error! Reference source not found. for the road sector). This clearly
rticulated Vision gave a strong impetus to R&BD to review the way it was doing its
business and initiate the necessary reforms to promote implementation of the
Vision in the road sector.
23
F IGURE 1: S OURCES OF FUNDING FO R THE INVESTMENT PLAN OF THE ROAD SECTOR – V ISION -2010
Source: http://www.gsrdc.com/vision_2010.htm
4.1.2 N E C E S S IT Y
The national policy of economic reform in 1991 unleashed tectonic shifts in all
states, arising out of the larger national/global context, as well as local/regional
developments, and generating fascinating changes both in policies and in the
institutional structures underlying developmental strategies. In the early 1990s, as
path-breaking economic reforms were being initiated at the national level, the
GOG was faced with a state-level fiscal crisis, with significant fiscal deficits over
1996-2001 and growing revenue imbalance. Moreover, the dismantling of the
previous long-standing national policy framework for public finance and for
infrastructure development raised new challenges for the states, including Gujarat.
As the traditional national policies of licensing and financing were vanishing, the
state agencies’ relevance and role in mediating central rules and regulation faced a
challenge. Public finance and governance reforms had increasingly become an
imperative for the state, affecting all major sectors.
Downsizing was imposed on R&BD already in 1986, as well as a ban on further

employment of labour. The resulting shrinkage in the R&BD “force account” labour
pool necessitated contracting out even some routine maintenance works.
Notwithstanding occasional special GOG approval for some ad hoc recruitment of
new engineers, this sustained GOG-wide process of downsizing had however
induced more discipline and a culture of streamlined program administration in R &
BD.
In 2001, Gujarat’s people, government and economy were also traumatically

affected by a major earthquake disaster, involving (inter alia) widespread and
costly damage to infrastructure and housing. In acknowledgement of the huge
social and economic burdens the state then had to bear, significant national and
international assistance was provided both for emergency assistance and for
rehabilitation measures in key sectors. The R&BD needed to play a major role in
the GOG response, particularly in its key responsibilities for public housing and the
state’s road network. The urgent and daunting responsibilities then impinging on
24
the R&BD (as well as other key GOG agencies) again underscored the importance
of modernization towards more efficient organizational arrangements,
management and implementation, technical capacity, systems and processes, and
heightened R&BD and GOG interest in innovation in the planning, executing and
financing aspects of public infrastructure provision in future.
In effect, the stimulus of necessity (via fiscal constraints, humanitarian disaster and
economic crisis) triggered important and crucial innovations and interventions in
Gujarat, particularly in the roads sector.
4.1.3 E X P O S U R E T O I N T E R N A T IO NA L B E S T P R AC T IC E S
World Bank Gujarat State Highway Project (GSHP). The WB-funded project was
initiated on time with the launch of the Gujarat Vision 2010 and provided a myriad
of opportunities for the state to learn about international road sector experience
(e.g., international construction methods and FIDIC contracts). The preparation of
the project started in late 1990s and became effective in 2000. The World Bank
was in a unique position to respond to the opportunities and challenges faced by
Gujarat by providing the critical long-term capital needed to support infrastructure
development for accelerated economic growth, using its lending and advisory
capabilities to leverage the institutional and policy reform process, and ensuring
that social and environmental concerns would be fully reflected in project design
and implementation.
The project design and strategy supported the newly-embarked Vision through
promoting State-level reforms in the road infrastructure sector, improving
strategic planning and maintenance effectiveness, mobilizing increased outlays for
investment and maintenance of road infrastructure, and facilitating private sector
involvement in engineering, construction and maintenance. Its design addressed a
number of critical sector issues, such as: (i) strengthening the institutional capacity
of the R&BD to better manage the State road network, through, (ii) improving the
capacity and structural quality of key segments of the core state road network, and
(iii) reducing the maintenance backlog.
The World Bank-funded GSHP supported (i) the carrying out of an institutional
development study (IDS) of the state’s roads sector and of the R&BD in that
context, and (ii) the implementation of the resulting institutional strengthening
action plan. The objective of the IDS was to establish the basis for strategic
measures to sustainably improve the capacities available to GOG for effective
future management of road infrastructure in Gujarat and in that context, to
strengthen R&BD capabilities in the following fields and activities:
a. road planning and investment selection based on user requirements, road

transportation network factors, and sound economic considerations;
b. planning, implementation, and management of road construction

programs;
c. development and management of efficient, cost-effective, and rationally-

determined road network maintenance programs;
d. generation of increased, dedicated, and sustained levels of funds for on-

going road network maintenance needs and planned road investment
requirements;
25
e. effective use of private sector resources in the engineering and execution

of Gujarat's road projects/programs; and
f. consultation with the main road user stakeholders in Gujarat in the

planning of road network developments, and investments for improved
road transport.
Based on the results of the IDS, GOG formulated the Institutional Strengthening
Action Plan (ISAP), which was a blueprint for the first major stage of modernizing
the R&BD and directing its attention towards road management, planning and
policy. The ISAP target areas included reduction of staff to objectively essential
levels, preparation of annual performance reports and business plans, and the
setting up of the Policy & Planning (P&P) Unit, the Highway Design Unit (HDU), as
well as the Environmental Management Unit for more effective compliance with
social and environmental safeguards. The project-supported ISAP also included
progressive computerization of the R&BD, appointment of a dedicated Law Officer
to the R&BD, enhancement of the Department’s human resource development/
training policy, program and facilities. Appendix 2 contains an overview of the
GSHP’s institutional work and its achievements.
4.2 K EY R EFORMS A CHIEVED DURING 1997-2007

4.2.1 M O V E FROM “P R O V I D E R ” TO “M AN AG E R ” OF R O A D I N F R AS T R UC T UR E
The major reform which affected the way doing business in R&BD was the move
from the role of “provider” to “manager” of road infrastructure. It enabled R&BD
to embrace a ‘whole-of-network’ approach to planning and managing the road
network development and maintenance, and to take a more integrated approach
in the budgeting and funding processes for different road categories in the State,
previously managed separately. As part of this reform, the following actions were
undertaken.
Creation of a Policy & Planning Unit. The GOG's ‘road asset management’ and
‘governance’ capacities were substantially improved through the Policy and
Planning initiative. The Policy & Planning Unit (PPU) set up in the R&BD was
assigned a responsibility to prepare annual budget plans for the department by
using a computer-based Gujarat Road Management System (GRMS). That was
quite a noteworthy achievement for effective and efficient road planning and
management, compared to the past practice by which all the budget plans were
prepared manually, with lack of data support or thorough analysis. It is central to
the change of focus from execution of civil works to planning and managing the
network. The PPU brings a scientific approach to road management by means of
the GRMS: the process of budget allocation changed from a need-based (focused
on network improvement) to a more scientific planning (focused on asset
preservation) approach. It is also assigned some of the more intellectual tasks such
as producing the R&BD’s Annual Reports (since 2005) and articulating the
Department’s mission statements. The Chief Engineer (CE) position heading the
PPU also carries ‘lead’ responsibility for the Human Resources Development (HRD)
function in R&BD.
Use of Gujarat Road Management System. Now operational for approximately

20,000 km of the state’s highest priority major roads, the GRMS has helped the
R&BD address maintenance funding issues which are typically difficult for most of
road agencies in the developing countries (or PWDs in India) and has facilitated a
more effective dialogue with the Finance Department about maintenance funding.
26
Provided there is adequate up-to-date road network data collection and entry, it
can provide a systematic and scientific determination of budget needs (for both
maintenance and road improvements). Maintaining assets does not have the
appeal and high profile of creating assets. Maintenance is often neglected and in
the case of road pavements the lack of timely maintenance can lead to costly
remedies being needed in very few years. Lack of timely maintenance not only
increases the road agency’s costs in the long run, it also increases road user’s costs,
principally due to the effect of road roughness on travel time and vehicle operation
cost. As R&BD was unable in the past to demonstrate the cost impact of
maintenance backlog in the longer run and quantify the costs borne by road users it
has previously been difficult to convince the Finance Department of the level of
funding needed for timely maintenance. Using GRMS, R&BD can demonstrate the
need for, and economic benefit of, its proposed program of maintenance in
relation to roads covered by the GRMS data.
GRMS comprises nine modules of which the core is the Pavement Management
System. This optimises periodic maintenance by minimising the sum of road
4
agency and road user costs using HDM-4. A Routine Maintenance Management
System and a Bridge Management System are used to complete the asset
management picture. Together these three modules feed into the Budgeting and
Programming System to produce a proposed programme of works for the coming
year. Supporting modules providing input data to the above are the Road
Information System, the Traffic Information System and the Accident Information
System. GRMS can also be effectively used for feasibility studies of road
improvement projects. (Appendix 3 provides more details on GRMS).
R&BD's Governance Initiatives. Since 2005-2006 the Department has been

committed to governance-oriented activities such as preparation of annual R&BD-
specific business plans, agency-level performance evaluation and annual reporting,
which are in place and on-going. In line with other major GOG agencies, the R&BD
has also long recognized the importance of transparency of information and has a
website (http://www.rnbgujarat.org) with basic information about the department,
its organizational structure and functions, its vision for 2010, the quality control
provisions and vigilance structure, achievements, budget, toll policy, contractor
registration requirements and details of projects being developed. Under India’s
Right to Information Act (RTIA 2005), R&BD public information officers have been
duly appointed and trained in implementation of the Act. There are also some
notable individual initiatives for facilitating retrieval of information for better
project management, reporting and decision-making. One such initiative is a web-
based system for project management, being rolled out to the entire department
over mid- 2010. This database is being populated with data on all R&BD projects
and will facilitate the divisions in compiling their monthly reports on projects
faster.
Enhancement of Quality Control. A separate unit on Quality Control (QC) under a

dedicated Chief Engineer of the R&BD has, since 2003, looked after quality of
works, as well as (in more recent times) related issues such as construction safety
and child labor. In this regard, while there were capacity constraints up until 2005,
the situation seems much better now in terms of adequacy of staff and vehicles for
4
HDM-4 (Highway Development and Management Model, version 4) is a
computerized system using data on pavement structure and condition, road geometry, traffic
counts, heavy vehicle axle loads, vehicle operating costs, and road construction and
maintenance costs to optimize road expenditures for, typically, a period of 20 years.
27
inspection. The divisional engineers routinely inspect at least 25 random works per
month and record their observations in an elaborate format. In addition to these
routine inspections, the QC wing also investigates cases referred to it by the
Gujarat Vigilance Commissioner (GVC) or by the committee of chief engineers. For
testing purposes, the unit can avail of empanelled laboratories including those of
5
Gujarat Engineering Research Institute (GERI) , local engineering schools and some
private organizations. Since 2006 the GOG has supported a better resourced and
more advanced quality control framework and mechanisms centered on GERI and
its field units, which has helped to improve the overall quality assurance culture in
the state and helped to further raise public confidence in road construction quality
in the state. In addition, GERI conducts all types of quality related training in
Gandhinagar in conjunction with the Staff Training College (STC) - jointly run by
R&DB and the Irrigation Department – both on GERI premises and at the STC site.
The GERI training programs include e-governance and e-management of works.
The training programs and the advanced nature of the equipment at GERI for
conducting all types of tests for road quality – including mobile testing units, IT
based test instruments and equipment and (most recently) IT-based centralized
analysis and compilation of field test data – have fostered a stronger quality
assurance culture and expectations in the state.
4.2.2 S E P AR A T I O N O F C E R T A I N F U NC T IO NS F R O M R&BD
In parallel with the Bank-funded GSHP, the GOG took an early action to set up the
Gujarat Infrastructure Development Board (GIDB) to streamline clearance of
infrastructure projects implemented under PPP, as well as the Gujarat State Roads
Development Corporation (GSRDC) and various special-purpose toll road
development and management bodies.
The Gujarat Infrastructure Development Board (GIDB) was established in 1995 as a

registered society and in 1999 it was given a statutory status by the Gujarat
Infrastructure Development Act 1999 (GID Act). The objective was to facilitate a
higher flow of private sector funds to infrastructure development and to ensure
coordination among various government agencies in the facilitation of new
infrastructure projects chaired by the Chief Minister, it is the main private sector
participation (PSP) facilitator in Gujarat.
GIDB itself does not develop infrastructure but acts as a catalyst for infrastructure
development and focuses on:
 overall planning of infrastructure projects and preparing the framework

for execution;
 preparing projects by conducting prefeasibility and feasibility studies
using consultants;
 preparing concession agreements which define risk-sharing in a public-
private partnership;
 overseeing competitive bidding process;
 advising Departments on financial structuring;
 coordination between various sector specific departments;
 monitoring progress of projects; and
 building the capacity of Departments in the infrastructure sector and
bringing in international experience and best practices.
5
An ISO 9001:2000 certified organization that has advanced equipment for
conducting all road quality tests.
28
GIDB contributes to infrastructure policy making through interaction with

stakeholders and drafting the policy measures for the State Government. Learning
from international best practices, it has developed the capacity for
conceptualizing, preparing and structuring infrastructure projects. Through close
collaboration with Government Departments/Agencies, it makes the projects
attractive for PSP. GIDB has not only given confidence to private investors but also
facilitated substantial private investment in the State.
T ABLE 3: G UJARAT ’ S PPP P ROJECTS IN I NFRASTRUCTURE , 1999-2008
Category of road 1998-99 2008-09 Change, %
NHs 1,570 3,229 106%
SHs 19,655 18,556 -6%
MDRs 20,364 20,641 1%
ODRs 10,355 10,493 1%
VRs 18,665 21,119 13%
Total 70,609 74,038 5%
Source: GIDB presentation, UNESCAP, Bangkok, February 2009
GIDB has adopted the Model Concession Agreement of the Planning Commission
of the Government of India for road sector projects. It has a dedicated corpus to
financially support the PPP projects. State government departments and agencies
look to this fund for financial support of up to 20% of project costs where the
private sector concessionaire is selected through competitive public bidding as
prescribed by the GID Act and a concession agreement has been entered into. User
charges at a defined tariff are a prerequisite. The executive Committee of GIDB
approves and releases the funds.
The GID Act provides a legal framework and is the main law governing PSP and
PPP. The preferred means of developer selection is competitive bidding but the
6
Swiss Challenge approach may also be used if no subsidy is needed. An
amendment to the Act in 2006 added an option of direct negotiation with
prospective concessionaires.
Gujarat State Road Development Corporation Ltd. (GSRDC) was incorporated in

1999 as a limited company for development of road infrastructure on
privatization/BOT basis. It is a wholly-owned government undertaking operating as
an arm of R&BD and supported by R&BD staff. Chaired by the Minister of Roads
and Buildings, its other members are: Principal Secretary, R&BD; Chief Executive
Officer, GIDB; Joint Secretary/Financial Adviser, R&BD; and two representatives
from the private sector. For better coordination a Chief Engineer of R&BD is posted
as Managing Director on deputation to GSRDC. GSRDC’s objectives are to:
6
A Swiss challenge is a form of public procurement when an unsolicited proposal is
received. The bid is published and third parties are invited to better it. The entity that
submitted the unsolicited proposal is then invited to match the best bid from the Swiss
challenge process. If the entity does not match the best bid the GID Act requires that its costs
in preparing the proposal are reimbursed.
29
 cater for development of bridges and roads.

 raise funds from banks, Institutions, mutual funds, individuals, etc.
 commercially develop and exploit land alongside the roads/bridges.
 draw up plans for project preparation and undertake feasibility studies.
In its early years GSRDC undertook many cost-benefit analyses without attracting
interest from the private sector. Interest was generated by coupling project
proposals with viability gap funding offered initially by the GIDB and from 2006,
also by the GoI. The confidence level of the PPP entrepreneurs has progressively
increased even as GSRDC has improved its project selection and packaging skills,
with steadily positive results. The Corporation’s success at attracting private sector
investment is evidenced in Appendix 7.
GSRDC provides PPP bidders at least one month to prequalify and at least six
months to bid. Bidders are given technical details such as the required cross-
section, current traffic counts, and details of existing bridges and culverts. A
minimum pavement thickness may be specified. Bidders must undertake all the
necessary surveys themselves. The concession period and toll rates (escalated by
the wholesale price index) are usually specified and the bid criterion is either a lump
sum subsidy or the share of revenue paid to the government. Sometimes only toll
rates are prescribed and the length of the concession period is the bid criterion.
For the PPP projects, GSRDC has been able to leverage the public financing in a
smart manner. Under the Bank financed GSHP, the narrow and intermediate lane
highway were upgraded to a full 2 lane highway and once the traffic further grew
and the roads became viable under the BOT toll scheme, BOT projects were taken
up.
Special purpose toll road development and management bodies. Gujarat Road and
Infrastructure Company Ltd (GRICL) was incorporated in 1999 as Gujarat Toll Road
Investment Company Ltd, for investment in two toll-road special purpose vehicles
(SPVs), Vadodara-Halol Toll Road Ltd and Ahmedabad-Mehsana Toll Road Ltd.
These SPVs were promoted by GoG and Infrastructure Leasing and Financial
Services (IL&FS) on 30-year concessions and was a pioneering SPV based PPP
effort among all states.
Work on the Vadodara-Halol (State Highway 87) road started in April 1999 and its
widening of to a four-lane divided carriageway was completed in October 2000
(project length of 32 kms, cost of Rs. 168 Crores). Work on Ahmedabad-Mehsana
(State Highway 41) road started in April 2000 and was completed in February
2003(project length of 63 kms, cost of Rs. 308 Crores). Both these roads were
widened to a four-lane divided carriageway with service roads on either side for
most of their length.
However, initially traffic and toll revenues proved to be lower than expected and
the two companies were unable to service their debts. In 2004 the debts were
restructured and the companies were merged into GRICL. GoG took a 16% equity
stake in GRICL. Toll collections have since improved and are better than the
projections envisaged at the time of restructuring. Revenues increased 31%
between fiscal years 2007 and 2008 after GRICL auctioned toll collection. Service
roads were meant for local traffic and were not tolled. This led to a tendency where
through traffic also started bypassing toll plazas by using the service roads at plaza
locations. This loop hole has now been plugged by keeping a record of vehicles that
30
bypass two successive toll plazas. Such vehicles are required to pay the toll even
though they used the service roads. Enforcement is by manual recording of licence
plate numbers. This has helped to improve the toll revenues.
A policy framework is critical to address all toll-related issues such as whether there
should be an alternative route that is not tolled, assurances regarding development
of competing routes, toll plaza spacing, the basis for calculating tolls, relative toll
levels by vehicle class, exempt vehicles, treatment of local traffic etc. BOT projects
are usually based on the private investor collecting tolls and retaining all or part of
the revenue. The government needs the power to charge tolls on public roads and
also the power to delegate this power to private sector concessionaires, so that an
authorised private entity can charge and recover tolls from the road users.
The power to collect tolls in Gujarat originates from the Bombay Motor Vehicles
Tax Act 1958. In 2008 a new toll policy was released (see Box: Toll Policy) which
was vetted at the highest level of the government.
31
B OX 1: T OLL POLICY
Government of Gujarat
Roads and Buildings Department
Resolution No. Toll Policy/G-19/10/2008/303796/Pvt
14/1, Sardar Bhavan, Sachivalaya, Gandhinagar
Date 25th August, 2008.
PREAMBLE
High growth trajectory of the state demands robust infrastructure support. Well laid out road network for last mile
and seamless connectivity to Ports, SEZs, SIRs, APMCs, Tourism spots, Industries etc. constitutes robust road
sector infrastructure. Provision of such a road network involves huge investment. Public private participation is
required for bringing both, the investment and the expertise. The state government, in cognizance of this need, has
decided to encourage PPP mode development in road sector. Enabling legislation is in place in the state. Gujarat
Infrastructure Development and Bombay Motor Vehicle Act, 1958 empowers GOG to levy user charges (toll) and
grant concession to private investors for collecting and retaining toll.
To facilitate clarity regarding toll rate, location of toll plaza, distance between two toll plaza, types of preferred
road sections on which toll can be collected etc. and thereby also encourage private investor, need is perceived to
lay down tolling principles through a policy document.
In considering of above, Government of Gujarat has formulated a Toll Policy as read below.
(1) Minimum facility configuration
Facilities created/improved with public private participation and having following configuration may be considered
for tolling depending up to their techno-economic-socio feasibilities.
Roads having four and more than four lane with or without service road and of length not less than 10 continuous
kilometres.
Roads having two lanes with paved shoulders and of length not less than 25 continuous kilometres.
Bypasses having minimum configuration of two lanes with paved shoulders.
Major bridges/road over bridges.
(2) Toll Rates
Toll rates shall be fixed on a case to case basis. Toll rates of Government of India may be considered applicable for
the comparable facilities. For other facilities, toll rates may be decided on the basis of toll rate viability, uniformity
of rate in the region and restricting recovery to the tune of 50% of the perceived users benefits. Toll rates may be
revised periodically for increase in tariff. Government may give some relaxation to local traffic using portion of the
project facility.
(3) Distance between two toll plazas
Preferable distance between two plazas may be 25 to 30 km. Distance may be adjusted on the basis of trip length
characteristics of road users. The effort should be to keep the distance as much as possible between two to plazas.
For the facilities serving special designated area of industries / economic activities. And also Government of Gujarat
may decide for tolling on a case to case basis.
By order and in the name of Governor of Gujarat

(R.K.Chauhan)
Officer on Special Duty (SP)
Roads and Buildings Department
32
4.2.3 S T R E N G T H E N I N G G O V E R NA NC E
Gujarat has been a pioneer in strengthening governmental policies, institutions and
procedures for better governance. It has been increasingly using information and
communication technologies to offer citizen based services to improve their
accessibility, make them more transparent and reduce response time. Gujarat also
ranks first in the country to have made E-Governance functional in all its
municipalities and municipal Corporations.
One of these initiatives that will go a long way in reducing time and cost overruns in
the highway sector is the e-Dhara initiative which is aimed at complete
computerization of land records across the state, eliminating the bureaucratic and
cumbersome process of manual record-keeping. This has ensured better
transparency, minimal errors, reduced chances of fraud and made sure that R&R
benefits and payments are received by the actual beneficiaries.
There is a centralized, functioning e-procurement system in the state. In

accordance with the GOG e-procurement provisions, the R&BD uses e-
procurement for all works valued more than Rs. 1 million (approximately $25,000),
irrespective of source of funding. According to the GVC, procurement-related
complaints have decreased significantly with the advent of e-procurement.
Another measure of accountability in the government is the State-wide Attention

on Grievances through Application of Technology (SWAGAT) Online project.
Through a video-conference held on every fourth Thursday of the month in the
presence of Chief Minister, all the department heads and district representatives,
public grievances are addressed and suitable solutions are provided online
immediately. The success rate for satisfactory resolution claimed for this system is
extraordinary high (about 92%) since its implementation. Although the criterion
for success is not entirely clear, SWAGAT is widely thought to provide an effective
instrument for citizens to redress their grievances, while contributing to
improvements in delivery of government services.
Further, Gujarat has the benefit of the GVC, patterned along the lines of the
Central Vigilance Commission that has jurisdiction on complaints of
fraud/corruption over all public servants in the state except for the Chief Minister
and his/her cabinet. The GVC conducts preventive vigilance on about 100 random
works (about 10% of all works) a year, with the help of GERI. On average, it
receives about 400 complaints a year, (about 70% of which are worthy of further
investigation), which mostly relate to sub-standard quality of works.
Gujarat has also implemented an Integrated Workflow and Document

Management System (IWDMS) for automating the government functions and
processes at all levels of the administrative hierarchy in all departments including
the R&BD. It provides for better record-keeping, information retrieval and
knowledge management and fosters a collaborative environment between
government departments for faster decision-making. This is particularly useful in
the R&BD context, for expediting pre-construction activities such as utility shifting,
tree-cutting, for forest/environmental clearances for projects.
st
With effect from 01 May 2010, Gujarat has now also implemented an on-line
mechanism for release of sanctioned funds right up to the level of the field officers,
avoiding delays and difficulties in timely disbursement of Contractors bills and
discharging other financial commitments.
33
The state has also set up a State Data Centre (GSDC) to serve as a central data
repository of the State and provide secure data storage, online delivery of citizen
information/services, intranet & disaster recovery services, and enable remote
management etc. GSDC is intended to enable better operation & management
control and minimize overall cost of data, IT resource management and
deployment costs.
The online services of the R&B Department (via its portal, www.rnbgujarat.org)
aim to bring the department closer to the citizens and to make the work and
procedures of the Department speedy and transparent. It makes all the R&BD far
more approachable and accessible; provides in-depth information about each
office (over and beyond the RTIA requirements), and contact information of all
officers.
4.2.4 S E LE C T IV I T Y IN N E T W O R K M AN AG E M E NT
Gujarat was one of the first sates in India to develop a strategic or core road
network by applying the 80/20 rule i.e. 80% of the traffic was carried by 20% of the
road network and that part of the network should be prioritized for further
development and asset management. The concept was first formulated in 2001,
which was further crystallized under the Bank funded GSHP. Gujarat’s flagship
programs like Pragati Path, Vikash Path, Kisan Path and Pravasi Path have actually
centred around the strategic road network concept and the state has been able to
manage their investments better through the strategic road network approach.
Pragati Paths are roads connecting one corner of the state to another by adopting
corridor improvement approach. Vikas Paths are road stretches passing through
urban/semi-urban areas with divided carriageways, barriers in the median,
footpaths, street lightings and proper covered drainage system. On both sides of
roads, Kisan Paths are roads connecting villages to nearest agriculture produce
markets and Pravasi Paths are roads connecting places of tourists’ interest.
4.2.5 C R E A T IO N O F M O R E C O N D UC I V E E N V IR O N M E N T F O R C O NT R AC T O R S
In addition to creation of GIDB and GSRDC to facilitate public-private partnerships
in road infrastructure financing/development (see above), GOG made a substantial
effort to improve a dispute resolution system and inculcate a culture of
cooperation among the three contractual parties.
Key changes/improvements in the dispute resolution system
Government of Gujarat operates Contracts on two types of formats. Where FIDIC

document is used, the conscious efforts have been made to implement a dispute
resolution clause in its letter and spirit. As a result issues are discussed in periodical
(monthly) meetings of the three parties and solutions are sought before these are
blown into full fledged disputes. Dispute avoidance rather than resolution is
strongly encouraged. Thus very few disputes are referred to Dispute Review Boards
(DRBs) in the first place. In case where these disputes are referred to DRBs, matters
are largely settled at the DRB Recommendation level by discussions and
negotiations across the table. This has inculcated a culture in the department
which helped reducing the number of disputes even on works where FIDIC
document is not used.
Key changes/improvements effected in the ways of cooperation between the three

contractual parties:
34
(1) Monthly Meetings with the Contractor and the Engineer regularly.
(2) Timely payments to the Contractors.
(3) Timely redressal of grievances including active encouragement of
dispute avoidance and across-the-table settlement.
4.2.6 S T R O N G E M P H AS I S O N P R O F E S S IO NA L S T AF F D E V E LO PM E N T IN R&BD
The need for an R&BD-dedicated Human Resource Development (HRD) strategy in
R&BD was seen as a counterweight to the Gujarat Rules of Business 1990. Finance
Department approval is needed to add new staff where there are financial
implications and consultation with the General Administration Department is
routinely required to transfer or promote Executive Engineers (Class I), or above.
The mid-1990s GOG policy of requiring officers to complete at least 3 years tenure
in a given position before being granted a transfer has at least been beneficial to
staffing stability and the consolidation of experience in the R&BD. However, R&BD
itself has no authority to set its own mandated HRD policies in spite of the fact that
most of its officers perform technical or specialist functions. As a result,
departmental officers were until recently serving in an environment of
administrative norms and standards rather than professional and managerial
performance criteria and incentives, with the former mostly framed for the
efficiency of a relatively generic ‘whole-of-government’, ‘at-level’ approach to civil
service HR management in GOG and similarly elsewhere in India.
The IDS had recommended that an HRD system centred on the R&BD be
established for:
 personnel performance appraisal

 career planning
 devising programmes for training and development
In a series of steps, with the support and resources of the GSHP and as well as in
response to the impetus of increasingly proactive GOG policies on public sector
administration and governance, the R&BD:
 established a Vision 2010 -based HRD Policy

 began implementation of an annually-updated ‘3-year rolling Training
Program’
 took progressive action to refurbish and strengthen the Staff Training
College in terms of physical and professional resources
 enhanced the focus, scope and contents of the STC suite of training
programs and courses
 appointed an external HRD professional on a fixed-term as HRD Manager
to assist the STC on embracing innovations in syllabus, ‘faculty’ resources
and ‘delivery’ modalities
 introduced a (still ongoing) Computer / IT Training program
 initiated the first rounds of a multi-phase Manager Development Program
aimed at enhancing the managerial skills of middle-level R&BD staff for
new and evolving responsibilities in the Gujarat road sector environment.
The main focus of the HRD/staff training program enhancements and delivered
activities have been contract management/procurement, Monitoring & Evaluation,
environmental and social ‘safeguards’ functions and management, project
management, planning, finance, quality control/management, and, more recently,
35
e-procurement/e-governance. Occasional seminars and workshops have also been

facilitated for R&BD staff and senior managers via STC on topical professional and
governance matters. The staff of the Irrigation Department and other GOG
agencies have also taken up many of the enhanced STC courses and programs,
more intensively since 2003-2004 onwards. The R&BD also availed a bilateral
assistance from CIDA in 2000-2001 that enabled five senior R&BD staff take part in
a multi-week Transport Infrastructure Development & Management program in
Canada. The current STC training program ‘calendar’ addresses the technical and
managerial skills of all cadres of engineers in the state of Gujarat. Some of the main
forms of training currently are:
1. Nano-Technology based waterproofing materials and its application in

road construction.
2. Energy Saving Appliances for lighting on roads.
3. Use of fly-ash in road construction.
4. Use of modified bituminous materials in road construction.
5. Use of stone matrix asphalt in road construction.
6. Computer awareness for auto-cad applications
7. Training on Project Management Software for Infrastructure Projects.
8. Construction of Green Roads Concept
9. Safety Materials and Methodology for Road Infrastructure including
Traffic Management.
10. Ready Mix Concrete and its use in Road Construction.
11. Use of Pre-cast Structures in Bridge Construction
Overall, the strengthened and modernized HRD planning, implementation

capacity and results achieved by the R&BD during the GSHP period and since then,
particularly via the enhancement of the STC and its capabilities, have significantly
helped to improve the effectiveness and quality of human resources and
contributed to strengthening of overall governance in the Gujarat roads sector.
4.2.7 R E F O R M S I N S O C I AL A N D E NV IR O NM E NT AL S AF E G U AR DS M A NAG E M E N T O F
R O AD P R O J E C T S
Pioneering reforms in social safeguards management were demonstrated in first
generation BOT toll projects in the state. National ‘Social Management’ policy
were the basis for state guidelines established for this ‘safeguards’ aspect for the
BOT toll projects while for Environmental Management, a compilation of good
practices from elsewhere has been done as the basis for an eventual state wide
Environmental Management (sector) policy for application, inter alia, to
investment projects applied by R &BD.
Good practices in resettlement were demonstrated by IL&FS in the Ahmedabad-

Mehsana and Vadodara-Halol highway projects during the 1990s. By using
replacement cost, IL&FS deviated from the standard approach to compensation for
land and houses. These were estimated from market surveys, village records,
assessments by agriculture specialists and consultation with project-affected
persons (PAPs). The resulting valuations were 4-6 times higher than the
compensation paid by the government under the Land Acquisition Act. The
difference was paid as rehabilitation assistance from project funds. For structures,
replacement cost was based on engineering estimates for new construction
without depreciation. Compensation was paid at the rates applicable for residential
properties for some of the agricultural properties since the PAPs had purchased
36
these lands with the intention of converting them into residential properties. The
compensation amounts were equivalent to the return on investment on fixed
deposit schemes offered by nationalized banks.
IL&FS also introduced incentive-based income-generation schemes as part of the

rehabilitation assistance. Eligible families who purchased assets needed for self-
employment were given assurance of reimbursement in two stages: 50 per cent of
asset value at the end of eighteen months; and 50% at the end of the three years
contingent upon the PAPs continuing with the activities and earning the targeted
incomes. During this three year period, beneficiaries were offered maintenance
allowance in the first year and insurance of the asset against theft, disease, etc, as
appropriate thereafter. Few specific innovative measures included:
 Special measures for vulnerable families

 Old age pension to all above 60 years of age in urban areas.
 Support for income generating activities given to an additional family
member for families with older members in a rural setting.
 Repayment of outstanding debts on lost assets (as a grant).
In the case of Vadodara-Halol, community fragmentation was avoided by

relocation of an entire community. Instead of just the seven affected families, all 17
families in the community were offered an alternative developed plot and
construction costs, which enabled them to live together and retain their economic
and social linkages.
Some of these practices have been mainstreamed in subsequent BOT projects

managed by the state.
4.3 A REAS WHERE THE REFOR MS HAD LIMITED IM PACT

The Gujarat reform story had its share of shortcomings too. Certain functions/areas
where particularly coordination with other agencies/departments were warranted
had somewhat muted success.
4.3.1 R O A D F IN AN C IN G R E F O R M S /R O AD F UN D
A GSHP-funded study was undertaken with the assistance of external expertise to
define the financing requirements faced by the state for effective asset
management in future, to identify the scope for road maintenance financing
reforms, in particular a possible state-level Road Fund as a means of mobilising
appropriate funds to meet future requirements, and to provide advice on the
implementation of these reforms, particularly the possible road fund. While the
goal of establishing a Road Fund had been included in the institutional Action Plan
of the GSHP, this had not gained favour with central GOG areas, and accordingly
the Study recommendations for action towards a maintenance-oriented Road
Fund did not succeed by the end of the GSHP period. The availability of increasing
‘capital works’ funds from state, national and private sector sources in successive
years since then had slowed down even further the process towards a general
consensus among the relevant key departments of the GOG. However, due to the
continued strong demand for road infrastructure development and extension in the
state, and the increased sector-wide awareness of the associated rise in road asset
maintenance costs facing the state if the operability and performance of the major
road network is to remain satisfactory, the issue of formation of a Gujarat Road
Fund, however, has found its place in the new Vision 2020 document of the GoG.
37
4.3.2 R O A D S AF E T Y M A N A G E M E NT
Some studies, funded by GSHP, were conducted on a pilot basis in 5 districts where
extensive surveys were undertaken and black spot analysis was done. Templates
were also prepared classifying the black spots into various categories depending on
the treatments to be given. Funds were also allotted. However nothing much
beyond this could be achieved.
Action Plan for Road Safety Management, involving other departments/entities

who have stakes in the matter was also prepared and forwarded to the respective
departments of the GoG. No much progress however has been achieved beyond
this point.
In a nutshell, on the road safety strategy front, the reforms were unfortunately not
very encouraging largely due to lack of political and bureaucratic championship.
While the state boasts of one of the most modern accident and emergency
response system the upstream intervention measures of safety engineering,
enforcement and awareness were not given due attention. Gujarat has a long way
to develop a safe transport system comparable with the international best
practices.
4.3.3 F U N C T IO N I N G OF POLICY A ND P L AN N ING U N I T

While the creation of the PPU was successful, recruiting and retaining staff who are
not in mainstream engineering was problematic. This may be perceived as a
transitory problem, but in fact it may more reflect inherent problems, such as
finding a sufficient and steady workload or a perceived lack of promotion
opportunities. The reforms envisaged the PPU using salaried staff to undertake its
work in-house. Experience from other countries shows that: engineers prefer field
supervision to “backroom” jobs such as planning; non-engineers doubt their career
advancement in engineer-oriented organisations; lumpy workloads fall on only a
few specialist staff; and there are frequent losses of trained staff through transfers
and resignations.
The PPU need not necessarily employ conventional staff to meet all its specialist
needs. Maintaining the data bases for the GRMS is a very large job. Its demands are
lumpy. Running the system, based on HDM-4, is technically demanding and
requires experience. It is a problem when staff leave after being trained. Since its
development by consultants, GRMS has continued to be maintained and operated
by consultants, but for this to be a sustainable longer-term solution, adequate
funding must be provided, given the market rates for such services relative to
government pay scales and norms.
Eventually, when GRMS becomes a working tool for field offices, R&BD could
revisit the option of bringing the operation of GRMS fully into PPU using salaried
staff. Even then, it is likely that the data collection will remain outsourced. India
now has specialist firms undertaking automated pavement data collection using
expensive technical equipment that requires more than one customer state to
achieve economic utilisation.
38
4.3.4 Q U A L IT Y C O N T R O L
The Quality Assurance concept could not take off the ground. The Quality Control
wing in the R & BD is true to its title it does quality control. But, by doing so, it is
duplicating or replacing what should be done by the supervision engineers in the
field. Moreover, what it does is very narrowly focussed on the input materials and
very little on processes and final output / delivery. It has not come anywhere closer
to what was envisaged in the Institutional Development Study (IDS) carried out as
part of the Bank-funded Gujarat State Highway Project.
The Quality Control wing diligently applies its resources to the checking of the
most important civil works. The IDS study proposed major changes, extending its
activities to cover everything from contract preparation to project financial
management. The solution proposed by the IDS was to follow the principles of
“quality assurance” (QA). QA examines the process used to create deliverables.
With QA there should be no need to check the outputs themselves although
from time-to-time outputs are checked to audit whether the QA system is working
as intended.
QA has three components:
 Guidance documents (manuals) and procedures.

 Staff with proper qualifications/training/skills/experience.
 Records of what is done and records of checks of what is done.
The following makes the distinctions clear.
 Quality Control checks outputs, either as a census (check all) or on a sample

basis.
 Quality Assurance is a management system to promote quality output. It is
founded on:
(i) guidance documents telling staff what to do;
(ii) staff who have the proper qualifications/training/skills/experience; and
(iii) records what has been done and internal checks that have been carried
out.
 Quality Audit is Quality Control of Quality Assurance (i.e., a check of the QA
system).
Hence the Chief Engineer undertakes Quality Audit and the contractor undertakes
Quality Assurance (which includes Quality Control).
4.3.5 S T R E N G T H E N I N G LE G A L M AN AG E M E NT C AP AB I LI T Y T H R O U G H AP PO IN T M E NT O F
L E G A L A D V IS E R
The IDS report envisaged the role of a Legal Adviser working at a senior level giving
advice to senior managers on policy matters and correspondence, vetting tender
documents and contracts, and negotiating BOT agreements with well-briefed and
powerful private developers. The aim was to avoid legal problems rather than to
solve them. The IDS did not specify that an officer necessarily needed to be
recruited by the department. The sourcing options included:
 second an individual from the Legal Department
39
 appoint an individual as a permanent Legal Adviser

 retain a private law firm to provide advisory services
In R&BD, the role of the legal officer, attached to the office of the Principal
Secretary, R&BD, was sometimes more like that of a legal clerk: making sure that
nothing is overlooked and checking that obligations are met. A legal officer was
appointed but has moved out.
It is difficult to recruit a qualified person, which is understandable since the job

content is thin. Further contracts-related legal assistance has in recent times also
been available to the R&BD from time to time via, for example, the GRDC.
40
5 GUJARAT ROAD SECTOR POST REFORM
5.1 R&BD
R&BD has changed from an organisation focused on execution of civil works to an
agency that manages the road network and outsources much of its work. The
construction industry has been transformed in its capacity and competence.
Successful implementation of GSHP helped R&BD to create an image as a
department that performs; the examples of construction of good roads in urban
areas (e.g.) of Siddhpur and Unjha towns on Mehasana Palanpur Road generated a
demand for similar urban stretches of roads in other towns and cities for through
roads passing through their towns/cities. In fact this was the genesis of the scheme
Vikas Path. Because of rational use of maintenance grants and the GSHP
component for improvement of existing roads, the condition of roads improved.
This created an impact on the general public and in turn on politicians and senior
GOG administrators/officials. Good contract management resulting in timely
payments and timely redressal of disputes also improved relations between the
contracting industry and the department.
Staffing outcome: During the reforms, no changes were made in terms of essential
professional and administrative staff of RB&D. Labour force was about 20,000
before the reforms (1986) which reduced to 9,493 in year 2010.
T ABLE 3: R & BD S TAFFING 1198-2008
Positions 1998 2008
Chief Engineer 7 8
Superintending Engineer 23 24
Executive Engineer 112 112
Deputy Executive Engineer 425 416
Source: R&BD: http://www.rnbgujarat.org/Manual1.doc
5.2 M AJOR O UTCOMES OF THE R EFORMS IN THE G UJARAT R OAD S ECTOR

The reforms undertaken in the Gujarat road sector during late 1990s-mid 2000s
had a major impact on a number of critical areas, in particular, administrative costs,
maintenance backlog, maintenance funding, and efficiency of service delivery.
Reduction in administrative costs. The share of administrative cost in the capital

and maintenance budget was reduced by almost half - from 30% to 15.7 % during
7
2000-2007 .
Steady decline in staffing. The number of both professional workers and casual
labourers in R&BD have steadily declined over years in spite of the network size
and budget significantly growing. The casual labourers declined from 14203 in 1988
to 10621 in 2000 and further to 8338 in 2010. Similarly the professional workers
declined from 11075 in 2004 to 10250 in 2008 and further to 9381 in 2010.
7
World Bank. “Implementation Completion and Results Report on a Loan in the Amount of
US$280 million to India for the Gujarat State Highway Project.” June 18, 2008.
41
Reduction in maintenance backlog. During 2000-2007, the maintenance backlog

was reduced from 10,000 km at the baseline to 5,000 km, which was a 50%
decrease. That included over 1,800 km reduction contributed by the Bank-funded
GSHP.
Significant Increase in Plan Budget Allocation. The Annual Plan Budge for the
road sector underwent a steady and significant growth from Rs. 130 Crores in 1995-
96 to Rs. 1292 Crores in 2007-08. Even in relation to SDP (state Domestic Product)
at constant prices (1995-96) the road sector allocation increased from 0.3% of SDP
in 1995-96 to 0.54% in 2002-03 growing further to 0.6% in 2005-06. The increase
has been sustained and even accelerated beyond 2007-08 and the plan allocation
for road sector in 2010-11 was Rs. 2747 Crores. More significantly the percentage of
allocation for roads in the overall annual plan in the state has grown from a 4.9% to
8% in 2007-08 and 9.3% in the current year. Such significant increase in the
financing share represents the R & BD’s ability to create the requisite credentials
and trust with the Finance Department and corroborates the political commitment
for the road sector.
Increase in maintenance funding. Investment in new roads increased 6 times

compared to the pre-reform times (Error! Reference source not found.). Funding
or routine and periodic maintenance which typically receives less attention and
support from politicians also increased, though to a less extent, but it still doubled
by 2008-09 compared to 1998-99. Comparative statistics on annual road
maintenance expenditure in select states during 2001-2005 shows that Gujarat
paid more attention to maintenance than any other states in India. It spent
US$884 per km, which is over 15 percent more than the second spending on
maintenance state, Kerala, among the select number of states.
The double increase in maintenance funding demonstrated the understanding of

Gujarat’s politicians that lack of maintenance would lead to deterioration of roads
they had invested in and all their investments would be wasted. They clearly
understood that this could not be afforded as it would undermine their efforts in
achieving ambitious goals set out in the Gujarat Infrastructure Agenda: Vision
2010.
T ABLE 4: A NNUAL PROVISION OF FUNDS TO R&BD IN 1998-99 AND 2008-09, R S .
Type of works 1998-99 2008-09 Change, times
New construction 2690 16260 6
Maintenance
Routine 1380 2500 2
Periodic 340 620 2
Emergency 200
Other 220 130 1
Total 4630 19710 4
Source: R&BD.
F IGURE 2: A NNUAL ROAD MAINTENANCE EXPENDITURE IN G UJARAT AND COMPARATOR STATES DURING 2001-2005,
US$/ KM
42
Source: World Bank South Asia Poverty Reduction (SASPR) Database 2006
Increase in efficiency of service delivery. As a result of the reforms in Gujarat’s road

sector, most of contracts were executed with minimal time and cost overruns and
sometimes even with cost reductions which was uncommon for India’s road sector.
The civil works contracts implemented under the Bank GSHP were delivered with a
significant cost reduction – at about 23%, which was confirmed by comparing per-
km project cost at appraisal with that at completion (see Table below).
T ABLE 5: U NIT CONSTRUCTION COS T COMPARISON BETWEEN APPRAISAL AND COMPLETION OF GSHP
Total Cost Total Cost Unit Cost

Length
Item ($ million, 1997- ($ million, ($000/km,
(km)
98 prices) 2007-08 prices) 2007-08 prices)
Project Road Works Costs at Appraisal
Widening and Strengthening $348.8 $443.7 886 km $501
Road Maintenance $55.2 $70.2 857 km $82
Total $404.0 $513.9 1,743 km ---
Road Works Costs at Implementation Completion
Widening and Strengthening --- $330.0 871 km $379
Road Maintenance --- $66.6 969 km $69
Total --- $396.6 1,839 km ---
43
6 KEY ENABLING FACTORS FOR THE REFORM
6.1 S TRONG P OLI TICAL W ILL

Gujarat has been lucky to have reform-minded government exhibiting strong
political will and clear vision of its ambitious goals for the development and
prosperity of the State. During the launch of the Infrastructure Vision, the State’s
Chief Minister assured industrialists to provide the infrastructure needed to serve
industries operating in the state. The political commitment to implementation of
the Infrastructure Vision is also demonstrated through (a) close politico-
bureaucracy relationship and exemplary inter-departmental coordination (resulting
in efficient project delivery (in terms of minimal time and cost overrun and
disputes); (b) creation of enabling legal environment, which included enactment of
the Gujarat Infrastructure Development Act, 1999, Toll Policy. Gujarat was the first
state in India to have a law governing Build Own and Transfer (BOT) transaction
and such other arrangements along with private participation in infrastructure
projects.
6.2 C ONTINUITY OF L EADERSHIP IN THE R&BD

Two important factors playing a key role in the successful reform of Gujarat R&BD
were leadership by a technocrat and continuity of leadership. Firstly, R&BD was
headed by a technical Principal Secretary. Support for a technocrat as Principal
Secretary R&BD was strong and popular among stakeholders. As indicated by
R&BD staff during this study, officers posted to R&BD for three years cannot have
the same affinity for the department as an officer whose career has been in the
department. A technocrat who has risen from the ranks “owns” his department and
knows it inside out. He knows the persons surrounding him well, understands their
strengths and weaknesses, and is in a good position to run the department and to
transform it.
Secondly, R&BD had continuity of leadership involving the same ‘age-group’ of

officers for a considerable period of time. While it was valuable that the one
Principal Secretary (initially as Special Secretary) oversaw throughout its term the
Bank-funded GSHP project that supported many innovations and provided
exposure to international best practices, it was also significant that the overall
group of Chief Engineers and Superintending Engineers at the R&BD during the
last ten years was of a younger median age than current norms for those levels in
other PWDs, ensuring longer tenure and stability at those levels. Continuity was
also largely due to R&BD’s personnel planning policy whereby engineers are
directly recruited through Public Service Commission examinations to Class I and
Class II posts. This ensures good career progression and availability of officers at a
comparatively young age to man superior posts, so they can hold these posts long
enough to frame policies and oversee their implementation.
6.3 D EVELOPMENT OF S UPPLY - SIDE C APACI TY THROUGH GSHP

GSHP helped contractors to develop and grow, while the GSHP supervision
consultant(s) were also constructive in dealings with contractors, to foster
adoption of good practices from elsewhere. Contractors learned from the
international consultant in applying FIDIC contract conditions. Contractors had to
45
hire good technical staff and good equipment. Contractors thrived in an

environment where transparency and integrity were valued and prompt contract
payments were made. The three parties (Employer, Contractor, Engineer)
interacted in good spirit. Packaging of works in variable sizes also helped industry
capacity development by providing opportunities to all categories of contractors,
including local contractors, and enabling contractors to ‘graduate’ to larger
contracts from satisfactory execution of smaller ones. All these factors helped a
good deal in maintaining good relationship with the contracting fraternity.
Even post GSHP the story continues to remain very positive; the gains made
appear permanent. Tender transparency is good. Online tenders are accepted,
processing is swift and the Chief Minister is said to be “strict” which stifles any
possible corruption. Designs are much better than before. Standard designs are
used and adapted for site conditions. In one of the local contractor’s version
“Corruption is less, work is faster and there is no problem being paid.”
R&BD also benefited from the GSHP learning experience. R&BD engineers were
exposed to methods used elsewhere, learnt to work with consultants and learnt to
outsource work that the department could not undertake itself due to staff
constraints. Engineers from R&BD were also occasionally sent abroad for training,
which helped broaden their horizons.
6.4 O PPORTUNITY FOR S ETTING G OOD P RACTICE E XAM PLES THROUGH

GSHP
The works executed under GSHP demonstrated the contemporary best practices
and standards in the sector, resulting in raised public expectations. The public
demanded that other departmental road works were carried out to the same
standard. This promoted a positive and constructive work culture throughout R&B
D.
6.5 C ULTURE OF R ESOLVING I SSUES BY I NVOLVING THE P UBLIC

Gujarat has a long standing history of public participation in decision making. This
culture permeates through all public service delivery organisations in the state. To
cite an example, an improvement project involved building up the crust of the road
carriageway by thick layers of granular sub-base which raised the formation level
and utilised the crust underneath the existing carriageway. There was strong public
opposition to this method as it was thought this would cause inconvenience and
the works would linger on. There was a call for the additional crust to be made up
of bituminous overlays, which was not an economically sound proposal. A pilot
road section of 10 km was built to demonstrate that the proposed road
construction method would not be as troublesome as feared and that the quality
would be as good as a road built using bituminous overlays.
6.6 E-G OVERNANCE AT S TATE L EVEL

Gujarat established a separate information technology division, under the General
Administration Department. Subsequently, the government set up a separate
Department of Science & Technology. The state’s e-governance programme has
implemented the Gujarat State Wide Area Network (GSWAN) which is thought to
be the world’s second-largest IP-based WAN connecting over 2800 government
offices.
46
Moreover, the IWDMS (as described earlier) has streamlined documentation in

government offices. To the extent possible, files are electronic; transmission is
instantaneous. Not only can a file be located instantly, but also the history of its
movement can be retrieved. Dwell times can be displayed in graphical form,
revealing any tardy processing of the file. This has helped to increase
accountability and deter rent-seeking behaviour – while formerly there may have
been an incentive to process a file slowly, now the incentive is to process files
promptly.
6.7 H IGH D EGREE OF A WARENESS , T RAINING AND I NNOVATIVE M ETHODS

OF G OVE RNANCE AT S TATE L EVEL
Recognizing that governance is only as good as the human resources employed,
the GoG has institutionalized a Vibrant Governance (V-Governance) training
initiative. The program aims to bring about an attitudinal change in the work
culture and foster result-oriented governance in the state. The program is for all
staff (at all levels) in all departments. The main objectives of the program are as
follows:
 To inculcate the ability to adapt to and respond to changes

 To augment capacity building to ensure citizen focus
 To cultivate positive approach, pro-activeness, cost-consciousness and
more effective processes
 To facilitate attitudinal and behavioural change for better professional and
personal development.
The program has been designed after a comprehensive training need assessment
of all the departments and intensive focus group discussions. The training is
interactive and contextual, with several examples of success stories within the
government weaved in, for better applicability. The program also trains volunteer
trainers, who can then render training to other government employees. More than
4000 class 1, 2, 3 and 4 employees in the GOG state secretariat have already
undergone this training. Many middle and senior level employees from GOG
departments and districts have now also completed the training. The ultimate goal
of the program is to train all 500,000 employees of the state government. To
ensure that the training is effective and is contextual, regular feedback is also
obtained from the participants.
Peer Review. Gujarat has a system of inter-departmental peer reviews, wherein

departmental secretaries are given the task of monitoring projects/programs in
departments other than their own. For instance, the R&BD Secretary may have to
review the progress of educational schemes. This system brings in a certain
amount of independence and objectivity in terms of project monitoring and
reporting.
47
7 INTERNATIONAL EXPERIENCE AND ITS RELEVANCE

IN THE CURRENT CONTEXT
The objective of this Chapter is to determine where the Gujarat highways sector
stands in terms of institutional reform among other developed and developing
countries. In addition, it is intended to identify other possible initiatives that
Gujarat may want to consider to become even more efficient.
7.1 P HASES OF I NSTITUTIONAL R EFORMS IN THE R OAD S ECTOR

In mid-90s, Talvitie (Talvitie, 1996) suggested 5 phases in the institutional evolution
in the road/highway sector based on his long-term observations in many countries.
Talvitie’s classification of the phases was slightly adjusted by Queiroz and Kerali
(Queiroz and Kerali, 2010) about 15 years later based on their experience. The main
differences between the two models are in the definitions of Phases 2 and 5. Phase
2 is defined by Talvitie as “Identification of client and producer functions”, while by
Queiroz and Kerali as “Separation of client and producer functions”, because
separation, not identification, of functions, will certainly mean execution of these
functions by different entities. Phase 5 is defined by Talvitie as “Corporatization of
the client organization”, while by Queiroz and Kerali as “Establishment of an
Executive Agency or a Commercialized (Client) Organization” because some of
road administrations may not have become commercialized but a more
streamlined agency and less micro-managed by the line Ministry with their main
focus on management of the road network.
According to the both models the five-phase process is not necessarily sequential
and different parts of an organization can be in different phases. While some of the
road administrations may skip certain phases, the sequential five-phase process
seems more beneficial as the road administration continues its evolution through
learning and experience generated from each phase. These 5 phases include:
Phase 1: Traditional Road or Public Works Department (PWD). It is the starting

phase where the road administration/PWD is a single organization employing
thousands of people to execute road works. The road agency is centralized with the
line Ministry micro-managing budgets, selecting projects and using a political
criterion in resource allocation and management. The road administration is in
charge of technical issues: standards and specifications, and execution of works.
Construction of new roads has a priority.
Phase 2: Separation of the client and producer functions. The road administration
adopts a de-concentrated organizational structure with execution of works being
separated from project management. Efficiency is emphasized in service delivery
and contracting. Several units are established with specific responsibilities, such as
planning, management, inspection/supervision, and works execution.
Phase 3: Separation of the manager (client) and provider (producer)

organizations. Greater reliance on the market mechanism drives the separation of
the client and supplier organizations. The client function remains with the road
administration with the central office in charge of administration and
management, and regional/field offices in charge of supervision/monitoring of the
49
services. Regional implementation organizations are formed to execute road works

in accordance with contracts issued by the road administration or its regional/field
offices. The line Ministry delegates the budgetary and other responsibilities to the
central office of the road administration while it defines the mission, broad goals
and the annual budget of the road administration.
Phase 4: Privatization of the supplier organizations. The supplier organizations

are privatized. All supply functions are contracted out to the private sector. The
road administration continues to report to the line Ministry. The Ministry carries
out periodic oversight through a Board/Council and monitors its efficiency through
agreed performance indicators. The Ministry concentrates on defining and
developing the policy framework and carries out periodic oversight of the road
administration’s efficiency through agreed performance indicators. All budgetary
responsibilities are delegated to the road administration. The central office of the
road administration is responsible for policy implementation, budget distribution,
and performance audits, while the regional/field offices manage the road program
and carry out mandatory performance measurement.
Phase 5: Establishment of an executive agency or a commercialized (client)

organization. The (client) road administration/agency becomes the formal owner
of the road network on behalf of the government. The road administration either
becomes an executive (streamlined) agency (e.g., U.K. Highways Agency) under
the line Ministry, which outsources most of its activities and keeps in-house only
core strategic functions, or commercialized road entity (e.g., the Croatian
Motorways Ltd.), whose structure is similar to that of a private corporation, but
subject to oversight of Road Board/Council that reports to the Ministry. The
income sources of the latter are revenues from road user charges or public
subventions declared in a medium-term fiscal framework. This mid-(or long-) term
financial commitment are necessary for the entity to plan future investments. In
some countries, the corporate entity is empowered to enter into concession
agreements with the private sector to build and operate highways (e.g., in Croatia
and Latvia).
7.2 W HERE G U JARAT HI GHWAYS SECT OR STANDS IN ITS INS TITUTIONAL

REFORMS
th
The Gujarat highways sector can partially be considered in the 5 phase of its
institutional evolution. The R&BD is the formal owner of the entire state road
network, including NHs, SHs, MDRs, ODRs, and village (rural) roads. The State
government concentrates on defining and developing the policy framework for the
sector as part of its comprehensive policy for all sectors. The functions of the client
and service provider have been separated for a long time. The central office of the
R&BD is responsible for policy implementation, development of budget, and
quality control. The R&BD outsources most of its activities and only keeps in-house
its core functions – planning and management. Several units, including Policy and
Planning Unit, Quality Control unit, Engineering Staff College, Arbitration Tribunal
and Vigilance Office, have been established. It has adopted modern technology
and management system (i.e., GRMS) for planning and decision-making process.
Supply functions are procured from the private sector. Its field offices supervise
execution of physical works.
Several functions, specifically planning, management and oversight of PPP

projects, have been separated from the R&BD and new organizations have been
set up to perform these functions. Planning of PPP highway projects as part of
50
overall planning of infrastructure projects and development of the framework is

the responsibility of GIDB, while development of PPP road infrastructure is the
responsibility of GSRDC. Although the R&BD is not the owner of PPP roads, its
Policy and Planning Unit (PPU) still takes part in strategic decision making process
on financing of roads - whether they will be developed using BOT-toll or BOT-
Annuity. The R&BD’s PPU carries out a preliminary screening through GRMS to
assess the projected traffic and cost of developing a particular stretch of the
network. If the preliminary screening finds that the stretch amenable to PPP (BOT-
TOLL or Annuity) mode, the R&BD passes it on to GSRDC for a further detailed
analysis. GSRDC engages a transaction advisor to carry out such analyses and
develops a full blown project proposal for approval of the Finance Department and
endorsement of GIDB.
Performance management is in its early stage in the sector and no performance

indicators have been developed for R&BD and GSRDC. The Central office of the
R&BD does not carry out performance audits but rigorously focuses on quality
control of inputs and processes.
7.3 I NTERNATIONAL C OMPARISON

To draw an international comparison, it was decided to bring in a state / province in
a developing country with a federal system, which is similar to Gujarat, is in an
advanced stage of development and industrialization and whose highways sector
has undergone substantial institutional reforms. The State of Sao Paulo in Brazil
has been selected for that purpose. At the same time, it has also been decided to
broadly highlight the highly successful road agency reforms in two developed
economies, UK and New Zealand, to appreciate where Gujarat is vis a vis the best
in the sector.
7.3.1 I N S T I T U T IO N AL D E V E LO P M E N T IN B R AZ I L ’ S H IG H W AY S S E C T O R
Brazil, as India, is a federation consisting of twenty-six States, one federal district
(which contains the capital city, Brasilia) and municipalities. States have
autonomous administrations, collect their own taxes and receive a share of taxes
collected by the Federal government. They have a governor and a unicameral
legislative body elected directly by their voters. Municipalities also have
autonomous administrations, collect their own taxes and receive a share of taxes
collected by the Federal government and state governments.
The Brazil highways sector has undergone substantial institutional evolution. The
Ministry of Transport (MOT) concentrates on defining of the policy framework as
well as strategic planning, developing guidelines for implementation and
prioritization of investment programs for the highway sector, among other sectors.
The client and supplier functions are separated. The client function is performed by
the National Department for Transport Infrastructure (DNIT), which reports to the
MOT. DNIT is the legal successor of the former Brazilian National Highway
Department and is responsible for implementing the government’s transport
policy, including construction, maintenance, and operation of federal highways,
besides railways, waterways, and ports. Its main source of funds is the federal
budget. DNIT implements its work program directly or through contracts and
delegations to other public agencies or the private sector. The client function for
the Federal Highway Concession Program that remains under the MOT is
performed by a separate agency - National Agency for Land Transport (ANTT)
(which is also responsible for the railway concession). The source of income is the
federal budget.
51
7.3.2 I N S T I T U T IO N AL D E V E LO P M E N T IN S T AT E OF S A O P A UL O ’ S H IG H W AY S S E C T O R
The State of Sao Paulo, as the State of Gujarat in India, is the major industrial and
economic powerhouse in Brazil and is the richest state of the country. It alone is
responsible for one third of the country’s GDP. Similar to the State Government of
Gujarat, the State Government of Sao Paulo recognizes transportation as the
mainstay of its development and allocates a significant share of its budget to have
a well functioning transport infrastructure. About 26% of State of Sao Paulo’s
budget is spent on transport infrastructure and an additional 26% on urban
8
transport. The State has the largest number of two-, four- and six-lane highways
in Latin America. According to the National Confederation of Transports (CNT), the
State of Sao Paulo has the best highway grid in the country, with around 60%
classified as excellent, and nine of the 10 best Brazilian highways are in the State of
9
Sao Paulo.
The State of Sao Paulo highway sector has the client function separated from the
supplier function. Similar to the State of Gujarat, Sao Paulo State has two separate
agencies responsible for management of public road system, which are (a) the
State Roads Department (Departamento de Estradas de Rodagem, DER-SP),
responsible for non-concession roads; and (b) the Regulatory Agency for Delegated
Public Transport Services (Agência Reguladora de Serviços Públicos Delegados de
10
Transporte do Estado de São Paulo, ARTESP ) responsible for the roads under
concession. While the income source of the former is the state budget, the income
source of the latter, in addition to budgetary resources, includes revenues from
upfront payments and annual fees paid by the toll road concessionaires. Both of
the agencies report to the State Secretary of Transportation and hold
responsibilities for policy implementation in their respective sub-sectors: non-
concessional roads and concessional roads. All supply functions are procured from
the private sector through contracts. All toll roads in the State of Sao Paulo, as well
as in Brazil, are operated by private concessionaires.
7.3.3 I N S T I T U T IO N AL D E V E LO P M E N T IN UK’ S H IG H W AY S S E C T O R
The UK Highways Agency (HA), which is responsible for operating, maintaining and
improving the strategic road network in England, is in an advanced stage of its
institutional evolution. The functions of the client and supplier are clearly
separated. In delivering some of its functions, the HA relies on outsourcing external
organizations and commercial firms. For instance, routine maintenance is provided
by private companies under contracts let by competitive tender. The HA has also
packaged parts of the motorway network into commissions and then invites 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 (DOT) and the
contractor who then carries out all work on instruction from the consultant.
8
Source: “State of Sao Paulo Overview”. 2009. Presentation to the World Bank South Asia Study Tour by
Vital Luna, Secretary of Economy and Planning, State of Sao Paulo.
9
”The Highway Concessions Program of the State of São Paulo: a successful experiment”. 2009.
Presentation to the World Bank South Asia Study Tour by Carlos Eduardo Sampaio Doria, Director
General, ARTESP.
10
http://www.artesp.sp.gov.br/
52
B OX 2: K EY L ESSONS IN V ISIONS AND V ALUES LINKING WITH B USINESS P LANNING “ NETWORK CHALLENGES ” AS SAFETY
AND RELIABILITY OF TRAVEL TIME .
The HA sees its prime “network challenges” as safety and reliability of travel time
A corporate scorecard is used to align the UKHA’s business activities with its aims and objectives. The scorecard also provides
staff with a clear link between individual and team objectives and the Agency’s high-level performance targets.
The highway agencies aim to maintain the network in a safe and serviceable condition whilst minimizing lifetime costs.
Maintenance needs are identified by regular asset condition surveys and inspections.
Transport planning needs to be aligned with wider spatial planning. The HA is working with regional and local planning
bodies and developers to find sustainable transport solutions to support housing and development.
The HA works with staff to develop leadership, people management and delivery capability, including program and project
management skills, commercial and contractual competence.
Source: US FHWA. “Linking Transportation Performance and Accountability: Australia, Great Britain, New Zealand, Sweden.”
International Technology Scanning Program. 2010.
HA is a semiautonomous arm of the Department for Transport (DOT) with its own
board and chief executive. The relationship between HA and the DOT is
formalized. The DOT approves and determines HA’s budget and agrees to its
business plan and targets, while HA is responsible for delivery. From the DOT
strategic goals flow the objectives for HA, which has an aim of “safe roads, reliable
journeys, informed travelers.” The HA’s Annual Business Plan is built around these
objectives (see Box 3Box 3).
B OX 3: UK H IGHWAY A GENCY ’ S OBJECTIVES
Reduce delay and congestion on the strategic road network by delivering sustainable capacity improvements, making
journey time more reliable.
Influence customers’ travel behavior and decisions by making network information more readily available.
Improve road safety by maintaining the network in a safe and serviceable condition.
Enhance the environment by mitigating the potentially adverse impact of the strategic road network and supporting the
department’s environment and climate change objectives.
Provide an effective Traffic Officer Service.
Seek and respond to feedback from customers.
Deliver efficiency and value-for-money savings and improvements.
Source: US FHWA. “Linking Transportation Performance and Accountability: Australia, Great Britain, New Zealand,
Sweden.” International Technology Scanning Program. 2010.
The HA has embraced performance management as the system for delivering

results and documenting accountability. The British performance management
system, which has evolved significantly during the past decade, has shifted the
central government’s approach from setting many precise performance targets for
its transportation agencies to setting broader, more general goals. Regular
reporting of results provides feedback to the central government on how
effectively its priorities are being achieved by the complex network of central,
regional, and local transportation agencies, as well as by the many private
contractors who operate in the highly privatized British transportation system. The
11
HA measures its performance in the following eight key areas :
 Reliability: Implement a program of delivery actions that tackle unreliable

journeys on the strategic road network;
 Major projects: Deliver to time and budget the program of major schemes
on the strategic road network;
11
http://www.highways.gov.uk/aboutus/26993.aspx
53
 Safety: Deliver the Highways Agency’s agreed proportion of the national

road casualty reduction target;
 Maintenance: Maintain the strategic road network in a safe and reliable
condition, and deliver value for money;
 Carbon: Contribute to national and international goals for a reduction in
carbon dioxide emissions by lowering the Highways Agency’s emissions;
 Environment: Improve quality of life for transport users and non-transport
users, and promote a healthy natural environment;
 Customer Satisfaction: Deliver a high level of road user satisfaction;
 Efficiency: Deliver the Highways Agency’s contribution to the Department
for Transport’s efficiency target.
A set of targets under each of these areas (deliverables) have been agreed with the
Ministers and performance against targets is reported in annual reports.
7.3.4 I N S T I T U T IO N AL D E V E LO P M E N T IN N E W Z E A LA N D ’ S H IG H W AY S S E C T O R
New Zealand (NZ) is famous for its institutional reforms in the road sector and
experimenting with the split of responsibilities by function between several
institutions to manage the country’s road system. Its reforms date back to 1978
(see Annex 6). In the past decade NZ had two separate agencies, one to manage
highways, and the other to provide the funds. In 2008 the two agencies were
merged to form the New Zealand Transport Agency (NZTA) “to provide an
integrated approach to transport planning, funding and delivery.” In announcing its
formation the Minister of Transport explained that the NZTA was charged with
making sustainable transport choices for moving people and freight using different
modes and in so doing will work closely with regional transport committees.”
National and regional plans now take precedence over benefit-cost analysis as the
12
method of choosing investment in road networks . Integrated transport plans
coordinate the development of transport networks and land use plans to avoid
unintended impacts and to make best use of funds.
NZ has frequently been cited in many international studies of best practices in

asset management, performance management processes and road safety. Those
processes, while remain in place, are currently undergoing a shift in priorities as a
new government has taken a new direction in the national transport policy. It
strongly promotes improvements to national highway corridors as a component of
a national economic development strategy. As a result, the transportation agency’s
performance management system is shifting rapidly to respond to and incorporate
the new government objectives. The New Zealand experience in 2009 provided an
example of how a long-standing performance management system shifts priorities
to respond to changing social objectives (see Annex 6).
B OX 3: K EY L ESSONS IN FORMULATING R EFORM S TRATEGY AND I MPLEMENTATION
Policy advice should be separated from delivery.

The private sector should own and operate transport systems.
There should be intermodal neutrality in respect of costs, regulations and other impositions.
Modes should compete freely, with minimal government intervention.
The government’s role is to formulate strategic policy from a multi-modal perspective.
Promote affordable, integrated, safe, responsive and sustainable land transport.
Manage the state highway system, including planning, funding, design, supervision, construction and maintenance
operations.
12
Manage funding of the land The nationalsystem,
transport and regional plans do
including not conflict
auditing with the principles
the performance of benefit-cost receiving
of organizations analysis as land
their intent
transport funding. is to serve the national good.
Manage regulatory requirements for transport on land.
Source: US FHWA. “Linking Transportation Performance and Accountability: 54 Australia, Great Britain, New Zealand,
Sweden.” International Technology Scanning Program. 2010.
NZTA’s road safety approach takes a holistic view of road safety, putting the
emphasis on the road system design: to make it more accommodating of human
error; to manage the forces that injure people in a crash to a level that the human
body can tolerate without serious injury; and to reduce unsafe road user behavior.
Its state highway safety plan aims to provide a consistent, safe and forgiving road
environment with no surprises for road users, and to provide a safe working
environment for maintenance and construction activities. The plan covers speed
management, reducing vehicle-train crashes, the needs of vulnerable road users,
keeping vehicles on the roadway and minimizing the consequences of leaving the
roadway, and reducing head-on and across-median crashes. This plan is being
updated in response to the government's Road Safety to 2020 Strategy.
7.3.5 G U J AR AT ’ S K E Y AC H IE V E M E NT S C O M P AR E D T O IN T E R N AT I O N A L P R AC T I C E S
When comparing the reform process in Gujarat highway/road sector with
international best practices, it is quite evident that Gujarat did well in formulating
the Vision and Values and linking it with the Business Planning. The infrastructure
vision was business driven and fully embedded in its political ambition, vision and
culture. The infrastructure / road sector vision enjoyed high degree of political
patronage, the business plan was well grounded in that long term vision and the
success of the business plan was achieved through the constant support from the
highest level of Government. In performance measurement and management,
Gujarat is leading among the India states. The R& BD’s flagship GRMS and home
grown initiative in developing an IT based Monitoring and Evaluation System are
testimonials to this performance measurement and management culture.
7.4 F URTHE R P OSSIBLE I NITIATIVES FOR G UJARAT

While comparing to the best international pratices, there is indeed ample scope for
continued modernisation and reforms of the road sector in Gujarat. Over the
medium term, Gujarat may particularly wish to consider undertaking a number of
initiatives to further strengthen its performance and efficiency in the highway
sector:
 Reform strategy and implementation: In formulating the reform strategy,

Gujarat should have perhaps focused more on the inert-modal integration
and mode neutrality to promote an integrated land transport strategy
rather than focusing more aggressively on the road based transport. The
current framework of federal level control and management of rail
transport has somewhat hindered a broader multi-modal integration. The
state is conscious of this shortcoming and the GIDB anchored
Infrastructure Vision 2020 strives to deal with the port-road-rail
interconnectivity aspect in a more strategic and comprehensive manner.
 Performance measurement and management: Although Gujarat is

leading among the India states in this area, it needs to more actively
embrace performance management, e.g., develop a number of
performance measures which are linked to the Vision, well understood to
the public, as well as improve the current systems for disseminating
results and documenting accountability. Building on the base of a strong
community and private sector particption particpation culture, the road
agencies should also regularly organise staeholder workshops / meet,
enhance the public communication interface by issuing regular
newsletters etc. and improve integration of public / user input in policy
planning and implementation startegy. While successful performance
55
management systems turn out to be long-term and iterative processes

that require a commitment of financial and human resources, they prove
to substantially improve efficiency and accountability of a government
agency.
 Road Asset Management. While a lot of civil works are outsourced to the
private sector, Gujarat has mainly been using traditional contracts. The
state, however, needs to do more in evolving a culture of performance /
output based contracting and fully integrating in its way of business.
 Road Safety Reform. On the road safety strategy front, the reforms were
unfortunately subdued largely due to lack of political and bureaucratic
championship. While the state boasts of one of the most modern accident
and emergency response system the upstream intervention measures of
safety engineering, enforcement and awareness were not given due
attention. Gujarat has a long way to develop a safe transport system
comparable with the international best practices.
56
8 R ECOMMENDATIONS FOR REPLICATION OF GUJARAT

ROAD SECTOR REFORMS
This chapter attempts to answer two key questions (a) Whether the Gujarat
experience can be replicated elsewhere, and (b) if so, how.
Gujarat is blessed with advantageous initial structural conditions: a strong

industrial base, a historically strong private sector culture and interest, and
considerable basic state capabilities, which are crucial to the trajectory of reform.
The state also has the geographical advantage of a 1600 km long cost line and of its
‘corridor state’ status between the two prime growth centers in the country,
Mumbai and Delhi.
Moreover, the private sector pressure, both implicit and explicit, played crucial
roles in shaping up the reforms. The close historical interaction between private
capital and the state in Gujarat ensured that state officials have internalized the
requirements of capital in a way that may be impossible in most other states.
Gujarat is fortuitous in benefiting from strong path dependence and historical
experiences of reform, for example the joint sector idea that allows it to implement
the current model of private sector participation much more easily and without
much conflict. Economic reforms gave a renewed legitimacy to such interactions
and imperatives. Many policies were shaped and energized by private sector needs
and initiatives.
Gujarat’s unique business culture, its investment climate and strategic

geographical position are not replicable elsewhere. However, Gujarat’s approach to
a long term vision based set of reforms, developing a business plan well grounded
in that long term vision, and creating an enabling framework to deliver the
business plan can be well replicated across the boundaries to support more
efficient and effective governance in the transport sector in other states and
countries.
The pre-requisite for reforms is setting a Long term Vision, to which the top
leadership of the state—in both government and the private sector-- is
committed and seriously determined to pursue. The Vision Statement sets out
the goals for the infrastructure and the service standards which a road agency
aspires to achieve by a target year. The Vision Statement for the agency should be
supportive of the broader strategic goals of the state or the country, consistent
with its resource potentials, and reflect the ambition and priority of its primary
clients. For Gujarat the seed for the Road Agency’s Vision Statement was sown in
people’s aspiration expressed through the Chief Minster’s vision that it should be
possible to travel by road between any two locations within the state in six to seven
hours. This was interpreted as a goal to provide a robust highway network in the
state where average travel speeds of at least 80km/h could be maintained.
A Business Plan needs to be developed to implement the vision. The Business Plan
would depend on the specifics of individual cases and the aspirations of the state as
set out in the vision statement. At a minimum, the business plan should include (i)
the Policy Framework, including identification of existing legal authorities and any
necessary legal and regulatory developments,, (ii) organisational changes, with a
clear delineation of the new structures, (iii) physical work plan, and (iv) associated
budget requirements. The Business Plan cannot be implemented by PWDs/R&BDs
in isolation. At a minimum, support of the Finance Department is needed because
57
it provides the funds, approves changes in organisation structure and staffing; and
has an interest in the policy and legal frameworks. The “Team Gujarat” aspirations
have typically been supported by an MoU across the various governmental
stakeholders (e.g. road department, revenue department, forest department,
utility agencies and finance department) for each project which sets forth realistic
work plan targets for each of the parties. Ideally, the Business Plan should be
agreed at the highest level of the Government and involve all the key stakeholders
e.g. Ministry / Department of Finance, Home Affairs (Police), Traffic, Revenue,
Forests, Environment and Social Affairs.
Strategic Collaboration on Budgetary Programming. Close and systematic

interactions between the roads agency and the central agencies of government
responsible for economic planning and financial management (e.g., the Finance
Department) can build mutual confidence in medium-to-longer term budget
planning, particularly when the roads agency shows that it has the data, tools and
skills to readily demonstrate sound ‘service delivery’, administrative transparency,
effectiveness in management, and capacity to absorb more significant budget
allocations efficiently and with low operational risk factors. This was amply
demonstrated in Gujarat’s case through the quantum leap in the road sector
budget allocation and utilisation thereof during 1995-2005 and onwards - and the
commensurate leap in physical works accomplished.
Partnership with the supply side. A liaison with the contracting industry through
their authorized forums/associations to understand and address their concerns in
advance can be most beneficial. Regular interaction with the prospective bidders
from the stage when the technical parameters of the project are under finalization
and thereafter when the draft tender documents are under preparation (without in
any way sharing the financial aspects of the project), can go a long way in
minimizing anomalies in the technical provisions of the project and in the tender
documents. Moreover, the culture of true partnership among all the contractual
parties and across- the table- resolution of disputes, as amply demonstrated in
Gujarat, goes a long way to ensure smooth and efficient project delivery.
Governance and Accountability, respecting the rule of law. It is well known that
good governance is a precursor for economic growth, which is amply
demonstrated in the case of Gujarat. Strong and transparent institutions, policies,
procedures and human resources are crucial ingredients for sustained growth.
With specific reference to the road sector, some of the key governance challenges
across the country and how the initiatives in Gujarat can help address these are
now considered:
 Avoiding project delays and rent seeking behaviour. Avoidable delays to

road projects arise when government agencies fail to cooperate. Much too
often, each agency sticks rigidly to its own set of rules. Unfortunately, the
potential to withhold supervisory approvals to impose costly delays on
contractors also creates a serious moral hazard, particularly where the
bureaucratic cadres responsible for supervising works and enforcing the
multiplicity of regulations are poorly paid relative to the earnings of their
counterparts in private employment, as in many states in India (and other
countries). Use of this leverage to obtain financial payoffs or other favours
(such as educational support for dependents of supervisory staff) is often
too great a temptation, with not infrequent disruptions to work progress
where contractors are reluctant to comply. Such practices have been a
common albatross about the throat of PWDs, other infrastructure
58
authorities, and their contractors, throughout the various states of India

for very many years. The interest of the project is sacrificed, ostensibly on
the altar of bureaucratic procedures, but the real issue is often the rent-
seeking behaviour of the responsible supervisory staff.
 These practices have been mitigated in Gujarat, first, by the

demonstrated commitment from the highest state leaders to the
problem-solving attitudes of the “Team Gujarat” culture, carried down
through the ranks of government staff, and extending across to the
partnership with contractors. The system is in place to identify, prevent,
and reduce or eliminate avoidable delays through timely dialogue and
agreed procedures.
 Adherence to this ‘can do’ culture has been strongly supported by the
introduction of key instruments of modern management that provide
the essential mechanisms for accountability and control. Well designed
e-governance systems for procurement, including the Integrated
Workflow and Document Management System, provide accessible,
transparent information on the state of progress, and enable quick
pinpointing of any sources of delay. Similarly, the e-Dhara initiative,
aimed at complete computerization of land records across the state, is
eliminating the bureaucratic and cumbersome process of manual record-
keeping, ensuring greater transparency, minimal errors, reduced chances
of fraud, and also helping to ensure that R&R benefits and payments are
received by the actually entitled beneficiaries. Inter-departmental peer
reviews, enhanced disclosure of information (as in the portal of GoG’s
Home Department) and facilitation of citizen inputs in the government’s
functioning as practiced in Gujarat can be replicated in other states to
support better monitoring, public scrutiny and participation. The
SWAGAT online initiative in handling complaints is also instructive to
other states (although most states have some variation of this already in
place).
Balancing HRD and stability in HRM. While there is certain value of Vision-based
HRD and training strategies in the professional and technical development of roads
agency staff, this needs to be taken up in a context of policy-based staffing
stability. As evidenced by Gujarat, at all major staff levels, stability in staff tenure
in their respective positions is vital for improving the roads agency’s capabilities
over time. The GOG policy of generally limiting HR movements across
professional, technical and administrative positions to a three-year minimum cycle
is a positive HRM factor worthy of emulation in other Indian states.
59
APPENDIX 1: TERMS OF REFERENCE
Terms of Reference for Transport Institutional Development Consultant

(International)
Introduction: Background, Rationale
The India Gujarat State Highways project completed in 2007 was rated Highly
Satisfactory by both Implementation Completion Report (ICR) prepared by SASDT
and World Bank Independent Evaluation Group (IEG). Governance framework and
institutional arrangements in the Gujarat road sector has been found exemplary.
The Project Development Objective was to enhance the capacity of the
Government of Gujarat (GOG) for effective and efficient planning and
management of road infrastructure, while concurrently maximizing existing road
infrastructure asset utilization through priority investments and increased
maintenance funding. The Project not only achieved its objective and targets, it
was also implemented with a significant cost reduction – at about 23%, which was
confirmed by comparing per-km project cost at appraisal with that at completion.
In addition to external factors affecting this cost reduction, both the IEG review and
the ICR identified several internal factors, in particular organizational reforms that
took place during the preparation and implementation of the subject project. As a
result of these reforms and institutional development, the traditional Public Works
Department (PWD) focusing on execution of civil works was being converted into a
modernized road agency focusing on road management, planning and policy. It
was a major innovation in the PWD context in India, and it has strong implications
to good governance in the highway sector.
Many Indian states have expressed interest in learning lessons from Gujarat to
improve the performance and management of their road sectors. Unfortunately,
the scope of ICR for the project was limited and was unable to go into in-depth
research and analysis to understand all factors and reforms leading to improved
governance and performance of the Gujarat highway sector. Thus, this study will
pursue seeking responses to the following questions:
 What were the internal factors that led to transformation of the

conventional PWD and what were their exact impacts?
 What were the institutional reforms this PWD had gone through? What
were the key challenges in implementation of these reforms and how
were they addressed?
 What worked well and what did not work well?
 How can this practice be replicated in other Indian states, other South
Asian countries, and countries of other regions?
The study will cover the period of 1997-2007 because the project preparation
started in 1997 and implementation was carried out during 2000-2007.
Aims and Objectives
The objective of this study is to determine key success factors for implementation
and sustainability of institutional reforms in the road/highway sector. It aims at
analyzing institutional reforms in the road/highway sector in the state of Gujarat,
60
India, and other countries, and drawing lessons of applicability and replication for
other countries on how to improve performance of their road sectors under on-
going or proposed Bank-funded projects. The study will concentrate on reviewing
and analyzing, in particular:
 Institutional reforms in the road/highway sector worldwide undertaken in

the past decade;
 The governance framework, including organizational set-up, regulatory
framework, decision-making process, accountability mechanisms, etc. in
Gujarat’s highway sector before and after the reforms;
 The institutional reform process the Gujarat PWD went through to be
transformed from a conventional PWD focusing on execution of civil
works into a modernized road agency focusing on road management,
planning and policy;
 The critical policy/regulatory/institutional factors in Gujarat which
facilitated or enabled the reforms;
 The challenges in implementation of the institutional reforms
encountered and solutions applied to address these challenges;
 The types of studies/technical assistance carried out during the project
preparation and implementation and types of recommendations from
these studies/technical assistance taken forward and implemented.
The ultimate goal of the study will be to promote the Gujarat good practice in the
road/highway sectors of other South Asia countries and other regions and promote
the findings and recommendations of this Gujarat study into design of new Bank-
funded road/highway projects.
Outputs/Results
The key outputs of the study are expected to be:
 Identification of key factors affecting the success or failure of institutional

reforms worldwide in the past decade;
 Identification of good practices and key factors that have led to
performance improvements and successful institutional reforms of a
state-level PWD in Gujarat;
 Development of strategic recommendations for implementing similar
institutional reforms targeting transformation of traditional PWDs into
modernized road agencies;
 Development of benchmarks for improved institutional capacity (including
improved governance) based on the review of the Gujarat State Highway
Sector;
 Development of indicators for monitoring and evaluation of institutional
strengthening process in similar departments in other Indian states and
South Asian countries.
Expected Outcomes and Impact
The expected impact of the study is better understanding by PWDs and road
departments (from SAR countries) of the Gujarat highway sector institutional
reforms that have led to more efficient and effective performance and improved
governance of the sector.
61
The findings and recommendations of the study are expected to be discussed with
representatives of PWDs of Indian states during the proposed dissemination
workshop in Gujarat, and with representatives of road agencies of SAR and other
countries during the proposed GDL event. The discussions will enable better
understanding by PWDs/R&BDs of the Gujarat good governance practices and
institutional reforms undertaken. In addition, they will also lead to
experience/knowledge sharing among PWDs and promotion of similar reforms in
other Indian states and other countries.
Thus, the expected outcomes of the study should include:
 Increased interest of government officials from the road sectors of Indian

states and SAR countries in governance and institutional reforms,
 Promotion of the Gujarat good practices and institutional reforms in the
Bank-funded highway/road sector projects;
 Incorporation of lessons drawn from the Gujarat experience into the
design of new Bank-funded roads projects in SAR and other countries;
 Use of governance benchmarks identified in the Gujarat experience in the
results monitoring framework of the Bank funded road/highway lending
projects to monitor efficiency outcomes of institutional strengthening and
governance improvement components.
Activities and Methodology
The study will be carried out using the following methodology:
 Literature review of institutional reforms in the road/highway sector

worldwide;
 Review of the available documentation and literature related to the Bank-
funded project and Gujarat State Highway Sector covering the period of
project preparation and implementation;
 Interviews and/or surveys of (i) Gujarat state government representatives
that were involved in the project as well as promotion and implementation
of institutional and regulatory reforms; (ii) construction industry
representatives who were active in Gujarat state before and after
implementation of these reforms.
The scope of this study will cover:
 Overview of successful and unsuccessful institutional reforms in the

road/highway sector worldwide;
 Analysis of organizational reforms targeting improvement of governance
that took place in the Gujarat’s highway sector during preparation and
implementation of the Bank-funded highway project;
 Analysis of key factors leading to successful implementation of the
governance and organizational reforms in Gujarat highway sector;
 Determination of benchmarks based on the Gujarat example to improve
governance and strengthen institutional capacity in the highway/road
sector of other Indian states and other countries;
 Development of strategic recommendations for Indian states and other
countries to improve governance and strengthen institutional capacity of
their highway/road sectors.
62
Dissemination Plan
Dissemination workshop in March 2010: It will be organized in Gujarat with

involvement of representatives of Indian PWDs to discuss the findings of the study
and promote mainstreaming of the Gujarat good practices and institutional
reforms in the highway sector of all Indian states;
GDL event in March 2010: It will be organized with participation of representatives

of the Ministries of Transport and Departments of Roads from South Asia countries
to disseminate the findings of the report and promote the good practices identified
in the Gujarat State Highway Sector across SAR countries. Countries from other
regions that may be interested in this event will also be encouraged to participate
in this event.
Publishing of the report on internet in May 2010: The final report will be posted
on the websites of the Gujarat Roads and Bridges Department and the World Bank
South Asia Transport.
Consultant Qualification Requirements
The study is to be implemented by a team of an international consultant (TTL) and

a local consultant (Research Assistant). The International Consultant is to have at
least 15 years of experience in institutional reforms in the transport/road sector in
several countries, including developing or transition countries and developed
countries, and have experience in handling governance issues in the transport
sector. Good familiarity with the India road sector context is highly desirable. In
addition, he/she is to have proven skills in task leading of analytical works covering
transport/road sector and complex issues, have experience of working with road
projects on the ground and have an understanding of policy and decision-making
process, management, planning and procurement in the sector.
The International Consultant will receive support from a local consultant, who will
help setting necessary meetings with the Gujarat PWD officials and other
stakeholders and research for necessary information for the study.
Reporting
The Consultant will report to Arnab Bandyopadhyay, Sr. Transport Engineer, who
is TTL of the study and Natalya Stankevich, Governance/Operations Analyst, co-
TTL of this study and primary author of the ICR for that Gujarat State Highways
Project.
The draft report and final report will go through the World Bank and Gujarat PWD
peer reviewing processes. Only after the comments from the peer reviewers are
reflected in the final report and it is cleared and approved by the World Bank and
Gujarat PWD, the report will be recommended for dissemination through a
workshop, GDL event and World Bank website.
Duration of the consulting services
The consulting service of 20 working days would be required during September 19,
2009 through May 31, 2009.
63
P ROJECT T IMELINE : S EPTEMBER 2009 – M AY 2010
Milestones Deadline
Concept Note Review 31 August 2009
Submission of Draft interim report on 15 November

findings 2009
Final draft report 15 January 2010
Dissemination (workshop/GDL event,

website) 30 April 2010
64
APPENDIX 2: INSTITUTIONAL DEVELOPMENT

UNDER GSHP
The GSHP stretched over a decade, starting with the PCC in February 1997 and
finishing at the end of 2007 following the completion of the civil works.
The consultant carrying out the PCC fielded a separate team in the second half of
1997 to undertake an institutional strengthening study. Its report, GSHP
Institutional Development Strategy (IDS), was completed in February 1998 and was
a blueprint for modernising R&BD giving it an added focus on road management,
planning and policy.
The IDS study contemplated further consulting support, which was realised in the
13
form of a road safety study , a training needs assessment report, and institutional
strengthening consultancy services to help implementation of the Institutional
Strengthening Action Plan (ISAP). The ISAP consultant was deeply involved with
the establishment of a Policy and Planning Unit (PPU) in R&BD.
This appendix describes these institutional reforms. It also describes the very
important educational value of the civil works undertaken under GSHP.
GSHP Civil Works
The civil works were completed 23% under the budgeted cost and generally on
time. All the players concerned with GSHP did a good job. The following
summarises the salient lessons learned from that success.
Good project monitoring helped the project. Visits by the World Bank team were
frequent (about every four months) and long enough (10 days) to facilitate
interaction and application of minds to issues as they arose.
GSHP helped modernise the way the R&BD oversees contractors.
Project success was founded on cooperative working relationships between all

parties. R&BD, World Bank and the consultant cooperated harmoniously. Other
departments also obliged. For example, property acquisition by the Revenue
Department and tree clearance by the Forest Department were undertaken in a
timely manner.
The relationship was not at all adversarial. World Bank officers were open-minded,
helpful and flexible. They took account of local conditions rather than try to impose
solutions that worked in other countries. The World Bank wanted large contract
packages to attract capable contractors. R&BD considered the packages too small
to attract international bidders and too large for local contractors. A compromise
was reached which retained only one large package. Only five contractors
prequalified for this large package. The lowest bid was 27% higher than the
engineer’s estimate and the spread from lowest to highest bid was a mere 2%. The
Bank concurred with R&BD that the contract be split and re-bid. These two smaller
13
Road Safety Assessment Study and Implementation Strategy, Road Safety Study, 2006.
65
contracts were won by contractors who had not been able to prequalify for the
large contract and were completed for less than the engineer’s estimates.
The following examples further illustrate the benefits of a cooperative approach.
GSHP was preceded by the Strategic Options Study in 1995 which evaluated
3000km of Gujarat state highways and selected 1500km for detailed evaluation.
R&BD collected data before the Strategic Options Study consultant mobilized. The
consultant devised a matrix of attributes to rank roads according to needs, but this
process produced some odd results. Jointly, R&BD and the consultant found that
the reason lay in misinterpretation of the some of the data.
Widening the Ahmedabad-Mehsana road required removal of trees in the right-of-

way. The Forest Department wanted the standing trees be auctioned after giving
public notice. That could have delayed the project by many weeks. The contractor
was permitted to cut the trees and stack them at depots, from where they were
auctioned later. Cooperation of the Forest Department meant progress on road
works did not suffer.
A similar example concerned the bidding documents, which required contractors to

pay the Revenue Department royalties based on quantities of materials extracted
from time to time. This would have involved checking of quantities, making
payments, verification, etc, at various stages of the works and at various levels in
the Revenue and R&B Departments. The extra work and distraction it would have
caused would have impeded the contractors’ smooth and speedy execution of
work. The bid documents were changed to allow contractors to pay royalties based
on the quantities estimated to be needed. The Revenue Department accepted
there would be both underpayment and overpayment on account of small
differences between estimated and actual quantities used in the works
The GSHP contract was negotiated in 1998 but signing was delayed by the
embargo that followed India’s nuclear weapons testing. The Bank’s flexibility
permitted the maintenance component to start before contract signing. The
standard $10 million ‘retroactive financing’ (that is, money that can be spent in
advance of signing) was increased to $20 million.
A cooperative spirit extended to the contractors also. The first three years of the
contract were the worst economically for Gujarat. Added to the effect of the
embargo there was a serious earthquake in 2001. Restoration after the earthquake
diverted funds from the state budget which was already depleted by loss of
revenues due to tax concessions introduced after the disaster. Consequently, in the
first phase, payments to contractors were late. After 42 days the contractors were
entitled to interest, but they did not insist.
Continuity of key staff facilitated a cooperative working relationship. Continuity of

key personnel lead to mutual understanding and trust. The Bank officer in charge
of the project remained in that role almost to the end. Continuity at R&BD was
maintained throughout by the Special Secretary who later became Principal
Secretary. This worked to the ultimate benefit of the project. Political stability also
helped. The same government under the same Chief Minister governed the state
from October 2001 until the completion of the project.
Demand for good work was created by setting examples. An instance of this was
the road from Mehasana to Palanpur (both district headquarters) which passed
through two smaller towns Sidhhpur and Unjha. Sidhhpur and Unjha were provided
66
with service roads, well-designed traffic junctions and good roadside drainage. This
aroused public demand for roads with similar infrastructure in Mehsana and
Palanpur. It was argued that these are bigger towns and as district headquarters
must have such facilities also. It became easier to get approvals for such proposals
from Finance, Planning and other departments as these demands were backed by
support from the people’s representatives.
The works executed under GSHP raised public expectations. The public demanded
that other departmental road works were carried out to the same standard. This
promoted a positive and constructive work culture throughout R&BD.
Public involvement resolved issues. For example, the project involved building up
the crust of the carriageway by thick layers of granular sub-base which raised the
formation level and utilised the crust underneath the existing carriageway. There
was strong public opposition to this method as it was thought this would cause
inconvenience and the works would linger on. There was a call for the additional
crust to be made up of bituminous overlays, which was not an economically sound
proposal. A pilot road section of 10 km was built to demonstrate that the proposed
road construction method would not be as troublesome as feared and that the
quality would be as good as a road built using bituminous overlays.
Contractors were helped to develop and grow. Contractors are quick to praise
the GSHP supervision consultant, who was constructive and helpful to the
contractors. The contractors greatly appreciated the time spent by the consultant
explaining, helping and educating them. The contractors grew in their ability and
were able for perform to standards they had hitherto not been asked to achieve. At
the end of GSHP the contractors felt confident to bid for larger works and in other
states.
GSHP was Gujarat R&BD’s second project funded by the World Bank. The first was
for rural roads. Heavy machinery for that project was acquired by R&BD to assist
the contractors working on those projects. This machinery was useful for executing
GSHP. Post 1991 the economic climate in the country became more liberal.
Imported spare parts for heavy machinery became more readily available,
enhancing the utility of these machines further.
A contractor who has seen his business nearly five-fold described the GSHP system
as “perfect”. He gained invaluable experience from contract supervision by an
international consultant applying FIDIC contract conditions. He had to hire good
technical staff and good equipment, which he purchased from Europe. Early
relocation of utilities (which save 5% or more of the cost, according to another
contractor) was achieved much of the time. Contractors as a whole said processes
were transparent and payments prompt. The three parties (Employer, Contractor,
Engineer) interacted in good spirit.
Post GSHP the story remains very positive; the gains made are permanent. Tender
transparency is good. Online tenders are accepted, processing is swift and the
Chief Minister is “strict” which stifles possible corruption. Designs are much
better than before. Standard designs are used and adapted for site conditions.
“Corruption is less, work is faster and there is no problem being paid.”
There is still room for improvement. For example, contracts remain heavily in
favour of Employer. FIDIC sets out the role of Engineer as an impartial adjudicator
of claims by Contractor. FIDIC could be adopted, not just in name, in spirit also.
FIDIC is generic whereas specific contracts require specific conditions. These are
67
spelt out in Conditions of Particular Application, known as COPA. COPA must not
be used to shift the powers of Engineer back to Employer.
R&BD benefited greatly. GSHP was a learning experience for R&BD engineers,
who were exposed to methods used elsewhere, learnt to work with consultants and
learnt to outsource work that the department could not undertake since additional
staff had not been approved. Engineers from R&BD were sent abroad for training.
This helped them broaden their horizons.
Successful implementation of the project helped R&B to create an image as a

department that performs. This helped R&BD to garner more funds once the
Finance Department was in a position to allocate more funds following the
earthquake restoration work.
Institutional Development Strategy
The IDS study pointed R&BD in the direction of managing the road network
seeing itself in a new light of planning and supervising rather than designing and
executing civil works. Whilst the transformation has been partial, rather than
complete, it has marked a large step forward in the evolution of the road sector in
Gujarat.
The report’s conclusions were summed up in an institutional development matrix,

reproduced in Table 7. The status of each of these thirteen actions reflecting the
judgments of the authors of this report [this Appendix] are briefly stated in Table 8.
These are expanded upon in the following sections.
68
T ABLE 6: I NSTITUTIONAL STRENGTHENING ACTION PLAN FROM IDS REPORT
Activity Key Outputs Action(s) Required
1. Develop a Road Management System Functioning PMS, BMS and RMMS for state Put out Consultancy and follow up on
and establish units in R&BD to operate roads recommendations
the systems
2. Establish an Environmental Monitoring Functioning GSHP EMU Permanent EMU in Establish GSHP EMU and appoint staff.
Unit for GSHP which will evolve into a R&BD
permanent unit in R&BD Skills transfer and training at Division
level
3. Develop a Project Financial Management Functioning PFMS for GSHP and other Appoint Financial Manager
System for GSHP and R&BD R&BD projects
Development of PFMS for GSHP by PCC
4. Strengthen construction administration Completion of GHSP Appoint supervision consultant to transfer

and QC systems skills
Strengthened QC Wing, improved control
procedures and documents Technical audit and quality control for
periodic maintenance
5. Establish a Computer Systems Unit and Functioning computer systems in head Introduce computerization at Division and
install computer systems needed to office and Circle/Division field offices Sub-Division level
operate new management systems
Procurement and training
6. Establish a Highway Design Unit Transfer of GSHP design technology to a Decision by R&BD and establishment of
functioning Highway Design Unit Unit
7. Appoint a Legal Advisor in R&8D Permanent Legal Advisor post Decision by R&8D and appointment of
staff
8. Establish a Policy and Planning Unit in Functioning unit, manuals, planning tools Decision by R&BD and appointment of
R&BD and traffic/accident databases staff to Unit
9. Establish a BOT Unit to manage BOT and Procedures for project evaluation, Activate privatization Cell (BOT) with
toll projects agreements and monitoring training, etc.
10.Appoint a Human Resource Functioning HRD system training program Decision by R&BD and appointment of
Development Manager and establish a in place and R&BD staff receiving training HRD Manager
HRD training program
11. Establish a Road Transport Council Permanent Road Transport Council actively Already in place. Activate
coordinating road sector issues
12. Establish a Road Safety Council Permanent Road Safety Council actively Already in place. Activate
coordinating road safety initiative
13. Reform road taxation and establish a Fuel tax surcharge to cover Plan and Non Review by R&BD
Road Fund Plan expenditures. Road Trust Fund in
place Decision by GoG
69
T ABLE 7: B RIEF COMMENTS ON IDS ACTION PLAN
Activity Comment on Status as at end 2009
1. Develop a Road Management System and System working well but tasks outsourced because of difficulties recruiting and
establish units in R&BD to operate the retaining suitable staff
systems
2. Establish an Environmental Monitoring Implemented in name only. For major projects, the necessary environmental
Unit for GSHP which will evolve into a and resettlement investigation is outsourced as part of the feasibility and design
permanent unit in R&BD work.
3. Develop a Project Financial Management A financial management system was developed by the Institutional
System for GSHP and R&BD Strengthening Consulting Services but has not been fully introduced.
4. Strengthen construction administration Unit is doing a diligent and useful job. “Quality Assurance” concepts are not
and QC systems being applied.
5. Establish a Computer Systems Unit and Computerization proceeded at pace. Staff receive training and must pass
install computer systems needed to computer skills tests to be eligible for promotion.
operate new management systems
6. Establish a Highway Design Unit The unit exists but is not clear as to its mandate. Training of engineers has
improved design skills but the Highway Design Unit is not used as the
department’s “centre of excellence” for design.
7. Appoint a Legal Adviser in R&8D Appointee resigned. Post vacant. R&BD outsources legal services so this post is
mainly administrative. The IDS envisaged a much different role for the Legal
Adviser.
8. Establish a Policy and Planning Unit in Established and functioning but too much of its functions rest on the Chief
R&BD Engineer because of problems recruiting and retaining staff. Much of the work
therefore outsourced, and this may be the best option.
9. Establish a BOT Unit to manage BOT and Established in the form of the GSRDC. Functioning well.
toll projects
10. Appoint a Human Resource Development Implemented in name only, but not without some success.
Manager and establish a HRD training
program
11. Establish a Road Transport Council Established. Its operation was not reviewed but there is a need for a less formal
interaction with civil contractors and other stake holders to air views and avoid
problems rather than solving them.
12. Establish a Road Safety Council Established. Its operation was not reviewed.
13. Reform road taxation and establish a RoadNot actioned, but R&BD does not consider it lacks funding. At least for now, a
Fund Road Fund would be of marginal benefit.
Develop a Road Management System
This has been achieved fully, as expanded upon in Chapter 4.
Environmental Monitoring/Management Unit
The report envisaged an in-house environment unit which engaged in community

consultation and ensured R&BD projects met standards set for environmental
protection, land acquisition and resettlement. The report gave examples of
engineering solutions being improved as a result of community consultation.
70
Appropriately, this role of Environment Officer has been assigned to the Policy and
Planning Unit, but recruitment and retention of suitable staff is problematic, as it is
with other professional posts that lie outside mainstream engineering.
Financial Management System
A financial management system was developed by the Institutional Strengthening

Consulting Services but has not been fully introduced.
Quality Control
The Quality Control wing diligently applies its resources to the checking of the
most important civil works. Quality control should not be confined to construction
work, however. The IDS study envisaged quality control extending from contract
preparation to project financial management. This is a broad scope of work, and
checking it all is impractical.
The solution is to follow the principles of “quality assurance” (QA). QA examines

the process used to create deliverables. With QA there should be no need to check
the outputs themselves although from time-to-time outputs are checked to
audit whether the QA system is working as intended.
QA has three components:
 Guidance documents (manuals) and procedures.

 Staff with proper qualifications/training/skills/experience.
 Records of what is done and of checks of what is done.
The following makes the distinctions clear.
 Quality Control checks outputs, either as a census (everything checked) or

on a sample basis.
 Quality Assurance is a management system to promote quality output. It
does so by means of guidance documents for staff with proper
qualifications/training/skills/experience and by recording what is done and
what internal checks are carried out.
 Quality Audit is Quality Control of Quality Assurance (i.e., a check of the
QA system).
Hence, the Chief Engineer undertakes Quality Audit and the contractor undertakes
Quality Assurance (which includes Quality Control).
The Quality Control wing is true to its title it does quality control. But, by doing
so, it is duplicating or replacing what should be done by the supervision engineers
in the field. And what it does is very narrowly focussed. It does not achieve what
was intended by the IDS.
This is one of the most prominent examples of a deficiency that pervades all of
R&BD an absence of job specifications to tell people what they should be doing
and how they will (or should) be judged in annual performance reports. It should be
spelt out the Quality Control wing should be adopting a QA approach.
Computerization
This has been achieved very successfully, from the springboard of GoG’s e-
governance drive (see Section 5.7.)
71
To illustrate, the following is the software hardware available in the R&BD Highway
Design Unit (circle) at head office.
Hardware
Personal computers 120

Plotters 33
Line printers 4
Laser printers (A3 &A4) 50
Software
STAADPro Bridge & Buildings Structural Analysis & Design

STRUDSBuildings Structural Analysis & Design
STRAP Buildings Structural Analysis & Design
MIDAS Bridge Structural Analysis & Design
AUTOCAD Structural Details Drawings of Bridge & Buildings
Highway Design Unit
The unit exists, is well equipped, and is producing a lot of work. It is, however,
without a clear mandate as to what design work it should do and what should be
done by the divisions.
This is another prominent example of the absence of job specifications telling

people what they should be doing and how they will (or should) be judged in annual
performance reports.
Legal Adviser
The IDS report envisaged the Legal Adviser working at a senior level giving advice
to senior managers on policy matters and correspondence, vetting tender
documents and contracts, and negotiating BOT agreements with well-briefed and
powerful private developers. The aim is to avoid legal problems rather than solve
them.
A legal officer was appointed but has moved to a more important posting in Delhi.
The role of the legal officer in R&BD is more like that of a clerk making sure that
nothing is overlooked and seeing that obligations are met. It is proving difficult to
recruit a qualified person, which is understandable if the job content is thin. The
IDS did not specify that an officer necessarily needed to be recruited. The options
were:
 second an individual from the Legal Department.

 appoint an individual as a permanent Legal Adviser.
 retain a private law firm to provide advisory services.
Policy and Planning Unit
Formation of a new unit to deal with “policy and planning” is arguably the most
important recommendation in the IDS report. The PPU is at the heart of the
transformation from a Public Works Department focused on executing civil works
to a modern road agency that concentrates on road management, planning and
policy.
72
Some of the PPU’s eleven officers were trained but have since moved on.
Recruiting and retaining staff who are not in mainstream engineering is
problematic. This may be a transitory problem. On the other hand, it may reflect
inherent problems, such as finding a sufficient and steady workload or a perceived
lack of promotion opportunities.
The PPU need not necessarily employ staff to meet all its specialist needs. Indeed,
the operation of the Gujarat road management system (GRMS) has to date been
carried out by consultants. It may be best left that way. Consultants with more
than one person capable of undertaking tasks and are thus less vulnerable when a
staff member resigns. And consultants are paid only when there is work to be done,
not all year round like a member of staff.
BOT Unit
Establishment of a BOT unit has been met by creating Gujarat State Road
Development Corporation Ltd (GSRDC) in 1999 (see Section 5.5).
HRD Manager
An HRD post was created in PPU but is unfilled. HRD duties have been assumed by
the PPU’s Chief Engineer/Additional Secretary, assisted by the Staff Training
College. Although this is not in keeping with the intention of the IDS study, it has
not been without its benefits. A number of initiatives by the Staff Training College
have resulted from this collaboration.
The IDS saw the need for an HRD section against the backdrop of Gujarat Rules of
Business 1990, and Rule 11 in particular. Finance Department approval is needed to
promote or add new staff where there are financial implications. Consultation with
the General Administration Department is required to transfer or promote
Executive Engineers (Class I), or above. The IDS concluded that departmental
officers were administratively-oriented rather than professionally- and
management-oriented because R&BD has no authority to set its own HRD policies
in spite of the fact that most of its officers perform technical or specialist functions.
The IDS recommended that an HRD system be established comprising:
 personnel performance appraisal

 career planning
 programs for training and development.
Preparing job specifications/descriptions for all positions should be a precursor to

these three elements. (Without job specifications how can performance be
assessed?) Without job specifications organisational efficiency and staff morale will
likely be significantly compromised.
Institutional Strengthening Consulting Services
The contract for Institutional Strengthening Consulting Services was signed in mid-
2003 and (after an extension) the project finished at the end of 2006. The largest
task was establishing the Gujarat Road Management System (GRMS) and
attendant RMMS and BMS (see below). It also reported on quality management
and training needs.
73
Quality Management
Consistent with the comments made in above, the Institutional Strengthening

Consulting Services aim was to:
“Undertake a change in philosophy as it concerns Quality, whereby responsibilities

are revised as follows:
Quality Control Responsibility of the Contractor

Quality Assurance Execution by R&BD
Quality Audit Responsibility of the Quality Wing of R&BD.”
In addition to the Quality System development, procedure manuals were prepared

as follows:
 Quality System Manual for R&BD

 Model Quality Assurance Plan for a Project
 Construction Supervision Manual
 Road Maintenance Manual
 Quality Control Test Procedures Manual
Thus, material has been supplied that would enable the Quality wing adopt a QA
approach to its tasks. It should do so.
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APPENDIX 3: GUJARAT ROAD MANAGEMENT

SYSTEM
Development and establishment of the GRMS is the major element of the
Institutional Strengthening Consulting Services. The GRMS resides on a dedicated
server at headquarters in Gandhinagar. It is designed to be simple to use and is
connected to the field offices via GSWAN. Extensive training has been given by the
consultants, including a “train the trainers” programme to promote wide
dissemination of knowledge needed to contribute to and use the system.
GRMS comprises the following modules:
 Road Information System (RIS): The RIS forms the skeleton of the GRMS.
It imposes the same, well-defined reference points for all modules. The
input data define the nodes and links of the network as well as the road
types, link lengths, etc.
 Pavement Management System (MPS): The PMS is designed for strategic
and project-level analyses. It is capable of (a) strategic budgeting studies,
(b) project level technical analyses and (c) multi-year road works
programming and optimization under budget constraints.
 Routine Maintenance Management System (RMMS): The RMMS is
designed to improve the quality of routine maintenance through
standardization of activities including specifications, performance
standards, quantity standards, and supervision.
 Bridge Management System (BMS): The main purpose of the BMS
module is to plan, record and monitor bridge inspections, repairs and
improvements in a systematic way, enabling preventive maintenance and
early identification of deficiencies.
 Traffic Information System (TIS): The TIS stores traffic volume data, as
well as data from axle load surveys and origin-destination surveys. The TIS
14
produces a range of analysis/results, including AADT estimates of and
traffic forecasts.
 Accident Information System (AIS): The AIS records traffic accidents and
their attributes so they can be correlated with road data and ‘black spots’
identified.
 Environment and Social Information System (EIS): The EIS helps the
department make much wider use of the environmental and social data to
reduce the impacts on the physical and human environment.
 Monitoring and Evaluation System (MES): The MES measures/assesses
the performance of works/services to thereby manage outcomes and
outputs more effectively in relation to defined targets.
 Budgeting and Programming System (BAP): The BAP system has two
options:
 use HDM-4 to prioritise expenditures and generate a multi-year works
programme constrained, if necessary, by the available funds,15 or
14
Annual average daily traffic.
15
Version 4 of the Highway Development and Management Model (HDM-4) is a computer
system which uses data on pavement structure and condition, road geometry, traffic counts, heavy
vehicle axle loads, vehicle operating costs, and road construction and maintenance costs to optimize
road expenditures for, typically, a period of 20 years.
75
 use a “decision tree” method to generate a one-year works

programme using simple rules that were devised from analyses using
HDM-4.
This structure is comprehensive and will be invaluable when (if) it is fully

implemented.
Already, great value is being derived from the core modules of the system (which
are based on HDM-4) as they are fully operational and working well. These
modules are the RIS (Road Information System), PMS (Pavement Management
System) and BAP (Budgeting and Programming System). Although R&BD staff
have been trained in their use, the difficulty retaining staff in PPU has meant that
the consultant who set up the system is hired annually to operate it and produce
the prioritised programme of works, subject to budget constraints.
This process takes inputs from the TIS (Traffic Information System) which is also
fully functional and is being used as intended. A state-wide traffic counting
programme is undertaken twice yearly at a large number of locations across the
state. The data are entered in the system which makes seasonal and other
adjustments to produce forecasts of average annual traffic. Axle load data and
origin-destination data are collected intermittently, in the course of preparing
projects.
In 2010-11, the RIS will be extended to include 33,000km of MDRs and ODRs (major
district roads and other district roads). The plan is to eventually also include VRs
(village roads).
The RMMS (Routine Maintenance Management System) is simply an inventory and

data base. It is not yet contributing to more efficient expenditure on routine
maintenance by the field offices.
The BMS (Bridge Management System) is not so much a “system” for maintenance
management as a catalogue of bridge condition with photographs. As such it
enables specialist engineers to give advice to field officers without the time and
cost of travel to site. It is not known whether the BMS is being used this way in
practice.
The AIS (Accident Information System) is not operating. Cooperation of the Police,
who need to enter the required information on field data sheets, has not been
forthcoming.
The EIS (Environment and Social Information System) has been populated.
Updating the EIS is meant to take place when there is a change in field conditions.
This begs the question of how a change in conditions is notified, and what happens
if there is no update after the change.
The MES (Monitoring and Evaluation System) is not working as intended. The field
officers are meant to enter details of work underway and completed. Most are not
doing so.
The current state of the MES underscores the importance of job specifications
telling people what they should be doing and how they will (or should) be judged in
annual performance reports.
76
The MES also underscores the importance of relevance. The system’s core modules
produce a works programme defining the major works to be done in the
forthcoming year but, to the field engineer, this is just a “black box”. He contributes
data for the system to use, but has no further contact with it until he is presented
with a list of tasks. There is no point inventing work just to make the field engineers
feel an affinity with the process, but there may be a way in which the field
engineers can use the system themselves. For example, field engineers may find
themselves having to redeploy funds that, for some reason, will not be spent on the
works to which they were allocated. Could they use the BAP module in decision
tree mode to optimise that redeployment?
77
APPENDIX 4: GUJARAT ECONOMIC &

POLITICAL BACKDROP
The population of Gujarat state has passed 50 million. The gross state domestic
product (GSDP) of Gujarat (see Error! Reference source not found.9) is growing in
eal terms at a compound rate of around 9% annually in real terms (i.e., taking out
the effect of inflation). GSDP per person is 25% above the average for India.
T ABLE 8: G UJARAT GSDP (R S CRORE )
Year Current prices Constant prices Percent growth over previous year
Current prices Constant prices
1999-00 109861 109861 - -
2001-02 123573 113277 11.2 8.4
2002-03 141534 122500 14.5 8.1
2003-04 168080 140598 18.8 14.8
2004-05 189118 153079 12.5 8.9
2005-06 219780 170200 16.2 11.2
2006-07 254533 185802 15.8 9.2
Mean 11.5 9.2
Source: Socio-economic Review, Gujarat State 2007-08, Directorate of Economics

and Statistics, Gujarat, February 2008.
The tertiary sector is the highest contributor to GSDP. A key driver of Gujarat's
economy is manufacturing, notably textiles, petrochemicals, pharmaceuticals and
agro-based products.
As a proportion of India’s output Gujarat accounts for:
 39% of industrial output

 10% of mineral production
 25% of its textile production
 40% of pharmaceutical products
 67% of petrochemical production
 20% of exports.
Gujarat has extensive forest cover and a large cropping area. It is a leading
producer of horticultural crops and Gujarat Cooperative Milk Marketing Federation
enjoys a significant market share in India's processed food sector. The agricultural
sector, including animal husbandry, contributes 15% of GSDP. Gujarat produces
60% of India’s cotton and two-thirds of its denim. It also produces one-third of
India’s man-made fibre.
78
The state is rich in minerals, especially limestone, lignite and bauxite. The state
also has India's largest hydro-electricity project, the Sardar Sarovar project.
The chemical industry in Gujarat accounts for half the state’s annual investment.
India's first specialized chemical handling port was developed at Dahej, in the
Bharuch district. A liquefied natural gas (LNG) terminal has been recently
commissioned at Dahej to serve the power sector and other industries. Jamnagar is
the site of what is claimed to be the world's largest “greenfield” refinery. Over one-
third of India’s installed refining capacity is in Gujarat.
The Government of Gujarat (GoG) has taken a proactive approach to state

development. In 1999 it announced ‘Gujarat Infrastructure Agenda: Vision 2010’
which envisaged investment of Rs.116,983 crore encompassing 383 projects in:
power, ports, industrial parks, roads, railways, water supply, sanitation, urban
transport, water, airports, a gas grid and information infrastructure.
To attract investment Gujarat has set up single-window facilities at the district

level. The Gujarat Industrial Promotion Board is setting up kiosks at important
places to disseminate information regarding regulations governing new
investment.
Of the states of India, Gujarat has the longest coastline. It has 42 functional ports
including the major port at Kandla which is the site of India's largest multi-product
Special Economic Zone (SEZ). Gujarat has actively sought private participation to
improve infrastructure facilities. Gujarat developed port facilities, estates and
roads in conjunction with the private sector.
Ports in Gujarat can serve many landlocked northern states, namely Punjab,
Haryana, Himachal Pradesh, Uttarakhand, Delhi, Rajasthan and western parts of
Uttar Pradesh and Madhya Pradesh. Roads connecting Rajasthan, Punjab,
Haryana, Delhi and other states to Mumbai, the commercial capital of India, pass
through Gujarat. To exploit this geographical advantage, the importance of good
roads is recognized by a population known for its strong business and
entrepreneurial instinct. Accordingly there is political will to develop Gujarat’s
roads and keep them in good condition to attract investment.
Road works included in the state budget under the head ‘Pragati Path’ and ‘Vikas
Path’ are evidence of political will. These corridors are being developed by GoG
independently from its own resources to ensure good road connectivity of
adequate capacity from one corner of the state to the other (around 500 km) in six
to seven hours.
In addition to well-developed road infrastructure, Gujarat has 13 domestic airports

(the highest of the states) and one international airport. It also has an extensive
railway network of 5,188km.
Likewise, the energy sector is well-developed. Installed electricity capacity was

9,628MW in 2008 with very low transmission losses of less than 4%. Gujarat is the
only state in India to have an integrated gas grid. It is 2200km in length and is
operated on an open-access common carrier principle.
Gujarat has more than 2 million direct telephone exchange lines and more than 20
million cellular telephone subscribers.
79
Gujarat has the highest geographical area (27,125 hectares) designated for Special
Economic Zones (SEZs). As at the end of 2008 Gujarat had 55 approved of which 45
are sector-specific and 10 are multi-product. Gujarat‘s three operational SEZs are:
Kandla SEZ, Sur SEZ and Surat Apparel Park. It claims to be the first state to
formulate an SEZ policy, which includes flexible labour laws and exit options for
investors.
Gujarat is proactive in seeking development. (See Box: Vibrant Gujarat Global

Investors' Summit 2009.) As an inducement, the state makes a commitment to
provide all supporting public investment.
In summary, Gujarat is a prosperous state and has a progressive government with

strong political will. This is a favourable environment for infrastructure
development (including roads) and for reform of infrastructure management. This
is the backdrop to the success of the road sector in Gujarat.
B OX 4: V IBRANT G UJARAT G LOBAL I NVESTORS ' S UMMIT 2009
Vibrant Gujarat Global Investors' Summit 2009
The Government of Gujarat (GoG) organized the 4th biennial Global Investors' Summit 2009 during 12-13 January 2009.
Based on the theme ‘Gujarat Going Global’ and aimed at bringing together business leaders, investors, corporations,
thought leaders, policy and opinion makers; the summit served as a perfect platform to understand and explore business
opportunities with the State of Gujarat.
‘Vibrant Gujarat’: Global Investors' Summit 2009 was likewise a success. During the course of two days MoUs worth US$
243 billion were signed. The summit witnessed participation of delegates from 45 countries, amounting to over 600 foreign
delegates, who were joined by a “who’s who” of Indian industry.
Japan was the Partner Country to this Summit. This being the first time any country has agreed to partner with a State of
another country. Japan External Trade Organisation was designated as the partner organization. Japan also reciprocated
Gujarat’s initiatives for mutual economic cooperation by sending two senior level delegations, led by the Ambassador of
Japan to India and a Former Minister of Economic & Fiscal Policy of Japan. The maximum number of delegates was from
Japan, totalling to over 70 members. Another major delegation was from USA. The 232 stalls catered for companies from
India and 16 foreign countries.
Earlier Summits held in 2003, 2005 and 2007 led to the signing of MoUs worth US$ 14 billion, US$ 20 billion and US$ 152
billion respectively.
http://www.business.gov.in/outerwin.htm?id=http://www.vibrantgujarat.com/
80
APPENDIX 5: ROAD DEVELOPMENT IN

GUJARAT
Funds available to R&BD have increased dramatically since the start of GSHP.
Inflation has been of the order of 80% from 1998-09 to 2008-09 but the increases in
funding exceed that by a very wide margin (see Error! Reference source not
ound.10).
T ABLE 9: A NNUAL PROVISION OF FUNDS TO R&BD, 1998-99 AND 2008-09, R S CRORE
1998-09 2008-09 % change
New construction 269 1626 604

Maintenance
Routine 138 250 181
Periodic 34 62 181
Emergency 20
Other 22 13 150
SUBTOTAL 463 1971 425
Other sources of funds

NABARD 520
TFC 224
CRF 1 122
TOTAL 464 2838 611
GSHP widened and strengthened 871 km of state highways between the end
of1999 to the end of 2007 and carried out maintenance of a further 969 km. The
original financial outlay was Rs 1524 crore by the World Bank and Rs 640 crore by
GoG. Due to cost savings the final figures were much less, namely Rs 1190 crore
and Rs 545 crore.
Statistics of the Gujarat road network before and after the GSHP are found in
Error! Reference source not found.below.
81
T ABLE 10: R OAD LENGTHS BY CROSS SECTION AND SURFACE TYPE , 1998 AND 2008
ROAD LENGTH - March 2008

SURFACED ROADS UNSURFACED ROADS
Total Non- Total GRAND
BLACK TOP WBM (gravelled road) Motor-
surf- motor- unsurf- TOTAL
able
BSSL SSL SDL SML Total BSSL SSL SDL SML Total aced able aced
National highways 0 16 1375 1842 3233 0 0 0 0 0 3233 0 11 11 3244
Total 0 16 1375 1842 3233 0 0 0 0 0 3233 0 11 11 3244
State roads SH 855 9655 6736 817 18063 6 86 9 0 101 18164 103 153 256 18420
MDR 465 2913 267 30 3675 7 5 0 0 12 3687 4 32 36 3723
ODR 108 1760 22 0 1890 17 4 0 0 21 1911 2 0 2 1913
VR 73 2996 16 0 3085 0 9 0 0 9 3094 2 6 8 3102
Total 1501 17324 7041 847 26713 30 104 9 0 143 26856 111 191 302 27158
Panchayat SH 17 7 0 0 24 0 0 0 0 0 24 3 0 3 27
MDR 6327 9553 235 41 16156 197 145 0 0 342 16498 148 195 343 16841
ODR 3613 3781 21 0 7415 367 166 0 0 533 7948 195 296 491 8439
VR 8379 5606 57 8 14050 1836 1062 0 0 2898 16948 752 703 1455 18403
Total 18336 18947 313 49 37645 2400 1373 0 0 3773 41418 1098 1194 2292 43710
ALL NH 0 16 1375 1842 3233 0 0 0 0 0 3233 0 11 11 3244

SH 872 9662 6736 817 18087 6 86 9 0 101 18188 106 153 259 18447
MDR 6792 12466 502 71 19831 204 150 0 0 354 20185 152 227 379 20564
ODR 3721 5541 43 0 9305 384 170 0 0 554 9859 197 296 493 10352
VR 8452 8602 73 8 17135 1836 1071 0 0 2907 20042 754 709 1463 21505
GRAND TOTAL 19837 36287 8729 2738 67591 2430 1477 9 0 3916 71507 1209 1396 2605 74112
ROAD LENGTH - March 1999

SURFACED ROADS UNSURFACED ROADS
Total Non- Total GRAND
BLACK TOP WBM (gravelled road) Motor-
surf- motor- unsurf- TOTAL
able
BSSL SSL SDL SML Total BSSL SSL SDL SML Total aced able aced
National highways 0 0 1600 277 1877 0 0 0 0 0 1877 0 0 0 1877
Total 0 0 1600 277 1877 0 0 0 0 0 1877 0 0 0 1877
State roads SH 1515 10371 6727 174 18787 13 245 23 0 281 19068 164 200 364 19432
MDR 435 2706 159 0 3300 5 58 0 0 63 3363 13 33 46 3409
ODR 294 1522 11 1 1828 23 23 0 0 46 1874 32 0 32 1906
VR 317 2306 0 0 2623 8 30 0 0 38 2661 10 29 39 2700
Total 2561 16905 6897 175 26538 49 356 23 0 428 26966 219 262 481 27447
Panchayat SH 23 24 0 0 47 26 0 0 0 26 73 3 10 13 86
MDR 8881 6371 70 6 15328 872 612 0 0 1484 16812 463 255 718 17530
ODR 4017 1709 6 0 5732 1453 712 0 0 2165 7897 553 185 738 8635
VR 5880 1583 29 3 7495 5291 2108 0 0 7399 14894 1619 862 2481 17375
Total 18801 9687 105 9 28602 7642 3432 0 0 11074 39676 2638 1312 3950 43626
ALL NH 0 0 1600 277 1877 0 0 0 0 0 1877 0 0 0 1877

SH 1538 10395 6727 174 18834 39 245 23 0 307 19141 167 210 377 19518
MDR 9316 9077 229 6 18628 877 670 0 0 1547 20175 476 288 764 20939
ODR 4311 3231 17 1 7560 1476 735 0 0 2211 9771 585 185 770 10541
VR 6197 3889 29 3 10118 5299 2138 0 0 7437 17555 1629 891 2520 20075
GRAND TOTAL 21362 26592 8602 461 57017 7691 3788 23 0 11502 68519 2857 1574 4431 72950
SH state highway BSSL below-standard single lane

MDR major district road SSL standard single lane (3.75 - 4.05m carriageway)
ODR other district road SDL sandard double lane (7m carriageway)
VR village road SML standard middle lane (5.0 - 5.5m carriageway)
82
GoG has implemented a program called Pragatipath Yojana which widened and
strengthened 3710 km of roads at a cost of Rs 1750 crore in the corridors shown in
Error! Reference source not found.3. Average speeds of 80km/h are envisaged to
ake it possible to travel from one corner of the state to another in six to seven
hours.
F IGURE 3: T HE P RAGATIPATH Y OJANA ROAD NETWORK
Since 2005-06 another program known as Vikaspath has been upgrading roads
passing through urban areas as 2- or 4-lane carriageways with kerbs, footpaths,
lighting, drainage, and provision for parking. Separate pipelines or channels were
provided for utilities (water, gas, telephone etc.). Rs 2250 crore has been expended
thus far. When the work is completed, at a remaining cost of Rs 150 crore, 688 km
of roads will have been improved.
Another programme known as Kisanpath is improving rural connectivity for farm

produce and has to date spent Rs 370 crore on improving nearly 5300 km of roads
benefiting 3500 villages. A further 1400 villages will gain from the expenditure of a
further Rs 470 crore.
83
APPENDIX 6: INTERNATIONAL EXPERIENCE

IN ROAD SECTOR REFORM
Performance Measurement and Management
International experience of transport agency performance and accountability

is still developing, so much so that in 2009 the US Federal Highway
Administration sent a team to learn from countries that have had performance
management systems for at least a decade. (For definitions, see box.) The
teams studied how the transport agencies (i) demonstrated accountability to
elected officials and the public and (ii) how they used goal setting and
performance measures to manage, explain, deliver, and adjust their budgets
and internal activities.
In more detail, the team sought the following information:
 examples of how national, State, or provincial strategic goals are

translated into meaningful performance measures for the
transportation agency;
 ways to establish effective and achievable performance levels based
on input from the public, elected officials, and the business
community;
 examples of linking performance and transparency to national, state,
regional, and metropolitan plans and budgets;
 ways in which transportation agencies demonstrate good governance
and accountability in meeting or exceeding performance
expectations; and
 advice on what works and what does not when performance
measures are applied to Federal or multiregional transportation
programs.
B OX 5: • P ERFORMANCE M EASUREMENT AND M ANAGEMENT :
Performance Measurement and Management:
Definitions
Performance measurement is ongoing monitoring and reporting of progress toward goals.
Performance measures can be a qualitative or quantitative. They measure outcomes, outputs, efficiency, or cost-
effectiveness of efforts to meet strategic goals, not merely short-term aims.
Performance management translates strategic goals into specific targets, determines actions to achieve them,
allocates resources to perform those actions, and undertakes performance measurement.
The agencies consulted were:
 Swedish Road Administration, Sweden

 Department for Transport, and Highways Agency, England
 New South Wales Roads and Traffic Authority, and Austroads,
Australia
85
 Victoria Department of Transport, and VicRoads, Australia

 Queensland Department of Transport and Main Roads, Australia
 New Zealand Transport Agency, New Zealand.
The countries and agencies chosen have mature performance management

systems and large, complex, industrialized transport networks and many
services provided by local governments or private contractors. All are
parliamentary democracies, which limits the speed with which policies can
change.
The following sections summarise the conclusions reached by the FHA team.
Broad Policy Goals and Collaboration
Central governments articulate broad policy goals, and transport agencies

translate those goals into specific performance measures or targets in
collaboration with the federal or state governments. This collaborative target-
setting occurs between national and State governments and between State
and regional/local governments.
The team seldom found that one level of government mandates the
performance of another. Rather, they negotiate performance measures and
targets which are codified in one- to five-year service agreements.
Negotiations are fluid and continuous, and supported by extensive data
collection that show trends in system wide performance. All agencies were
highly focussed when it came to safety.
Cascading national goals into state/regional performance measures creates a

focus on outcomes rather than processes.
Unsurprisingly (given the uncertain longevity of political office) all agencies

noted that elected officials emphasised short-term accomplishments at the
expense of long-term trends.
Connecting Funding Allocations and Performance
Transport agencies’ performance management systems demonstrated

improved customer satisfaction, more reliable travel times, reduced
environmental impacts, and greater efficiency. Performance management
systems dovetailed with asset management systems that demonstrated a
good understanding of funding and investment needs. Agencies benefitted by
earning credibility with legislators and budgeting agencies.
Most agencies did not have dedicated road user funds and budget levels were
not strongly influenced by performance. This was due to overall funding
constraints and competition from other sectors, such as education and health.
One agency stated that while its performance management did not garner
budget increases, elected officials viewed it as so effective that it maintained
its budget when others were cut. Half the agencies expressed discouragement
that they could not convince legislators to spend more on network
preservation despite sophisticated documentation.
Ambitious Goals and Visions Drive Investment
Ambitious national visions and broad goals, more than specific performance
targets, generated new investments. When governments articulated new
86
transport visions, adopted new transport goals, or sought to use transport

investment to achieve other ends (e.g., economic stimulus) the likelihood of
new investment increased.
The following are examples of recent budget increases for expanding the
network or new economic stimulus programs:
 In 2009, the Australian “Nation Building” program funded a record

$22.1 billion road and rail construction program.
 Sweden has been undertaking significant investments for nationally
important corridors and bridges. A cordon pricing system will be used
to pay for a new outer belt for Stockholm.
 New Zealand’s new government is pursuing a national road network
similar to the US system.
 Great Britain is using tolling and long-term design-build-finance-
operate contracts for a $10.2 billion upgrade and long-term
maintenance of the M25 highway.
Value for Money
“Value for money” is a common theme. Several agencies apply benefit-cost

analysis to every project. Benefit-cost analysis gives agencies a common
language to demonstrate the value of their projects and programs.
Sometimes major projects are selected for political and policy reasons, not just
benefit-cost ratios. And some are re-evaluated after they are completed, to
check whether the expectations of the original benefit-cost analysis are
realised.
Several agencies summarize future asset management needs to quantify the

government’s future financial liability and reveal the consequences of under-
investment in maintenance.
Accountability is Transparent
All agencies produce detailed, ongoing measures detailing achievement of

goals and management of public resources. Regular reporting is viewed as
critical for accountability.
Agencies regularly reviewed performance with their managers to produce

monthly, quarterly, and annual performance summaries. Continual two-way
dialogue occurred between ministers and executives, as well as parliamentary
committees.
Limited Number Targets
In general, governments have steadily reduced the number of targets for

transport agencies and moved toward fewer, broader, more policy-oriented
goals. For example, since 1998 the number of measures to be met by the UK
agency shrunk from 600 to 30.
“Do It With People, Not To Them”
“Do it with people, not to them” was both a direct quote and a common
sentiment of transportation officials.
87
The preferred way to manage performance is: carrots versus sticks, incentives
versus penalties, dialogue versus dictates.
Performance measurement identifies areas for improvement, not imposition

of penalties. When improvement is needed, it is achieved through training,
benchmarking, peer exchanges, and local agency staff development.
Performance Management Takes Time and Resources
All agencies have staff dedicated to collecting and reporting performance

data. Performance measures evolve. They take time and significant effort to
develop. Outcomes are difficult to measure such as transport’s effect on the
economy.
Lessons Learned
The following are the lessons learned by the team:
 Articulate a limited number of high-level national goals linked to clear

targets and measures of success.
 Negotiate intergovernmental agreements on how agencies will
pursue these national goals, adapted to reflect regional or local
priorities.
 Evaluate performance by tracking performance measures and
reporting them in clear language.
 To promote performance, and achieve targets, encourage state,
regional, and local agencies by incentives, training, and support (not
penalties).
 Rather than focus on many short-term targets, use performance
management to advance long-term improvements in decision making
and investment.
 Use benefit-cost analysis to demonstrate value-for-money.
Undertake some post-construction evaluations to assess whether the
anticipated benefits were realized.
 Recognize that major national visions, not achievement of narrow
targets, tend to generate new investment.
 Express long-term deferred maintenance as a long-term future
liability which links budget allocation to long-term sustainability of
the network.
 Demonstrate accountability by producing annual performance
reports on agency achievements. Rather than use technical terms,
report results using language that is meaningful to the public.
 Collaborate frequently with other government agencies. Meet
periodically with top leadership on cross-cutting issues such as
economic development, public health, highway safety, and so on.
 As well as the usual performance measures (infrastructure condition,
internal operations, transit times,) have a strong safety focus and
document the results of safety measures.
 Focus on desired outcomes for travel time reliability that lead to
expanded strategies for highway operations.
 Decision making needs high-quality performance data. Provide
resources to collect, analyze and report performance data.
 Performance management is a culture that needs to be fostered so
that it becomes part of the organisation.
88
H IG H W AY S A G E NC Y B U S INE S S P L AN  U N IT E D K I NG D O M
One of the agencies visited by the Federal Highway Administration team was
the UK Highways Agency, which is an executive agency of the Department of
Transport. The Highways Agency has a highly developed performance
management system. This section describes its fifty-page Business Plan 2009-
10.
Aim, Objectives and Values
The Business Plan states the Agency’s aim, objectives and values as follows:
Our aim is “Safe roads, Reliable journeys, informed travellers” and all of our
work is framed around delivery against this aim.
Our prime objective is to deliver a high quality service to all our customers by:
 reducing congestion and improving reliability.

 improving road safety.
 respecting the environment.
 seeking and responding to feedback from our customers.
We also have four enabling objectives.
 To ensure more effective delivery through better working

relationships.
 To implement best practice and innovative solutions to improve
service.
 To be a good employer.
 To be an efficient agency with effective business processes and
resource management systems.
There are six values setting out how we behave in fulfilling our objectives:
 Customer Service we put our customers first and aim to deliver

world class quality of service
 Teamwork we work together in dynamic teams and partnerships.
 Continuous Improvement we are committed to learning,
innovation and flexibility.
 Diversity we value people for who they are and their contributions.
 Best Value we provide quality services that provide value for
money.
 Integrity we build trust by acting with honesty, openness and
fairness.
Challenges
The Highways Agency sees its prime “network challenges” as safety and
reliability of travel time. The Agency has a Public Service Agreement (PSA)
with the government which says: “The Highways Agency will minimise
increases is journey time unreliability through the implementation of a
89
programme of delivery actions.” The safety PSA has a quantitative target of a

40% reduction in those killed or seriously injured in the decade to 2010.
The Highways Agency’s “strategic challenges” are sustainability (lasting

economic, social and environmental benefits), climate change (reducing
carbon emissions) and fiscal stimulus (boosting the economy by increased
public expenditure in response to the current financial crisis).
To address these challenges, a set of deliverables and targets have been

agreed with Ministers and performance against targets is reported in annual
reports. The following are the areas in which performance is measured.
 Reliability implement a programme of delivery actions that tackle

unreliable journeys on the strategic road network.
 Major Projects deliver to time and budget the programme of major
schemes on the strategic road network.
 Safety deliver the Highways Agency’s agreed proportion of the
national road casualty reduction target.
 Maintenance maintain the strategic road network in a safe and
reliable condition, and deliver value for money.
 Carbon Emissions contribute to national and international goals for
a reduction in carbon dioxide emissions by lowering the Highways
Agency’s emissions.
 Customer Satisfaction deliver a high level of road user satisfaction.
 Efficiency deliver the Highways Agency’s contribution to the
Department for Transport’s efficiency target.
A corporate scorecard is used to align the Agency’s business activities with its
aims and objectives. The scorecard also provides staff with a clear link
between individual and team objectives and the Agency’s high-level
performance targets.
The budget can be categorised by five areas of activity: traffic

management; major improvements; technology improvements (e.g.,
installation of CCTV cameras); maintenance (to minimise lifetime costs of
assets); and smaller schemes (e.g., research and development, information
technology).
Managing, Maintaining and Improving the Network
The Agency’s Reliability Delivery Plan consists of seven programmes

containing 30 measures to reduce congestion. GPS equipment is reducing
accident investigation times and allowing lanes to be re-opened quicker. Local
solutions are being applied to fix specific problems. “Quick change” moveable
barriers are being used at road works to make the maximum number of lanes
available at peak times. Technology, such as variable message signs, is being
used to improve traffic flow management. A 24-hour information service and
real-time travel information guides road users’ travel decisions.
The Agency aims to maintain the network in a safe and serviceable condition
whilst minimising lifetime costs. Maintenance needs are identified by regular
asset condition surveys and inspections. Road condition information (rutting,
road texture and road profile) is captured by survey vehicles travelling at traffic
speed. The Agency is currently introducing the world’s first Traffic Speed
90
Deﬂectometer vehicle, which measures the pavement’s structural condition

without the need to close traffic lanes. Improvements to the Integrated Asset
Management Programme are ongoing.
For the delivery of major schemes to improve the network, the Agency has
been building its commercial and project management capabilities. It is now
focussing on the following areas.
 Introducing better defined performance measures for suppliers, to

enable the Agency to manage their activities.
 Providing commercial capability training for our staff.
 Completing the establishment of a new Commercial Division.
 Extending and improving use of ‘earned value’ management
techniques.
 Providing training specific to the needs of project managers.
Improving the Environment
Acting on environmental responsibilities forms part of the Agency’s approach

to Sustainable Development. The Agency is reviewing its strategic approach to
the environment, to minimise negative impacts of roads and to enhance the
quality of the environment where that is practical and cost effective. This
covers air quality, cultural heritage, nature conservation, noise, water quality
and drainage, materials and landscape.
Supporting Wider Government Policy
The strategic road network plays an important part in supporting wider

government policy spanning spatial planning, national road safety goals and
sustainability.
The Agency is producing its third Sustainable Action Plan in support of the
government’s sustainability strategy ‘Securing the Future’ published in 2005. It
is working on climate change, reduction of carbon emissions, and safety. The
Agency has adopted a Safety Risk Management culture to ensure the safety
needs of road users and road workers are considered when a road scheme is
being developed and delivered.
Transport planning needs to be aligned with wider spatial planning. The

Agency is working with regional and local planning bodies and developers to
find sustainable transport solutions to support housing and development.
The Agency is contributing to the Department for Transport’s ‘Value for

Money’ delivery agreement with the Treasury, which was established as part of
the 2007 Comprehensive Spending Review. Efficiencies will be achieved
through a variety of activities, including the staged introduction of new
maintenance contracts, managing down the cost of major projects, and
minimising the impact of construction industry inflation through better
procurement.
The Agency has responded to the government initiative to improve handling

of datasets that hold sensitive personal data to protect them from loss or
accidental release. All staff are completing a training course to raise awareness
of data handling and information risk issues. We will also continue to work with
91
our supply chain so that they fully understand our requirements for protecting
information they may be handling on our behalf.
Building Capability
The Agency is working with staff to develop leadership, people management

and delivery capability, including programme and project management skills,
commercial and contractual competence. Modernisation of rewards in line
with the Cabinet Office reward principles is intended to improve organisational
flexibility.
Engaged employees are more connected to their work and organisation, which
results in better performance and customer satisfaction. ‘You Make It Happen’
Awards to staff members recognise outstanding examples of actions and
attitudes.
The Agency is endeavouring to work with a wider range of suppliers. To that

end it has established a Supplier Diversity Day to see how we can better work
with the supply chain.
Customer Focus
Communicating with customers and stakeholders is an important part of the

Agency’s job. Each year it communicates with about 13,000 customers through
road users’ satisfaction surveys. By asking for views and acting on feedback the
Agency can raise its standards by addressing potential improvements.
An annual Stakeholder Performance Survey of 3000 stakeholders reveals what

drives satisfaction and dissatisfaction. By working closely with stakeholders
the Agency conveys the rationale behind its work and receives feedback and
ideas which it considers to be true collaboration.
We continue to look for ways to help our customers with their journeys. Our
Customer Promise consists of a series of enduring statements to focus and
drive the service we provide. It helps to provide shape and direction for our
entire workforce. And our customers should be able to see the benefits of our
actions in relation to each aspect of the Promise. It will also assist us in
delivering our own contribution to the Government’s Service Transformation
Agreement.
To drive the service it offers and guide its workforce the Highways Agency has
formulated a ‘Customer Promise’ as follows.
We will:
 help you make your journeys safely and reliably.

 provide value for money and invest in improved services.
 provide information to help you make choices before and during your
journey.
 clear up incidents quickly and safely.
 limit any delays when carrying out road works and improvements.
 play our part in protecting the environment.
 ask you for your views and act on feedback.
 deal with you promptly, courteously and helpfully.
92
ROAD REFORM IN N E W Z E AL AN D
The Beginning: Funding Reform
New Zealand is prominent in road sector reform. Its reforms date from April
1978 when a sophisticated system of Road user charges was introduced. Road
user charges were motivated by the fact that pavement costs are principally
determined by heavy vehicles, mainly trucks. Whilst it is equitable that users
are charged for the road costs they incur, the main reason for road user
charges was to encourage trucks to spread their weight over the pavement by
fitting the right number of axles. Trucks bought licences in multiples of 1000
km at a price that depended on the nominated maximum weight and the axle
configuration. Light vehicles paid their road user charges through a per-litre
levy on fuel. All revenues were paid into a road fund for spending solely on
constructing and maintaining roads.
The road fund was administered by the National Roads Board, chaired by the
Minister of Works and Development and with members representing the
government, road users, and local authorities. The national Roads Board was
serviced by the Road Division of the Ministry of Works and Development which
was also responsible for planning, construction and maintenance of the
national network of ‘state highways’. Local roads were the responsibility of
local authorities. Prioritisation of road projects was mainly based on benefit-
cost analysis which was introduced in the early 1970s.
The road fund paid for all costs of state highways and half the costs of local
roads.
Road Management Reforms: First Round
In 1984, the government-of-the-day decided the NZ public sector should be

reformed based on the following principles.
 Government policy should be separated from regulatory and service

delivery functions.
 Activities that are better undertaken commercially should be
contracted-out. Government agencies involved in service delivery
should be sold to the private sector or formed into state-owned
companies.
 Government departments and agencies should be accountable for
managing their operations.
Reforms in the transport sector were based on the following principles.
 Policy advice should be separated from delivery.


16
The private sector should own and operate transport systems.
 There should be intermodal neutrality in respect of costs, regulations
and other impositions.
16
This was of major significance to the railways. The New Zealand Government Railways
had been commercialized and had transformed into the more lean New Zealand Railways
Corporation. It was later sold to private interests.
93
 Modes should compete freely, with minimal government

intervention.
 The government’s role is to formulate strategic policy from a multi-
modal perspective.
 Safety is a joint responsibility of operators and the government.
 Costs of safety monitoring and law enforcement should be met on a
user-pays basis.
The process of road reform started in 1986. It signalled the end of the National
Roads Board and the Ministry of Works and Development, which had a staff
and wage-worker force of nearly 10,000 persons. In April 1988, all the
Ministry’s commercial activities were grouped into one organisation known as
Works and Development Services Corporation (NZ) Ltd a wholly government-
owned company. Policy and regulatory functions concerning roads passed to
the Ministry of Transport.
In October 1989, the New Zealand government changed the way roads and
highways were managed. It established Transit New Zealand, a government
entity with an independent board responsible for funding and managing the
national state highway network and allocating funds to local roads.
The Transit New Zealand Act 1989 required competitive tendering of design,
supervision, maintenance and construction for works on all state highways and
most local roads from July 1991. Prior to 1991 the Ministry of Works and
Development had carried out most of the work on state highways, without
competition. Local authorities had carried out most of their own road works.
After 1991 nearly all road and highway works moved to the private sector.
Government-owned businesses were sold and most of local government's
construction units were also sold. Instead of building and maintaining roads
and highways using their own staff, central government and local
governments behaved as network owners managing their assets and
developing competitive pricing procedures for securing services and
contracting physical works.
Transit New Zealand developed ten-year ‘performance specified’ maintenance

contracts where contractors take total responsibility for delivering agreed
service levels. Regular audits check compliance. Cost savings around 20% were
achieved, as well as improved services. Other contracting techniques such as
desig-build, were also utilised.
Transit New Zealand set about developing innovative policies, procedures and
information systems that included:
 end-result specifications;
 QA (quality assurance) for all physical works;
 a road asset maintenance management system;
 traffic monitoring systems;
 a safety management system;
 planning and protection systems;
 a national road project financial management system;
 a ten-year forward planning software tool for maintenance planning;
 a property management system;
94
 a long-term procurement strategy;

 a national highway strategy framework;
 intelligent transport systems, and
 local/national road management alliances.
Transit New Zealand managed state highways on the basis that users should
expect a ‘no surprises’ road environment, with accountability being sheeted
home to Transit New Zealand if stated conditions were not met.
Safety Reform
The Land Transport Safety Authority was established in 1993 and charged with
promoting land transport safety at reasonable cost meaning that safety
17
regulations were required to be subject to benefit-cost analysis. The Land
Transport Safety Authority maintained a road accident database which helped
determine road safety funding allocations, targeting of road safety
programmes, and monitoring performance.
Road Management Reforms: Second Round
In July 1996, Transfund New Zealand was created to take over the funding role
of Transit New Zealand using road user charges revenues deposited in the
National Land Transport Fund. This separated Transit New Zealand’s ‘funder’
and ‘supplier’ roles, leaving Transit New Zealand to manage state highways.
The board of Transfund was accountable to the Minister of Transport under
the terms of its Performance Agreement with the government.
A national land transport strategy was developed and made public in

December 2002. Once adopted by the Minister of Transport, regional land
transport strategies were required to be aligned with the national strategy,
bearing in mind community aspirations, availability of resources, and viability
of alternative transport modes. Key features of the national strategy were that
it should: not be ‘owned’ by road authorities; be subject to full
consultation; and be binding on all regional land transport plans.
A state highway strategy was also developed, setting out Transit New
Zealand’s vision for the state highway network and translating this vision into
specific policies and targets with corresponding performance measures for
levels of service, pavement roughness, road geometry, safety, environmental
factors, etc.
In December 2004, the Land Transport Safety Authority and Transfund New
Zealand were replaced by Land Transport New Zealand, established with the
objective of \promoting safe and functional transport by land.
Current Status of Reforms
In August 2008, Land Transport New Zealand merged with Transit New
Zealand to become the NZ Transport Agency (NZTA). In announcing its
formation the minister of transport explained that the NZTA was charged with
making sustainable transport choices for moving people and freight using
17
Safety reforms were first introduced in aviation, then spread to the maritime sector and
to land transport (road and rail).
95
different modes and in so doing will work closely with regional transport
committees.”
With this change, at least one element of reform has gone full circle. Trans
Fund was created to remove Transit New Zealand’s potential conflict of
interest as the arbiter of the road fund’s allocation of money to itself (Transit
New Zealand) for state highways and how much was allocated to local
authorities for local roads. Now these roles are back under one agency, but
with a difference: national and regional plans now take precedence over
benefit-cost analysis as the method of choosing investment in road
18
networks. Integrated transport plans coordinate the development of
transport networks and land use plans to avoid unintended impacts and to
make best use of funds.
F IGURE 4: L AND TRANSPORT MANAGEMENT PROCESS
18 The national and regional plans do not conflict with the principles of
benefit-cost analysis as their intent is to serve the national good.
96
The mission of the NZTA is as follows:
“Our role is to ensure that the government's objectives for land transport are
delivered through activities such as the provision of infrastructure and services.
We work with stakeholders to deliver safe and optimum transport solutions
that best meet the needs of communities both today and in the future.
We develop standards, guidelines and rules to help manage all transport

networks. We're also responsible for the allocation of funding for land
transport activities. Planning, building and maintaining the state highway
network is also a function we undertake.”
Legislation specifically defines NZTA’s responsibilities as follows:
 promote affordable, integrated, safe, responsive and sustainable land

transport;
 investigate and review accidents and incidents involving transport on
land;
 manage the state highway system, including planning, funding,
design, supervision, construction and maintenance operations;
 manage funding of the land transport system, including auditing the
performance of organizations receiving land transport funding;
 manage regulatory requirements for transport on land;
 cooperate with, provide advice and assist any government agency or
local government agency at the Minister’s request;
 provide the Minister with advice on our functions;
 carry out any other land transport functions directed by the Minister;
 carry out the functions required by the Land Transport Management
Act or other Act;
The process in which NZTA is a key player is shown in .
The chief executive of NZTA reports to a statutory board appointed by the

Minister of Transport. The organisation of NZTA is shown in
Figure 5.
NZTA issued a Statement of Intent 2009–2012, setting out the approach and
course of action for the next three years that will contribute to achieving the
government’s vision for the transport sector and economy as a whole. It covers
the Agency’s strategy and priorities, financial forecasts, and service
performance.
NZTA maintains close working relationships with:
 transport operators and the general public;

 transport committees, regional councils and local authorities, which
are responsible for implementing transport projects and other
activities funded through the National Land Transport Program;
 suppliers, including contractors and consultants;
 the NZ Police, which provides road policing services; and
the Ministry of Transport, which is responsible for leading development of
strategic transport policy and monitoring performance of the sector’s
government entities.
97
Figure 5: NZ Transport Agency Organisation Chart
Regional, district and city councils are responsible for delivering land transport
infrastructure and services in their areas. NZTA helps to fund these
programmes. After public consultation, regional transport committees
develop regional land transport programmes which contain:
98
 a statement of land transport priorities for the region

 lists of land transport activities included in the program
 the priority of each activity other than for local road maintenance,
local road renewals, local road minor improvement works, and
existing public transport services
 an assessment of each activity
 an assessment of the program by the regional transport committee
 a 10-year financial forecast of anticipated revenue and expenditure.
It is NZTA’s policy to avoid, remedy or mitigate effects on the environment

during the planning, construction, maintenance and operation of the state
highway network. To that end, it has an environmental plan which sets out a
strategic environmental vision that guides specifications and standards for its
contractors undertaking road works.
NZTA’s road safety approach takes a holistic view of road safety, putting the
focus on the road system design: to make it more accommodating of human
error; to manage the forces that injure people in a crash to a level that the
human body can tolerate without serious injury; and to reduce unsafe road
user behaviour.
NZTA’s state highway safety plan aims to provide a consistent, safe and
forgiving road environment with no surprises for road users, and to provide a
safe working environment for maintenance and construction activities. The
plan covers speed management, reducing vehicle-train crashes, the needs of
vulnerable road users, keeping vehicles on the roadway and minimising the
consequences of leaving the roadway, and reducing head-on and across-
median crashes. This plan is being updated in response to the government's
Road Safety to 2020 Strategy.
In 2009, NZTA opened New Zealand’s first new toll road. It uses electronic toll
collection allowing traffic to flow freely without changing lanes or stopping.
Tolls enabled the toll road to be built earlier than otherwise possible, delivering
safety, travel time and other benefits to road users.
Potential toll road projects are evaluated in terms of the government’s

priorities (as set out in its Government Policy Statement on Land Transport
Funding and its New Zealand Transport Strategy) and whether the toll
revenues make a meaningful contribution to construction costs, after
deducting costs of toll collection and operating and maintaining the road. All
toll projects will use fully electronic collection systems that enable traffic to
flow freely at all times and will be inter-operable nationwide.
Travel time reliability is recognised as an important objective. Twice-yearly

travel time surveys in main cities identify where journeys are taking longer
because of increasing congestion. Where longer journeys are unacceptable
actions will be taken to reduce congestion.
99
APPENDIX 7: GSRDC PROJECTS

UNDERTAKEN UNDER BOT/PPP
Please see the next page for a list of projects undertaken under BOT/PPP.
100
Project Project VGF

Name of Project cost cost Length Concession From From Total Current status
with Rs km period GOI GOG
land Crore
Rs
Crore
Commissioned BOT
project
Himatnagar Bypass, 7.00 7 8.73 15 Years 0% 0% 0% Commissioned April 2006
Himatnagar
0/0 to 8/73 km. on
SH-9
Chhayapuri ROB, 27.06 22.32 1.038 181 0% 0% 0% Commissioned March
Vadodara Months 2003
Km. 105/2 on
Vadodara-
Ahmedabad link road
(SH86)
Bhuj – Nakhatrana, -- 35.04 44.6 13 years 3 0% 0% 0% Commissioned February
Kutch months 2 2008
5/2 to 50/0 of SH-42. days
Ongoing BOT project
Kim – Mandvi , Surat -- 21.1 38.2 20 Years 0% 15% 15% Construction in progress
14/4 to 52/6 on SH-65
Under VGF Scheme
Ahmedabad– 1015.36 785.403 180 22 Years Construction in progress
Viramgam-Maliya and scheduled to be
11/50 to 59/0 (SH-17) complete by December
59/0 to 195/065 km 2012
(SH- 7)
Rajkot – Jamnagar – 774.8 604.22 131.65 20 Years Premium quoted by Construction in progress
Vadinar Bidders and scheduled to be
3/0 to 125/55 km. on No VGF needed. complete by December
SH-25 2012
Halol – Godhra – 808.65 580.575 173.06 20 Years Construction in progress
Shamlaji and scheduled to be
335/16 to 501/39 km. complete by December
on SH5 2012
RFP Stage, BOT
project
Deesa – Panthavada – 47.74 39.77 44.32 Period to N.A N.A Financial closure to be
Gundri be quoted achieved in
(Banaskhantha) by bidders December2009.
140/92 to 185/24 km. Construction to be
on SH-7 completed by December
2010
RFQ Stage, BOT
project
Bagodara – Wataman 883.9 464.62 101.76 Period to N.A N.A Bidding stage
– Tarapur - Vasad be quoted
0/0 to 101/76 on SH-8 by bidders
RFQ stage, VGF
project
Bhachau – Bhuj 256.94 182.39 77 30 Years 20% 0% 20% Bidding stage
(Kutch) 51.4
0/0 to 77/0 on SH-42 Crore
Nakhatrana – 203 141.26 79.15 30 Years 20% 20% 40% Bidding stage
Panendhro (Kutch) 40.6 40.6
101
Project Project VGF

Name of Project cost cost Length Concession From From Total Current status
with Rs km period GOI GOG
land Crore
Rs
Crore
Commissioned
BOT project
Himatnagar 7.00 7 8.73 15 Years 0% 0% 0% Commissioned April
Bypass, 2006
Himatnagar
0/0 to 8/73 km. on
SH-9
Chhayapuri ROB, 27.06 22.32 1.038 181 0% 0% 0% Commissioned March
Vadodara Months 2003
Km. 105/2 on
Vadodara-
Ahmedabad link
road (SH86)
Bhuj – Nakhatrana, -- 35.04 44.6 13 years 3 0% 0% 0% Commissioned
Kutch months 2 February 2008
5/2 to 50/0 of SH- days
42.
Ongoing BOT
project
Kim – Mandvi , -- 21.1 38.2 20 Years 0% 15% 15% Construction in
Surat progress
14/4 to 52/6 on
SH-65
Under VGF Scheme
Ahmedabad– 1015.36 785.403 180 22 Years Construction in
Viramgam-Maliya progress and scheduled
11/50 to 59/0 (SH- to be complete by
17) 59/0 to December 2012
195/065 km (SH-
7)
Premium quoted by
Rajkot – Jamnagar 774.8 604.22 131.65 20 Years Construction in
Bidders
– Vadinar progress and scheduled
No VGF needed.
3/0 to 125/55 km. to be complete by
on SH-25 December 2012
Halol – Godhra – 808.65 580.575 173.06 20 Years Construction in
Shamlaji progress and scheduled
335/16 to 501/39 to be complete by
km. on SH5 December 2012
RFP Stage, BOT
project
Deesa – 47.74 39.77 44.32 Period to N.A N.A Financial closure to be
Panthavada – be quoted achieved in
Gundri by bidders December2009.
(Banaskhantha) Construction to be
140/92 to 185/24 completed by
km. on SH-7 December 2010
RFQ Stage, BOT
project
Bagodara – 883.9 464.62 101.76 Period to N.A N.A Bidding stage
Wataman – be quoted
Tarapur - Vasad by bidders
0/0 to 101/76 on
SH-8
RFQ stage, VGF
RFP = request for proposals. RFQ = request for prequalification.
102
REFERENCES
FHWA. “Linking Transportation Performance and Accountability.” FHWA-PL-
10-011. April 2010. Washington, D.C.: US FHWA
Dunlop, R. J. “The New Zealand Experience in Restructuring Road

Administration. New Zealand Road Reform.” Transit New Zealand.
http://www.worldbank.org/transport/roads/rpl_docs/dnlop.pdf
Queiroz, C., Kerali, H. “A Review of Institutional Arrangements for Road Asset

Management: Lessons for the Developing World.” TP-32. April 2010.
Washington, D.C.: The World Bank.
http://siteresources.worldbank.org/INTTRANSPORT/Resources/3362
91-1227561426235/5611053-1229359963828/TP-32-
Road_Asset_Mgmt.pdf
Rijkswaterstaat - RWS (the Netherlands Directorate-General for Public Works

and Water Management). 2007. "International Comparison - Road
Administrations." Rijkswaterstaat AVV Transport Research Centre,
The Netherlands.
http://www.rijkswaterstaat.nl/dvs/Images/Comparing%20RA%20wer
kdoc%20def_tcm178-160558.pdf
Talvitie, A. P. “International Experiences in Restructuring the Road Sector.”

Paper for the Annual Meeting of the Transportation Research Board,
1996. Washington, D.C.: The World Bank.
103
LIST OF ABBREVIATIONS
AIS Accident Information System
BAP Budgeting and Programming System
BMS Bridge Management System
BOT Build-Operate-Transfer
EIS Environment and Social Information System
FIDIC International Federation of Consulting Engineers (in French)
GERI Gujarat Engineering Research Institute
GID Act Gujarat Infrastructure Development Act
GIDB Gujarat Infrastructure Development Board
GoG Government of Gujarat
GoI Government of India
GRICL Gujarat Road and Infrastructure Co Ltd
GRMS Gujarat Road Management System
GSDC Gujarat State Data Centre
GSDP Gross State Domestic Product
GSHP Gujarat State Highway Project
GSRDC Gujarat State Road Development Corporation Ltd
GSWAN Gujarat State Wide Area Network
GVC Gujarat Vigilance Commission
HDM-4 Highway Development and Management Model, version 4
HRD Human Resources Development
IDS Institutional Strengthening Strategy
ISAP Institutional Strengthening Action Plan
IT Information Technology
IWDMS Integrated Workflow and Document Management System
ISCS Institutional Strengthening Consulting Services
LNG Liquefied Natural Gas
MES Monitoring and Evaluation System
MoU Memorandum of Understanding
PAP Project-Affected Person
104
PCC Project Coordinating Consultancy
PMS Pavement Management System
PPU Policy and Planning Unit
PSP Private Sector Participation
PPP Public-Private Partnership
PWD Public Works Department
QA Quality Assurance
R&BD Roads and Buildings Department
RFP Request for Proposals
RIS Road Information System
RFQ Request for (Pre) Qualification
RMMS Routine Maintenance Management System
Rs Indian Rupees
SEZ Special Economic Zone
SH State Highway
SPV Special Purpose Vehicle
STC Staff Training College
TIS Traffic Information System
VGF Viability Gap Funding
105
Transport Division
Transport, Water and

Information and Communication
Technology Department
The World Bank
1818 H Street NW
Washington DC 20433
USA
www.worldbank.org/Transport
106

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INSTITUTIONAL DEVELOPMENT AND

GOOD GOVERNANCE IN THE HIGHWAY

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Cover picture: Courtesy Road and Building Department, Government of

EXECUTIVE SUMMARY .......................................................................... 1

3 GUJARAT ROAD SECTOR PRE-REFORM DAYS................................. 19

3.1 CURRENT SITUATION: ROAD NETWORK IN GUJARAT .............................................. 19

4.1 DRIVERS OF REFORMS ....................................................................................... 23

5.1 R&BD ............................................................................................................ 41

6.1 STRONG POLITICAL WILL ................................................................................... 45

7.1 PHASES OF INSTITUTIONAL REFORMS IN THE ROAD SECTOR .................................... 49

APPENDIX 1: TERMS OF REFERENCE ................................................... 60

APPENDIX 2: INSTITUTIONAL DEVELOPMENT UNDER GSHP .............. 65

APPENDIX 3: GUJARAT ROAD MANAGEMENT SYSTEM ....................... 75

APPENDIX 4: GUJARAT ECONOMIC & POLITICAL BACKDROP ............... 78

APPENDIX 5: ROAD DEVELOPMENT IN GUJARAT ................................ 81

APPENDIX 6: INTERNATIONAL EXPERIENCE IN ROAD SECTOR

APPENDIX 7: GSRDC PROJECTS UNDERTAKEN UNDER BOT/PPP ....... 100

REFERENCES ..................................................................................... 103

LIST OF ABBREVIATIONS ................................................................... 104

Table 1: Road Network in Gujarat and Other Comparative States .......................................................... 19

Table 3: R & BD Staffing 1198-2008 ........................................................................................................ 41

Table 6: Institutional strengthening action plan from IDS report ............................................................ 69

Table 7: Brief comments on IDS action plan.............................................................................................70

Figure 3: The Pragatipath Yojana road network ...................................................................................... 83

Figure 4: Land transport management process ...................................................................................... 96

Box 1: Toll policy .................................................................................................................................... 32

Box 3: UK Highway Agency’s objectives ..................................................................................................53

Box 4: Vibrant Gujarat Global Investors' Summit 2009 ........................................................................... 80

The “Institutional Development and Good Governance in the Highway Sector -

 Gujarat was blessed with advantageous structural conditions prior to

Use of Gujarat Road Management System. Now operational for approximately

1.4.2 Separation of Planning, management and oversight role from PWD

 preparing projects by conducting prefeasibility and feasibility studies

GSRDC was incorporated in 1999 as a limited company for development of road

 to cater for development of bridges and roads

1.4.3 Strengthening Governance

Gujarat has been a pioneer in strengthening governmental policies, institutions and

complete computerization of land records across the state, eliminating

1.4.4 Selectivity in Network Management

1.4.5 Creation of more conducive environment for contractors

In addition to creation of GIDB and GSRDC to facilitate public-private partnerships

Key changes/improvements effected in the ways of cooperation between the three

Mandatory Monthly Meetings with the Contractor and the Engineer

Timely payments to the Contractors, and

Timely redress of contract disputes including active encouragement of dispute

1.4.6 Strong emphasis on professional staff development in R&BD

 established a Vision 2010-based HRD Policy

Overall, the strengthened and modernized HRD planning, implementation

1.4.7 Reforms in social and environmental safeguards management of road

Pioneering reforms in social safeguards management were demonstrated in first

Good practices in resettlement were demonstrated in the Ahmedabad-Mehsana

self-employment were given assurance of reimbursement in two stages: 50% of

Several specific innovative measures were pioneering and noteworthy:

 Special measures for vulnerable families

GOG prepared a state-specific road development master plan (Gujarat Road