Completion Report

Project Number: 24076 Loan Number: 1453 May 2010

Philippines: Bukidnon Integrated Area Development Project

CURRENCY EQUIVALENTS

Currency Unit – peso (P)

At Appraisal At Project Completion Review Mission (12 July 1993) (2 October 2009)

P1.00 = $0.0385 $0.0212 $1.00 = P25.980 P47.175

ABBREVIATIONS

ADB – Asian Development Bank BHS – barangay health station CIS – communal irrigation system EA – executing agency EIRR – economic internal rate of return FIRR – financial internal rate of return ha – hectare IA – implementing agency IPM – integrated pest management kg – kilogram km – kilometer LBP – Land Bank of the Philippines LGU – local government unit MHC – municipal health center NGO – nongovernment organization NIA – National Irrigation Administration PCR – project completion report PhilHealth – Philippine Health Insurance Corporation PMO – project management office RRP – report and recommendation of the President SDR – special drawing rights

NOTE

In this report, "$" refers to US dollars.

Vice President C. Lawrence Greenwood, Jr., Operations 2 Director General K. Senga, Southeast Asia Department Director J.H. Mir, Agriculture, Environment, and Natural Resources Division,

Southeast Asia Department Team leader C. Wensley, Lead Professional (Water Resources), Southeast Asia

Department Team member A. Musa, Financial Due Diligence Specialist, Southeast Asia

Department E. Tayao-Castro, Assistant Project Analyst, Southeast Asia Department

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

BASIC DATA i

MAP

I.  PROJECT DECRIPTION 1 II.  EVALUATION OF DESIGN AND IMPLEMENTATION 2 

A.  Relevance of Design and Formulation 2 B.  Project Outputs 2 C.  Project Costs 5 D.  Disbursements 6 E.  Project Schedule 6 F.  Implementation Arrangements 7 G.  Conditions and Covenants 7 H.  Consultant Recruitment and Procurement 8 I.  Performance of Consultants, Contractors, and Suppliers 8 J.  Performance of the Borrower and the Executing Agency 8 K.  Performance of the Asian Development Bank 9 

III.  EVALUATION OF PERFORMANCE 9 A.  Relevance 9 B.  Effectiveness in Achieving Outcome 10 C.  Efficiency in Achieving Outcome and Outputs 11 D.  Preliminary Assessment of Sustainability 11 E.  Impact 11 

IV.  OVERALL ASSESSMENT AND RECOMMENDATIONS 13 A.  Overall Assessment 13 B.  Lessons Learned 13 C.  Recommendations 14 

APPENDIXES

1. Project Framework 16 2. Budget Summary and Actual Cost 24 3. Annual Loan Disbursements of the Asian Development Bank 26 4. Implementation Schedule 27 5. Project Management Office Organization Chart 29 6. Status of Compliance with Major Loan Covenants 30 7. Consulting Services at Appraisal and Utilized 37 8. List of Procured Items 38 9. Economic Analysis 42 10. Overall Assessment 45

BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan – Original Amount – Net Loan Amount 7. Project Completion Report Number

Philippines 1453 (SF) Bukidnon Integrated Area Development Project Government of the Philippines Provincial Government of Bukidnon $20,000,000 (SDR13,835,000) $2,600,000 (SDR1,964,145) PCR: PHI 1163

B. Loan Data 1. Appraisal – Date Started – Date Completed Reappraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate – Maturity (number of years) – Grace Period (number of years) 8. Terms of Relending (if any) – Interest Rate – Maturity (number of years) – Grace Period (number of years) – Second-Step Borrower

12 July 1993 29 July 1993 16 January 1996 27 January 1996 20 June 1996 20 June 1996 23 July 1996 3 June 1997 1 September 1997 7 October 1997 0 30 June 2004 1 April 2004 0 0% per annum; service charge of 1% per annum 35 10 14% per annum 15 3 0

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9. Disbursements a. Dates Initial Disbursement

22 December 1997

Final Disbursement

1 April 2004

Time Interval

75.3 months

Effective Date

7 October 1997

Original Closing Date

30 June 2004

Time Interval

80.5 months

b. Amount ($)

Category Number Description

Original Allocation

Last Revised

Allocation Amount

Canceleda Amount

Disbursed Undisbursed

Balance 01 Civil works 8,616,454 1,268,822 7,347,632 1,268,822 0

02 Vehicles and equipment 5,681,465 347,233 5,334,232 347,233 0

03

Office supplies and

furniture 137,937 20,685 117,252 20,685 0

04 Consulting services 1,863,680 583,949 1,279,731 583,949 0

05

NIA, engineering

services 1,546,425 244,301 1,302,124 244,301 0

06

Community organizing

and training 571,672 2,717 568,955 2,717 0

07

Benefit monitoring

and evaluation 118,013 16,985 101,027 16,985 0

08 Service charge 764,783 99,552 665,231 99,552 0

09 Unallocated 1,903,528 0 1,903,528 0 0 Total 21,203,956 2,584,244 18,619,712 2,584,244 0NIA = National Irrigation Administration. a There were two partial cancellations totaling $15,826,127.09: $14,547,189.34 on 4 November 2002 and

$1,278,937.75 on 1 April 2004. The effective date of loan cancellation was 4 November 2002 (per the government's advice on 25 October 2002).

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c. Amount (SDR)

Category Number Description

Original Allocation

Last Revised

Allocation Amount

Canceled Amount

Disbursed Undisbursed

Balance 01 Civil works 5,622,000 977,786 4,644,214 977,786 0

02 Vehicles and equipment 3,707,000 258,991 3,448,009 258,991 0

03

Office supplies and

furniture 90,000 15,733 74,267 15,733 0

04 Consulting services 1,216,000 439,943 776,057 439,943 0

05

NIA, engineering

services 1,009,000 182,429 826,571 182,429 0

06

Community organizing

and training 373,000 2,119 370,881 2,119 0

07

Benefit monitoring

and evaluation 77,000 12,799 64,201 12,799 0

08 Service charge 499,000 74,345 424,655 74,345 0

09 Unallocated 1,242,000 0 1,242,000 0 0Total 13,835,000 1,964,145 11,870,855 1,964,145 0NIA = National Irrigation Administration. 10. Local Costs (Financed) - Amount ($) 982,553 - Percent of Local Costs 42.40% - Percent of Total Cost 38.02% C. Project Data

1. Project Cost ($‘000) Cost Appraisal Estimate Actual Foreign Exchange Cost 15,079 2,512 Local Currency Cost 22,212 4,001 Total 37,291 6,513 2. Financing Plan ($‘000) Cost Appraisal Estimate Actual Implementation Costs Borrower Financed 12,826 3,929 ADB Financed 19,279 2,485 Other External Financing 4,465 Total 36,570 6,414 IDC Costs Borrower Financed 721 – ADB Financed 99 Other External Financing – Total 37,291 6,513 ADB = Asian Development Bank, IDC = interest during construction.

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3. Cost Breakdown by Project Component ($‘000) Component Appraisal Estimate Actual Rural Infrastructure 21,909 1,330 Community Development 5,824 34 Social Services 6,729 4,021 Project Management and Institutional Development 2,108 1,029 Total Project Cost before Service Charge 36,570 6,414 Service Charge during Implementation 721 99 Total 37,291 6,513 4. Project Schedule Item Appraisal Estimate Actual Date of Contract with Consultants Winrock International RDI Philippines Pert Consult GTS Technologies, Inc.

Year 1, quarter 3 Year 1, quarter 3 Year 1, quarter 3 Year 1, quarter 3

25 March 1999 16 April 1999 29 April 1999 29 April 1999

Date of Fielding of Consultants Winrock International RDI Philippines Pert Consult GTS Technologies, Inc.

Year 1, quarter 4 Year 1, quarter 4 Year 1, quarter 4 Year 1, quarter 4

15 May 1999 20 June 1999 3 July 1999 3 July 1999

Civil Works Contract Date of Award Year 1, quarter 4 27 June 1999 Completion of Work Year 5, quarter 4 30 June 2001 Vehicles First Procurement Year 2, quarter 4 24 April 1998 Last Procurement Year 4, quarter 3 7 November 2000 Equipment and Supplies First Procurement Year 2, quarter 1 2 March 1998 Last Procurement Year 4, quarter 4 5 August 2002 5. Project Performance Report Ratings Implementation Period

Ratings Development

Objectives Implementation

Progress From 31 December 1998 to 31 December 2000

Satisfactory Satisfactory

From 31 January 2001 to 30 June 2001 Satisfactory Partly Satisfactory From 31 July 2001 to 31 December 2001 Satisfactory Satisfactory From 31 January 2002 to 31 January 2003 Satisfactory Partly Satisfactory From 28 February 2003 to 28 February 2003 Partly Satisfactory Partly Satisfactory From 31 March 2003 to 31 December 2004 Partly Satisfactory Satisfactory

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D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons

No. of Person-

Days Specialization of Membersa

Fact-Finding 20 April–4 May 1993 6 90 a, b, g, i, l Appraisal 7–21 July 1993 4 48 a, h, l, m Reappraisal 16–30 January 1996 7 100 a, b, g, i, l, m

Follow-Up 27 February–6 March

1996 a, b, g, i, l, m Loan Inception 14–15 January 1997 3 6 f, m, p Loan Review 18–24 April 1999 1 7 j Special Project Administration 11–13 September 2000 2 6 i, o Loan Review 12–15 December 2000 3 12 i, o, p Loan Review 11–15 February 2002 2 10 c, n Special Project Administration 19 March 2002 1 1 d Midterm Review 19–30 August 2002 2 17 c, n Project Completion Reviewb 1–15 June 2009 3 21 c, k, l, p a a = senior agronomist, b = senior programs officer, c = senior water resources specialist, d = senior restructuring

specialist, e = senior programs officer, f = senior consultant services specialist, g = project specialist, h = project engineer, I = project economist, j = rural development specialist, k = financial due diligence specialist, l = counsel, m = staff consultant, n = associate environmental specialist, o = associate project analyst, p = assistant project analyst.

b The project completion review mission comprised C. Wensley (mission leader), A. Musa (financial due diligence specialist), E. Tayao-Castro (assistant project analyst), and T. Bock Thiam (staff consultant).

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I. PROJECT DECRIPTION

1. Bukidnon is one of the seven provinces in Region X, the poorest region in the Autonomous Region of Muslim Mindanao within the Philippines. With a total population of 934,860 in 1995, the province was the third most populous and least developed in the Region X. It had the highest percentage of rural dwellers, with 85% of its population living in rural areas. In 1994, about 41.0% of all households in the province were officially classified as poor against a national index of 35.7%, with about 32.0% of urban and 49.0% of rural households living below the national poverty line.1 2. Bukidnon Province’s road density was 0.67 kilometer (km) per square km, lower than the Department of Public Works and Highways (DPWH) standard of 1.0 km per square km. Most of its roads were in poor condition, making many production areas inaccessible to market centers, especially during the rainy season, and resulting in very high transport costs. Further, existing irrigation systems covered only about 12,678 hectares (ha) or one third of the total irrigable area of 32,300 ha. Due to the lack of irrigation facilities, many farmers in Bukidnon were unable to increase their crop production. Regarding social services, the province had less than one half of the Government's requirement on the number of barangay2 health stations (BHSs), with a ratio of 1 to 7,400 against a national standard of 1 to 3,000. 3. The intended impact of the Bukidnon Integrated Area Development Project (BIADP) was to improve the socioeconomic status of poor rural communities in Bukidnon Province through increased, sustained production of high-value vegetables and improved delivery of basic social services.3 The project aimed to strengthen local government units (LGUs) and communities to initiate and manage development activities and to collaborate with private investors to produce high-value crops. The project had four components, focusing on (i) rural infrastructure, including communal irrigation systems (CISs) and farm-to-market roads; (ii) community development support, including community organizing, agricultural extension services, rural livelihood, and agricultural credit support; (iii) social services, comprising health and child care services and rural water supply; and (iv) project management and institutional development. 4. The project was planned to benefit 38,700 rural households (218,000 people) comprising (i) 2,300 farm households through increased agricultural output and income from production of high-value crops; (ii) 28,600 households with improved health services; (iii) 10,000 households with improved water supply; and (iv) 2,000 children with an improved day care center. The potential beneficiaries included some 500 farm families who belonged to an indigenous group known as the Lumads. The project framework is in Appendix 1. 5. This project was canceled on 4 November 2002 at the request of the Provincial Government of Bukidnon, having disbursed only $2.6 million of the $20.0 million loan after about 6 years of implementation. This project completion report (PCR) was prepared to glean lessons learned from the cancellation.

1 Government of the Philippines. 1994. National Statistical Coordination Board Poverty Estimates. Manila. 2 A barangay is the smallest political unit in the Philippine society. 3 Asian Development Bank (ADB). 1996. Report and Recommendation of the President to the Board of Directors on

a Proposed Loan to the Philippines for the Bukidnon Integrated Area Development Project. Manila.

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II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

6. In October 1992, at the request of the Government of the Philippines, the Asian Development Bank (ADB) approved a small-scale technical assistance to prepare a feasibility study based on the integrated area development concept.4 A team of researchers from Central Mindanao University conducted a study in 1993 which supported the proposal for new investments in communal irrigation systems (CISs) and farm-to-market roads to improve crop yields and farmer incomes. In April 1993, ADB conducted a fact-finding mission for the project and an appraisal mission in July 1993. 7. In 1993, ADB approved a private sector loan of $4.6 million and $0.9 million in equity in the Bukidnon Resource Company, Incorporated (BRCI) to build and operate a 30-ton-per-hour tomato paste factory in Bukidnon Province at a total project cost of $23 million.5 The factory was designed to produce 20,200 tons of tomato paste annually from 120,000 tons of fresh tomatoes annually, which were to be planted on some 3,000 ha of irrigated farmland. The project design assumed that farmers would be provided with credit and irrigation facilities and that their annual farm income would be raised from $200 per ha to $1,116 per ha. The financial internal rate of return (FIRR) was estimated at 21.7%. To a large extent, the Bukidnon Integrated Area Development Project was based on studies relating to this private sector investment. 8. The BIADP placed a high priority in the government's Medium-Term Philippine Development Plan 1993–1998, which aimed to improve the quality of life by sustaining the gains made since 1990 in economic recovery and to reduce poverty.6 It was also in line with ADB’s sector strategy in its country assistance program for the Philippines, 1996–1998. In particular, ADB sought to address impediments to the economic and social advancement of the poorest regions in the Philippines through better delivery of social services for human development and improved living conditions. B. Project Outputs

1. Component 1: Rural Infrastructure a. Communal Irrigation Systems

9. Under the project, five new CISs, using drip irrigation for high-value crops, were to be developed. They were to cover a total area of about 1,160 ha in the municipalities of Kulaman (300 ha), La Fortuna (80 ha), Maninit (80 ha), Sagayon (500 ha), and Sigmatan (200 ha). At midterm, this component had achieved about 12.8% weighted physical completion with the following progress: (i) completed engineering designs for four out of five main delivery systems (with the exception of the Kulaman CIS); (ii) irrigation associations formed or strengthened in all five CISs project areas and registered with the Philippine Securities and Exchange Commission; and (iii) five multipurpose farmer cooperatives formed covering the CIS project areas.7 4 ADB. 1992. Monthly Report on Small-Scale Technical Assistance Projects. Manila (TA No. 1757-PHI, $100,000.00,

approved on 29 September). 5 ADB. 1993. Report and Recommendation of the President to the Board of Directors on a Proposed Equity

Investment in and Loan to Bukidnon Resources Co. Inc. Manila. In 1994, ADB added P7.3 million to install a drip irrigation scheme for farmers contracted to supply tomatoes to this factory.

6 National Economic and Development Authority, Government of the Philippines. 1993. Medium-Term Philippine Development Plan 1993–1998. Pasig City.

7 During the August 2002 midterm review, the mission discussed the provincial governor’s desire to introduce modular greenhouses into the irrigation systems. The mission, however, noted that the technology would be

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10. In 2001, the provincial government proposed to reduce the project scope and to complete only the La Fortuna, Maninit, and Sigmatan CISs, covering 360 ha of the original 1,160 ha. It cited uncertainties about the source of irrigation water at the Sagayon CIS, which hydrologic studies conducted by the National Irrigation Administration (NIA) determined could only support 200 of the proposed 500 ha; and difficulties and cost implications of developing the intake for the Kulaman CIS, which increased its development cost. Development at the Sagayon site was thus suspended in September 2001 per instructions of the provincial governor. Thus, with the cancellation of the loan in 2004, this component remained incomplete.

b. Farm-to-Market Roads

11. Under the project, about 78.1 km in four road sections were to be rehabilitated, and one road section of 9.8 km was to be constructed. Although design and pre-engineering works for all road sections were completed, in accordance with the instructions from the provincial governor, the work contract on this component was terminated at the end of October 2001, due to excessively high costs from over-design of the roads and poor contract supervision of ongoing road projects. At the date of termination, the consultants had completed about 38% of their design contract, and the project had completed a single section of 11.5 km of farm road.

2. Component 2: Community Development Support a. Community Organization and Training Activities

12. The project envisioned contacting nongovernment organizations (NGOs) and short-term consulting services to (i) assist farmers in each CIS project area to formulate a community action plan; (ii) assist Lumads to develop an indigenous peoples’ plan; (iii) assist farmers without formal land tenure to secure titles; (iv) strengthen two existing irrigation associations and establish two new ones to operate and maintain CISs; and (v) form and train farmers’ cooperatives in the project areas. The NGOs provided only 64 person-months out of the 129 budgeted, and the actual services of some other consultants were lower than the targets at appraisal. However, the executing agency (EA) did not record the quantitative progress of this subcomponent.

b. Agricultural Extension Services

13. This subcomponent was aimed at training LGU agricultural extension staff to teach farmers to (i) operate and maintain drip irrigation facilities, (ii) transfer proven integrated pest management (IPM) at the five CIS sites, (iii) obtain and manage production loans obtained from the Land Bank of the Philippines (LBP), and (iv) set up a price-sharing system between farmers and companies interested in contract farming. Most activities did not materialize, as most infrastructure investments and all LBP production loans were canceled.

c. Rural Livelihood Skills Training

14. The project sponsored a series of workshops aimed at improving beneficiaries’ knowledge of family health, nutrition, and child care, and encouraged pooling of savings by members of farmers' cooperatives to invest in rural enterprises. The project provided a lump-

expensive, costing about $10,000 per ha compared with about $3,000 per ha for the proposed irrigation scheme that could be used for both paddy and vegetable cultivation, and suggested pilot-testing the development of greenhouses. This suggestion was not taken up due to cancellation of the Project.

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sum contract to recruit resource speakers and trainers for these workshops. However, the outcomes of these investments were not recorded.

d. Agricultural Credit Support

15. At appraisal, LBP agreed to provide about $4.465 million in agricultural credit for production loans to farmers’ cooperatives that met certain criteria. However, this credit facility was not implemented due to the cancellation of the CIS component. The provincial government provided a very limited amount of production credit to farmers through a livelihood program, and the quantitative progress of this subcomponent was not recorded.

3. Component 3: Social Services

a. Health and Child Care Services

16. The project provided for the construction of 27 BHSs, three municipal health centers (MHCs), and 35 day care centers on land donated or owned by the LGUs. Standard Department of Health (DOH) designs were adopted and the buildings were provided with water and electricity. 17. Of the 27 BHSs targeted, 23 are currently established and functional, 17 of which were completed under the project. Six BHSs were implemented by the LGU after the project, with financial assistance from the Provincial budget. The remaining four BHSs were established in 2009 through financial assistance from the concerned LGU, Provincial budget, Congressional Fund, and Senatorial Fund. BHSs provide basic preventive health care within barangays, including basic first aid, family planning, health and nutrition counseling, prenatal and postnatal care, tuberculosis screening, and vaccinations. The municipality provides free medicines, although their availability varies across municipalities. The BHSs also serve as a base for a midwife and health workers, and for once- or twice-monthly doctor visits. 18. Of the 35 day care centers envisioned, 16 were funded by the project, while the remaining 19 were funded and implemented through the Provincial budget. The day care centers provide preschool education for children within a barangay (about 20–30 enrolled children, ages 3 to 6 years), and are staffed by a teacher and volunteer workers paid by both the barangay and municipality. The day care centers allow mothers the freedom to work at a farm or house while the child is at school, and parents are pleased with the education provided prior to entering primary school. 19. Of the three MHCs planned (i.e., 10-bed hospitals), only that in Malitbog was completed under the project. The Baungon MHC was later constructed by the provincial government. MHCs are funded and operated by the municipal administration, and provide municipal-level preventative health care including public health, dental, nutrition, water supply and sanitation, and family planning services. Together, these facilities were intended to serve 21,948 municipal residents who would otherwise have to travel to larger urban centers for treatment. 20. The Malitbog MHC has since been converted into a primary hospital. As envisaged under the project, it provides municipal-level curative care facilities, with emergency and operating rooms; maternity and pediatric wards; an isolation ward; and x-ray, pharmacy, and laboratory facilities. Since 2002, the hospital’s facilities have been funded and operated by the provincial government. It has 32 staff members, including four doctors and eight nurses. The hospital building also incorporates the municipal and rural health centers.

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21. Since project appraisal, the provincial government has revised and strengthened its health care plans and priorities. The revised health care program takes advantage of the nationally sponsored public health insurance program through the Philippine Health Insurance Corporation (PhilHealth). Since the project termination in 2002, the provincial government has funded, established, and maintained 15 provincial health stations to provide outpatient services, all of which are accredited by PhilHealth. It has upgraded its main hospitals in the larger urban centers of Malaybalay and Maramag, and constructed or refurbished secondary referral provincial hospitals in Kibawe and Manolo Fortich to provide intermediate-level treatment facilities. It continues to maintain the three existing primary provincial hospitals in Kalilangan, San Fernando, and Talakag, and seven of the provincial hospitals are now accredited as provincial health stations by PhilHealth.

b. Rural Water Supply

22. The project provided financing to expand the coverage of level II and III water supply facilities8 in the four municipalities of Baungon, Libona, Manolo Fortich, and Talakag to link to outlying rural areas. The four water systems aimed to serve about 10,000 households. At midterm, a rural waterworks and sanitation association was formed at each site, and users were trained to operate and maintain the system and to collect water charges. Three of the rural water supply projects (Baungon, Libona, and Manolo Fortich) were partially implemented under the project, accomplishing about 68% of the subcomponent. Following project termination in 2002, the provincial government has completed the Baungon and Libona facilities using the Provincial budget, while Manolo Fortich was found to be financially unviable and was not completed. The provincial government completed the Talakag water supply project from the Provincial budget and other sources. At the time of the PCR mission, the Baungon municipality planned to enhance its system, adding a water purification facility costing $154,000 to provide potable water to some 36,000 consumers.

4. Component 4: Project Management and Institutional Development

23. The project provided incremental remuneration for several provincial staff members assigned to the project management office (PMO), and hired the project director on a contractual basis. The project also recruited several consultants to strengthen PMO capacity; to set up the development management structure; and to conduct in-house staff training in new areas such as community organizing, environmental monitoring, and participatory development approaches. The project also covered costs of renovating the administrative building to house the PMO, office equipment and furniture, service vehicles, and incremental operation and maintenance. At project completion, all PMO staff members were reabsorbed into the provincial government and continue to support viable project components. C. Project Costs

24. At appraisal, the total project cost, inclusive of taxes, physical contingencies, and service charge, was estimated at $37.3 million, comprising $15.1 million in foreign exchange costs and $22.2 million in local currency costs. The table below presents the budget planned at appraisal and the actual expenditures of the project components at completion.

8 Level I systems comprise stand-alone water points (such as wells), Level II comprise piped water systems with a

communal water point, and level III comprise piped water supply systems with a private (e.g. household) water point.

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Table: Summary of Project Cost Estimate and Actual Expenditure ($'000)

Component Budget Actual Percent Rural Infrastructure 21,908 1,330 6.1 Community Development 5,825 34 0.6 Social Services 6,730 4,021 59.8 Project Management and Institutional Development 2,107 1,029 48.8 Total Project Cost before Service Charge 36,570 6,414 17.5 Service Charge during Implementation 721 99 13.7 Total 37,291 6,513 17.5

Sources: Report and recommendation of the President and project completion review mission. 25. Only 17.5% of the total budget planned at appraisal was spent. Due to the cancellation of most CISs and rural roads, only 6.1% of the budget was spent for rural infrastructure. Since the rural roads were designed primarily to serve the newly irrigated areas, work on this component was also terminated after the completion of 11.5 km of farm roads or 14.4% of the planned length of 80 km. The major items under the social services component were generally completed, at a total cost of 59.8% of the initial budget. About $4.5 million budgeted under the community development component for credit to assist farmers in the drip irrigation schemes was also unused. Expenditure on project management and institutional development was also significantly reduced, as many investment activities were canceled. 26. ADB-financed expenditures amounted to only about $2.6 million (about 13% out of the intended $20.0 million budget), and the remaining balance was canceled. The government, including the provincial government, municipalities, barangays, and beneficiaries, recorded a total actual expenditure of about $3.9 million (about 30%) against the intended total budget of $12.8 million. Appendix 2 presents details of the initial estimates of project costs and actual expenditures. D. Disbursements

27. The appraisal targeted cumulative disbursement of funds from 1997 to 2003 from all financiers at about 7% by 1997, 24% by 1998, 45% by 1999, 65% by 2000, 80% by 2001, 95% by 2002, and full disbursement in 2003. As a result of administrative delays, the loan became effective only in October 1997. After effectiveness, the Department of Finance established an imprest account at LBP to expedite disbursement of the loan proceeds. The imprest account and statement of expenditure procedures were managed in accordance with ADB's guidelines. The actual disbursements for the project components started in 1999 and were completed in 2004. Appendix 3 presents the actual disbursements of the loan; no consolidated records exist about the detailed disbursements of funds from other financiers. E. Project Schedule

28. The project was originally scheduled for 7 years, from July 1997 to December 2003. In the first 3 years, progress was relatively slow due to (i) significant time spent on project start-up, including administrative and financial arrangements, office setup, staff requirements, and approval of project management guidelines; (ii) delays in the recruitment of consultants; (iii) problems relating to land acquisition and rights-of-way under the CIS and road components; (iv) poor performance of the consultants engaged for the CIS component; (v) delays in procurement of equipment; and (vi) difficulties encountered in complying with Municipal Development Fund Office procedures for fund-withdrawal applications. By the midterm (i.e., the

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end of June 2002), weighted project completion was estimated at about 47% of the original scope against an elapsed loan period (since loan effectiveness) of 57 months (70%).9 Appendix 4 presents the project implementation schedule as planned at appraisal and its actual implementation. F. Implementation Arrangements

29. The EA was the Provincial Government of Bukidnon, and the implementing agencies (IAs) were the seven municipalities, 115 barangays, NIA, and Department of Agriculture. A project advisory committee was formed to advise the provincial governor on, and identify solutions to, policy-related and interagency coordination issues pertaining to project implementation. As planned at appraisal, the committee was composed of senior staff members from the provincial administration and regional offices of national agencies concerned with project implementation, including the Department of Agriculture, Department of Environment and Natural Resources, Department of Finance, Department of Health, DPWH, LBP, National Economic and Development Authority, and NIA. NGOs were also engaged to assist with community organization and training activities and provided technical assistance for the implementation of specific project components. 30. The provincial government set up a PMO for the day-to-day implementation of the project and coordination with the LGUs. In accordance with the government's devolution program, PMO staff members were drawn from existing provincial administration instead of establishing a competing, temporary bureaucracy solely for the purpose of the project. Since the existing provincial administration lacked personnel experienced in development project management, the appraisal provided for a project director, with qualifications and experience acceptable to ADB, to be recruited to head the PMO and to serve as the secretary of the project advisory committee. The project director was to be assisted by two deputies: one for the rural infrastructure support component and the other for the community development support component. The project’s organizational structure is in Appendix 5. 31. The PMO at midterm had 38 staff members as compared with a minimum of 32 recommended at appraisal. A recommendation was made that technical working groups, comprising senior technical staff members, be formed, which would be able to meet more frequently to identify and solve major problems hindering project implementation. However, before this recommendation could be implemented, the project was canceled. G. Conditions and Covenants

32. No covenant was modified, suspended, or waived during project implementation. However, the government did not comply with several loan covenants, including those obligating it to enter into memoranda of agreement with LBP for providing production loans and with NIA for CIS operation and maintenance, due to the cancellation of the CIS component. The project only partially complied with some covenants, because (i) the flow of project funds was very slow, impairing the implementation of activities; (ii) the required reports were delayed in most cases, and the provincial government did not prepare a PCR report; (iii) the project did not appoint a local consultant experienced in project management to fill the project director post, appointing one of its existing staff members; (iv) the project advisory committee did not meet regularly because senior staff members were too busy; and (v) the benefit monitoring and evaluation system was not implemented as envisaged. Appendix 6 shows the status of

9 The midterm review mission, conducted in August 2002, estimated about 30% completion.

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compliance with the loan covenants. Overall, the government partly complied with the loan covenants. H. Consultant Recruitment and Procurement

33. The project was to engage 496.5 person-months of consulting services in three contract packages in accordance with ADB’s guidelines. For the first package, 14.5 person-months were provided for designing the drip irrigation system (3.5 foreign and 11 from local engineers). The second package was for 306 person-months of national consultants for designing and supervising road construction. The third package was for 176 person-months of national consultants, including a water supply engineer, rural waterworks and sanitation association expert, and various others to strengthen the PMO. It was also to engage an NGO on a 5-year lump sum contract, not exceeding $300,000, to undertake community organizing and training activities. Through small contracts not exceeding $50,000 in total, the PMO was to engage local universities or training institutions to assist with project impact studies and to conduct training workshops for the rural livelihood skills training program. Due to the cancellation of most investment activities, however, the project only used 224 person-months. Appendix 7 compares the consulting services targeted at appraisal and the actual use of their services. 34. The project procured equipment in accordance with ADB’s guidelines. However, there were some delays in the recruitment of consultants and procurement due to time taken to train staff members on ADB’s guidelines and the need for flexibility to accommodate provincial contracting procedures. Procurement plans for land acquisition, contracting NGOs, and incremental production credit were canceled, and many other expenditures were much lower than the targets set at appraisal. The list of various goods and equipment procured under the loan is given in Appendix 8. I. Performance of Consultants, Contractors, and Suppliers

35. In general, the performance of consultants, contractors, and suppliers met ADB's requirements, but the EA was not satisfied with the performance of most of these consultants. Its main complaint was their slow pace of work and their inability to undertake many assignments to the standard expected by the EA. The contracts were awarded through national selection. Prior to the midterm review, the contracts of several consultants were suspended by the provincial government due to alleged nonperformance. This situation was never fully resolved, and final payments to these consultants remain outstanding. No significant delays occurred in the supply of equipment, furniture, or materials. The overall performance of consultants, contractors, and suppliers is rated as partly satisfactory. J. Performance of the Borrower and the Executing Agency

36. The PMO was established in accordance with the loan agreement, with staff members drawn from the provincial administration. The initial project director, appointed from the provincial administration, served for 3.5 years and passed away in September 2001. The former deputy project director, who was seconded from the provincial government, was subsequently appointed as the acting project director. The midterm mission recommended that a consultant be hired as project director to provide the leadership and direction necessary to ensure the efficient and timely completion of the project, but this did not occur. Further, the termination of consulting services and NGO contracts to provide specialist services under the project (para. 33), and the transfer of these activities to PMO staff members, resulted in many key activities

9

not being undertaken or completed in a timely manner. The overall performance of the borrower and EA is thus rated as partly satisfactory. K. Performance of the Asian Development Bank

37. ADB fielded seven review missions (one inception, three loan review, two special project administration missions, and one midterm review) during project implementation. However, between 1998 and 2001, all reviews were conducted in Manila since security concerns did not allow ADB staff members to travel to the Autonomous Region of Muslim Mindanao. These Manila-based reviews did not adequately record implementation findings compared to aide-mémoires prepared when missions were conducted in the field. 38. A major shortcoming by ADB was its failure to execute a major change in project scope when the BRCI tomato-processing factory defaulted on its ADB loan in October 1996. The default occurred 3 months after BIADP approval and seriously compromised the potential benefits to be derived from the irrigation and rural road component. In June 2001, the provincial government requested that ADB suspend the bidding for the drip irrigation component after the invitation for bids had been published, shortly after the new provincial governor took office after the May 2001 general elections. This request was based on the observation that without the factory, interest in growing tomatoes had dwindled considerably, and large areas of existing and potentially irrigated areas for tomatoes had been leased to banana and pineapple growers, crops that can be grown without irrigation. Only the social services component proceeded as planned. 39. Although ADB was unable to conduct field reviews for an extended period, it provided regular monitoring of overall project administration, as well as training on procurement and disbursement, which was helpful in developing project staff capacity and their understanding of ADB’s standard operational procedures. However, despite ADB's routine monitoring of project administration, the performance of ADB is rated as unsatisfactory given its poor attention to project design issues.

III. EVALUATION OF PERFORMANCE

A. Relevance

40. At both appraisal and completion, the project concept was highly relevant to government and ADB policies and priorities to develop rural communities and to reduce poverty. The project was in accordance with the Medium-Term Philippines Development Plan, which at the time of project formulation promoted sustainable economic growth and poverty reduction as the foundation for regional and sector policies, programs, and projects. The project was also in accordance with the Government's Medium-Term Agricultural Development Plan 1993–1998, under which government assistance was to be focused on infrastructure, post-harvest handling and market assistance, credit support, and research and extension services. The project’s objectives also complemented ADB’s country and sector strategy for the Philippines, which emphasized economic growth based on sustainable development. ADB’s strategy for agricultural and rural development in the Philippines was to increase agricultural production and productivity by developing rural infrastructure such as roads and irrigation, post-harvest and storage facilities, and agricultural support services, especially with respect to community development and self-help approaches to increase rural incomes, sustainable approaches to resource management, and on-farm research and extension.

10

41. In retrospect, the project preparation studies were unsatisfactory and unrealistic, leading to the provincial government’s decision to cancel most project investments. The BIADP was designed to increase tomato production by 50,000 tons or by more than double the 1995 output of 23,500 tons. Project preparatory work undertaken in 1995 assumed that the factory would operate until 2020, and the economic analysis essentially used the same assumptions of high yields and low prices of tomatoes as used in the preparation of the private sector loan to the BRCI (footnote 5). The economic analysis also did not consider the risks of the factory discontinuing its operation, and assumed that 80% of the tomatoes grown would be sold to the BRCI factory.10 The appraisal also failed to identify the risk that farmers would face through wide fluctuations in the annual prices for fresh tomatoes and other high-value crops, and it did not provide for market information systems to mitigate price fluctuations. 42. The BRCI factory operated at only limited capacity for about 2 years, closing in mid-1997. The closure of the factory virtually eliminated the market for most of the project output. The main factors leading to the closure were its failure to secure a sufficient supply of tomatoes; the tomato-growing area in Bukidnon Province being less than 1,300 ha; a very low average annual yield of 16 tons per ha; and the failure to enforce the agreement that farmers provided with free irrigation water and credit would sell all of their produce to the factory. Market prices for fresh tomatoes were much higher than prices offered by the factory; therefore, farmers sold their produce to traders. Overall, the project is thus rated as less relevant. B. Effectiveness in Achieving Outcome

43. Despite the loan cancellation and failure to implement most infrastructure investments, the project generally achieved its objective of providing commodity support and improvement in social services. The provincial government, strongly supported by the provincial governor elected in 2001, has prioritized health care and social services, and has built upon the initial investment provided by the project to build a comprehensive network of public sector hospitals that now ranks as one of the best public health care provider in the country and staffed by highly trained medical personnel. It has developed eight public hospitals, and provincial government investments in the new secondary and tertiary hospitals was about P253 million by the time of the PCR Mission, In 2008, some 250,000 people were provided with comprehensive health care, with most people enrolled in the PhilHealth-sponsored program that entitles them to free medical care. In 2008, PhilHealth contributed P48.379 million to Bukidnon Province as its share of the cost of this program. 44. At the village level, the 35 day care centers, 23 BHSs, and 1 MHC provided under the project bring the provincial network to 1,035 day care centers, 351 BHSs, 15 provincial health stations, and 8 hospitals. Of the four water supply projects envisioned by the project, two water supply systems were completed (Baungon and Libona) and are currently used by 7,560 households. Although the project intended to serve 10,000 households with water supplies, one water supply system (Manolo Fortich) was implemented but is nonfunctional. Implementation of the Talakag water supply project is still ongoing. The farm road improvement of 11.5 km is part

10 The economic analysis used overly optimistic tomato yields and forecasted that yields would triple from the existing

16 tons per ha to 52 tons per ha, provided that farmers used new technology and high levels of farm inputs under irrigated conditions. It also assumed that the BRCI factory would be able to obtain tomatoes from farmers at a price of $0.06–$0.08 per kilogram (kg), which was the price paid by its competitor in Ilocos Norte in 1993, although the fair market price was considered to be $1.50 per kg in 1993 prices. It considered that the factory could only be profitable if it was able to purchase tomatoes at less than $0.385 per kg, while the FIRR analysis assumed that the farmers could sell their produce above $0.77 per kg. During the PCR mission, farmers interviewed indicated that it was not viable to produce tomatoes if their market price was less than $0.557 per kg.

11

of a network of 852.85 km of farm-to-market roads that is currently maintained by the LGUs. Despite significant achievements in the social services components, the failure to complete the irrigation and most rural infrastructure investments leads to an assessment of less effective. C. Efficiency in Achieving Outcome and Outputs

45. The project has improved access for the rural sector to public health, water supply, and pre-primary education. All targets set at appraisal for these investments have been considerably exceeded. The government has placed a high priority in ensuring that all rural inhabitants have access to these services at the same standard enjoyed by the higher-income populations in urban centers. The economic evaluation of the only road constructed showed that investment in this subcomponent is viable, with an economic internal rate of return (EIRR) of over 20%. However, the $1.925 million spent on CISs, representing 17% of the actual project cost, can be considered as ineffectual. Thus, overall, the project is assessed as less efficient. D. Preliminary Assessment of Sustainability

46. The project achieved significant social impact: a large number of beneficiaries receive better health care, water, and childhood education. Gender awareness has been enhanced, as the project included a high proportion of women in all activities. Environmental awareness has been raised in educational programs and replanting of forests in deforested areas. The strengthening of livelihood programs also provided alternative enterprises for some 5,000 families to supplement their farm incomes. The investments required to sustain the provincial health care program, as noted earlier, are expected to continue. Overall, the sustainability of completed project components is rated as likely. E. Impact

1. Appraisal

47. At appraisal, a financial and economic evaluation was carried out for the project as a whole and separately for the farm-to-market roads and CISs, which were expected to generate the major portion of direct quantifiable benefits. The financial impact of the CIS component was also assessed, comparing typical farm incomes under with- and without-project scenarios. Under a scenario considering production of tomato and potatoes in the irrigations systems, the financial internal rate of return (FIRR) for the CIS component, CIS and road components combined, and the whole project were estimated at 34.5%, 18.6%, and 12.5%, respectively. The economic internal rate of return (EIRR) of the project as a whole was estimated at 21.7%. The EIRRs for the farm-to-market road and CIS components, which are major sources of the project benefits, were estimated at 11.6% and 49.5%, respectively, while EIRRs for health and day care facilities and rural water supply were not calculated, because user fees were less than or equal to the recurrent costs. The EIRR of the combined two infrastructure components, which are physically and functionally interrelated, was 29.8%. The lower FIRR than EIRR for the project as a whole reflects its social service aspects for which users would not pay or would pay less than the charges, such as farm-to-market roads, community development services, and health services. 48. The farm income analysis at appraisal assumed that the introduction of high-value crops would increase farmers’ annual incomes by 75% to 290%, i.e., from $960–$1,550 at appraisal to $2,620–$2,930 at the 10th year. The analysis also indicated that tomato production under the drip irrigation system would require a high labor input at about 340 person-days per ha per crop

12

season, which is more than five times the current labor requirement for rain-fed corn. While the 380 months of labor would be available from the surrounding villages or thanks to migrant laborers from other provinces, the demand for hired labor in excess of available family labor would have been much higher if the irrigated farm size per household exceeded the projected 0.5 ha. The farm input analysis indicates that the hired labor requirement would increase from 17 to 280 days if a household increased tomato production from 0.5 to 1.0 ha. As labor scarcity is a potential risk in attaining project targets, particular attention to labor needs to be paid in designing cropping patterns and calendars. The financial and economic analysis of the project is in Appendix 9. 2. Project Completion 49. At project completion, the failure to complete the rural infrastructure component that contributed to overall project benefits eroded the financial and economic viability of this project. The only rural infrastructure component completed was the single section of 11.5 km of farm-to-market road at a cost of $1.218 million or $0.122 million per km, compared to the total allocation of $10.641 million or $0.133 million per km at appraisal. 50. At project completion, the total number of beneficiaries remained about the same as at appraisal, although the targeted 2,300 farm families did not receive any benefits from the drip irrigation schemes. These farmers did receive training over 6 months in the use of new technology and IPM for growing high-value vegetable crops. From interviews conducted during the PCR mission, it appears that farmers' yields are presently constrained by their inability to purchase the required quantities of fertilizer and chemicals to attain higher yields. Other problems include the large fluctuation in yields (due to weather and insect attacks) and fluctuation of produce prices (due to uncertainty in market demands). Farmers' incomes in real terms have not changed significantly from the pre-project situation; they were disappointed that the plans for the drip irrigation scheme were canceled and requested that the project be revived. They continue to follow traditional practices of growing high-value crops, such as tomatoes and potatoes, in the wet season, and corn in the dry season. 51. The project did not meet its target of 2,000 ha of reforestation of watershed areas serving as sources of irrigation water. Since the irrigation scheme was terminated, reforestation of these areas was accorded a lower priority, and over the last 10 years, the Department of Environment and Natural Resources reforested only 675 ha of this land. Further, the target of issuing land titles to 500 Lumad households was only partially achieved; to date, the province has issued five collective "mother" certificates for 34,143 households but has issued no individual titles. This lack of progress is also attributed to the termination of the irrigation component, as the objective of titles issued was to facilitate loans for growing high-value crops for individual farmers. 52. The annual per capita poverty threshold for 2006 was about $281 in 2009 prices. The poverty incidence among families for that year was 29.6% or 68,973 families. This compares with the appraisal estimate of $228 for 1994 in 2009 prices and the poverty incidence of 40.7% or 67,944 families. The poverty threshold income has increased by 23% in 2009 constant terms, but the number of poor families has increased by 1.5% or 1,028 families since 1994. The impact of the project in addressing poverty is considered to be relatively small.

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IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

53. The rural infrastructure components were not successfully implemented. However, the social services component was efficiently implemented in line with the arrangements envisaged at appraisal. Following ADB's post-evaluation guidelines,11 the project is rated as partly successful, despite the cancellation of a large component of rural infrastructure targeted to support a relatively small number of direct beneficiaries. The computation of the overall assessment is in Appendix 10. B. Lessons Learned

54. Many of the administrative lessons learned have been addressed and taken into account in the design of later projects through recent improvements in ADB project-processing methodologies such as the review of project concept papers, the use of project readiness filters, and harmonization of ADB and country procedures for procurement. However, many of the technical lessons learned point to the need for greater attention to design issues at the project formulation stage. They are as follows.

(i) Greater care should be taken when recommending the introduction of new technology such as drip irrigation, which had not been practiced on a large scale in the Philippines.

(ii) More resources should have been allocated prior to appraisal for the preparation of the feasibility study to verify that the project was both technically and economically viable. The small-scale feasibility study did not provide sufficient time or resources to collect important design data such as rainfall records, land tenure status, crop budgets (including realistic figures on crop inputs), yields, and prices for the with- and without-project situations. This additional information would have enabled the appraisal report to provide a more informed assessment of major project risks.

(iii) The feasibility study should have included a detailed value-chain analysis to trace the flow of produce from the farm to its final use and to identify all risks involved at different stages. Effective, feasible remedies should be recommended at each stage. A critical oversight in assessing risks was linking the investment project to the purchase of tomatoes by the tomato-processing factory.

(iv) The project should have supported a detailed market study to identify the demand for various high-value crops in different markets at various times of the year. This information could have been made available to farmers to guide them in their timing and choice of planting different crops. A market information system, linking farmers with major buyers for their commodities, could also have been provided to ensure that farmers receive the best prices for their crops.

(v) The high cost of providing water to crops, such as tomatoes, using drip irrigation can only be justified in situations where there is assurance of high yields and prices for farm produce. In the project design, insufficient attention was paid to ensuring that the farmers would be able to secure the resources to fund the purchase of high levels of farm inputs or that the marketing arrangements would remain in place for them to obtain high prices.

(vi) The water availability for the irrigation schemes appears to have been underestimated at the design stage. In particular, it was found that the Sagayon

11 ADB. 2006. Guidelines for Preparing Performance Evaluation Reports for Public Sector Operations. Manila.

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CIS (if implemented) would have been able to provide irrigation water to less than 35% of the area planned.

(vii) Procedures for project implementation at the local level need to be established at an early stage. More attention needs to be given to establishing an ongoing dialogue among ADB, national-level government agencies, and the provincial-level EA and IAs on the documentation required for the smooth flow of funds. More attention should have been given to capacity building of the EA and IAs in the early stages of project implementation.

(viii) Greater attention should have been given to the impact of the project on the budget resources of the province. Although the project was reduced in size from $66.0 million in the initial design to $37.3 million at appraisal, not enough consideration was taken of the province's financial capacity, its revenue, or its budget commitments, which in the end became a key consideration in the provincial government’s decision to cancel the loan (principally the irrigation and rural roads components) so that it could channel more of its discretionary budgetary resources into higher priority investments, which turned out to be health care, education, and water supply, and which part of the project did support.

C. Recommendations

55. The planted agriculture area and crop production figures in the province have remained relatively stagnant in the last 10 years. Farm incomes of some 100,000 poor farmers have also stayed the same. However, with the assistance of the project, the provincial government has achieved considerable success in providing social services such as health care, water supply, and education to a large number of low-income families. Given this situation, the Government may consider redirecting its attention to providing greater assistance to the agriculture sector to raise incomes and the standards of living of farm households. 56. ADB was unable to undertake regular annual or biannual project review missions to the field due to security concerns. Provision should be made for more regular reviews, even at a distance, to track project progress and resolve any problem faced by a project. Comprehensive aide-mémoires should be prepared, even for desk reviews, to record the main findings and proposed steps to overcome problems encountered. 57. Greater efforts should be made to ensure that all project management units at the LGU level produce annual reports that include information on all project expenditures, activities, and impact. Annual reports are currently only required at the overall project level. 58. The PMO should keep records of project expenditures by components in addition to expenditure by major procurement category items such as civil works, equipment, and consulting services. Expenditure by component is required to conduct an evaluation of project economic and financial viability, which is difficult if records are kept only of expenditure by procurement category. 59. A higher priority should have been placed on issuing land titles to indigenous farmers, which can be used as collateral to obtain loans from commercial banks.

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1. Project-Related

60. Ongoing monitoring of project costs and benefits needs to be institutionalized within the local government structure to ensure that an ongoing and cost-effective monitoring and evaluation system is established. This will enhance coordination between the provincial government and other line agencies. 61. Given the cancellation of a large portion of the project finances, a project performance evaluation report is not recommended for this project.

2. General

62. For future rural development projects in the Philippines, the following actions are recommended.

(i) A participatory approach with local communities and beneficiaries’ full involvement in project components should be used.

(ii) The pre-construction and pre-implementation participatory planning phase should be clearly distinguished from the construction and implementation phase to avoid delays in the implementation schedule and to allow lead-time for community consultation and preparation.

(iii) An adequate monitoring system needs to be in place. Regular collection of fees and the possibility of user charges for the use of new facilities should be included in the project design.

(iv) Monitoring of household incomes to measure project impact on poverty levels should be conducted in close coordination with the National Statistics Office to ensure that the methodology used is compatible with the family income and expenditure survey that is usually conducted every 3 years.

(v) The impact of a project targeted at a subnational entity, such as an LGU, should be fully assessed in terms of its impact on the LGU revenue and budgetary resources to ensure LGU budgetary flexibility over the lifetime of the project.

(vi) Greater involvement of LGUs in the design and preparation of the project is needed, particularly in decisions relating to funding priorities and sources.

16 Appendix 1

PROJECT FRAMEWORK

Design Summary

Performance Targets and/or Indicators in

Original Design Risks/ Assumptions Achievements and/ or

Comments 1. Goal Increased

opportunities for improving socioeconomic status of poor rural communities in northern Bukidnon.

100% increase in fresh and processed vegetables and other horticultural produce of northern Bukidnon by 2006. 140% net increase in average household income of direct beneficiaries of Project investments in agricultural production. Significant improvement in health and nutrition status of targeted communities by 2006. Achieved economic internal rate of return (EIRR) of 21.7%.

Manila and export prices of vegetables/ horticulture crops as projected. Beneficiaries willing and able to spend on health care.

At loan cancellation, the Project only completed about 47% of the original scope (30% as per midterm review mission estimates) and about 14,500 households benefited from the Project. At the village level, health and child care services increased by over 100% (with additional funding from the EA); 19.8% EIRR for the completed rural infrastructure component. Insufficient BME data and no progress assessment was made from BASO statistics. The EA failed to submit a PCR. Prices and yields of vegetables and horticulture crops were incorrectly estimated in the RRP. The health care program under PhilHealth was highly successful.

2. Purpose 2.1 Increased and

sustainable production of vegetables and other high-value crops at the five communal irrigation system (CIS) sites.

Area planted with vegetables/ high-value crops increased from 750 ha in 1996 to 2,300 ha by 2003. 100% increase in contract-growing with agroprocessing companies.

Private companies willing and able to invest in Project area/ Bukidnon agricultural labor available and attracted to Project area. Land Bank of the Philippines (LBP) credit available as projected. LBP cooperatives meet LBP criteria.

Contract growing with agro-processing companies, specifically with the tomato paste plant was not achieved due to the plant's closure in 1998, and the subsequent decision to cancel the Project without completing the irrigation facilities.

2.2 Five thousand households have improved access to basic social services

Preschool children attending day care centers (DCCs) increased by 2000 in 35 barangays. Additional 10,000 households in four target

Parents and barangay councils meet criteria for DCC and BHS and use the facilities.

Achieved ratio of BHSs to population. At project completion, the total number of beneficiaries remained about the same as at appraisal, although the targeted 2,300 farm families

Appendix 1

17

Design Summary

Performance Targets and/or Indicators in

Original Design Risks/ Assumptions Achievements and/ or

Comments municipalities with access to clean domestic water supply by 2000. Attained 1:3,000 ratio of barangay health stations (BHSs) to population in 27 barangays by Year 2001. Time spent to travel to nearest municipal health center (MHC) reduced from 3 hours to less than 1 hour.

did not receive any benefits from the drip irrigation schemes. Impact studies were not conducted due to Project cancellation. LBP agreed to provide agricultural credit in the form of production loans to farmer cooperatives in the project area. The credit demand generated by the Project was expected to amount to P4.5 million for LBP financing. A memorandum of agreement was signed on 12 Feb 1998, but no loans were applied as the Project was canceled.

3. Outputs

a. Rural Infrastructure

3.1 Five new CISs with

drip irrigation facilities established and operational, covering total service area of about 1,160 ha.

CISs at Sigmatan and Maninit operational by 2000. CISs at La Fortuna and Kulaman operational by 2001. CIS at Sagayon operational by 2003.

Timely release of counterpart funds.

With the loan cancellation, no irrigation systems were completed.

3.2 About 70 km farm-to-market roads rehabilitated/ upgraded; 1 new 12-km road segment constructed.

Road civil works completed: Libona segment –Jun 2000 Talakag segment –Jan 2001 Sumilao segment – Dec 2001 New road segment (Talakag) – Jan 2001

The Project completed 11.5 km farm-to-market road, covering barangays Crossing, Maambog, San Jose, and Silipon in Libona, benefiting 1,924 households or approximately 9,990 people.

Appendix 1

18

Design Summary

Performance Targets and/or Indicators in

Original Design Risks/ Assumptions Achievements and/ or

Comments

b. Community Development

Support

3.3 Community action plan process strengthened.

Five community action plans produced by irrigators' associations by 1998.

Nongovernment organization (NGO) capability as assumed.

Community action plans were formulated.

3.4 Three irrigators' associations and about ten farmers' cooperatives formed.

Operation and maintenance of CIS completely turned over to irrigators' associations by 2003.

Favorable and sustained farmer response to Project inputs.

Five irrigation associations and farmer cooperatives were established.

3.5 Integrated pest management (IPM) integrated into farming practices.

Fifty municipal agricultural extension staff trained as trainers.

Women can find time to participate in Project activities.

Workshops and training were conducted for potential beneficiaries on family health, nutrition, and child care.

3.6 Rural livelihood enterprises enhanced.

One hundred to two hundred farmers trained per year.

Volunteers to assist with Project Implementation.

The pooling of savings was encouraged to invest in rural enterprises.

3.7 Community forestry program established in CIS catchment areas.

At least 10% of Project beneficiaries invest in rural enterprises.

Farmer field schools were conducted.

3.8 Farmers' cooperatives have access to credit.

2,000 ha of catchment area forested by 2003.

3.9 Indigenous people's plan (IPP) implemented.

500 Lumad households have attained and tenure instruments.

c. Social Services

3.10 Thirty-five DCCs constructed and operational by 2000.

About 2,000 preschool children in 35 barangays enrolled.

Seventeen BHSs, one MHC, and 35 DCCs were constructed.

3.11 Twenty-seven BHSs constructed and operational by 2000.

About 80,000 people in 35 barangays have access both to a BHS and an MHC within a 1-hour travel time.

Department of Health includes Project-supported BHS and MHC in national programs.

3.12 Three MHCs, each with 10-bed capacity, constructed and operational by 2000.

Private doctors agree to set up their practices at MHC.

Appendix 1

19

Design Summary

Performance Targets and/or Indicators in

Original Design Risks/ Assumptions Achievements and/ or

Comments 3.13 Four rural water

supply systems operational by 1999 and managed by users.

Ten thousand households in target areas served by June 1999. Four rural water and sanitation associations (RWSAs) organized and trained.

The coverage of water supply facilities was expanded in three municipalities to serve about 10,000 households. Associations were formed, and members were trained to operate and maintain the system and to collect water charges.

d. Project Management and Institutional Development

3.14 Provincial

administration capability to implement Project strengthened.

Project fully implemented by the Provincial Government of Bukidnon staff by 2003. Memoranda of Agreement with NIA, Department of Environment and Natural Resources (DENR), LBP, DA, National Economic and Development Authority and IPP Incorporated in Project planning matrix (PPM) and implemented. – 10 staff from Project

Management Office (PMO) and local government units trained in using ZOPP planning methodology.

– All staff trained in tasks identified in PPM

Project Advisory Committee functioning by 1997. PMO fully established and operational three months after loan effectiveness. PPM adopted as Project implementation framework by June 1999.

Municipalities and barangays maintain support for the Project.

The PMO was established as envisaged, which coordinated with the municipal and barangay government units to administer the project. The PMO, at midterm, had 38 staff members as compared with the minimum of 32 recommended at appraisal. At project cancellation, all PMO staff members were reabsorbed into the provincial government and continued to provide support for all viable project components. Bukidnon State College prepared the benchmark survey proposal in May 1999, and the final report for the technical assistance for benchmark survey in October 2000. Quarterly progress reports were submitted.

3.15 Project BME system established.

Project BME system operational by March 1997.

The BME system was not established.

Appendix 1

20

Design Summary

Performance Targets and/or Indicators in

Original Design Risks/ Assumptions Achievements and/ or

Comments Monitoring mechanisms

were formulated but were not fully implemented due to project cancellation. The provincial government had adequate funds to pre-finance some project activities; initially, this was complied with. Due to cancellation of NGO and other consultant contracts, and with the revocation of the memorandum of agreement with NIA, most of these activities came to a standstill.

4. Activities

a. Rural Infrastructure

4.1 Detailed engineering

design for all CISs completed.

Inputs Provincial Government of Bukidnon contract with NIA for design of diversion works and maintain conveyance line.

Engineering designs were completed by NIA for four of the five systems.

4.2 Drip irrigation systems designed for CISs.

14.5 person-months consultancy services.

4.3 Preparation of prequalification, tender, and contract documents for civil works and equipment completed in 1996.

4.4 Construction of civil works.

Sigmatan and Maninit, 1998-2000 La Fortuna and Kulaman, 1999-2001 Sagayon, 2001-2003

Construction work was started (but not completed) in La Fortuna, Maninit, and Sigmatan. Works at Kulaman did not start due to difficulties in locating a route for the main supply pipeline for the source.

4.5 Drip irrigation equipment installed and tested with farmers.

Appendix 1

21

Design Summary

Performance Targets and/or Indicators in

Original Design Risks/ Assumptions Achievements and/ or

Comments 4.6 Surveys and

detailed design of farm-to-market roads: - Sumilao Section,

1997-1999 - Libona Section,

1997-1999 - Talakag Section,

1996-1998

306 person-months consultancy services. Road equipment purchase.

Consulting firms bidding for contracts. Field competent personnel.

7.02 person-months consultancy services rendered.

4.7 Procure equipment and prepare tender and contract documents, 1997.

4.8 Construction works: - Sumilao – 1999 to 2002 - Libona – 1998 to 2000 - Talakag – 1998 to 2001

b. Community Development Support

4.9 Organize and train

three irrigators' associations and ten farmers' cooperatives.

NGO contracts, $300,000

Irrigation associations were formed in all five CISs Five multipurpose farmer cooperatives were also formed.

4.10 Train about 50 municipal agricultural extension staff in IPM using farmer field school approach.

Five CIS sites receive DENR funds by 1997.

The NGO initially assessed specific agricultural practices and the farmers' training needs. An IPM specialist coordinated the IPM program. Four farmer field schools with 100 participants were conducted in Impasugong, Libona, Manolo Fortich, and Sumilao.

4.11 Conduct farmer field school for 100-200 farmers per season, to reach 10,000 by 2001.

IPM consultancy services ($50,000). DA technical support for IPM facility.

122.92 person-months consultancy services were rendered

4.12 Land mapping completed by 1996-1998.

$3.8 million LBP production credit targeted for the Project.

Farmers' cooperatives can meet LBP criteria for loans. LBP's funding resources available.

Appendix 1

22

Design Summary

Performance Targets and/or Indicators in

Original Design Risks/ Assumptions Achievements and/ or

Comments 4.13 Issuance of land

tenure instruments to Lumads and farmers prior to construction of CIS at each site.

IPP consultancy services ($100,000).

4.14 Ten training workshops on rural livelihood skills per year.

c. Social Services 4.15 Construction of:

- 27 BHSs,1997 to 2002 - 35 DCCs,1997 to 2000 - 3 MHCs, 1997 to 2000

Five person-months of consulting services. Short-term consulting services from NGOs and local universities.

Barangay budget available for BHS operation and maintenance. Teachers available in the barangays. Municipal budget sufficient for MHC operation. Water charging system established and collection rate high enough to cover operation and maintenance cost.

Constructed 17 BHS, one MHC, and 35 DCCs; and expanded the coverage of water supply facilities in three municipalities to serve about 10,000 households. The NGO initially assessed specific agricultural practices and the farmers' training needs. An IPM specialist coordinated an IPM program. The NGO contract was terminated by instruction of the provincial governor.

4.16 Training workshops for 50 barangay health workers completed.

4.17 Thirty-five DCCs teachers recruited and trained.

4.18 Detailed design of rural water supply systems, 1996-1997.

4.19 Construction works, 1997-2000.

d. Project Management and Institutional Development

4.20 Project Director recruited.

26 person-months consultancy services

Project Director is competent and holds job for at least three years.

The PMO was established, but the project did not appoint a local consultant

Appendix 1

23

Design Summary

Performance Targets and/or Indicators in

Original Design Risks/ Assumptions Achievements and/ or

Comments Suitably qualified and

motivated staff assigned to PMO. Consultants are competent and motivated.

experienced in project management to fill the project director post. Instead, an existing staff member was appointed.

4.21 Office building renovated in 1997.

Beneficiaries keen and able to participate in Project.

The provincial administrative building to house the PMO was renovated.

4.22 Office furniture and equipment purchased in 1997.

Timely release of counterpart funds.

Office equipment and furniture, service vehicles, and incremental operation and maintenance costs were financed under the project.

4.23 Thirty-two provincial administration staff assigned to PMO.

At project completion, all PMO staff members were reabsorbed into the provincial government and continue to support all the viable project components. Monitoring mechanisms were well formulated but were not fully implemented due to project cancellation.

4.24 PMO consultants recruited in 1997.

Most assumptions and risks were well formulated during appraisal, except for the potential failure of the tomato-processing factory.

4.25 PPM and work plan produced in 1997.

4.26 Ten staff from PMO, municipalities and barangay trained in ZOPP methodology.

4.27 All staff trained in their task identified in PPM.

ADB = Asian Development Bank, BASO = Bureau of Agricultural Statistics Office, BHS = barangay health station, BME = benefit monitoring and evaluation, CIS = communal irrigation system, DCC = day care centers, EA = executing agency, EIRR = economic internal rate of return, ha = hectare, IPM = integrated pest management, km = kilometer, LBP = Land Bank of the Philippines, MHC = municipal health center, NGO = nongovernment organization, NIA = National Irrigation Administration, PCR = project completion review, PMO = project management office, PPM = project planning matrix, RRP = report and recommendation of the President, ZOPP = Ziel Orienterte Projekt Planung (Objectives Oriented Project Planning) . Source: Asian Development Bank.

24 Appendix 2

BUDGET SUMMARY AND ACTUAL COST

Table A2.1: Project Costs by Component ($'000)

Foreign Local Total Foreign Local TotalItem Exchange Currency Cost Exchange Currency Cost

A. Rural Infrastructure1. Farm-to-market Roads 4,467 6,165 10,632 208 287 4952. Communal Irrigation Systems 6,770 4,506 11,276 501 334 835

Subtotal (A) 11,237 10,671 21,908 709 621 1,330

B. Community Development Support1. Community Organizing and 46 943 989 1 33 34

Development Planning2. Agricultural Extension Services 145 169 314 – – –3. Rural Livelihoods Skills Training – 57 57 – – –4. Agricultural Credit Support – 4,465 4,465 – – –

Subtotal (B) 191 5,634 5,825 1 33 34

C. Social Services1. Health and Child Service 1,068 1,735 2,803 741 1,208 1,9492. Rural Water Supplies 1,541 2,386 3,927 808 1,264 2,072

Subtotal (C) 2,609 4,121 6,730 1,549 2,472 4,021

D. Project Management 321 1,786 2,107 154 875 1,029

Total Project Cost Before Service Charge 14,358 22,212 36,570 2,413 4,001 6,414

Service Charge During Implementation 721 – 721 99 – 99

Total 15,079 22,212 37,291 2,512 4,001 6,513

Appraisal Actual

Source: Asian Development Bank and the Government of the Philippines.

Appendix 2 25

Table A2.2: Expenditure Accounts by Financier ($)

Provincial Municipalities Categories ADB Government and Barangays Beneficiaries Land Bank TotalA. Investment Costs

01 Civil Works 9,214,000.00 8,760,000.00 – 458,000.00 – 18,432,000.0002 Vehicles and Equipment 5,807,000.00 1,114,000.00 – – – 6,921,000.0003 Office Supplies and Furniture 137,000.00 45,000.00 – – – 182,000.0004 Consulting Services 1,905,000.00 212,000.00 – – – 2,117,000.0005 NIA, Engineering Services 1,532,000.00 327,000.00 – – – 1,859,000.0006 Community Organizing, Training 170,000.00 91,000.00 – – – 261,000.0007 Benefit Monitoring and Evaluation 116,000.00 – – – – 116,000.0008 Service Charge 721,000.00 – – – – 721,000.00

Total Investment Costs 19,602,000.00 10,549,000.00 0.00 458,000.00 0.00 30,609,000.00

B. Recurrent Costs1 LGU Equity – – – – – 0.002 LGU Equity - staff salaries – 1,280,000.00 156,000.00 - - 1,436,000.003 PMO Building – – – – – 0.004 Land Acquisition – 229,000.00 40,000.00 68,000.00 - 337,000.005 Contract with NGO 398,000.00 44,000.00 – – – 442,000.006 Incremental Production Credit – – – – 4,465,000.00 4,465,000.00

Total Recurrent Costs 398,000.00 1,553,000.00 196,000.00 68,000.00 4,465,000.00 6,680,000.00

Grand Total 20,000,000.00 12,102,000.00 196,000.00 526,000.00 4,465,000.00 37,289,000.00

GOP ProvincialCategories ADB Loan Grant Government TotalA. Investment Costs

01 Civil Works 1,268,821.53 875,595.33 1,509,963.43 3,654,380.2902 Vehicles and Equipment 347,233.02 91,332.19 157,502.31 596,067.5203 Office Supplies and Furniture 20,684.77 16,639.44 28,694.64 66,018.8504 Consulting Services 583,949.03 139,405.99 240,405.74 963,760.7605 NIA, Engineering Services 244,301.18 52,530.79 90,589.09 387,421.0606 Community Organizing, Training 2,717.05 9,698.84 16,725.29 29,141.1807 Benefit Monitoring and Evaluation 16,984.89 3,906.84 6,754.55 27,646.2808 Service Charge 99,551.86 – – 99,551.86

Total Investment Costs 2,584,243.33 1,189,109.42 2,050,635.05 5,823,987.80

B. Recurrent Costs1 LGU Equity – – 206,026.32 206,026.322 LGU Equity - staff salaries – – 362,524.20 362,524.203 PMO Building – – 120,751.02 120,751.024 Land Acquisition – – – 0.005 Contract with NGO – – – 0.006 Incremental Production Credit – – – 0.00

Total Recurrent Costs 0.00 0.00 689,301.53 689,301.53

Grand Total 2,584,243.33 1,189,109.42 2,739,936.58 6,513,289.33ADB = Asian Development Bank; GOP = Government of the Philippines; LGU = local government unit; NGO = nongovernment organization; NIA = National Irrigation Administration; PMO = project management office.Sources: Asian Development Bank; Audited Financial Statements.

Appraisal

Actual

26

Appendix 3

ANNUAL LOAN DISBURSEMENTS OF THE ASIAN DEVELOPMENT BANK ($)

Category 1997 1998 1999 2000 2001 2002 2003 2004 Grand Total

01 Civil Works 0.00 0.00 0.00 152,997.53 566,704.89 0.00 340,906.76 208,212.35 1,268,821.5302 Vehicles and Equipment 0.00 0.00 176,471.30 14,804.67 0.00 0.00 155,957.05 0.00 347,233.0203 Office Supplies and Furniture 0.00 0.00 8,478.83 8,403.70 0.00 0.00 3,802.24 0.00 20,684.7704 Consulting Services 0.00 0.00 232,502.56 198,337.95 72,037.24 0.00 81,071.28 0.00 583,949.0305 NIA, Engineering Services 0.00 0.00 66,700.85 40,562.51 0.00 108,440.40 0.00 28,597.42 244,301.1806 Community Organizing, Training 0.00 0.00 0.00 2,717.05 0.00 0.00 0.00 0.00 2,717.0507 Benefit Monitoring and Evaluation 0.00 0.00 0.00 0.00 0.00 0.00 16,984.89 0.00 16,984.8908 Service Charge 0.00 7,984.80 10,063.49 12,578.29 17,091.71 24,167.71 27,665.86 0.00 99,551.86

Total Loan Disbursements 0.00 7,984.80 494,217.03 430,401.70 655,833.84 132,608.11 626,388.08 236,809.77 2,584,243.33

Source: ADB's Loan and Financial Information System.NIA = National Irrigation Administration.

Appendix 4 27

IMPLEMENTATION SCHEDULE

YearQuarter 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

A. Project Management Office (PMO)1. Establishment of the PMO

2. Project Work Plans

3. Project Planning Management

4. Establishment of Monitoring and Evaluation System

5. Monitoring and Evaluation Survey

6. Project Cycle Management Training

B. Rural Infrastructure1. Farm-to-market Roads

a. Sumilao Municipality (3 contract packages)Survey, Investigation, and Detailed Design Construction Works

b. Libona Municipality (1 contract package)Survey, Investigation, and Detailed Design

Construction Works

c. Talakag Municipality (2 contract packages)Survey, Investigation, and Detailed Design

Construction Works

2. Communal Irrigation Systems (CISs)a. Survey, Investigation, and Detailed Design

b. Construction of Sigmatan and Maninit CISs

c. Construction of La Fortuna and Kulaman CISs

d. Construction of Sagayon CISs

1997 1998 1999 2000 2001 2002 2003 2004Component

28 Appendix 4

YearQuarter 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

C. Community Development Support1. Community Organization and Indigenous

Peoples' Plan Implementation2. Organizing Irrigator's Association3. Organizing Rural Waterworks and

Sanitation Association4. Agricultural Support Services

a. Training of Trainers

b. Farmer Field Schools for Integrated Pest Management

5. Rural Livelihood Skills Training

D. Social Services1. Health and Child Care

a. Barangay Health Stations

b. Municipal Health Centers

c. Day Care Centers

d. Health and Nutrition Training

2. Rural Water Suppliesa. Engineering Design

b. Construction of Water Supply Works

Projected implementation.

Actual implementation.Notes: Most items under component C were not accomplished due to the Government's request for loan cancellation.Sources: ADB and Government.

1997 1998 1999 2004Component

2000 2001 2002 2003

A

ppendix 5 29

PROJECT MANAGEMENT OFFICE ORGANIZATION CHART

Project Directpr's Office (6) RIS (11) CDS (15)1. Project Director 1. Deputy Director 1. Deputy Director2. Finance Officer 2. Engineer (4) 2. Agriculturist/ Planning Officer/ Environment Officer3. Monitoring and Evaluation Officer/ 3. Secretary 3. Secretary Interagency Liaison 4. Municipal Engineer (5)a 4. Health Officer4. Secretary 5. Consultant 5. Municipal Agricultural Planning Officer (7)a

5. Driver 6. Consultantsb

6. Computer Operator

CommunalExtension and

Support Services

Community Organization and

Development Planning

Community Development

Support (CDS)

Rural Infrastructure Support (RIS)

Provincial Governor

Project Advisory Committee

Consultants

(CIS)Water Supply

Project Director

Irrigation System BHS/ DCCRoads and

Bridges

BHS = barangay health stations; DCC = day care center a Part-time seconded staff. b 87 person-months of consulting services.

Appendix 6

30

STATUS OF COMPLIANCE WITH MAJOR LOAN COVENANTS

Covenant Timing Reference in

Loan Agreement Status 1. The Borrower shall make

available to the province, promptly as needed, all funds, facilities, services and other resources that may be required, in addition to the proceeds of the loan and the counter part funds to be provided by the Province, for the carrying out of the Project.

As required

Article IV, Section 4.02

Partially complied with. The flow of funds was very slow in the first 3 years; impairing the implementation of programmed activities. Several meetings were held between PGB and DOF/MDFO, but these meetings did not produce the desired result.

2. The Borrower shall cause the

Province and each of the implementing agencies to maintain separate accounts for their respective components of the Project; have such accounts and related financial statements audited annually, furnish the Bank not later than 12 months after the end of each related fiscal year certified copies of such audited accounts and financial statements and report of the auditors, including the auditor’s opinion on the use of the loan proceeds.

Yearly

Article IV, Section 4.06 [b]

Complied with.

3. The Province will submit to

the Bank quarterly progress reports on the carrying out of the project.

Within one month after the effective date

Article IV, Sec. 4.07 [b]

Complied with.

4. The Borrower shall ensure

that the Province prepares and furnishes to the Bank a project completion report on the execution and initial operation of the Project.

Promptly after physical completion but not later than three months thereafter.

Article IV, Sec. 4.07 [c]

Not complied with as the project completion report was not submitted .

5. The Province will establish a

PMO. The PMO shall be responsible for overall execution of the Project and coordination with implementing agencies and other agencies involved with the implementation of the

Within one month after the effective date.

Schedule 6, para. 2

Complied with.

Appendix 6

31

Covenant Timing Reference in

Loan Agreement Status Project. The PMO shall have two divisions, the Rural Infrastructure Support (RIS) and the Community Development Support (CDS) Divisions. It will have about 32 qualified staff drawn from the existing provincial administration.

6. A Project Director acceptable

to the Bank will be engaged to head the PMO. The Project Director will be vested with administrative and financial authority and responsibility as may be allowed by the laws of the Borrower and which are necessary to ensure the smooth implementation of the Project.

The Project Director will be assisted by two deputies, one each for RIS and CDS.

Within three months after the effective date.

Schedule 6, para 3

Partly complied with. PGB did not appoint a local consultant experienced in project management to fill this post; instead it preferred to use one of its existing staff with limited project management experience in this role.

7. A Project Advisory Committee

(PAC) will be formed at the provincial level to advise the Governor of the Province on, and identify solutions to, policy-related and inter-agency coordination issues pertaining to Project administration. The PAC shall consist of representatives from DOF, the provincial administration, and the regional or field offices of NEDA, DA, NIA, LBP, DPWH, and DENR.

Within one month after the effective date.

Schedule 6, para. 4

Partly complied with. The PAC did not meet regularly since senior staff had a busy schedule. Mid-level representatives were appointed to sit on the PAC on a regular basis since senior-level staffs were unavailable.

8. The CIS component shall be

implemented by NIA with the active participation of the IAs concerned.

Schedule 6, para 5

Not complied with. CIS component was cancelled.

9. The Province will enter into a

MOA with NIA.

The operation and maintenance of the CIS will be turned over to the IAs as soon as they have demonstrated their

Prior to loan disbursement for the construction of any CIS. Determined from monitoring results.

Schedule 6, para 6

Not complied with. CIS component not completed at time of loan cancellation. The IAs in the five CISs had been organized.

Appendix 6

32

Covenant Timing Reference in

Loan Agreement Status competence to perform the required tasks.

10. The Province will enter into a

MOA with the IA concerned, which will confirm the obligations of the Province and the IA with respect to the operation and maintenance, amortization and turnover of the relevant segments of the CIS and drip irrigation equipment.

Prior to loan disbursement for the construction of any CIS.

Schedule 6, para 7

Not complied with. CIS component not completed at time of loan cancellation.

11. The farm-to-market roads

shall be implemented by the PEO. The Borrower and the Province shall enter into a MOA providing arrangements satisfactory to the Bank for the maintenance of the road.

Barangay roads will be maintained by the barangay concerned. The Province will maintain the provincial road rehabilitated under the Project. The custody and upkeep of the road maintenance equipment procured under the Project will be the responsibility of the PEO.

Prior to the construction of the national road extension

Schedule 6, para 8

Complied with. Roads included in provincial inventory and maintenance undertaken by the Provincial Government. Complied with.

12. Agricultural extension

services under the Project shall be provided by the Municipal Agricultural offices in coordination with the provincial office of the Department of Trade and Industry.

The Province and DA will enter into a MOA for the construction, operation and maintenance of the IPM facility under the Project.

Within three months after the effective date

Schedule 6, para 9

Complied with. Complied with.

13. The Province will enter into a

MOA with LBP to confirm that (i) LBP is prepared to meet the estimated annual demand of up to P150M for production loans under the Project; (ii) farmer cooperatives in the

Within one month after effective date.

Schedule 6, para 10

Not complied with since CIS was not implemented.

Appendix 6

33

Covenant Timing Reference in

Loan Agreement Status five sites that meet criteria agreed by the Borrower, LBP and the Bank will be granted credit; and (iii) LBP staff will assist with the Project’s credit training program for farmer cooperatives.

14. Field workers from the

Provincial Health Office, together with the municipal health officers, shall be responsible for the health and childcare services of the Project. The operation and maintenance of the DCC will be the responsibility of the parents within the community, the barangay councils and the municipal offices of the DSWD. DSWD will select and train daycare workers for this component of the Project.

During project implementation.

Schedule 6, para 12

Complied with.

15. The rural water supply

systems under the Project shall be the responsibility of the waterworks division of the PEO, in cooperation with the beneficiary groups. An RWSA will be formed. The RWSA will charge users for the consumption of water at a rate sufficient to pay for the cost of such operation and maintenance and the RWSA’s administration cost.

Prior to the construction of the water supply system.

Schedule 6, para 13

Complied with.

16. The Province and the

concerned municipality or barangay will enter into a MOA to confirm their respective responsibilities in relation to the facilities to be constructed.

Prior to loan disbursement for the construction of any facility.

Schedule 6, para 14

Complied with.

17. Each MOA between the

Province and the municipality shall confirm (i) assignment of municipal government staff to coordinate Project activities; (ii) contribution of land and the acquisition of rights of way for the construction of the CIS; (iii) issuance of land

Prior to loan disbursement for the construction of any facility.

Schedule 6, para 15

Complied with.

Appendix 6

34

Covenant Timing Reference in

Loan Agreement Status tenure instruments for the CIS beneficiaries; (iv) provision of land, personnel, furniture, equipment and introduction of cost recovery measures for the MHC; (v) training of extension and health care staff; (vi) organization and training of RWSA. The MOA shall specify the terms of the motorbike lease-purchase scheme. Gasoline for such motorbikes shall be provided by the municipalities concerned.

18. Each MOA between the

Province and a barangay shall confirm the (i) assignment of barangay staff to coordinate Project activities; (ii) acquisition of land and rights of way for the construction, operation and maintenance of the barangay farm-to-market roads, BHS and DCC (including contributions of land, personnel and equipment, and introduction of cost recovery measurers); and (iv) training of extension and health care staff.

Prior to loan disbursement for the construction of any facility.

Schedule 6, para 16

Complied with.

19. The Province will ensure that

all land and rights of way necessary for such a facility and construction are acquired in accordance with the applicable laws and procedures of the Borrower.

Prior to the construction of any project facility.

Schedule 6, para 17

Complied with but not required since CIS component was canceled.

20. The Province will ensure that

the municipalities and barangays make satisfactory arrangements and provide adequate funding through budgetary allocations or suitable cost recovery measures, for the ongoing operations and maintenance of the barangay roads and other facilities constructed or updated under the Project.

Annually.

Complied with, for the finished subprojects.

Appendix 6

35

Covenant Timing Reference in

Loan Agreement Status 21. The Province will enter into a

MOA with NEDA to specify the technical assistance to be provided by NEDA to the PMO in setting up a benefit monitoring and evaluation system. Such BME system will be established within one year after the effective date to provide the necessary information to assess the Project’s implementation progress, produce quarterly progress and indicators for monitoring the Project’s socio-economic and environmental impact at mid-term and at completion. NEDA shall be responsible for supervising the collection of the necessary data and organizing training workshops for PMO staff to enable them to produce the reports required by the Borrower and the Bank. The NEDA Regional office will provide staff, trained in BME, to assist in designing and training PMO staff to use and maintain it.

Within six months after the effective date.

Schedule 6, para 19

Partially complied with. The baseline survey was completed and BSC report submitted in July 2000. BME activities ceased at time of loan cancellation.

22. A mid-term review (MTR) will

be conducted to assess the initial impact of completed project outputs.

Fourth year after the effective date.

Schedule 6, para 20 [b]

Complied with. MTR fielded in May 2002.

23. The Province will ensure that

all civil works and other activities carried out under the Project are in compliance with all applicable environment laws and regulations of the Borrower. In particular, prior to loan disbursement for civil works which require Environmental Compliance Certificate (ECC), the Province will ensure that such ECCs have been obtained. The Provincial Environment Unit shall be responsible for monitoring the Project environment impact and compliance with the relevant environmental laws and regulations.

Prior to loan disbursements for civil works.

Schedule 6, para 21 [a]

Complied with.

Appendix 6

36

Covenant Timing Reference in

Loan Agreement Status 24. The Province will coordinate

with DENR to ensure that the catchment areas of each CIS are included in the watershed protection and community reforestation program under the Bank-financed Forestry Sector Project (Loan No. 1191-PHI) and will assist DENR in identifying, surveying and appraising such catchment areas for reforestation.

Schedule 6, para 21 [b]

Partially complied with. The MOA was endorsed by the DENR Regional Office for approval by the DENR Secretary. The catchment areas were not included in the ADB Forestry Sector Project, as this was terminated at the end of 1999. The PMO submitted the maps of the catchment areas of the CIS projects to the PENRO. PENRO has included these sites in their reforestation program.

BHS = barangay health station, BSC = baseline survey completion, BME = benefit monitoring and evaluation, CDS = community development support, CIS = communal irrigation system, DA = Department of Agriculture, DCC = day care center, DENR = Department of Environment and Natural Resources, DOF = Department of Finance, DPWH = Department of Public Works and Highways, DSWD = Department of Social Welfare and Development, ECC = environmental compliance certificate, IA = implementing agency, IPM = integrated pest management, LBP = Land Bank of the Philippines, MHC = municipal health center, MDFO = municipal development fund office, MOA = memorandum of agreement, NEDA = National Economic and Development Authority, NIA = National Irrigation Administration, PAC = project advisory committee, PEO = Provincial Engineer's Office, PENRO = Provincial Environment and Natural Resources Office, PGB = Provincial Government of Bukidnon, PMO = project management office, RIS = rural infrastructure support, RWSA = rural waterworks and sanitation association. Source: Asian Development Bank

Appendix 7

37

CONSULTING SERVICES AT APPRAISAL AND UTILIZED (person-months)

Appraisal Utilized

A. Project Management Office1. Project Director 84.00 44.002. Project Management Consultant 3.00 3.003. Monitoring and Evaluation Specialist 3.00 2.724. Environmental Specialist 3.00 3.005. Integrated Pest Management Consultant 3.00 2.156. IPM Trainer 3.00 3.587. IPM Trainer 3.00 3.268. IPM Trainer 3.00 0.93

Subtotal 105.00 62.64

B. Community Organization and Training Activities1. Nongovernment Organization Contractor

($300,000.00/5 year lump sum)Paid for 64.23 pm out of 129 pm

2. Local Training Institutions($50,000.00/ lump sum contract)

C. Communal Irrigation System1. International Consultant 3.50 0.522. Local Consultant 11.00 6.50

Subtotal 14.50 7.02

D. Farm-to-Market Roads 306.00 122.92

E. Rural Water Supply1. Water Supply Engineer/Hydrogeologist 2.00 2.002. RWSA Expert 3.00 2.82

Subtotal 5.00 4.82

F. Indigenous Peoples Plan Consulting Services1. Cultural Anthropologist/ Lumad Expert 12.00 9.102. Legal Counsel 12.00 6.943. Land Survey Technician 12.00 6.764. Land Survey Technician 12.00 3.185. Computer Programmer 12.00 0.68

Subtotal 60.00 26.66

Total 490.50 224.06IPM = integrated pest management, pm = person-month, RWSA = rural waterworks and sanitation association.Source: Asian Development Bank and the Government of the Philippines.

38 Appendix 8

LIST OF PROCURED ITEMS

Date Acquired Quantity

(units) Particulars Amount

(P) Spare Parts 20 April 1998 – Tire rim 22,800.00 24 April 1998 – Spare part 7,907.70 22 June 1998 5 Tire 15,175.00 12 May 1999 4 Tire 19,942.00 3 August 1999 – Seat cover 14,000.00 21 July 2000 10 Tire 69,500.00 16 February 2001 10 Tire 69,500.00 2 July 1999 – Tire 68,800.00 20 December 2001 – Tire 51,992.00 Subtotal 339,616.70 Other Items 3 September 1998 – Flower vase, kitchen utensil 16,557.50 9 June 1998 – Multitester, electrical material 7,535.00 14 July 1998 – Stove 2,200.00 14 July 1998 – Coffeemaker 1,912.50 17 August 1998 – Rain boots 3,700.00 17 August 1998 – Raincoat with pants 3,995.00 7 September 1998 1 Fax modem 4,500.00 28 October 1998 – Pencil 925.00 27 April 1999 – Triangle ruler 4,942.95 24 May 1999 – Tray, wall clock, doormat 2,382.75 24 May 1999 – Extension wire, flexible hose 658.00 24 May 1999 – Fork and spoon 1,560.00 24 May 1999 – Water glass, cup, saucer 3,200.25 29 June 1999 1 Trolley 2,350.00 2 July 1999 – Composition cover 9,994.60 31 August 1999 – Organizer and communicator accessories 4,692.38 31 August 1999 1 Document bag or briefcase 2,750.00 30 September 1999 – Electrical material 8,575.00 28 August 2000 – Toshiba battery pack 6,726.37 19 July 2000 – Toshiba copier part 7,112.00 17 October 2000 – Dinnerware set 12,084.00 18 June 2001 – Office supplies 8,407.45 22 November 2001 – Motolite battery 2,580.00 16 June 1998 – T-square 4,950.00 Subtotal 124,290.75 Other Current Assets – Oxygen tank 90,000.00 Subtotal 90,000.00

Appendix 8 39

Date Acquired Quantity

(units) Particulars Amount

(P)For Land Improvements – – NIA, surveys and investigation 1,000,000.00 – – NIA, CIS engineering and administration 1,600,000.00 – – NIA, irrigation associations 1,000,000.00 – – NIA, CIS engineering and administration 735,000.00 – – NIA, engineering services 5,241,338.00 – – NIA, La Fortuna CIS 5,445,370.00 – – Benefit monitoring and evaluation 241,470.00 – – NIA, Sililpon communal irrigation project 2,000,000.00 – – NIA, Maninit communal irrigation project 2,000,000 – – NIA, engineering and administration 354,885.00 Subtotal 19,618,063.00 Firefighting Equipment 30 September 1999 4 Fire extinguisher 14,000.00 Subtotal 14,000.00 Technical and Scientific Equipment 3 June 1998 – Survey equipment 214,000.00 22 December 1999 – LCD projector 150,000.00 6 May 2001 – Medical equipment, Malitbog Hospital 477,240.00 7 November 2001 – Hospital supplies, Malitbog Hospital 62,589.00 13 December 2001 – Hospital supplies, Malitbog Hospital 8,417.00 13 December 2001 – Medical equipment, Malitbog Hospital 12,060.00 22 February 2001 2 Altimeter 15,000.00 16 March 1999 – Digital camera 21,113.00 28 April 1999 1 Planimeter 40,000.00 19 August 1999 1 Pantograph 38,000.00 28 October 1999 – Current meter digital 90,000.00 Subtotal 1,128,419.00 Information Technology Equipment and Software 8 February 2001 – Computer 96,000.00 23 June 1998 – LAN card 36,000 18 February 1999 3 Computer system 114,000,00 12 May 1999 1 Computer motherboard 10,800.00 19 August 1999 2 Antivirus system 8,600.00 19 August 1999 2 Laserjet toner 8,970.00 31 August 1999 – UPS unit (computer) 29,400.00 11 April 2000 – Computer upgrade 11,000.00 26 April 2000 – Computer part 10,165.00 8 February 2001 – Computer accessory 39,900.00 27 April 1998 – Computer system 150,000.00 26 May 1998 – Computer system 220,950.00 10 June 1998 – Laserjet printer 66,368.00 12 August 1998 – Computer 55,000.00 31 March 1999 – Scanner, printer, copier 35,500.00 25 May 1999 – Computer system 125,000.00 19 July 1999 1 Computer printer 18,500.00 9 May 2001 – Computer system 34,000.00 27 June 2001 – Computer equipment 88,767.00 Subtotal 1,160,920.00

40 Appendix 8

Date Acquired Quantity

(units) Particulars Amount

(P) Telegraph, Telephone, Cable, Television, and Radio Equipment 2 March 1998 3 Cordless telephone 7,420.00 31 August 1999 – Telephone set 9,390.00 1 October 1999 – Mobile antenna 21,000.00 23 February 2001 3 Cellular telephone 24,000.00 16 April 2001 3 Cellular telephone 22,920.00 21 October 1998 – VHF/FM transceiver 212,700.00 1 December 1998 – Sony VHS 7,200.00 1 December 1998 – Audio-video equipment 16,651.00 25 February 1999 – Globehandy telephone 13,360.00 23 February 1999 – Radio handset 17,350.00 5 August 2002 – Cellular telephone 11,430.00 Subtotal 363,421.00 Motor Vehicles 24 April 1998 18 Motorcycle 1,318,500.00 10 December 1998 5 Service vehicle 4,490,000.00 26 January 2000 3 Service vehicle 2,826,535.40 8 December 2000 2 Hilux power pick-up 1,820,000.00 22 January 2001 2 Service vehicle 1,820,000.00 23 April 1999 1 Pick-up 898,000.00 15 July 1999 – Customs duties and taxes 1,362,292.00 7 November 2000 1 Isuzu Forward (boom truck) 430,000.00 Subtotal 14,965,327.40 Office Equipment 29 April 1998 – Typewriter 49,000.00 9 March 1998 – Vacuum cleaner 6,813.00 29 April 1998 – Bundy clock 14,900.00 15 December 1998 – Camera 16,875.00 10 August 1999 – Imaging unit 17,571.10 22 February 2001 – Laminating machine 7,985.00 27 March 1998 – Photocopier 96,800.00 31 March 1998 – Typewriter 23,275.00 16 June 1998 – Facsimile machine 19,500.00 16 June 1998 – Acetate pen, cassette recorder 14,497.00 16 June 1998 – Lettering set (Rotring) 13,700.00 9 June 1998 – Photocopier 59,500.00 25 June 1998 – Electric typewriter 29,500.00 26 June 1998 – Photocopier 55,950.00 16 July 1998 – Sound system 43,950.00 3 December 1998 – Typewriter 21,000.00 18 January 1999 – Binding machine 58,500.00 17 June 1999 – Organizer and communicator 33,115.39 Subtotal 582,431.49

Appendix 8 41

Date Acquired Quantity

(units) Particulars Amount

(P)Furniture and Fixtures 24 July 2000 – Steel cabinet 40,480.00 10 February 1998 – Chairs and table 226,595.00 7 April 1998 – Window blinds 44,928.00 29 April 1998 – Computer table 5,200.00 2 June 1998 3 Filing cabinet 26,208.00 20 August 1998 – Filing cabinet 62,031.00 12 August 1998 – Glass door 3,855.50 16 December 1998 24 Conference chair 52,800.00 16 December 1998 24 Visitors chair 39,600.00 15 December 1998 – Typing table 4,800.00 27 January 1999 – Locker 23,238.00 27 January 1999 – Storage cabinet 19,100.00 6 April 1999 – Computer table 7,800.00 6 August 1999 – Board paneling 5,000.00 27 August 1999 4 Filing cabinet 31,680.00 31 August 1999 3 Photocopier stand 3,600.00 31 August 1999 3 Steel cabinet 60,720.00 21 October 1999 – Window blinds 16,765.50 24 July 2000 1 Steel cabinet 7,920.00 4 October 2000 3 Steel cabinet 31,335.00 9 February 2001 – Bookcase (furniture) 12,250.00 30 March 1998 – Floor polisher 11,700.00 7 July 1998 – Computer table 33,700.00 9 June 1998 – Glass door 65,000.00 10 June 1998 – Computer table 7,800.00 16 June 1998 2 Mirror 1,300.00 2 July 1998 – Air-conditioning unit 570,000.00 11 August 1998 – Table and chair 103,530.00 29 September 1998 – Air-conditioning unit 15,800.00 4 December 1998 – Board paneling 67,707.98 26 October 1999 – Bookcase 19,400.00 26 October 1999 – Office chair 26,220.00 26 October 1999 – Office table 27,000.00 Subtotal 1,675,063.98 Books 1 October 1999 – Reference book 23,800.00 31 March 1998 – Dictionary 4,900.00 18 July 1999 – Medical book 1,620.00 3 August 1999 – Health book 2,899.00 17 March 2000 – Reference book 10,200.00 Subtotal 43,419.00 TOTAL 40,106,683.14 – = data not available, CIS = communal irrigation system, NIA = National Irrigation Administration. Source: Provincial Government of Bukidnon.

Appendix 9

42

ECONOMIC ANALYSIS A. Major Assumptions 1. General assumptions used in this analysis for the Bukidnon Integrated Area Development Project were (i) all values were expressed in local currency in constant 2009 prices; (ii) the economic life of the farm-to-market road was assumed to be 25 years; and (iii) the standard conversion factor of 0.82, which was used at appraisal, was also used for adjusting the nominal prices of nontraded goods to economic prices. The only farm-to-market road constructed under the project was Libona Road, which measures 11.5 kilometers. Economic evaluation was carried out for this road, where the cost and benefits were quantifiable. B. Project Costs and Benefits 2. The cost of road construction obtained from the project management office was adjusted to 2009 prices. The incremental operation and maintenance costs of the road were based on the estimates provided by the participating municipalities and barangays (neighborhoods). Vehicle operating cost savings were determined by the without- and with-project transport conditions in terms of the quality of road provided. The savings used in the appraisal report converted to 2009 prices were used. Passenger traffic volume was estimated based on (i) one trip per person per month to the municipal capital and four trips per person per year out of the municipality; and (ii) freight tonnage equal to the agricultural production in the influence area, assuming that consumption within the area is balanced by inward and nonagricultural freight. 3. The economic benefits generated by the road comprise (i) a reduction in transport costs for freight and passengers, (ii) reduction in road maintenance costs, and (iii) increased economic activity in areas influenced by the road. C. Other Benefits 4. User fees for day care, medicine, and medical services were used as minimal estimates of economic benefits. For the rural water supply systems, the proposed water charge of about P60 per household per month (depending on the water consumption volume) was assumed to reflect the beneficiaries’ willingness and ability to pay, because the proposals are based on beneficiaries’ participation in project planning. The standard conversion factor was used in converting these nominal peso values to border prices. Consumer surplus, multiplier effects of project investments, and forward and backward links of project activities were not quantified in the analysis. 5. By paying fees for day care, medicine, and medical services, users of day care centers and health facilities will defray the operation and maintenance costs, though these will not be sufficient to recover the initial investment costs. The benefits of the services will be much higher than the user fees because of concessional price setting. D. Evaluation Results 6. At appraisal, the economic internal rate of return (EIRR) of the entire project was estimated at 21.7%, with the EIRRs for the farm-to-market road and communal irrigation system components estimated at 11.6% and 49.5%, respectively. At project completion, the failure to complete the rural infrastructure component seriously eroded the overall project benefits and significantly reduced its financial and economic viability. The only rural infrastructure component

Appendix 9

43

completed was the 11.5-kilometer Libona Road, at a total cost of P31.64 million or a per-kilometer cost of P2.75 million, compared to the total allocation of P276.45 million or P3.46 million per kilometer at appraisal. The EIRR for this road was 19.8%, as shown in Table A9, as compared to the EIRR of 22.7% at appraisal. 7. The EIRR for the other two components, community development support and social services, are negative, since the user fees for these services (i.e., health, day care facilities, and rural water supply) are less than or equal to the recurrent costs. 8. At project completion, the total number of beneficiaries remained about the same as at appraisal, although the targeted 2,300 farm families did not receive any benefits from the drip irrigation schemes. Farmers received training over 6 months in the use of new technology and integrated pest management for growing high-value vegetables. However, from field interviews conducted during the project completion review mission, yields are constrained by their inability to purchase the required quantities of fertilizer and chemicals. Other problems include the large fluctuation in yields due to weather and insect attacks, and fluctuation of produce prices due to uncertainty in market demands. Farmer income in real terms has not changed from the pre-project situation in 1996. They were disappointed that the plans for the drip irrigation scheme were canceled and requested that the project be revived. They are still practicing the traditional practice of growing high-value crops, such as tomatoes and potatoes in the wet season and corn in the dry season.

44 Appendix 9

Table A9: Economic Cost and Benefits of Libona Road

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Transport Cost Savings – – – – – 6,732 6,550 6,239 5,937 5,794 5,648 5,506 5,368 5,368 5,368 Inflow – – – – – 6,732 6,550 6,239 5,937 5,794 5,648 5,506 5,368 5,368 5,368 Road Development Cost 1,730 3,839 8,740 3,205 1,073 – – – – – – – – – – Maintenance Cost – – – – 300 300 300 300 300 300 300 300 300 300 300 Outflows 1,730 3,839 8,740 3,205 1,373 300 300 300 300 300 300 300 300 300 300 Net Benefit–Cost Flow Total Net Flow –1,730 –3,839 –8,740 –3,205 –1,373 6,432 6,250 5,939 5,637 5,494 5,348 5,206 5,067 5,067 5,067 Notes: The internal rate of return for the road in Libona is 19.8%. The net present value (NPV), at 10%, is 14,767. Source: PCR Mission and Provincial Government of Bukidnon.

Appendix 10

45

OVERALL ASSESSMENT

Criterion Weight

(%) DefinitionRating

Description Rating Value

1. Relevance 20 Relevance is the consistency of a project’s impact and outcome with the government’s development strategy, the Asian Development Bank’s lending strategy for the country, and the Asian Development Bank’s strategic objectives at the time of approval and evaluation. It is also concerned with the adequacy of the design.

Less relevant 2

2. Effectiveness 30 Effectiveness describes the extent to which the outcome, as specified in the design and monitoring framework, either as agreed at approval or as subsequently modified, has been achieved.

Less effective 1

3. Efficiency 30 Efficiency describes how economically resources have been converted to results. It uses the economic internal rate of return or cost effectiveness of the investment or other indicators as a measure as well as the resilience to risk of the net benefit flows over time.

Less efficient 1

4. Sustainability 20 Sustainability considers the likelihood that human, institutional, financial, and other resources are sufficient to maintain the outcome over its economic life.

Likely 2

Overall Assessment (weighted average of above criteria)

Partly Successful 1.4 Highly Successful: Overall weighted average is greater than or equal to 2.7. Successful: Overall weighted average is greater than or equal to 1.6 and less than 2.7. Partly Successful: Overall weighted average is greater than or equal to 0.8 and less than 1.6. Unsuccessful: Overall weighted average is less than 0.8.