ASIAN DEVELOPMENT BANK PCR:BAN 18036

ASIAN DEVELOPMENT BANK PCR:BAN 18036 PROJECT COMPLETION REPORT ON THE SECOND HEALTH AND FAMILY PLANNING SERVICES PROJECT (Loan No. 1074-BAN[SF]) IN BANGLADESH July 2001

CURRENCY EQUIVALENTS Currency Unit Taka (Tk) At Appraisal (as of 15 Nov 1990) At Project Completion (as of 30 Sep 1998) Tk1.00 = $0.0275 $0.00 $1.00 = Tk36.41 Tk47.10 ABBREVIATIONS ADB Asian Development Bank BME benefit monitoring and evaluation BSTI Bangladesh Standards Testing Institute CIF cost, insurance, and freight CMSD Central Medical Store and Depot DDC Development Design Consultants Ltd. DGHS Directorate General of Health Services DTL Drug Testing Laboratory HPSP Health and Population Sector Program MOHFW Ministry of Health and Family Welfare NEMEW National Electro-medical Equipment Workshop NIPSOM National Institute of Preventive and Social Medicine O&M operation and maintenance PCR project completion report PIC project implementation committee PIU project implementation unit PMU project management unit PO project office REMEW Regional Electro-medical Equipment Workshop TA technical assistance NOTES (i) (ii) The fiscal year (FY) of the Government ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends. For example, FY2000 begins on 29 June 1999 and ends on 30 June 2000. In this report, "$" refers to US dollars.

CONTENTS Page BASIC DATA MAP ii vi I. PROJECT DESCRIPTION 1 II. EVALUATION OF IMPLEMENTATION 2 A. Project Components 2 B. Implementation Arrangements 5 C. Project Costs and Financing Plan 5 D. Project Schedule 5 E. Engagement of Consultants and Procurement of Goods and Services 6 F. Performance of Consultants, Contractors, and Suppliers 6 G. Conditions and Covenants 7 H. Disbursements 7 I. Environmental and Social Impacts 7 J. Performance of the Borrower and Executing Agency 8 K. Performance of the Asian Development Bank 8 III. TECHNICAL ASSISTANCE 8 IV. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS 9 A. Financial and Economic Performance 9 B. Attainment of Benefits 9 V. CONCLUSIONS AND RECOMMENDATIONS 10 A. Conclusions 10 B. Lessons Learned 11 C. Recommendations 12 APPENDIXES 14

ii BASIC DATA A. Loan Identification 1. Country Bangladesh 2. Loan Number 1074-BAN(SF) 3. Project Title Second Health and Family Planning Services Project 4. Borrower People s Republic of Bangladesh 5. Executing Agency Ministry of Health and Family Welfare 6. Amount of Loan $51.0 million (SDR35.645 million) 7. PCR Number PCR:BAN 633 B. Loan Data 1. Appraisal - Date Started 19 September 1990 - Date Completed 2 October 1990 2. Loan Negotiations - Date Started 5 November 1990 - Date Completed 6 November 1990 3. Date of Board Approval 10 January 1991 4. Date of Loan Agreement 25 July 1991 5. Date of Loan Effectiveness - In Loan Agreement 23 October 1991 - Actual 28 October 1991 - Number of Extensions none 6. Closing Date - In Loan Agreement 31 December 1996 - Actual 30 September 1998 - Number of Extensions 2 7. Terms of Loan - Interest Rate 1 percent per annum - Maturity (number of years) 40 - Grace Period (number of years) 10 8. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval 6 January 1993 26 January 1999 6 years and 1 month Effective Date Original Closing Date Time Interval 28 October 1991 30 September 1998 6 years and 11 months

iii b. Amounts ($) Category Original Allocation Last Revised Allocation Amount Added/ (Canceled) Net Amount Available Amount Disbursed Civil Works Part A 14,230,748 16,799,230 652,936 17,452,166 17,452,166 Civil Works Part B 3,885,585 3,876,992 (1,556,605) 2,320,387 2,320,387 Civil Works Part C 144,000 142,454 (50,138) 92,316 92,316 Eqpt & Spare Parts Part A 9,316,266 9,143,318 2,373,004 11,516,322 11,516,322 Eqpt & Spare Parts Part B 148,000 146,192 48,682 194,874 194,874 Eqpt & Spare Parts Part C 1,903,194 1,867,757 (965.922) 901,835 901,835 Eqpt & Spare Parts Part E 13,000 12,902 10,712 23,614 23,614 Vehicles Part E 44,001 42,103 37,773 79,876 79,876 Furniture Part A 587,797 568,263 257,934 826,197 826,197 Furniture Part B 145,900 143,811 352,994 496,805 496,805 Furniture Part E 2,000 1,933 (1,546) 387 387 Contraceptives 2,631,990 2,526,589 111,278 2,637,867 2,637,867 Fellowships 182,600 182,451 (75,658) 106,793 106,793 Consulting Services Part E 174,999 174,510 (33,679) 140,831 140,831 Incremental O&M Cost Part A 2,816,789 2,729,459 (2,599,230) 130,229 130,229 Incremental O&M Cost Part B 325,999 315,863 (315,863) 0 0 Incremental O&M Cost Part E 349,999 341,423 (239,053) 102,370 102,370 LC Training & Fell. Part C 210,999 206,369 (108,307) 98,062 98,062 LC Consulting Serv. Part A 2,249,992 2,259,574 33,040 2,292,614 2,292,614 LC Consulting Serv. Part B 616,997 596,932 99,518 696,450 696,450 LC Consulting Serv. Part E 215,998 212,245 (146,595) 65,650 65,650 LC Incremental O&M Part C 100,000 96,955 (57,539) 39,416 39,416 Service Charge 1,319,996 1,291,962 (349,502) 942,460 942,460 Unallocated 9,383,151 6,786,843 (6,786,843) 0 0 Total 51,000,000 50,466,130 (9,308,609) a 41,157,521 41,157,521 a As of loan account closing date the value of the amount canceled was $9,428,332.77 or SDR714,762.82. Eqpt = equipment; Fell = fellowship; O&M = operation and maintenance; SDR = special drawing right. 9. Local Costs (Financed by the Asian Development Bank) C. Project Data - Amount ($million) 17.31 - Percentage of Local Costs 56.00 - Percentage of Total Cost 32.00 1. Project Cost ($million) Cost Appraisal Estimate Actual Foreign Exchange Cost 28.50 23.84 Local Cost 31.50 30.93 Total Cost 60.00 54.77

iv 2. Financing Plan ($million) Appraisal Estimate Actual Source Foreign Local Total Foreign Local Total Implementation Costs Borrower-financed - 9.00 9.00-13.61 13.61 ADB-financed 27.50 22.50 50.00 22.85 17.31 40.16 Total 27.50 31.50 59.00 22.85 30.92 53.77 IDC Costs Borrower-financed - - - - - - ADB-financed 1.00-1.00 1.00-1.00 Total 1.00-1.00 1.00-1.00 ADB = Asian Development Bank; IDC = interest during construction; - = zero. 3. Cost Breakdown by Project Components ($ million) Appraisal Estimate Actual Component Foreign Local Total Foreign Local Total Part A Civil Works 6,729 12,444 19,173 8,202 16,480 24,682 Equipment and Furniture 7,788 2,628 10,416 9,657 3,107 12,764 Part B Civil Works 1,828 3,429 5,257 1,090 5,599 6,689 Equipment and Furniture 158 171 329 243 584 827 In-service Training Support - 135 135 - - - Part C Civil Works 63 117 180 40 1,627 1,667 Equipment and Furniture 1,576 423 1,999 749 154 903 NEMEW Training Support - 210 210 - - - Fellowships 42 3 45 107 122 229 Part D Contraceptive Supply 2,500 150 2,650 2,506 132 2,638 Part E PMU Support 62 385 447 93 268 361 Consulting Support 136 279 415 141 70 211 Incremental O&M Costs 1,672 2,391 4,063 73 265 338 Service Charge 1,320-1,320 942-942 Contingencies 4,626 8,735 13,361 - - - Taxes and Duties - - - - 2,523 2,523 Total 28,500 31,500 60,000 23,843 30,931 54,774 NEMEW = National Electromedical Equipment Workshop; PMU = project implementation unit; O&M = operation and maintenance; - = zero.

v 4. Project Schedule Appraisal Estimate Actual Civil Works Contract Date of Award Jun 1992 July 1994 Completion of Work Oct 1995 Dec 1998 Consultants Date of Award Jan 1992 Aug 1993 Completion of Work Dec 1996 Dec 1999 Equipment First Procurement Jan 1991 Jun 1993 Last Procurement Sep 1994 Dec 1999 Furniture First Procurement Jan 1991 Jun 1995 Last Procurement Sep 1994 Dec 1999 D. Data on Asian Development Bank Missions No. of No. of Specialization Name of Mission Dates Persons Person-Days of Members a Fact-Finding Mission July 1990 Appraisal Mission 19 Sep 2 Oct 1990 Inception 1 8 21 Nov 1991 1 4 b Review 1 21 26 Mar 1992 2 6 b Review 2 27 Oct 3 Nov 1992 1 8 b Review 3 6 11 Mar 1993 1 6 c Review 4 30 Sep 4 Oct 1993 2 10 c, i Review 5 16 21 Feb 1994 1 6 c Review 6 8 18 Oct 1994 1 11 c Review 7 27 Mar 6 Apr 1995 2 22 d Midterm Review 5 6 Nov 1995 2 24 d, i Special Loan Adm 11 16 May 1996 1 6 e Review 8 4 15 May 1996 1 7 f Review 9 11 19 July 1996 1 9 f Special Loan Adm 12 18 Nov 1996 2 14 g Review 10 8 28 Nov 1996 1 21 g Review 11 24 Apr 2 May 1997 1 8 h Review 12 2 8 Jun 1997 1 7 c Review 13 18 24 July 1997 1 7 f Review 14 6 11 Nov 1997 2 12 c, j Review 15 13 19 Feb 1998 1 7 f Project Completion b 16 Oct 3 Nov 2000 4 69 f, i, j Total 29 264 a a manager, b population specialist, c senior project specialist, d health specialist, e project economist, f health specialist, g senior education specialist, h project specialist, i assistant project analyst, j staff consultants b The Mission comprised Wan Azmin, Health Specialist; R. Romasanta, Assistant Project Analyst; and two staff consultants.

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I. PROJECT DESCRIPTION 1. In Bangladesh, the Government gives high priority to improving health and family planning programs through a comprehensive health care delivery system. While the country s health status has improved over the years (Appendix 1), it is still among the lowest in the region. The referral system is ineffective and needs more physical facilities, equipment, trained human resources, better quality of service at all levels, and increased service efficiency and use. Many referral hospitals are dilapidated, with outdated and rundown equipment; are highly overcrowded; and have poor quality of care. Cost-effectiveness of health care delivery must be increased by improving hospital services and training health personnel. Family planning and community-based health programs also benefit from government programs to provide supplementary nutrition, reduce poverty, and from funding agencies support to develop rural primary health care facilities. 2. The design for the Second Health and Family Planning Services Project was based on (i) a project preparatory technical assistance (TA) 1 study undertaken from 25 April to 6 June 1990; (ii) the Government s draft national health policy; (iii) the Government s population policy; and (iv) recommendations of Asian Development Bank (ADB) missions, made in consultation with the government officials. The ADB Fact-Finding Mission reviewed the proposed Project with the Government in July 1990, and the Appraisal Mission from 19 September to 2 October 1990 confirmed the project scope and implementation arrangements. The Project s benefits were expected to unfold from (i) the development of government policies in the sector and contribution required to realize these policies through the proposed Project, (ii) the appropriateness and/or cost-effectiveness of the project design, (iii) the Project's target beneficiaries and distributional effects, and (iv) the risks associated with the Project's implementation. 3. The Project had five components. In part A, the Project aimed to upgrade four teaching hospitals and five district hospitals, construct three replacement district hospitals, and provide medical equipment for these hospitals. In part B, the Project was to upgrade four nursing institutes and two institutes of health technology, and constructed a replacement nursing institute. The Project also supported the in-service training for nurses, paramedics, and medical specialists in the training institutions. In part C, the Project was to help establish the Health Planning and Development Unit in the Directorate General of Health Services (DGHS), upgrade the National Electromedical Equipment Workshop (NEMEW) and the regional electromedical equipment workshops (REMEWs), and procure equipment. The Project was also to provide equipment and training for the Drug Testing Laboratory (DTL), condom testing at the Bangladesh Standards Testing Institute (BSTI), and teacher training in indigenous medicine. In part D, the Project was to support the family planning program by procuring contraceptives. In part E, the Project was to establish the project management unit (PMU) and project offices (POs) and other logistical support at the project hospitals. The Project was also to provide consultancy services in key areas to assist project implementation. 4. In addition to the project loan, a related TA 2 was approved for training and assistance to strengthen the capability of NEMEW and its REMEWs to manage and maintain medical equipment. One-time repair and rehabilitation of existing equipment was planned to improve 1 TA 1264-BAN: Second Health and Family Planning Services Project, for $250,000, approved on 26 December 1989. 2 TA 1463-BAN: Strengthening the Management and Maintenance Capabilities of NEMEW and its Regional Workshops (REMEWs), for $240,000, approved on 10 January 1991.

2 public sector maintenance of medical equipment and support development of medical equipment maintenance in the private sector. II. EVALUATION OF IMPLEMENTATION 5. The Project s objective was to improve the delivery and use of curative care services and quality of care at selected secondary and tertiary hospitals in Bangladesh. The anticipated project benefits were (i) a strengthened network of referral facilities with improved quality, accessibility, and use at the division level; (ii) increased number of qualified personnel; (iii) medical equipment of appropriate technology, with maintenance programs; (iv) an adequate supply of contraceptives; and (v) improved management capability at the central and district levels. The appraisal, however, had no specific targets or performance indicators. The project completion review, including evaluation of project implementation and assessment of project benefits, was constrained by limited information because the Ministry of Health and Family Welfare (MOHFW) was reorganized to implement the Health and Population Sector Program (HPSP) Project 3 and the PMU was disbanded in June 1999. The evaluation was conducted based only on information on a few project targets, reports from the DGHS and health management information system, service-use indicators, and the benefits monitoring and evaluation (BME) reports collected during the midterm review in December 1996 and during the Project Completion Review (PCR) Mission. A. Project Components 1. Construction and Upgrading of Referral Hospitals 6. The Project aimed to improve the health care referral system by upgrading the medical college hospitals in Barisal, Chittagong, Dhaka, and Rangpur and six district hospitals in Bogra, Feni, Lalmonirhat, Laxmipur, and Sherpur. Two 100-bed district hospitals were to be constructed only in Cox s Bazar and Meherpur, but the district hospital in Joypurhat was so dilapidated that a 100-bed hospital was built there, too. The Feni district hospital increased its beds from 50 to 100. During early project implementation, project consultants developed the master plans for (i) future rehabilitation; (ii) renovation and development; (iii) improvement of civil works and technical services, and construction of additional buildings; and (iv) technical services. Areas for improvement included facilities for (i) treatment of solid waste, (ii) sewerage, and (iii) waste disposal. The newly constructed district hospitals used standard designs as the basis for their facilities. 7. Civil Works. No significant problems arose in site acquisition, architectural drawings, or tendering of civil works supervised by the project domestic consultants. While all the civil works packages were completed as planned, construction was slow due to (i) difficulty of working in functioning hospitals; (ii) difficulty and delay in obtaining permission from the Public Works Department, which legally owns several hospital sites; and (iii) occupation of sites by squatters (Appendix 2). 3 The HPSP Project is a sectorwide management approach with health reforms covering the whole spectrum of health care services. HPSP was implemented 1998-2003, its estimated cost was $3 billion. It is assisted by the World Bank, Australian Agency for International Development (AusAID), Department for International Development (DFID), Canadian International Development Agency (CIDA), Germanische Technische Zusammenarbeit (GTZ), Royal Netherlands Embassy, and Swedish International Development Cooperation.(Sida).

3 8. The civil works for the four upgraded medical college hospitals in Barisal, Dhaka, Chittagong, and Rangpur were completed as planned. In general, the civil works completed at the medical college hospitals in Barisal, Chittagong, and Rangpur were better than those at the medical college hospital in Dhaka, which was completed on 30 June 1998. The completed facilities were fully operational, except in Dhaka. The architectural drawings for the new operating theater complex building at the Dhaka Medical College Hospital were outdated and the civil works and construction was unsatisfactory. 9. The civil works and construction of the new district hospitals, particularly in Cox s Bazar, Joypurhat, and Meherpur, were constructed as planned at appraisal. The hospital buildings were appropriately planned, well-constructed, and completed within acceptable time, and the use of the buildings was satisfactory. The outpatient clinics were well used and the basic equipment and furniture adequate and functional. The environment was clean and friendly, with staff quarters in good condition. However, the standby generators for emergency power supply were left unused due to lack of fuel and maintenance. 10. The renovation of the district hospitals in Bogra, Feni, Lalmonirhat, Laxmipur, and Sherpur proceeded as planned at appraisal and was completed with minimal delay. The refurbishment of the medical college hospital buildings in Barisal, Chittagong, Dhaka, and Rangpur was acceptable but slightly delayed. The renovated areas, particularly the intensive care unit, kitchen, and laundry, were also generally satisfactory. 11. Medical Equipment. At appraisal, an indicative list guided procurement of medical equipment under international bidding procedures. The equipment packages were listed according to institution, year of project implementation, and cost per package, and had minimal technical specifications. During project implementation, international and domestic consultants were engaged to procure medical equipment. The consultants prepared nine packages that were later reduced to four. However, 23 subpackages of medical equipment procured under packages I, III and IV were delivered, installed, commissioned, and handed over only after significant delay. The procurement of medical equipment was completed with the dropping of package II (medical equipment) due to serious problems, including political interference with the bidding process 4 and delays during procurement (Appendix 3). Subsequently, MOHFW advised the Mission that similar critical equipment for emergency care, operating theaters, sterile supply, and intensive care would be procured under the HPSP Project. 12. Although the procurement of medical equipment encountered difficulties, ADB procurement guidelines were generally followed. Other problems were the following: (i) attempts at standardization and equipment planning were minimal, and participation of hospital staff and end users weak; (ii) the specifications lacked detail; (iii) packaging was not well prepared; (iv) infrastructure in project hospitals was poor; (v) procedures in delivery, testing, commissioning, and handing-over were weak; and (vi) attention given to training on operating and maintaining equipment was inadequate. The staff of project hospitals were concerned about the (i) quality and condition of the equipment supplied; and (ii) incomplete equipment, including accessories, model, and country of origin. The equipment operating life was shortened by inadequate hospital power supply and user training. The Project made available basic medical equipment that was urgently required by the project hospitals. The Project also supplied more sophisticated and costly diagnostic tools, such as imaging and ultrasound machines. The equipment helped improve project hospitals diagnostic capability and overall quality of care. However, some 4 At several stages during procurement, members of Parliament attempted to intervene in the process. ADB refused to accept these interventions.

4 essential equipment for critical areas, particularly emergency care, operating theaters, sterile supply, and intensive care, could not be supplied due to long and serious delays in procurement, and so some of the completed project facilities could not be properly used. Overall, the procurement of equipment under the Project was partially successful. 2. Health Personnel Development 13. The Project aimed to improve the quality of nursing training by upgrading the nursing training institutes in Barisal, Chittagong, Dhaka, and Rangpur, and by constructing a replacement nursing training institute in Joypurhat. The Project also aimed to improve the training of health technologists in Dhaka and Rajshahi. The teachers at the nursing training institutes and institutes of health technology were trained in batches at the national Institute of Preventive and Social Medicine (NIPSOM). The Project provided the institutes with teaching equipment and upgraded four nursing institutes in Barisal, Chittagong, Dhaka, and Rangpur, and two institutes of health technology in Dhaka and Rajashahi, as planned. The Project also constructed a nursing training institute in Joypurhat, as planned. The Project provided these training institutions with adequate furniture and teaching materials, including models. In Dhaka, NIPSOM trained 37 nursing tutors and lecturers from nursing institutes and 29 teachers from institutes of health technology; the nursing training institute and the institute of health technology gave refresher courses to 20 nurses, 44 pharmacists, 22 radiographers, 37 medical laboratory technologists, and 11 dental technicians; and NEMEW trained 193 engineers and technicians (Appendix 4). 14. At appraisal, medical specialists were in short supply. The Project planned a six-month training for 40 medical doctors at the project hospitals in anesthesiology, blood transfusion, earnose-throat, obstetrics and gynecology, ophthalmology, and radiology. Eight staff were trained in ayurdevic (indigenous medicine) and one attended pharmaceutical training fellowships overseas, thus promoting a holistic approach to curative care by ensuring that the health care delivery system did not depend only on allopathic medicine. 5 A health human-resources policy and perspective plan to address the lack of key hospital personnel, including nurses and paramedics is being developed under the HPSP Project. Training institutions, continuing education for all categories of health personnel, and hospital management training should be developed further. A bigger loan allocation would have benefited this component. 3. Support for Health Services, Family Planning, and Project Management 15. At appraisal, NEMEW s maintenance and repair system was upgraded and its staff training center for the 18 REMEWs improved. The workshops were provided adequate furniture and maintenance and repair equipment. The medical college hospital in Chittagong was to have its own workshop. The Project provided essential spare parts for one-time repair of NEMEW equipment, which helped improve project hospitals equipment. About 193 engineers and technicians attended training at NEMEW in Dhaka and at REMEWs, as planned at appraisal. The establishment of the Health Planning and Development Unit in MOHFW s DGHS, as envisaged at appraisal, was dropped due to inadequate planning. The procurement of contraceptives and equipment for DTL, and condom testing at BSTI were completed satisfactorily as scheduled. The Project established as planned the PMU and POs at the project hospitals that were critical to project implementation. Consultants were engaged as planned but their performance was unsatisfactory. 5 Allopathic medicine refers to modern western medicine. Other schools of medicine include ayurvedic, homeopathy, unani, Chinese herbal medicine, and acupuncture.

5 B. Implementing Arrangements 16. MOHFW was the Project s Executing Agency. At the central level, the interministerial project implementation committee (PIC), chaired by the MOHFW secretary met every three to six months and provided guidance, resolved policy issues, coordinated the Project, and monitored major activities. The PMU was established within MOHFW, under the PIC s direction. At the field level, POs were established at project hospitals. The implementation arrangements agreed to at appraisal were followed, but most PMU staff were not from MOHFW, where decision making was overcentralized. Turnover of project directors was high and the five project directors were unable to strengthen the referral system. The PMU had disagreements with the and POs and the PIC. The PMU completed the procurement of civil works and medical equipment, was disbanded in June 1999, and was thus unable to carry out project completion activities. Significant delays at the beginning of project implementation resulted from (i) the late setting up of the PMU and POs, (ii) changes in the project director, and (iii) engagement of an unsatisfactory local architectural and engineering consultant. The delays were aggravated by MOHFW s lack of project ownership. C. Project Costs and Financing Plan 17. At the time of appraisal, the Project s total cost was estimated at $60.0 million equivalent (inclusive of taxes and duties), of which $28.5 million (about 48 percent) was the foreign exchange cost and $31.5 million equivalent (about 52 percent) the local currency cost. ADB approved a loan of SDR35.6 million, about $51.0 million equivalent, from its Special Funds, to finance the entire foreign exchange cost and $22.5 million equivalent of the local currency cost. The ADB loan represented 85 percent of the estimated project cost. The remaining local currency cost of $9.0 million equivalent was to be borne by the Government through annual budgetary allocations. 18. The actual commitment of Government counterpart funds of $13.6 million exceeded appraisal estimates of $9.0 million by 51 percent, mainly because the percentage of ADB financing for civil works fell from 80 to 68 percent, resulting in a Government contribution of 32 percent rather than the original 20 percent. The amendment of the Loan Agreement to reflect the above revisions was approved by ADB on 21 July 1994. The Government requested ADB to enlarge the planned hospital in Meherpur from 50 to 100 beds and to construct a 100 bed hospital in Joypurhat instead of renovating the existing often-flooded hospital. ADB approved the Government s request to increase the cost of civil works, particularly for part A, by reallocating funds from the unallocated portion of the Loan. 19. As of 30 September 1998, the revised loan closing date, the actual project cost was $54.8 million or 9 percent below the estimated cost, despite the cost overrun in civil works of about $2.5 million, as equipment package II (estimated about $8.8 million) was cancelled. The Government provided adequate counterpart funds but too late. The original appraisal estimates of project cost and ADB financing, and the actual expenditures, are compared in Appendix 5. D. Project Schedule 20. The five-year Project was approved on 10 January 1991 and declared effective on 28 October 1991. Loan effectiveness took about 9.5 months. The loan closing date, originally 31 December 1996, was extended to 31 December 1997, and finally to 30 September 1998, a delay of about 21 months, to allow the completion of civil works and delivery, installation, and

6 commissioning of medical equipment. The loan accounts were closed on 26 January 1999, and commissioning of the final package of medical equipment was completed on 31 December 1999. The civil works were delayed by about 39 months, and procurement of medical equipment, including installation and commissioning, by about 51 months. Only the training program and procurement of contraceptives were completed as planned. Disbursement was completed about four months after project completion due to the late closing of project accounts and submission of withdrawal applications for liquidation and refund of the remaining balance of the imprest fund. The envisaged and actual starting and completion dates of project activities are shown in Appendix 6. E. Engagement of Consultants and Procurement of Goods and Services 21. At appraisal, the consultancy services planned for hospital planning and for helping procure medical equipment included an international consultant for 10 person-months and domestic consultant for 90 person-months. The Project used a total of 10 person-months of international consultancy services as planned: 4 person-months for hospital planning and 6 person-months for medical equipment. 22. All the international and domestic consultants for the hospital planning and medical equipment, and domestic consultants for PMU management support and for architecture and engineering were engaged in accordance with schedule 5 of the Loan Agreement and ADB s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of domestic consultants. Goods were procured in accordance with ADB s Guidelines on Procurement, with 6 packages of equipment procured through international shopping, 5 under international competitive bidding, and 73 through local competitive bidding. Vehicles, including motorcycles, furniture, and teaching materials were procured through local competitive bidding in accordance with Government procedures acceptable to ADB. F. Performance of Consultants, Contractors, and Suppliers 1. Consultants 23. The project hospitals floor plans and architectural drawings prepared by the international consultant lacked sufficient details. The consultants requested an extension in consultancy period with work completed in their home country but this was not approved by the Government. The international medical equipment consultants prepared a detailed room data activity list that the end users and local consultant did not consider useful. The Government considered the international consultants performance unsatisfactory. The poor relationship between the client and consultants discouraged effective communications. Domestic consultants worked for a total of 143 person-months: 30 person-months for procurement of medical equipment, 36 for PMU management support, and 77 for architecture and engineering or design and supervision. The recruitment of the domestic supervising architectural engineering consultants was delayed for two years. The domestic equipment consultancy was increased from 20 to 30 person-months to complete work left over by the international consultants. The medical equipment specifications were inadequate and packaging was inappropriate. The performance of the architectural and engineering (design and supervision) consultants during construction and renovation was also unsatisfactory. Overall, the international and domestic consultants performance was unsatisfactory (Appendix 7).

7 2. Contractors 24. Overall the civil works contractors performed better at the district hospitals, particularly in Joypurhat and Meherpur, than at the medical college hospitals, where refurbishing of existing buildings was acceptable but not fully satisfactory. Supervision of the contractors was poor. Disputes occurred over minor variation orders, but all civil works were completed after a delay of about 39 months. Workmanship and quality of materials was poor, particularly for the civil works for the new operating theater complex at the Dhaka Medical College Hospital. Overall, the contractors performance was less than satisfactory. 3. Suppliers 25. Procurement of medical equipment took 78 months, compared to the 36 months envisaged at appraisal (Appendix 6). Although procurement followed ADB guidelines, serious concerns persisted about (i) quality and condition of the equipment supplied; (ii) incomplete equipment, including accessories, make, model, and country of origin; and (iii) the lack of coordination and serious shortcomings in the delivery, installation, testing, commissioning and handing-over of the medical equipment, with no follow-up remedial actions. As a result, the equipment and project facilities are not being used fully. Training for hospital staff and end users was inadequate, and postdelivery support and maintenance uncertain. Overall, the equipment suppliers performance was unsatisfactory. G. Conditions and Covenants 26. The implementation arrangements prepared at appraisal were organizationally sound and functional. However, with the institutional weaknesses and frequent changes in project director, compliance with a few loan covenants was delayed. The PMU was disbanded on 30 June 1999 and was unable to assist project completion activities. MOHFW has still not taken the agreed upon actions to comply with the remaining covenants, such as providing information on the project s BME, the audited financial statements for fiscal year 1998 and the Borrower s PCR (Appendix 8). The PCR Mission discussed this noncompliance with MOHFW during the wrap-up meeting and sought assistance from the Bangladesh Resident Mission to follow up on the matter. MOHFW took no further action. H. Disbursements 27. The initial disbursement was made on 6 January 1993 and the final one on 26 January 1999. Disbursement was slow during the Project s first two years but gained momentum later (Appendix 9). The total amount disbursed was $41.6 million, or about 81 percent of the net loan amount of $51.0 million. Loan savings of about $9.4 million were cancelled on 26 January 1999, the loan account closing date. The loan savings were mainly from the savings on civil works, equipment, incremental costs, and unallocated amount. The disbursement period was 6 years and 1 month while project implementation took 7 years due to the delay in submission of withdrawal applications for liquidation and late refund of the balance of the imprest fund. I. Environmental and Social Impacts 28. The Project had no adverse environmental impact and even enhanced public environmental awareness. Tertiary and district hospitals, nursing training institutes, and institutes of health technology were upgraded in accordance with government regulations.

8 Medical-waste incinerators were installed at medical college hospitals in Chittagong and Dhaka, but were not operational due to lack of resources. The garbage scattered in the hospital compounds reflects weak management and a general lack of environmental awareness. Overall, the Project (i) contributed to the well-being of rural communities, particularly poor women and children; (ii) increased job opportunities for women as nurses and medical laboratory assistants; and (iii) provided health workers with more in-service training opportunities. J. Performance of the Borrower and Executing Agency 29. The Project was implemented by the PMU under the guidance of MOHFW and the PIC. Decision making was overcentralized in MOHFW and slow with numerous changes aggravated by a high turnover of project directors. The PMU was disbanded at physical completion and no major activities were carried out at project completion, including closing of project accounts and preparation of the BME report and the Borrower s PCR. Overall, MOHFW s performance, particularly in meeting the responsibilities assigned in the implementation plan, was less than satisfactory. Supervision of civil works, procurement of medical equipment, management support of project implementation, and consultants performance was weak. The national maintenance policy proposed under the piggybacked TA was not implemented. K. Performance of the Asian Development Bank 30. ADB s relationships with MOHFW, the PMU, and POs were maintained satisfactorily throughout Project implementation, but turnover among the ADB staff was high. Nevertheless, ADB staff made a major and credible effort to keep the project civil works on schedule and to bridge the gap between the international consultants and the clients. ADB staff tried to ensure the integrity of equipment procurement and refused to allow political interference to change decisions. Headquarters staff was frequently in direct contact with equipment suppliers to expedite delivery before the loan closing date. The staff s lack of specific expertise in medical equipment hindered the procurement process. (Staff consultants were retained but they were also problematic.) ADB s Bangladesh Resident Mission provided considerable support during the Project s later stage. 31. ADB performed its role effectively in approvals, disbursements, and monitoring. ADB provided detailed guidance on terms of reference, bid documents, contract awards, and other matters affecting implementation procedures or schedules, and project costs. Overall, ADB s handling of the Project in the face of severe constraints was satisfactory. III. TECHNICAL ASSISTANCE 32. A piggybacked TA 6 was implemented under the Project to strengthen the management and maintenance capabilities of NEMEW and its REMEWs. International consultants were engaged for phase I (eight months) and phase II (two months). In phase I, the consultants prepared a management manual of policies and procedures, and in phase II, submitted a report on strengthening NEMEW and REMEWs to MOHFW. The consultants performed professionally. While phase III was not implemented, the National Policy on the Maintenance of Medical Equipment was formulated in 1996 at a joint workshop of MOHFW and ADB (Appendix 10). 6 TA 1463-BAN: Strengthening the Management and Maintenance Capabilities of NEMEW and its Regional Workshops, for $240,000, approved on 10 January 1991.

9 Drawn up through a participatory process, the policy addressed the need for (i) adequate funds for equipment maintenance and repair, and capital investment; (ii) decentralization of authority and responsibility, and involvement of NEMEW and REMEWs in hospital equipment maintenance and repair, training, and preventive maintenance; and (iii) operational policy and procedures on equipment procurement and commissioning. The Project strengthened NEMEW and REMEWs by (i) refurbishing their buildings; (ii) providing equipment, furniture, and spare parts; (iii) training about 200 staff; and (iv) providing support to the private sector experts. However, the National Policy for Maintenance of Medical Equipment, which also provided for improvement of NEMEW and REMEWs, was not implemented. IV. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS A. Financial and Economic Performance 33. As no financial or economic evaluation was carried out at appraisal, reevaluation is not possible. B. Attainment of Benefits 34. Quantitative assessment of the economic benefits of public sector health projects was considered difficult due to the Project s nature and composition and the lack of reliable and consistent data. Nonetheless, some assessment was made based on the following criteria: (i) government health sector policies and the Project s contribution; (ii) relevance of the project design; (iii) stakeholders and target beneficiaries; and (iv) risks associated with the project's implementation. The main project benefits anticipated at appraisal were (i) a strengthened network of referral facilities and improved quality of care and service use; (ii) better trained hospital staff such as nurses, paramedics, and specialists; (iii) improved medical equipment; and (iv) sufficient supply of contraceptives. 35. The Government policies emphasized (i) improving the referral system, including accessibility, quality, and range of services at determined levels of care; (ii) availability of essential drugs and contraceptives; and (iii) staff development. The project design focused on improving existing services with minimal increase in recurrent costs and staffing. Project efforts were directed primarily to improving the quality of tertiary and secondary curative care and meeting regional physical needs. The Project made a major allocation to upgrade secondary and tertiary facilities and develop staff. 36. The Project (i) improved facilities at the outpatient and inpatient care areas at four tertiary or medical college hospitals and eight secondary or district hospitals; (ii) upgraded four nursing training institutes and two institutes of health technology, and trained 174 hospital staff such as nurses, paramedics, and medical doctors; (iii) trained 193 engineers and technicians for maintenance and repair, and strengthened NEMEW and REMEWs; (iv) constructed and equipped the DTL and the condom testing facilities at the BSTI; and (v) ensured an adequate supply of contraceptives worth about $2.6 million for family planning services. 37. People living in the project areas significantly benefited from improved quality of care. Use of outpatient and inpatient care services increased in 1993-1999 (Appendix 11). In 1993 1999, increases in outpatient visits ranged from 121 percent at Rangpur Medical College Hospital to 476 percent at Chittagong Medical College Hospital, or overall increases of 11 55 percent in 1993 1995 during project start-up and 3 11 percent in 1997 1999 at project

10 completion. In 1993 1999, increases in the inpatient admissions ranged from 214 percent at Barisal Medical College Hospital to 2,694 percent at Chittagong Medical College Hospital, or overall increases of 7-30 percent in 1993 1995, and 13 34 percent in 1997 1999. 38. The increase in use of hospital services was widespread. Use of diagnostic, pathological, radiological, and blood transfusion services increased significantly, with increases ranging from 3 percent at Chittagong Medical College Hospital to 310 percent at Barisal Medical College Hospital. Normal deliveries saw an overall increase ranging from 170 percent at Rangpur Medical College Hospital to 596 percent at Chittagong Medical College Hospital, while increases in caesarian sections ranged from 212 percent at Rangpur Medical College Hospital to 982 percent at Chittagong Medical College Hospital. Increases in major surgical operations ranged from 197 percent at Rangpur Medical College Hospital to 563 percent at Chittagong Medical College Hospital. Doctors, nurses, and paramedics trained under the Project contributed to improving the services. The health care delivery system will improve further with the strengthening of the referral system, particularly the linking of levels of care with management of patient referral, staff training, and the management information system. More training of hospital managers will further improve health care delivery. 39. In 1993 1999, the increase in use of outpatient services in non-project district hospitals ranged from 23 percent at Faridpur District Hospital to 213 percent at Comilla District Hospital. Increases in inpatient admissions ranged from 104 percent at Faridpur District Hospital to 153 percent at Comilla District Hospital, significantly less than those of the project hospitals. The number of cases referred from the rural thana health complexes was about 30 70 percent of total admissions at tertiary hospitals and much lower at district hospitals. The percentage of operational medical equipment at the thana health complexes was only about 5 percent. 40. As project hospitals improved their facilities and services, the public found paying the ward charges under the existing cost-sharing system more acceptable, which helped generate resources and cover the increased costs in hospital services. In general, the entire population of Bangladesh benefited from (i) improvements in the tertiary and district hospitals, (ii) increase in trained staff, (iii) better equipment maintenance, and (iv) adequate supply of contraceptives. In time, the Project will help reduce the bypassing phenomenon at district and tertiary hospitals, and improve the management of patient referral and delivery of services in accordance with a referral system (Appendix 12). 41. The piggybacked TA helped improve the equipment maintenance system by strengthening NEMEW and REMEWs. Phases I and II were completed, and in phase III the National Policy for the Maintenance of Medical Equipment was formulated but only partially implemented. The trained technical staff and one-time repair and refurbishing of existing medical equipment enhanced public sector capability. The percentage of operational medical equipment ranged from about 70 percent in project district hospitals to 85 percent in the project tertiary hospitals. A. Conclusions V. CONCLUSIONS AND RECOMMENDATIONS 42. Overall, the Project is rated partly successful. The Project s objective of upgrading the quality of health services, mainly by focusing on services at referral hospitals (tertiary and district hospitals) and strengthening support areas, including manpower training and equipment

11 maintenance, was consistent with the Government policies in the health sector and hence relevant. The Project s design was based on correct analysis at appraisal. However, coordinated efforts to improve the referral system s institutional and management aspects were lacking. Such aspects include management of patient referrals from one hospital to another, staff training and development, emergency care services, information management system, and financing of services. 43. The Project s immediate benefit was improvement of the quality of care at the secondary and tertiary hospitals. Use of outpatient and inpatient care at the district hospitals and particularly at the tertiary hospitals increased significantly. However, the actual improvement in the quality of care could not be determined qualitatively. While the civil works were completed as planned, some of the completed project facilities cannot be used fully due to (i) poor quality and condition of the equipment; (ii) short supply of equipment; (iii) insufficient power supply; and (iv) incomplete equipment in critical areas in project hospitals, particularly in emergency care, operating theaters, sterile supply, intensive care, accessories, and spare parts. Further, the procurement of medical equipment was inordinately delayed by more than four years. The overall efficiency of project implementation was less than satisfactory. 44. While the project components included upgrading and construction of referral hospitals, health personnel development, and health services support, project implementation lacked focus on strengthening referral services and delivery of curative care and on maintenance of medical equipment. The Project s objectives and scope were not fully achieved, although the quality of care has improved in some district hospitals. Thus, the Project s efficacy is less than satisfactory. Primary health care and preventive services should have been better integrated with the curative services at the tertiary and district hospitals. 45. Project hospitals inadequate operating budgets based on outdated criteria and weak management resulted in operational performance that may work against the Project s long-term sustainability. 46. The incountry training comprised mainly refresher courses. Nurses who had graduated from training institutes waited for four to five years before being employed. Training programs to improve management skills do not exist. Although the training programs were implemented as planned, they did not significantly strengthen the institutional capacity of project hospitals and training institutes. MOHFW must establish a comprehensive health manpower development plan. B. Lessons Learned 47. During project design, the Executing Agency s institutional capacity and capabilities to achieve the project objectives must be assessed critically and adequate provisions made for capacity building. 48. Baseline data, including for financial and economic evaluation, should be established based on the financial analysis carried out at the beginning or during the Project. 49. Upgrading of tertiary hospitals requires close coordination and monitoring of architectural planning, purchase of equipment, staff training, capacity building, and management training and development.

12 50. Procurement of medical equipment is a complex process requiring careful planning. The equipment procurement process took 78 months and not 36 months as estimated at appraisal, and was completed only after a delay of about 51 months. The presence of a long-term, qualified medical equipment international consultant could have avoided these significant problems. 51. PIU s functions must be gradually integrated into the administrative structure of MOHFW. Simply disbanding the PIUs on project completion will offset sustainability and continuity. 52. The Project, which had an initial five-year implementation period, took eight years to complete, after two extensions. Project implementation period should be realistic and tools such as scheduling and project evaluation review techniques to minimize delays should be used (para. 20). 53. The Project did not adequately consider the lessons of the previous project and so encountered similar problems in design and implementation. The main lessons not adequately reflected in the Project design included: (i) keep projects simple, where absorptive capabilities are limited; (ii) balance hardware and software components; and (iii) pay greater attention to strengthening institutional capacity. C. Recommendations 1. For the Government 54. MOHFW should comply with the covenants, as per the Loan Agreement, on the submission of audited financial statements for FY 1998. 55. MOHFW should continue to monitor the project facilities to rectify and improve their use, particularly emergency care, operating theater complexes, sterile supply, and intensive care in the medical college hospitals in Chittagong and Dhaka. 56. The MOHFW should also undertake the following actions to improve operational efficiency: (i) (ii) (iii) Establish a central unit in MOHFW to standardize equipment for each level of service and to establish a formal procedure as part of health technology assessment, for the delivery, installation, testing, commissioning, and handingover of new equipment and facilities. Staff should be trained in equipment acquisition and in after-sales maintenance. Implement the National Policy on the Maintenance of Medical Equipment and provide adequate funds to implement NEMEW and REMEWs. Strengthen the referral system to optimally distribute and use hospital services to address the bypassing phenomenon and improve health care delivery system. The referral system will also profit from management-skills training for hospital administrators and from a sharing mechanism to make health services affordable, particularly to the poor.