Completion Report

Project Number: 45296-005

Technical Assistance Number: 8941
July 2020

Philippines: Davao Public Transport Modernization

Project

This document is being disclosed to the public in accordance with ADB’s Access to Information
Policy.
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.
 TECHNICAL ASSISTANCE COMPLETION REPORT

TA Number, Country, and Name: Amount Approved: $800,000

TA 8941-PHI: Davao Public Transport Modernization Project Revised Amount: $1,303,000
Executing Agency: Source of Funding: Amount Amount Used:
Department of Transportation TA Special Funds- Others Undisbursed: $1,281,941.60
and Communications $21,058.40

TA Approval Date: TA Signing Date: TA Completion Date

10 August 2015 15 February 2016 Original Date: Latest Revised
30 September 2016 Date:
31 December 2018

Financial Closing Number of

Date: Extensions:
19 June 2019 3

TA Type: TA Arrangement:
Project preparatory TA Stand-Alone
Ensuing Loan P45296-006 PHI: Davao Public
Transport Modernization Project

Description
The Government of the Republic of the Philippines recognized that an improved and operationally efficient urban
transport system in highly urbanized cities is a key factor to sustainable economic growth. Strong economic
growth in Davao City has resulted in rapidly growing demand for travel and increased traffic congestion. In line
with Presidential Administration Order No. 254, through its National Environmentally Sustainable Transport
Strategy, the Davao City approached the Asian Development Bank (ADB) to modernize public transport systems
in the city.1 ADB initially provided a policy advisory technical assistance (TA) for Davao Sustainable Urban
Transport Project. 2 The preferred option was to create a bus system improvement program with performance–
based franchising arrangements, extended service coverage area and operation hours, and traffic management
improvements to prioritize bus services at critical points across the network. 3 The TA laid the ground work for a
project preparatory TA for the proposed Davao Public Transport Modernization Project (DPTMP), that prepares
the project’s sustainable design, financing arrangements, social dimensions, and institutional strengthening
components.4 The ensuing project was consistent with the sustainable transport operational agenda of ADB’s
Midterm Review of Strategy 2020 and a focus area of the Sustainable Transport Initiative Operation Plan with
urban transport as one of the key pillars for ADB operations in the transport sector, and in the Philippines.5 The
TA was prepared in accordance with ADB’s country operations business plan (COBP), 2015–2017 and the
ensuing project is in COBP 2020–2022 and is expected to be approved in 2021.6

Expected Impact, Outcome, and Outputs

The TA assisted in preparing the public transport project design. The impact of the ensuing project is more
efficient movement of people. Its expected outcome is development of a modern and efficient public transport
system in Davao. It has three outputs: (i) public transport network improvement; (ii) institutional strengthening,
capacity development and social development program; and (iii) fleet renewal. The TA assisted in preparing
route rationalization, franchising arrangement, social development program, fleet renewal, and institutional
strengthening.

1
Malacañang. 2009. Presidential Administration Order No. 254, Urban Transport Program for Highly Urbanized Cities: Metro
Manila, Cebu, and Davao. Manila.
2
ADB. 2012. Technical Assistance Completion Report for Davao Sustainable Urban Transport Project. Manila. (TA 8195-
PHI)
3
ADB. 2015. Technical Assistance for Davao Public Transport Modernization Project. Manila. (TA 8941-PHI)
4
Other options such as mass rapid transit or bus rapid transit were found unsuitable at that time, as they would be confined
to main corridors which would not be effective for improving service across the wide area of the city and were too expensive
and would involve significant implementation problems.
5
ADB. 2010. Sustainable Transport Initiative Operation Plan. Manila; ADB. 2014. Midterm Review of Strategy 2020. Manila.
6
ADB. 2015. Country Operations Business Plan, 2015–2017. Manila.
2

Implementation Arrangements
The executing agency was the Department of Transportation and Communications (DOTC) and the City
Government of Davao was the implementing agency.7 A project management unit, within the City Transport and
Traffic Management Office, was established and both DOTC and the city assigned counterpart staff, including
officers from the Land Transportation Office and the Land Transportation Franchising and Regulatory Board. The
TA planned to engage a consulting firm using the quality- and cost-based selection (90:10) in accordance with
ADB’s Guidelines on the Use of Consultants (2013, as amended from time to time), with international (12 person-
months) and national (51 person-months) inputs for an 8-month implementation period from November 2015 to
June 2016.

The TA implementation period was originally planned for 8 months, from November 2015 to June 2016. The TA
became effective in February 2016. It was delayed by 3 months because the national and local election activities
inhibited the executing agency and implementing agency to make decisions. The new set of officials assumed
their positions in July 2016, which delayed the engagement of consultants by another 9 months. The recruitment
process was completed in November 2016. The consultant, GHD Pty Ltd., was mobilized for 24 months from 12
December 2016 to 31 December 2018 under a full lumpsum contract. A total of four contract variations were
processed to extend the contract services and add TA deliverables.8 Aside from the consulting firm, several
resource persons were engaged to support DOTC’s traffic modelling and financial analysis.

Conduct of Activities
All original activities planned under the TA were completed. TA activities were adjusted as a result of new
transport sector policy initiatives of the government, and two supplementary financings were provided for the
additional activities.9 The first supplementary financing for $170,000 was provided to review the Road-Based
Public Transport Reform Program and Public Utility Vehicle Modernization Program (PUVMP) and conduct the
Philippine Transport Forum in ADB in July 2017. The second supplementary financing for $330,000 was for the
preparation of Davao City’s comprehensive transportation and traffic masterplan. 10 The TA was extended three
times for a cumulative extension of 27 months from 30 September 2016 to 31 December 2018 due to (i) delay in
consultant’s recruitment because of national and local elections (12 months); (ii) declaration of Martial Law in
Mindanao and the review of the Road-Based Public Transport Reform Program and PUVMP (9 months); and
(iii) the preparation of Davao City’s comprehensive transportation and traffic masterplan (6 months).11 The TA
was financially closed on 19 June 2019, 6 months after the TA completion date because clarifications on the
expenditures for equipment and furniture under the consultant’s contract were needed as these were not detailed
in the TA paper. A minor change in implementation arrangements was approved on 23 May 2019 to include
these items.

The TA prepared the project design, which consists of rationalization of bus routes, new bus fleets, performance
based contracts with bus operators, establishment of bus depots and bus stops, traffic management system, and
social development program for affected people, including existing jeepney drivers and operators, based on the
stakeholder consultations. In addition, workshops on modern urban public transport systems were conducted to
strengthen the capacity of the executing and implementing agencies. The final report was submitted in November
2018.12 The consultant’s performance was satisfactory. As a result of the TA, the Board of National Economic
Development Authority approved in December 2019 the DPTMP proposal, which allowed the executing agency
to proceed with the detailed engineering design (DED) stage under an ongoing ADB loan, Infrastructure

7
DOTC was reorganized into the Department of Transportation effective July 2016 as a result of Republic Act No. 10844 or
"An Act Creating the Department of Information and Communications Technology".
8
The contract variations were processed due to the following: (i) increase in cost allocation of survey in June 2017,
(ii) replacement of expert, additional experts for additional tasks, increase in contract amount, and extension of contract
completion in October 2017; (iii) additional taks, increase in contract amount, and extension of completion in April 2018;
and (iv) for additional tasks, increase in contract amount, and extension of completion in September 2018.
9
Department of Transportation. 2017. Public Utility Vehicle Modernization Program. Manila.
10
The plan is requested to be submitted to DOTC under the Public Utility Vehicle Modernization Program.
11
The first extension was approved on 27 September 2016 by Director, SETC. The second and third extensions were approved
by Vice President (Operations 2) on 5 July 2017, and 23 October 2017 respectively.The Martial Law was declared on 23
May 2017. It took 2 months for international consultants to remobilize, after which work was adjusted on intermittent basis.
12
ADB. 2018 Davao Public Transport Modernization Project. Consultant’s Report. Manila.
 3

Preparation and Innovation Facility.13 The approval was delayed due to discussions on the cost sharing between
the national government and the city.

Technical Assistance Assessment Ratings

Criterion Assessment Rating
Relevance The TA captured ADB’s and the government’s national strategic priorities. Relevant
Davao City is an ideal pilot urbanized city to showcase the modern, integrated,
sustainable public transport system in the country. The DPTMP supports
Strategy 2030’s operational priorities in making cities more livable and
enhancing environmental sustainability.14 The TA activities were properly
adjusted to follow the government’s new initiative (footnote 9). The TA scope
captured the project’s due diligence requirements, and its design was
approved by the government.
Effectiveness All TA activities were completed. The TA prepared the design of DPTMP in line Effective
with the new policy initiative of PUVMP issued in 2017 (footnote 10). The
DPTMP was approved by the National Economic Development Authority
Board in December 2019 based on the final report developed under the TA,
and included in the COBP 2020–2022 (footnote 6). The DPTMP is envisaged
to be the catalyst in the development of a modern and efficient public transport
system in Davao.
Efficiency The TA was extended three times, 27 months in total, though part of the Less than
extension was due to elections and declaration of Martial Law in Mindanao, efficient
which were beyond ADB’s control. Two supplementary financings, resulting in
64% increase in TA amount, were provided for the addtional activities
described under Conduct of Activities. The TA amount was utilized by 98%.
Overall The TA successfully prepared the ensuing DPTMP. Although the TA was Successful
Assessment extended by 27 months, part of the extension is due to unanticipated events
outside the TA. The original scope was achieved within the original cost
estimate. The supplementary financing supported the additional activities to
follow the government’s new initiative. The executing and implementing
agencies’ knowledge and capacity in preparing urban public transport were
developed as intended.
Sustainability The TA’s initial gains are likely to be sustained. The financial analysis Likely
conducted under the TA shows that the bus operation will be self-sustainable, sustainable
given the government will finance civil works and social programs for the
affected people. The TA identified the implementing agency’s capacity
development needs and its cost was included in the project cost. The financial
analysis will be updated during the DED stage.

Lessons Learned and Recommendations

Design and/or planning The TA was able to adjust the proposed project design in line with the new nationwide
policy, and it is recommended that future TA projects for urban projects with multiple
stakeholders involvement be designed with flexible implementation arrangements to
allow swift adjustments in accordance with changes in both physical conditions and
regulating policies.
Implementation and/or Since meetings were often held in Davao City, it was difficult to confirm participation
delivery of representatives from the executing agency based in Manila. Use of video
conferences or similar methods should be considered for future TA projects. In
addition, clear demarcation of responsibilities between the executing and
implementing agencies should be confirmed during the TA design, so that different
levels of discussion can be conducted with them separately.

13
ADB. 2017. Report and Recommendation of the President to the Board of Directors: Proposed Technical Assistance Loan
to the Republic of the Philippines for the Infrastructure Preparation and Innovation Facility. Manila. (Loan 3589-PHI)
14 ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific .
Manila.
 4

Management of staff During the consultant’s demobilization during Martial Law (footnote 11), contractual
and consultants deliverables were not yet achieved, therefore, related milestone payments could not
be completed. Since the contract was on a full lumpsum basis, out-of-pocket
expenses could not be paid separately. For future contracts, more flexible payment
schedule, e.g. partial lumpsum payment, may be considered.
Knowledge building The comprehensive transportation and traffic masterplan for Davao City can serve
as a template for other similar highly urbanized cities. The TA shared data and good
practices gathered from other countries, which gave the implementing agency
confidence to proceed with its developmental plans. The TA was an appropriate mode
of support, since it would be difficult for the implementing agency to conduct similar
studies using their own resources and expertise.
Stakeholder Stakeholder consultations in relation to the project’s proposed social development
participation plan were conducted with the participation of major transport groups, vulnerable
commuter groups, and women's representatives from various affected groups. The
dialogue with these groups will continue in the course of the project preparation.
Partnership and There was no cofinancing under this TA. However, sectorwide discussions and
cofinancing coordination were conducted with the Japan International Cooperation Agency since
they had a parallel assistance, Davao City Infrastructure Development Plan and
Capacity Building Project, which was completed in June 2018. The coordination
contributed to improving the quality of passenger traffic estimates under the TA.
Replication and/or The leverage that the TA brought to the implementing agency gave them advantage
scaling up in spearheading their city development plans and transport policies. This project can
be replicated and scaled-up in other cities with adjustments for each city based on the
traffic conditions. Support in traffic studies and the implementing agency’s capacity
development for counterpart staff will be required. The participation of the Office of
the Public–Private Partnership in similar projects on operation and maintenace issues
will be beneficial to ensure the sustainability.
Post-TA financial After TA completion, the government decided to utilize Infrastructure Preparation and
resource Innovation Facility to prepare (i) DED for bus depots and bus stops, (ii) technical
specification of bus fleets, (iii) concessional documents with bus operators, and
(iv) updated safeguard documents (footnote 13). In addition, an allocation of around
$0.3 million under an ongoing regional transaction TA facility will improve the overall
readiness of DPTMP.15

Follow-up Actions
The proposed DPTMP is programmed for 2021 delivery (footnote 6). The executing agency will complete the
DED in 2020 (footnote 13). The ongoing TA support will support social and environmental due diligence of the
project (footnote 15). Discussion between ADB, the executing and implementing agencies will continue during
the course of project preparation. Establishment of the project management office and implementation units will
be prioritized prior to ADB project approval.
TA = technical assistance

Prepared by: Designation and Division:

Shuji Kimura Transport Specialist, SETC/SERD

15
ADB. 2019. Technical Assistance for Southeast Asia Transport Project Preparatory Facility Phase 2. Manila. (TA 9925-REG)
 Appendix 5

TECHNICAL ASSISTANCE COST

Table A.1: Technical Assistance Cost by Activity

($’000)
Amount
Item Original Revised Actual
1. Consultants 640.00 1,040.00 1,168.70
2. Goods 5.00 5.00 2.90
3. Training, seminars and/or 25.00 109.00 61.80
conferences
4. Surveys 40.00 54.00 48.50
5. Miscellaneous TA administration 10.00 1 5.00
6. Contingency 80.00 80.00
Total 800.00 1,303.00 1,281.90
Source: Asian Development Bank estimates.

Table A.2: Technical Assistance Cost by Fund

($’000)
ADB
1. Original 800.00
2. Revised 1,303.00
3. Actual 1,281.94
4. Unused 21.06
Source: Asian Development Bank estimates.