COMPARISON OF THE TIME REQUIRED FOR CONSTRUCTION OF SELECTED US AND SOVIET AID

Created: 9/1/1964

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COMPARISON OF THE TIME REQUIRED FOR CONSTRUCTION OF SELECTED US AND SOVIET AID PROJECTS IN LESS DEVELOPED COUNTRIES OF THE FREE WORLD

CIA/RR

CENTRAL INTELLIGENCE AGENCY Office of Research and Reports

Economic Intelligence Report

COMPARISON OF THE TIME REQUIRED FOR CONSTRUCTION OF SELECTED US AND SOVIET AID PROJECTS IN LESS DEVELOPED COUNTRIES OF THE FREE WORLD

CIA/RRJO

Thli inalrrlnlrinationbe NaUonalyOelrna* ot uie Unltoer States withineal of the espjonage laws. Title li/VBC.mi Tfi. the trans-mlMtan or revelation of whlcKta any mannernauthorizedrohlblted by law.

CENTRAL INTELLIGENCE AGENCY Office of Research and Reports

t I

FCHEVORD

Comparative performance ln construction of selected Soviet end US nonmilitary aid projects is evaluated ln this report. Primary attention hua been given to projects in the Industrial andsectors of construction. Although some comparisons of coathave been made, it has proved aaat feasible, in terse of the availability of data, to base conparisons on the tine of construction-Poor performance in the time required for constructioniven Soviet or US aid project does not necessarily indicate poor performance on the part of either the USSH or the US. In thla report, Soviet aid projects are compared vith US aid projects from the point of viev of the end results ln construction time, although in some instances the recipient country nay have been largely responsible for delays ln construction. Also considered arc certain differences ln the Soviet and US adminlstration of construction aid and the effects that the tvo Kinds of administration have had on construction Because of the small size of the saaple, care should be taken in generalizing about construction at Soviet and US aid projectsfhole >

- ii. -

iy faUS -T-

COWTE&ri'S

Surciary and

I.

II. Seven Pairs of Soviet and US Aid

Poverplanto

Plants

C-

Oil

ond Hydroelectric

III. Optimism in

IV. Seme Problems ln

Appendixes

Appendix A. Unpaired Soviet and OS Aid

Appendix B. Source Referenceo

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COMPARISON OF THE TIME RBjUIRKD POP QWSTBUCTTOs Of SELECTED SOVIET AMD US AID PROJECTS IH LESS DEVELOPED COUlfrBlKS OF THE FREE

Summary'oin'lusluns

An examination of the feu comparable Soviet and US aid projectsthat, as measured hy time of construction, the US industrial projects may have been markedly superior to comparable Soviet industrial projecto. On the other hand, performance at the Soviet transportation projects appears to have been oubatonttally better in terms of time of construction than the comparable US Irunsportation projects.

Ofoviet and US project* that vereairs were of sufficient comparability in alia to permit sane direct coapexlsofM or the time required for construction. For example, construction of the Soviet fertilizer project in Indonesia, vhen completed, probably vill have takenears longer than the counterpart US project. Similarly, if the present schedules ore met at the Soviet projects in oil refining and in thermal electric power, construction will take aboutnd lU months longer, respectively, than the counterpart US projects. On the other hand, in airport construction in Afghanistan, construction time of the Soviet project vasonths shorter than the US project..

The pattern of over-all US superiority at the various construction projects also is fcund in the rate of Implementation of foreign aid copitol (the period of time during which foreign aid capital ls tied up in unfinished projects that are not yeteturn orto the recipient country). Thus for rive pairs of industrial old projects of the USSR and the US the average period of implementation for the Soviet projects was planned to beercent longer than at the counterpart US project*. In addition, because of the logging performance at the Soviet projects, the average period actually will beercent longer. In contrast, the pattern is reversed for the two pairs of transportation projects. Thus the average planned period or Implementation at the Soviet projecto was little more than one-half that of the US transportation projects, and the overage actual period wao only one-third. For the seven matched pairs of aid projects token together, the average period of Implementation, planned and actual, wan less Tor the US projects, bul the margin of advantage does not uppear to be substantial.

A comparison of actual time required for construction of aid projects of the industrial and transportation types indicates that the construction

* The estimates and conclusions In this report represent the best Judgment of this Office asA. The conclusions on construction are basedncompleted projects as well as on completed projects (see I, p.elow).

schedules established for both US and Soviet projects generally are optimistic, but particularly so for the Soviet projects. Thusample ofS industrial projects actual construction time averaged Ik percent more than planned, whereasoviet industrial projects the average vasercent more than planned. In the transportation category, both the US and the Soviet projects generally have been optimistically scheduled, with five US project* averagingercent longer than planned and six Soviet projectsercent longer than planned. For the combined sample of Industrial and transportation projects, however, theS projects averagedercent more than planned, whereas the Ik Soviet projectsercent more than planned." Moreover, the sampling of projects probably hasias favorable for the Soviet projects because of the much higher proportion of uncompleted projects in the Soviet sample.

The USSR usually does not assume local currency obligations, and,esult, Soviot projects ln Indonesia and Afghanistan were delayed when these obligations were not met. Tho UI> generally has avoided this problem through the use of counterpartnd PL kQo funds, which has permitted some US control of the financing of localobligations.

In contrast, performance at four Soviet projects of the type was considerably better, with an average of actual time of only li percent more than planned.

unds of foreign currency received by the "JS from local sales or ecamodities exported to aid-receiving countries.

Funds of foreign currency received by the US froa sales ofsurpluses under PL kQo. These funds can be retained by then the recipient country and cun be used to finance localcosts if necessary.

I. Introduction

In many respects the types of involvement by the USSR Ond the US in aid projects are similar. Both countries provide constructionproduction machinery, construction materials not. produced locally, and technical assistance in the form of supervision, training, and design work- US projects examined for this report include projects performed by US contractors and financed either from US aid funds or from the countries' ovn funds. For US aid projects, over-alland financial arrangements have been handled by the Agency for International Development (AID) or by its predecessors in theof foreign aid funds, vith the requirementompetent US engineering firm be retained. The recipient country usually is permitted to award the construction contract to the lowest bidder. Some US projects, however, are undertaken without US government financing and coordinationthat is, US construction companies deal directly vith the government of the less developed country orirm in that country. In terms of the construction supervision, training, and design work provided by the US company or companies, both the privately financed and the AID types of projects arc similar.

Whereas US construction is worldwide, Soviet construction aid has been concentrated in the Middle East and Asia. For this report, hO Soviet and US aid projects in these areas were surveyed, andsufficient for an analysis of construction time was developed foridS projects andoviet projects. (Two projects were excluded from the sample of hO. One, the Aswan Dam, was excluded because of its uniqueness among aid projects. The other, the Kabul -Tor Kham road in Afghanistan, was excluded froa the US sample because it originally was intended to serve onlyraining project.)

Attention on all projects has been concentrated on the time aspect of construction performance because of the lack of precise data on cost. Complete information on construction schedules of aid projects is rare. Therefore, the basic determinants of tine as used in this report vere the official estimate of the number of months or years that would be required for construction, the month in which construction was started, and the month in which it was completed. The completion date vasas the month in which the project was turned over to the owner for operation or use. For those projects that are uncompleted, the latest availublc construction schedules have been used to determine the completion dates.

II- Seven Pairs of Soviet and US Aid Projects

In the data presentedoviet project, has been pairedS project for seven different, types of industrial, and transportation construction. Where possible, similar projects in tho same country have been paired. roup these projectsood but small sample of the pattern of successes and shortcomingsonstruction at theoviet and US projects examined.

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A. The real Powerplants

Although both the Cambay and Pieyveli Thermal Powerplant projects In India (see the following tabulation) have been delayed, the USat Cambay lo dlotinctly superior to tho Soviot effort at Neyveli.

Soviet Aid y*

Btage of the Weyveli Thermal Powerplant

kilowatts (kv) of Installed capacity; five generating units0 kw each; the fuel Is to be lignite coal-

ew of installed capacity; four generating units0 kv each; the fuel ia to be pul-verited coal, residual oil, or natural gas, either singly or ln

period Planned

onths9 to

onths1 to

Cost) Planned

onths9 toM

Uncompleted; estimated time requiredonths1 toM

exchange Local currency

Total Actual

hi. fc

1

exchange Local currency

For serially numbered source referent-en, nee Appendix D. " The data on planned and actual costs arc given in current USthrouehout thia report. Dollar values have been derived fromofficial rates of exchange and do not necessarily reflect the value of the dollar ln respect to construction costs in the countries Involved.

If the schedule at Cambay is met, construction time at the US project will totalmonths compared with an actual time ofonths at Hey-veli- econd stage expansion0 kv is now planned at Neyveli, it is doubtful whether additional work necessitated hy the expansion has accountedignificant portion of the Soviet timelag.

It is estimated that the cost of the Cambay plant vill exceed the original estimate by lessercent. On the other hand, the last available official estimatef the Heyveli projectthat the final cost vould exceed the original estimate byercent.

Factors behind the delays on the projects are not entirely clear. The only reason found for delay at Cambayrolonged labor strike in the springhich lasted for about hOot long enough to account for the entire delay. At Keyveli, noreasons vere found, only that construction has been delayed by "errors'1 committed by both Soviet and Indian engineers and that Indian bureaucracy contributed to the slowness of construction.

B- Steel Plants

Soviet construction time at the Bhilai Steel Plant in India (sec the following tabulation) lasted aboutercent longer than

IS Aid

Contract

Tim Planned

Actual

Cost (nllLfafl W

Uicsl currency Total Actual

I.taI corrency IV, ml

sUeeIUnt

Initial construction forllllon Ions* per year In Idro* uteel

:o

ontbs6 U>

6 to Karen

33

Expansion of tbe Tow Steel Plant

Expansion of exlstlnft capacityillionlLllon tone per year ln Ingot steel

JO TOnths (Decenberto

onths5 to

j

8

,

Tonnages ore given in metric tons throughout this report. ** Although the first Soviet loan was X'or $li8.'ioanillion for structural steel was made soon after the start of construction.

Cost Of the town, airstrip, and powernlant is not included.

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erformance almost identical with the US effort at the Tata Steel Plant in India, where construction time exceeded the plan byercent. The Tata project was an expansion of an existing facility, whereas the Bhilai project was an entirely new facility that wasand built with provision for subsequent expansion. All things considered, the greater size, complexity, and capacity of the Bhilai project appear to be reflected in the differences in the planned and actual times of the two projects. The actual cost of the Tata project is estimated to have been onlyercent greater than planned, whereas the Bhilai project exceeded the planned cost byrobablyreater effort at Bhilai to speed ccmple-tlon.

The two major causes of delay at Tuta were labor difficulties and problems concerning the supply of plant machinery. The delay at Bhilai was caused by the cumulative effect of several factors. Some of the more importantack of coordination between Sovietand private Indian contractors, shortages of both skilled and unskilled native construction workers, an inefficient Soviet system of inventory of the equipment delivered to the site, and the indifferent attitude of Indian contractors toward construction schedules.

C. Boads

Soviet construction on the Kushka-Herat-Kandahar Road in(see the following tabulation) hasiles per month

Aid

Contract

eriod Planned

A? Ual

Cost (nillion $)

PLanned

Foreign exchange Local currency

Total

Actual

I'oroign exchanjp* Local

itood

Biles of tvocon-Treti-paving with asphalt seal, Eur course, and dratrd bridges

onUiH1 to

Uncompleted; astinatul tin-for conplctlon.l to

Kabul-Kandahar Poadnd II)

iles of two lanes, sephalt riving, base course, andand bridges

2'i Months1 to

Uncompleted; eetiitAted tineired for ccntpletlon, to ninthsi to

liO.C

.

6 -

liliOHIL

in cooipariaonlanil.es- Insufficient compaction of the subgrade and inadequate drainage systems have resulted in washouts in the roadway, causing significant delays-Actual US construction on the Kabul-Kandahar Road in Afghanistan has averagediles per month in comparisonlan3 miles. hange of supply routes has been the major cause of delay. Constructiononth before closing of the Pakistan-Afghan border; thus most of the materials and construction equipment had to be shippedore costly route through Iran-

D. Airports

Around-the-clock construction by the USSR allowed operational use of the Kabul Civil Airport runway in Afghanistan (see thetabulation) for large aircraft afteronths. The major share

Soviet Aid

Centrnet

Time period Planned

Actual

Civil Airport

Concrete runvay designed for large Jets; taxlvoy, modem passengerand necessary support facilities

onths9 toe)

lil months9I

Kandahar International Airport

Asphalt runway designed for large Jets; taxi-way, hangars, modern passenger terminal, and necessary support facili-Lies

iontbs5 to7 toY

to

onths (September7 to9 tond July

E)

Planned

?orfiign exchange Local currency

Actual

:-

urrency

.

l.A,

7

of construction of the passenger terminal was completed byut the lack of finishing materials for Interior work delayeduntil the end of.

Although construction of the runway at Kandahar in Afghanistan was completed inonths,dditional months were required for installation of the transformer vault and the lighting system to permit operational use. The contract for design of the passenger terminal was signed inut construction was not even started untilonths after the runway became operational. Closings of the Pakistan-Afghan border aggravated the late start by delaying supply of construction materials. In addition, delays were caused by closingocal brick kilnonths andhortage of local plumbers, electricians, and air-conditioning technicians.

E. Fertilizer Plants

In Indonesia, US completion of the Palembang Urea Plant for fertilizer (see the followingonths ahead of schedule

soviet Aid

Superphosphate Plant

Superphosphatecapacityons per year and the necessary ancil-Lary facilities

Palembang Urea Plant

Urea fertilizer; capacityons per year end the necessaryfacilities

period Planned

Actual

Cost (ftillioii i) Planned

Foreign exchange Local currency

Total Actual

onths1 to

Uncompleted; eBtinated tine requiredonthsl to

7

2^2

x>nthsl

onths1 tc

.

exchange local currency

H.A.

H.A.

i- 'j r, n

was an excellent performance. The contract (including all engineering, design, construction, and operational testing) required greatercompetence than construction of the superphosphate plant of the same capacity. In addition, the training of the local personnel for operation of the plant encountered no delays.

To date, approximately one-fourth of Soviet constructionand production equipment has arrived at the site of the TJllatjap superphosphate plant in Indonesia. hortage of trucksack of material-handling equipment have delayed the delivery of Sovietto the site. Soviet obligations also include training of the local personnel in plant operation, but construction is an Indonesian responsibility. Indonesian construction progress to date includes partly completed warehouses, housing, and foundations for plant Inflation is continually devaluating funds previously earmarked for construction by Indonesia, thus undermining completion estimates-The limited extent of the Soviet commitment has been the major factor responsible for lack of progress. If Soviet involvement had included construction of plant structures, installation of equipment probably would not be suffering serious delays.

F. Oil Refineries

The US performance at the Ulsan Oil Refinery in South Korea (see the following tabulation) was substantially better than the Soviet

Contract

Tine period

Aid

Barnaul Oil Hennery, India

Capacity of 2tons of crude oil per year; ao&lgnod toun-Mr Of refined products

inths1 to

pletl (Jul)

Bdj estlartteilforon ths Si to Nnvenber

Uie an Oil Refinery. South

Capacityion tons of crudeer year; designed Vounber of rcftneil products

inths? to February

l'i aonths3 to)

(UllilMl S!

Planned

Po reign exchange

curranAy

Total

Actual

Foreign oxchaii^urrency

3

- 0 -

effort at the Barauni Oil Hefinery in India. The Ulsan refinery vas constructed in Ikonth ahead of schedule. The presentis that construction of the first stage of the Barauni refinery will be completed inomeonths after the start of According to the original contract, the second stage was to beonths after completion of the first stage. Construction of the Barauni refinery, therefore, probably willonths or more compared with the planned time ofonths. The last available estimate (inf the final total cost of the Barauni project was aboutercent greater than the original estimate.

Delays at Barauni have resulted from several factors. Heavy rains caused flooding of the construction site on two differentand in each instance the flooding was prolonged by inadequate drainage, and the site remained waterlogged foronth each time. Reports indicate that delaysonthsesult of late deliveries of machinery from the USSR. Delays also have been attributed to labor difficulties.

G. Paras aod Hydroelectric Powerplantu

Although the US performance at the Karaj Dam project in Iran (see the following tabulation) was not outstanding, it was superior to

Aid

Contract

Viae period Planned

Actual

Coet (million tl Planned

Dam. Afghanistan

rt) highdm; coverplaot wltA on0 kw and provisionourth turbine0 kv

ath*O to

Uliccnpleted; etainated tlcte required for

!

lotion. B3 nautili0 to

Karajron

t high concrete arch dan; powerplant with an Installed capacityw; do-nstreui regulating dan; to ulles of transmission lines

emos* to

ootfii'. to

losal

foreign

-

performance at the smaller Naghlu Dam project in Afghanistan, under Soviet aid. The Karaj project vas built inonths, whereas the Naghlu project currently is scheduled for completion inotal construction time ofonths. Although construction time at Karaj vasercent greater than that scheduled at present for Haghlu, the Karaj project clearly is on Uie order of more than one-half again as large as Naghlu. Actual costs at Karajercent higher than the original estimate, whereas at Haghlu aboutercent of the original estimate had been spent by, with much of the majorstill to be done.

Delays at Karuj were caused by landslides in the maininterfered with the supply of aggregate for concrete. Athe personnel were killed or injured in accidents, resultingwork stoppages and several investigations of thepractices. At Haghlu the Soviet engineers did not testformationsresult, additional survey work was

necessaryonsiderable amount of work had already been done. This brought about major changes in design of the dam and resulted in the relocation of the diversion tunnel.

H. Comparative Performance

The Soviet and US projects paired above are sufficientlyin terms of size and complexity of construction to permit some direct comparisons of the time required for construction. The road projects, in fact,ommon unit of measure for comparing the mileage of road paved per month. In these terras, performance at the Soviet project was noticeably better than at the US project, tforeover, thin was achieved with concrete paving over terrain that was generally aore difficult than at the US project- In airport construction also, performance at the Soviet project was distinctly better, with the US project takingonths longer to build.

On the other hand, performance at the US projects in fertilizer. Oil refining, thermal electric power, and dam construction has been distinctly belter than at the counterpart Soviet projects- Thus if the present schedule of the Tjilatjap fertilizer project in Indonesia is met, construction of this Soviet project will have takenears more than the counterpart US project. Similarly, if the presentofajnl Oii refinery in India is met, construction will have takenonths longer than the counterpart US project.* If the present schedules of the thermal electric power projects are met, as appears likely, construction of the Soviet project will have takenonths longer than the US project.

ratio Wi Ua: te : -

ity of the US project is less than the Soviet project.

-

Although less clearly definable than at the projects mentioned above, the work at the US dam project at Karaj in Iran waa substantially better than can be expected at the Soviet dam project at Ilagblu in Afghanistan. On the surface the opposite would appear to be the case. The present schedule for the Naghlu project,ears ofremaining, implies completion inercent less time than was required for the KoraJ project." Because of the much smaller size of the Hoghlu project, however, the US project actually was built inbetter time than the Soviet project will be.

Finally, in respect to the time required for construction of steel plants, no clear judgment of superiority for either aid project seems warranted- Performance at the Bhilai Steel Plant in Indiawas good; the project obviously was given top priority by the USSR. In comparing the greater size of the construction job at Bhilai with the shorter construction time at Tata, however, performance at the Soviet project cannot he said to have been substantially better than at the US project.

In summary, at four of the five pairs of industrial aid projects compared above, actual construction time of the US projects was or will be substantially better than that of the Soviet projects. At the other pair of industrial projects, there was no clear margin of superiority in construction time, given the difference inf the projects. On the other hand, at both pairs of transportation projects, the actual construction time of the Soviet projects has been substantially better than the US projects.

Io the recipient country, aid projects are an important means of obtaining productive capital from foreign countries. Other things being equal, therefore, it is to the advantage of the recipientto get foreign aid projects into operation as early as possible. In the case of loans (the form of most Soviett is particularly advantageous to minimize the period during which unfinished) tie up foreign capital and require payment of interest on credit already used and (S) yield no return from the capital obtained. In this respect also, in what may be called the rate of implementation of foreign aid capital, the Soviet projects in transportation show an advantage over the counterpart US projects, whereas the advantage falls

* Completion of the Naghlu project substantially ahead of the present schedule as established by the USSB appears lo be unlikely at this time.

Average rates of implementation of foreign aid capital areto be as follows {in monthsillion of cost in foreign exchange)*:

Average Bate ofAid OS Aid

6

The five pairs of industrial projects

Planned Actual

5

The two pairs of transportation projects

Planned Actual

All seven pairs of aid projects

Actual

li.

Thus the average period of implementation (that is, the average time required for construction before tho foreign aid capital can beginroductive return or use) for the Soviet transportation projects was planned to be little more than one-half that of the US transportation projects. In fact, because of the poor performance at the US transportation projects, the actual average period offor the Soviet transportation projects was only one-third that of the US projects. For the industrial projects, however, the average period of implementation for the Soviet projects was planned to be someercent longer than at the counterparT, US projects and actually will beercent longer. For the seven different types of aid projects taken together, the average period of implementation, planned and actual, was less for the US projects, tut the margin of advantage does not appear to be substantial.**

* 'lhe planned average rates of implementation were obtained from the total number of months Of planned time for the respective projects divided by the total Of planned costs in foreign exchange, expressed in units0 million. The actual average rates of implementation were calculatedimilar manner, using the total nunber of months of actual time and the total actual costs in foreign exchange (alanned costs in forci.gr, exchange were used where actual costs were riot Strictly speaking, of course, foreign aid capital is not all that is provided by the foreign exchange pari of an aid contract. ** 'lhe murgin of the US advantage may well be understated, 'ineweight of the transportation projects in the samole probably is hi#ier than in either the Soviet Or the US aid programshole.

L,

Information on costs of construction of aid projects Is not usually available. Moreover, direct, international comparison3 of tbe cost of Soviet projects with tbe cost of US projects are precluded by substantial differences in the proportion of cost financed byexchange. Some Indirect comparisons of costs, however, can be made by relating actual total (foreign exchange plus local currency) cost to that plannediven project. Thus actual costercent above plan at four US projects compared vithercent above plan at five Soviet projects.*

III. Optimism ln Scheduling

In addition to the paired projects discussedata nre available for determining the planned and actual times required for constructionotal ofther Soviet and US projects. Although these projects are not amenable to specific pairings of tho timeforeneral comparison of actuul and planned time can be made for each kind of project. The sample ofrojects can be subdivided by the following categories of construction (inof

SovietAid

as

In combination withairs of Soviet and US projects In the industrial category discussedhe actual construction time ofS industrial projects averaged lV percent aore than planned, whereasoviet industrial projects averagedercent more than planned. In the transportation category (including the two pairs of Soviet and UShe actual construction time of five U3 transportation projects averagedercent more than planned, whereas the six Soviet transportation projects averagedercent more than planned. For the combined sample of industrial and transportation projects, theS projects averagedercent more than planned, whereas theoviet projects averagedercent more than planned.

* At two of the four US projects, costs are available only ln the foreign exchange category. By and large, the increases ln actual costs above plan reriect increases in costs of construction engendered by the lags and delays In construction- Other factors, however, also may be reflected, such as inflation in the recipient country oror additional facilities not in tbe original plans.

** See II, p.bove. hort commentary on each of these projects, see Appendix A.

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The comparative performance in respect to planned construction time probably is even more favorable for the US than is indicated by the calculated averages, because the sample of industrial and transportation projectsavorable bias to the Soviet projects. Of theS projects,re uncompleted,f theoviet projects are uncompleted. Completion dates for all of the uncompleted projects were determined from the latest available construction schedules. It seems likely, however, that the much higher proportion of uncompleted Soviet projects resultsignificantly greater underestimation of time for the sample of Soviet projects than for the sample of US projects.

In contrast to industrial and transportation construction, however, performance at four Soviet projects of the institutional type wasbetter. The actual time for these projects averagedercent more than planned. If these four Soviet projects of thetype are included in the total sample, the actual timeotal ofoviet aid projects averaged onlyercent more than planned compared withS projects at which actual time averagedercent more than planned.

Finally, it is significant thatf the l8 Soviet projects were completed ahead of schedule, and both of these were of thetype. Hone of the Soviet projects in industrial andconstruction can be reasonably expected to be completed on or ahead of schedule. On the otherf theS projects were completed ahead of schedulehermal electric powerplants, an oil refinery,rea fertilizeras completed on(the section of the East-West Highway from Pilsanulok to Lom Sax in Thailand).

TV. Some Problems in Administration

In the Soviet and US aid programs the type of construction contract concluded with the recipient countryasic differenceadministration of Soviet projects and administration of US projects. Both the USSlt and the US perform initial project surveys in most casesontract separateat for the construction of the project, but the similarity ends there. In Soviet projects,for the Important phases of the work is usually incorporatedingle contract. Thus the Soviet contract with Afghanistan for construction of the Kabul airport included design, engineering, supply of construction materials and construction equipment, installation of the airport equipment, technical assistance, and actual construction of all the airport facilities. Although problems in coordination with recipient countries have been encountered ut many Soviet projects, resolution of adir-inistrative problems Is facilitated by the single-contract approach, which concentrates rather than disperses

Under the US aid program, multiple construction contracts ratheringle contract arc the rule- Thus,iven US project.

-

separate contracts may be concluded with various US organizations for design and engineering, for procurement of materials and equipment, and for actual construction of the project. For example, the UScontractor for the Kandahar airport project in Afghanistan also handled the design of the various facilities except the design of the terminal. The award of the contract for design of the terminal was delayed foronths after Afghanistan had approved construction of the terminal. The designer further delayed construction of the terminal by failing to provide thef materials for theestimate until after completion of the runway. The separatethus accountedonsiderable portion of the lag inof the Kandahar airport. Separate contracts for procurement of materials and equipment also have hindered US efforts in construction aid. Estimates of time and cost madeonstruction contractor con be unrealistic when procurement contracts are awarded to another-

The fragmentation of contracting at many of Lhe US projects results in fragmentation of responsibility in the absenceeneralcharged with all-phase implementation of an aid project. S construction contractor may have to operate as merely another interested party in working out his problems villi one or more engineering-design firms, with other construction contractors, with AID, and withof the recipient country.

The policy on most of the l8 Soviet aid projects examined was toeavy commitment in local resources fron; the recipient The effect of this policy is most clearly seer, ln Indonesia, where the failure of the Indonesians to fulfill local financinghaa resulted ln significant delays in construction at major Soviet aid projects- Constructionoad in southeast Kalimantan inwith moreoviet technicians and considerable quantities of roadbuilding equipment committed to the project, remains incomplete because Indonesia has supplied only one-half of the required local work force. Inadequate local financing of construction work also has forced delays at the fertilizer plant at Tjilaljap in Indonesia and the Salens Pass Road ir. Afghanistan. An attempt to solve this problem inhas been maderogram designed to provide localfor aid projects through the sale of Soviet commodities on the local market, but this program has remained small and not totally On the other hand, at many of theS projects examined, counterpart funds and those funds provided throughere used to overcome such problems in local financing.

Other factors accounting for delays at the projects exarlned include inadequate engineering surveys, inadequate transportation systems within the recipient country, shortages of skilled local labor, and adverseconditions. These factors have affected both the US aod the USSB-Their impact can be reduced by careful planning, hut they cannot be avoided

-liUi-civ if .iM i

veloped ureas.

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APPENDIX A

U?f? AIRED SOVIET AND US AID PROJECTS

Actual Timeercent of Planned

Soviet aid

Industrial and transportation Completed

Powerplant,

Construction waa started inith completion expected in The plant was completed inboutonthsschedule*

Port,

Construction vas started inith completion expected in The port was completed inboutonths behind schedule.

Uncompleted

Pass Road, Afghanistan IT/

Construction won otarted inithexpected in Completion is now officially set forb, aboutonths behind achodule.

Machinery Plant at

Construction was started inproduction slated to begin by Januarycompletion of the first stage. Trial production beganis now set for

U, aboutonths behind schedule for the first stage.

- IY -

Soviet aid

1?3

Industrial and transportation Uncompleted {Continued}

Coal Machinery Plant at Durgapur,

150

Construction was started inith trial production slated to begin by3 and completion of the first stage scheduled forU. Trial production began duringnd completion is now set for, aboutonths behind schedule for the first stage,

Southeast Kalimantan Road,

133

Construction was started inithexpected in April An official Soviet estimate in3ompletion date ofears behind schedule.

itaghdad-Basrah Railroad Line,

Construction was started in, with completion expected in. Inonversion of the rails was reported to be complete but the line was not expected to go into full operation untilear behind schedule.

Institutional

Completed

Institute of Technology,

Construction was started inith completion expected in Thewas completed inonths behind schedule.

-

Actual Timeercent of Planned Time

aid

Institutional

Completed (Continued)

Khmer-Soviet Friendship Hospital,/

Construction vas started inith completion expected inhe hospital was completed inonthschedule.

Djakarta Sports Stadium, Indonesia 2hJ

Construction was started inith completion expected in The stadium, was completed inonth ahead of schedule.

Soviet Gift Hospital in Djakarta, Indonesia

Construction was started inith completion expected ln't. The hospital was completed inonth ahead of schedule.

US old

Industrial and transportation Completed

Khmer-American Friendship Highway,

Construction was started inith completion expected in The road was completed inonthsschedule.

Delhi Thermal Powerplant, India 2j/

Construction was started lr;ithexpected inhe plant was completed inonths behind schedule.

.

Actual Timeercent of Planned Time

1C6

Project

US aid

Industrial and transportation Completed (Continued)

Ballabgarh Tire Plant,

was started inithexpected in. The plant vas was completed inl,onthschedule.

Aluminum Plant,

Construction was started inith completion expected ln The plant was completed inonths behind schedule.

Bypass Highway,

Construction was started inI, with completion expected in The road was completed inboutonths behind schedule.

Dura and Poverpianl,/

Construction was started inith completion expected in Work on the project was completed Inonths behind schedule.

Tangin Ri Thermal Powerpiant, South

Construction was started inith completion expected In The plant was completed inonths ahead of schedule-

Thermal Powerpiant, South

Construction was started inith completion expected in The plant was completed inonths ahead of schedule.

-

5

ActuaL Timeercent of Planned

Project

US aid

Industrial and transportation

Completed (continued)

Thermal Powerplant, South Korea

Construction vas started inith completion expected in The plant vas completed inonths ahead of schedule.

c

Chung-Ju Urea Fertilizer Plant, South Korea

Construction vas started inith completion expected in The plant vas completed inboutonthsschedule.

Highway, section from Pitsanulok to Lorn

Sax,

Construction was started inithexpected in The road was completed on tine.

Dam and Powerplant,

Construction was started inith completion expected in The project was completed ir.onths behind schedule.

110

Uncompleted

Eregli Steel Plant,/

Construction was 3tartea ir.ithexpected in Completion is now officially set forbout '1 months behind schedule-

-

APPENDIX fl

SOURCE REFERENCES

ino-Soviet Bloc Economic Activities in Under-

developed Areas, C/ State, Madras. ,ov ou. 9 OFT USE. Indian Industries,. kO. U.

State, AID. Country Assistance Program; India,.tate, , C.

State, Bombay. OFF USE.7 OFF USE. State, New Delhi. U, U.. l6 U.

U. Engineering U. The Times of India,. 1. U.0- 1. U.

State, Calcutta. Dsp IkJ, OFF USE.

Kabul. 7 7 C.

CIA. CS, Ik/ CIA. CS, Sk, CIA. CS,ar 6k. 8/

AID. Country Assistance Program: Afghanistan,

k. U.

State, Kabul. S.9 U.

Dally Report (Middle East, Africa and West Europe),

. OFF USE. JPRS. 2 U. CIA. CS,an 6l. 8/

State, Kabul. 9 OFF USE.

State, Kabul. 7 C. U. U. C.

CIA. CS,ar 6k. C.

State, Djakarta. ,an 6k. C.

State, UjaKarcu. ar bl. OFF USE. KM-Kayan,. 3. U.

State, New Delhi. 9 Jun Gl. U. The Eastern Economist,an 6l,. U.

Far Eastern Economic Review, l8. U.

FBIS. Daily Report (Middle East, Africa and Weston 62

p. 3- OFF USE. CIA. OO, C,

-_

blavf)

12. State, Seoul. , U.

South Korea, Ulsan Development Planning Authority. Ulsan Industrial. Area in Prospect,. U.

13- CIA. CS, 8/

Soviet News,. U.

State, Kabul. , ll; C.

OFF USE.

CIA. CS,ar 6k. S/

News-Record, Tehran. 4 C.

0 Mar 6l. C. CIA. 8 C.

Daily Report (USSR and East.

OFF USE. CIA. CS, S/

Middle East Business Digest, U. CIA. CS, S.

State, Kabul. . C. CIA. S/

State, Calcutta. OFF USE., u.

Slate, New Delhi. , OFF USE.

Ibid.

State. Djakarta. C.

Gt Brit, BBC. Summary of World Broadcasts, series,

an 6l. II.

JPRS. 6 Mar 6a, p. ll. U. State, Baghdad. , U.

State, Rangoon. ,ul 6l. OFF USE., S.

JPRS- eb 6l. OFF USE,

th Intelligence Corps. OFF USE. State, Djakarta. , l6 S.

25- Pravda, l6. 3- U.

Army, Djakarta. Engineering News-Record,un 6l, State, AID. Country Assistance program: India,. U.

State, New Delhi. , U.

State, New Delhi. , OFF USE.,ov 6l. U.

CIA. C. CIA. C.

-

CO, C.

Brown Engineers. Reconnaissance Report: Djakarta By-Pass Highway, New York, U.

0 C.

Air, Karachi. U. State, Dacca. 8 OFF USE.

0 C.

Pacific Bechtel Corporation. Steam Power Plants for the Republic of Korea, San Francisco, Ibid. 3h. Ibid.

Fifth Air Force. Fifth Air Force General Intelligence

Selected Topics, .o. and Hydrocarbon Research, Inc. Final Report, Engineering and Construction Contract, Urea Fertilizer Plant at Chung-Ju, Korea, Hew York, U.

and Parcel Engineering Co. Thailand Road Program, East-

West Highway Project, Final Report^ Bangkok, Thailand, and St, Louis, U. CIA. i An- TO. S.

37-

Water Power, State, Ankara. , OFF USE. U.

-

Original document.
Report this comment as inappropriate
Jan 28, 2010 @ 1:01 am
We are certainly apprciate this done of the International community and specialy to US,

dear sir,

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thnaks

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