Rehabilitating a national road in the Philippines

Program Overview

MCC’s $385 million Philippines Compact (2011-2016) invested $199.8 million in the Secondary National Roads Development Project (SNRDP), which rehabilitated 222 kilometers of road across Samar and Eastern Samar provinces. The project upgraded approximately 180 kilometers through major rehabilitation and another 40 kilometers through minor improvements, while also enhancing bridges, culverts, and drainage systems. The SNRDP aimed to improve transportation infrastructure and reduce costs based on the theory that better road conditions would decrease travel time, lower transportation costs, and ultimately support economic growth.

Key Findings

Evaluation Questions

This final performance evaluation was designed to answer the following questions:

1. 1
   Roads Usage:

1. Who is traveling on the road, why, what are they transporting, what are they paying for transport, and how long does it take to move along key routes? How does road usage vary by road-user’s income and sex?
2. Have road usage patterns changed in terms of who is traveling on the road, why, what they are transporting, what they are paying for transport, and how long it takes to move along key routes?

1. 2
   Economic Return:
   What is the economic return of the road investment?

1. 3
   Maintenance:

1. What are the relevant road authority’s current maintenance practices and what is the likelihood that MCC’s investment will remain adequately maintenance for the life of the investment?
2. In cases where MCC included targeted maintenance improvements, how were these implemented and what were the effects of those efforts?

1. 4
   Public Transport Users:
   Given the existing transportation market structure, what portion of transportation cost savings will be passed on to consumers of transportation services? If not all savings are passed on, how could this project have cost effectively addressed these inefficiencies?

Detailed Findings

Road Usage Patterns and Benefits

Average annual daily traffic increased dramatically following rehabilitation, growing between 302% and 426% from 2009 to 2023 depending on the location. Nearly 70-80% of vehicles on the road are private vehicles, primarily motorcycles and tricycles. Public transport and freight vehicles represent a smaller share. Travel speeds improved by 18%, from 49.7 km/h to 58.5 km/h, reducing travel time by approximately 40 minutes for the full journey.

Most passenger travel (89.5%) occurs within Eastern Samar province, primarily for school, work, and shopping, while similarly, most driver travel remains local (87.1%). The typical road user is a male in his mid-thirties with secondary education or less, though sex distribution among bus passengers is nearly equal (51.1% male, 48.9% female).  Over 95% of road users report quality of life improvements since the rehabilitation, citing reduced travel time, better comfort, and more transport options as the main benefits.

Road Conditions

Prior to rehabilitation, 81% (180 km) of the 222-kilometer corridor was in poor condition or unpaved. Following the MCC investment, the road has maintained good riding quality 8-10 years after construction, with most asphalt sections showing International Roughness Index (IRI) measurements between 3.1 and 3.6 m/km. Concrete sections show more variability (3.6 to 6.0 m/km), with sections in Contract Package 2 demonstrating higher roughness and ongoing repairs for landslide damage. The MCC road investment has significantly improved road quality, reducing road user costs by approximately $48.3 million annually through lower vehicle operating costs and reduced travel times.

Maintenance Practices

The DPWH Eastern Samar District Engineering Office in Borongan is directly responsible for maintaining the MCC-funded road. Routine maintenance is conducted by internal staff, while periodic and emergency repairs are contracted through competitive bidding. The district office’s maintenance activities must comply with national DPWH standards but are implemented locally.

Maintenance funding comes from the national budget following the abolition of the Road Board in 2019. Maintenance allocations for the MCC-funded road have fluctuated over five years, from $772,195 in 2020 to $186,321 in 2023, before rising to $552,061 in 2024. Despite these variations, the road remains in good condition, indicating sufficient funding for essential activities. The pilot Community-Managed Road Maintenance Project was discontinued after the initial phase when deemed neither viable nor efficient.

Transport Market Structure

Public transport fares are regulated by the Land Transportation Franchising and Regulatory Board. Rates are regulated based on external factors, such as fuel costs, (requiring operator petitions for adjustments) without consideration of road quality improvements. Freight transport rates are negotiated directly between operators and clients without price regulation.

Despite VOC reductions of 23-42%, these savings have not translated into lower passenger fares. However, infrastructure improvements may help moderate price increases over time. While fuel prices rose 41% during the evaluation period, the VOC savings may have helped operators absorb increased costs without petitioning for fare increases. 71% of passengers reported that fares had not changed and that service had improved in terms of comfort and reliability. The distribution of VOC savings reflects traffic composition, with cars and motorcycles collectively capturing 59.3% of benefits, trucks 32.5%, and buses 8.2%.

Economic Rate of Return

• 13.7%
  Original ERR
• 12.8%
  Evaluation-Based ERR

The Philippines Secondary National Roads Development Project delivered a 12.8% economic return, exceeding MCC’s 10% threshold and demonstrating strong economic viability despite higher-than-anticipated construction costs. This return, while slightly lower than the original investment decision ERR of 13.7%, represents substantial improvement from the 8.9% closeout ERR, largely due to higher-than-expected traffic growth in the evaluation period.

MCC Learning

• 
  Road maintenance interventions should continue to be assessed in evaluations and improved upon in future programs. Although this project included a community-based road-maintenance program, it was not continued. MCC has included road maintenance activities within road projects, and worked to build the maintenance capacity of road ministries.
• 
  MCC should continue to focus on different contracting methods to improve road quality, including supervision contracts that are more flexible to respond to unforeseen issues during construction.
• 
  MCC should collect baseline data on road users.  Although the Philippines Compact predated this, MCC has begun conducting baseline road-user surveys as standard practice.

Evaluation Methods

This performance evaluation used modelling, pre-post, and ex-post methodologies to assess the Philippines Secondary National Roads Project implementation and outcomes across five areas. Data collection occurred between May 2023 and November 2024, representing an 84-99 month exposure period after the project’s May 2016 completion. Methods included manual traffic counts at four locations, origin-destination surveys with 1,945 drivers, public transport user surveys with 1,136 passengers, road roughness measurements along the entire 222-kilometer corridor, key informant interviews with 21 stakeholders, and travel time studies. For economic analysis, the evaluation team employed the HDM-4 model to calculate the economic rate of return using updated traffic data, road roughness measurements, and observed maintenance practices.

2026-002-3144