Steve Lowry, Senior Program Manager for CDM Smith's work in Lesotho, describes the challenges of delivering large, critical water projects in the developing world.

1. October 11, 2015
Program Management in
Developing Countries:
Delivering Large Water Projects in Lesotho
Steve Lowry, P.E.
Senior Program Manager
Denver, CO
720-839-4132
lowrygs@cdmsmith.com

2. Topics
 Learning Objectives
 Metolong Dam & Water Supply Program
 Lesotho Highlands Water Supply – Phase II
 Learning Objectives – Revisited
(Questions during presentation are OK)
2

3. Learning Objectives

4. Learning Objectives
1. Understand funding agency
perspectives in international
development programs
2. Understand management and
logistical challenges facing the
program team
3. Describe competing stakeholder
needs and demands
4. How international approaches are
applicable in the U.S.
4

5. Governance of International
Development Programs

6. The International Development Market
 Developing countries face a $2.5 trillion annual investment
gap – UNCTAD; and by 2030 the OECD estimates that $70
trillion in additional infrastructure will be needed.
 Governments faced with massive infrastructure programs
completely overwhelm staff and systems
 Large government projects suffer from schedule delays,
funding shortfalls, lack of transparency and quality issues
6

7. International Development Programs
 Purpose and structure of programs varies widely, but
“typically” there are:
 Significantly larger budgets than the average project size
 High political visibility
 Multiple remote funding organizations
 Multiple local entities with some governance role
 Many other stakeholders
 Many benefits to achieve – parties do not necessarily
value all benefits equally
7

8. Donor Governance Issues
 Money goes where they earmark -
 “I’ll pay for this, but not for that”
 Compliance with conditions of aid
 Social & environmental safeguards,
workforce capacity building
 Transparency
 Anti-corruption measures, audits
8

9. Governance Challenges
 Cultural differences among stakeholders
 Multiple currencies and complicated tax structures
 Lack of support infrastructure, including communication
 Project and construction management maturity
Program Management approach, processes, and tools need to
satisfy stakeholder objectives while being subject to the many
constraints.
9

10. LESOTHO – COUNTRY
BACKGROUND

11. Location – Metolong Dam & Water Supply Program
11
Lesotho

12. Lesotho – Program Background and Overview
 Health
 #2 in HIV/AIDs
 Infant and Child Mortality –
 Ranks 161 out of 188
 Topography
 “Highest Low Point of Elevation” – 1300m
 Highlands >1700 m
 Lowlands <1700m
12

13. Programs Background & Overview
LHP1 - Katse Dam (1996)
LHP1 - Mohale Dam (2002)
LHP2 - Polihali Dam (2025)
Metolong Dam (2015)

14. Quick Photo Tour
14

24. Government Structure
 Constitutional Monarchy– King has limited
powers
 Democratic, parliament with two houses, since 1966
 Prime minister selected from major party
 Coalition government since 2013
 25 Ministries (Cabinet offices) – too many for a small country
 Ministry of Finance and Ministry of Water have lead roles in
International Development
24

25. Water Resources in Lesotho
 Maluti Mountains (Highlands) catch rain, snow – up to 1m
 Water is a resource, sold to South Africa per 1986 treaty
 Population of 1.9m - 60% coverage of water supply
 Lowlands Master Plan (2008) to provide 100% coverage
 Metolong (Lowlands) identified to
serve about 500,000 people in Lesotho
25

26. METOLONG DAM & WATER
SUPPLY PROGRAMME

27. Early Project Planning
 Concept developed in late 1960’s
 Provide water to Basotho in Lowlands
 Cost estimate $186M in 2008 from
Feasibility Studies
 Environmental, Social complexities recognized
 Millennium Challenge Corporation (MCC) did Due Diligence in
2007-8
 MCC recommended a Program Management (PgM) approach
27

28. Project Description – Metolong
28

29. Role Of MCC
 Signed Compact with GoL in 2008 for $363M
 “Poverty Reduction through Economic Development”
 Covered Health, Private Public Partnership, and Metolong
 MCC funding for Metolong was $87M to cover D-B of WTW
design of Conveyance System, and PgM.
 Grant for 5 years – cutoff date for funding is firm
 Set up Millennium Challenge Account – Lesotho (MCA-L) to
monitor the Compact and MCC contracts, including PgM
29

30. Selection of PgM
 MCC procurement - Quality & Cost Based Selection (QCBS)
 CDM Smith brought on in September 2008 as PgMer
 International experience of team
 Good local partners
 Broad coverage
 Pool of expert personnel
30

31. Initial Funding Picture
 PgM refined the Cost Estimate in late
2008
 New estimate was ~$400M
 Gap in funding identified at Funder’s
EXPO in early 2009
 European Investment Bank (EIB)
provided €140M (~$200M) loan
 South Africa provided $6M grant
31

32. Project Partnerships
 Multiple funders (9) – USA, EIB, KBOSA (5), RSA, GoL
 Funds not pooled
32
Republic of South Africa

33. Donor Interests
 KBOSA – each participant covered a different aspect or
percentage of the Dam, long approval process
 World Bank had overall “umbrella” interest, but only about
10% of the funding
 Local currency (1 ZAR = 1 Maluti) fluctuated from 6.5 to
12.0/$
 Sustainability - limited funding for training
 Procurement procedures trump schedule
33

34. Metolong Reservoir
Ha Sekantsi
Dam Wall, RWPS
Ha Seeiso
Metolong Ha Makotoko

35. Command
Reservoir
Water Treatment
Plant; High Lift Pump
Station
Command Reservoir
Rising Main
Raw Water
Main
Metolong Reservoir
Ha Sekantsi
Dam Wall; Part of Raw Water
Main(constructed by others)
Ha Seeiso
Metolong Ha Makotoko

36. Project Description – Advance Infrastructure
 Pre-2008 GoL built North Access Road and 10 MVa substation
 PgM managed other components needed for implementation
 Land acquisition for sites & contractor camps
 South Access Road for heavy Dam traffic
 Water & Sanitation in surrounding villages
 Operator housing for Dam, WTP
 Police stations – security
 Social, Environmental, Compensation programs
36

37. Project Description – Advance Infrastructure
 Pedestrian bridge needed for people/stock to cross reservoir
 Road bridge needed for vehicles to cross reservoir
37
Continues on next slide

38. Project Description – 2008 to 2015
 Dam: 75m high Roller Compacted Concrete $90M
38 Continues on next slide
24/7 operations

39. Project Description – 2008 to 2015
 Water Treatment Plant: 100 Ml/d (25 mgd), $65M
 Pump Stations: 4 MW (VFDs)
39 Continues on next slide

40. Project Description – 2008 to 2015
 Pipelines: welded steel, 160 km (100 miles), $85M
 Concrete Tanks: up to 40 Ml (10 MG), 8 total
40

41. Challenges: Organizational & Structure
 Pleasing two lead agencies
 Metolong Authority and Millennium Challenge Account
 Turnover at the top
 4 CEOs at MA
 9 Major funding sources
 multiple procurement practices
 Manage ~120 contracts
 5 major construction; 5 major design
 D-B-B, D-B, SSS
41 Continues

42. Challenges: Organizational & Structural
 Land acquisition / permitting
 Mix of international and local
contractors
 Use of FIDIC (Red and Yellow Books)
 Work and Residence Permits
 Taxes
42 Continues

43. Challenges(continued)
 Cultural issues
 Labor issues
 Health: HIV/AIDs
impact from/on
workforce
 Safety
43

44. LESOTHO HIGHLANDS PHASE II

45. Location – Lesotho Highlands Phase II
45

46. Phase 2 Project Description – 2013 to 2025+
 $1B total cost (2014)
 165m Concrete Faced Rockfill Dam
 5.2m (10 ft) diameter tunnel
38km (20 mile) long
 Advance infrastructure – roads,
bridges, camps, communications,
power
46
Continues on next slide

47. Phase 2 Project Description – 2013 to 2025+
 40+ major contracts
 Environmental, Social & Public
Health actions
 Relocation of many households:
flooding over 5,000 hectares
 Potential 1,200 MW Kobong
pumped storage (additional $1B)
47

48. Phase I Legacy
 Social and Environment issues not coordinated w Design
 Land compensation inadequate, led to 50-year monetary
compensation
 Corruption during procurement
 senior managers went to jail
 international design and
construction companies
were blacklisted
48

49. Challenges
 All of Metolong, plus
 Overcome Phase I’s negative procurement, social and
environmental issues
 Public consultation
 Funding from South Africa,
but project in Lesotho
 Shared design and construction $
between RSA and GoL
 Competing political interests
49

50. Governance – Organization of Client
 Lesotho Highlands Water Commission (LHWC)
 Lesotho Highlands Development Authority (LHDA)
 LHDA Board of Directors
 LHDA Technical Committees
 Trans Caledon Tunnel Authority (TCTA)
 Independent Oversight Committees
 Independent Panels of Experts (POEs)
50

51. Solutions
 Greater complexity justified strong PgM control
 Project Management Unit set up in 2013
 Engineering and Social & Environmental tasks
integrated with each other from the outset
 Standardization and policies developed (procurement,
design, compensation, communications, quality,
SHE&Q)
Continues on next slide
51

52. Solutions (continued)
 Anti-corruption policy established
 Procurement-balanced competiveness, transparency,
cost, quality and local preference (Lesotho, RSA, SADC,
international)
 Hiring practice followed procurement balancing
 Set up Young Professional Program to train locals
52

53. Solutions (continued)
 Centralized Project
Controls System
53
Continues on next slide

54. SOLUTIONS (continued)
54

55. LEARNING OBJECTIVES - Revisited
 Understand funding agency perspectives
 “Silos;” want separate reporting
 Understand management and logistical challenges
 Allow for time and cost to cover these
 Competing needs of stakeholders
 Landholders vs. water users
 Employment: RSA vs GoL
 International approaches applicable to U.S.
 Respect, communicate, plan, report, be patient
55

56. Questions

57. Continuing Education Credit
57
 A credit value is assigned to CMAA courses and seminars in units of Professional Development Hours (PDH),
Learning Units (LU), and CCM Recertification Points. CMAA guarantees that course material meets the minimum
requirements for a PDH, which is 60 minutes of instruction, or increments thereof.
 CMAA is a registered provider of continuing education for the National Council of Examiners for Engineering and
Surveying (NCEES). Certificates are available through the NCEES/ACEC Registered Continuing Education Program
(RCEP) at www.rcep.net All transcripts are reported based on the email address provided to CMAA when you
complete the online attendance form.
 “CMAA has met the standards and requirements of the Registered Continuing Education Program. Credit earned on completing
of this program will be reported to RCEP at rcep.net. A certificate of completion will be issued to each participant. As such, it
doesn’t not include content that may be deemed or construed to be an approval or endorsement by the RCEP.”
 CMAA is registered with the American Institute of Architects (AIA) as an approved CES provider of LUs. One
educational contact hour equals one (1) LU. To receive LUs through CMAA, you must provide your AIA member
number on all registration materials and attendance forms.
 Not all sessions and activities offered may be acceptable for continuing education credit in your state. Please
check your state licensing board’s requirements before submitting your credits.
 All courses approved by CMAA count toward CCM recertification points. For more information on recertification
points, please visit https://recerttrack.com/home.php?portal=24
Advancing Professional Construction and Program Management Worldwide

58. October 11, 2015
Program Management in
Developing Countries:
Delivering Large Water Projects in Lesotho
Steve Lowry, P.E.
Senior Program Manager
Denver, CO
720-839-4132
lowrygs@cdmsmith.com

59. THANK YOU!Thank You

60. Location – Metolong Dam & Water Supply Program
60
METOLONG
Highlands - Katse Dam (1996)
Highlands - Mohale Dam (2002)
Highlands - Polihali Dam (2023)
Lowlands - Metolong Dam (2015)

61. 61

62. 62