How frequent revisions push project costs up, benefits to back seat

Bangladesh is losing out on economic benefits from its development projects due to repeated revisions mainly because of a lack of efficiency of government agencies, poor planning and faulty implementation.

Some 35% of the ongoing projects – 640 out of 1,819 – have gone through revisions one or more times over the last decade, ultimately making development work costly.

As an example of how development projects are getting costlier day by day for repeated revisions, this fiscal year's revised projects under Annual Development Programme (ADP) escalated costs to Tk18,53,779 crore – equivalent to thrice the annual budget outlay, according to the Planning Commission.

Failed deadlines cause costs to rise

Project costs would have been much lower had these projects been implemented within their deadlines, say the people concerned.

Some 11 projects under the railways ministry were revised and their costs rose to around Tk66,460 crore from the original Tk43,919 crore, according to knowledgeable sources.

There are 58 revised projects of the Road Transport and Highways Division, which saw their costs rise by Tk24,544 crore.

Besides, costs of 20 projects of the Directorate General of Health Services increased by Tk13,081 crore.

Many other projects under different ministries and divisions also experienced time extension and cost hikes.

Inefficiency is a reason

Experts link delay in project implementation and cost escalation to a lack of capacity on the part of government agencies.

Dr Ahsan H Mansur, executive director at Policy Research Institute, told The Business Standard, "The government agencies have not been efficient in implementing projects even after 50 years of independence. Besides, projects are being taken up without any proper survey, which leads to the multiple revisions."

Sometimes, contractors and consulting firms deliberately implement projects slowly. They do so when prices of construction materials, such as rod and cement, go up. But in many cases, project managers and stakeholders prolong project completion in the hope of personal gains, he added.

Economist and Researcher Zayed Bakht said, "If a project is not finished on time, it costs more money that could have been used for other development activities. It also puts pressure on the economy."

In many cases, it takes a long time to appoint a project director. Similarly, delay in hiring consultants for projects funded by foreign loans hampers project implementation as well, he noted. 

Land acquisition also causes delay. Besides, designs of many projects need to be changed due to a lack of proper survey, he added.

The construction of the rail line from Dohazari in Chattogram to Cox's Bazar and Gundum via Ramu started in July 2010. The project, which was supposed to be completed in three years, was delayed due to complications regarding land acquisition and financing. 

As a result, project duration was extended for three more years and its costs went up too.

Besides, additional land acquisition for the construction of a broad-gauge railway line was also included in the project, which caused the project cost to rise by 874%. For this, the revised project was re-approved in April 2016. The project time was also extended for five years till June 2022.

So far, 68% of the project has been completed and an initiative has been taken to extend its time again.

Currently, 39 railway projects are under implementation, involving about Tk1,47,000 crore. Among them, 11 projects saw their tenures doubled and Tk22,450 crore more was allocated for them.

The Road Transport and Highways Division is currently implementing 198 projects involving around Tk2,85,879 crore. Some 69 projects have been revised at different times and costs of 58 revised projects increased by Tk24,544 crore, while expenditure of 11 projects were reduced by Tk291 crore after revision.

Experts say no major road project of the government has ever been completed in one term owing to a lack of proper design and planning.

"Projects need revision for updates"

State Minister of Planning Shamsul Alam said, "Many projects are revised to meet issues during the implementation period. But the Planning Commission discourages a project revision midway."

Sometimes, many five-year projects are revised to make them updated. The government also revises and updates its one-year budget. It is not essentially a bad practice, he added.

The state minister further said one of the major problems is land acquisition that takes time. Land cannot be acquired before the original project is approved. "In some cases, we undertake separate land acquisition projects. But it is not possible all the time because if the original project is not approved after the land acquisition, it will be a waste of money," he pointed out.

"Delays are deliberate"

Communication expert and professor at the Bangladesh University of Engineering and Technology Shamsul Hoque, said, "Consultants and contractors deliberately delayed project implementation in order to increase costs. They capitalise on the lack of capacity of project managers. There is a lack of skilled manpower in all the government agencies as well."

He mentioned frequent transfer of project directors, a lack of proper survey, and unplanned project approval by the Ecnec as the main reasons behind the tendency of unnecessary project revisions in the country.

"The development that the country has gone through in the last 10 years needs to be evaluated. We must identify the weaknesses and failures; otherwise the financial loss due to project revisions will double in the next decade," said Shamsul Hoque.

Litany of delayed project

As an example of a slow-moving health project, Kushtia Medical College Hospital Project of the Directorate General of Health Services has been running for more than a decade. The project cost has increased by 40%.

Similarly, the project of setting up the third branch factory of Essential Drugs Company, a state-owned pharmaceutical company, in Gopalganj has been running for more than a decade. Initially, the project cost was Tk31 crore, but it has now increased to Tk800 crore. 

Around 66% of the projects of the health directorate have been revised for different reasons. Out of 31 revised projects of this department, costs of 20 projects have increased by Tk13,081 crore. On the other hand, costs of eight projects were reduced by Tk2,433 crore. The information on three other revised projects could not be obtained.

Currently, the directorate general of health services is implementing 47 projects with a cost of Tk63,924 crore.

Meanwhile, the Local Government Division has the highest number of 244 projects in the revised ADP among the major ministries and divisions. The current implementation cost of these projects is Tk2,58,000 crore, and its 81 projects were revised one or more times.

Besides, 33 out of 80 projects of the Power Division, 20 out of 46 projects of the shipping ministry, 38 out of 114 projects of the water resources ministry, 33 out of 96 projects of the agriculture ministry, and 37 out of 78 projects of the directorate of secondary and higher education were revised.