Project procurement, execution delays leave nearly half of ADB's funds unspent

Infographic: TBS

Nearly half of the Asian Development Bank's (ADB) committed funds for Bangladesh remain unutilised due to persistent delays in project execution and procurement.

Data presented at the Tripartite Portfolio Review Meeting (TPRM) on 30 September revealed that $5.68 billion, or 48.1% of the total ADB portfolio, remains undisbursed as of August 2025.

Besides, the uncontracted balance – the portion of funds approved but not yet signed into contracts – stands at $2.539 billion, representing 21.5% of the portfolio. 

Bangladesh's ADB portfolio currently totals $11.81 billion across 50 projects in seven key sectors.

The latest ADB data shows significant disparities across sectors, with the energy sector accounting for the largest undisbursed amount, while agriculture leads in terms of the highest undisbursed percentage.

Agriculture and natural resources (AFNR) face the steepest delays, with 92% of funds ($329 million) uncontracted and 96% ($342 million) undisbursed.

The energy and public sector management and governance sectors also lag, with 54% ($1.28 billion) and 82% ($825 million) of allocations remaining undisbursed. 

By contrast, the finance (FIN) sector has 44% of funds pending, while transport (TRA) and water and urban development (WUD) sectors show moderate progress, with 38% and 48% of funds yet to be disbursed, respectively.

Gradual improvement achieving target

For 2025, contract awards totalled $461.6 million, achieving 76% of the annual target of $611.3 million. Disbursements reached $690.3 million, or 51% of the $1,350.5 million target, marking a noticeable improvement over 2024.

Financial management ratings remain satisfactory, with 91% of active projects rated "on track," one project (2%) rated "at risk," and three projects (6%) requiring attention. 

Timely submission of audited project financial statements (APFS) and audited entity financial statements (AEFS) remains strong, though the report notes ongoing concerns about outstanding audit observations and non-compliance with financial covenants.

Gains and challenges

Procurement efficiency has improved across ADB-funded projects. Average end-to-end (E2E) procurement for low-value contracts ($1–10 million) dropped to 165 days by August 2025, down from 218 days in 2020.

In total, 77 procurement packages worth $515.93 million are ongoing in 2025, with ADB financing $306.30 million. 

The energy sector leads with 24 packages worth $229.41 million, followed by transport with 24 packages valued at $79 million, and water and urban development with 38 packages totalling $189.57 million.

High-value contracts (over $10 million) still face delays, averaging 426 days to complete. The transport sector recorded the longest E2E procurement time at 603 days, whilethe  energy and WUD sectors averaged 438 and 442 days, respectively. AFNR projects were comparatively faster, averaging 412 days.

Alongside physical projects, 13 consultancy service packages valued at $76.93 million are ongoing, with ADB financing $58.27 million. Of these, six contracts have been awarded, totalling $12.21 million. 

Systemic weaknesses identified

Despite progress, the ADB report points to persistent systemic weaknesses in Bangladesh's procurement process. 

Key issues include insufficient project preparation, weak design quality, and inadequately prepared bid documents, leading to repeated clarifications and delays.

Prolonged government approval timelines and limited due diligence during bid evaluations further hinder timely procurement. 

The Bank said these challenges affect major infrastructure and development projects, contributing to slow fund disbursement.

Recommendations for improvement

To address these issues, ADB has proposed a comprehensive action plan covering seven areas: procurement readiness, monitoring support, capacity development, service standards, implementation, post-review mechanisms, and e-procurement expansion.

Recommendations include strategic procurement planning, rigorous risk assessments, engagement of qualified consultants, and use of advance procurement and retroactive financing where feasible. 

The bank also emphasised targeted training for executing and implementing agencies, focusing on contracts valued at $1 million or more.

Capacity-building measures include post-audit workshops to share lessons learned, while service-level standards aim to set clear benchmarks for procurement timelines. 

The quality of Bid Evaluation Reports (BERs) also needs improvement to reduce delays caused by repeated clarifications.

ADB urges the government to expand the electronic Government Procurement (e-GP) system, adopt single-stage single-envelope bidding, and leverage digital tools for service procurement. 

While many measures are immediate, digitalisation initiatives are planned for the medium term. 

ADB officials believe full implementation will significantly reduce delays, improve project readiness, and accelerate fund disbursement.