Lack of proper feasibility study leads to multiplied cost of projects

Highlights

• Tk3,464.65 crore additional cost for revising seven projects as work has not been completed on time
• Work on all these projects has started at a cost of Tk4,718.34 crore
• The revised expenditure has been fixed at Tk8,182.99 crore
• The expenditure has increased by 73.43 percent due to delays
• A project to build six rice and two wheat silos began in 2014 at a cost of Tk1,919.96 crore
• The project has been revised for a second time extending the deadline till 2023 and increasing the cost by Tk1,648.98 crore

Lack of proper feasibility study in many projects results in undue delay in their implementation and consequent higher cost. 

Although there is a lot of enthusiasm from the people concerned during the formulation of the projects, it diminishes at the implementation stage.

As a result, work of many projects has been pending for years. As the government is forced to complete the work of all these projects, it is increasing the duration and costs.

The issue came up for discussion at an inter-ministerial meeting chaired by Planning Minister MA Mannan in the middle of last month to review the progress of implementation of the revised Annual Development Programme (ADP) for the last financial year and ensure quality implementation of this year's ADP.

The planning minister strictly instructed the secretaries present at the meeting not to amend any project more than once.

He gave various instructions, including ensuring proper feasibility to make sure the quality of projects, the requirement for project managers to stay in project areas, and not assigning responsibility for more than one project to one director.

Revision of seven projects has been approved in three meetings of the Executive Committee of the National Economic Council (Ecnec) held half a month after the high-level meeting was held in the presence of secretaries of almost all ministries and departments.

A total of Tk3,464.65 crore has been added to these projects as the work has not been completed on time.

Although work of all these projects has started at a cost of Tk4,718.34 crore, the revised expenditure has been fixed at Tk 8,182.99 crore. As a result, the expenditure is increasing by 73.43 percent due to delays.

Work of the project to build six rice and two wheat silos in different districts of the country began in early 2014 with the aim of increasing the food storage capacity at the government level by 5.36 lakh tonnes.

Although the deadline of the Tk1,919.96 crore project ended in June, so far only Tk956.27 crore has been spent, which is less than half of the project cost.

The project has been revised once again, extending it till October 2023 to complete the work.

In addition to the 40-month extension, the cost of the project has also increased by Tk1,648.98 crore.

On Tuesday, the Ecnec approved the second revision of the project titled Construction of Modern Food Storage at a total cost of Tk3,568.94 crore.

The Planning Commission is blaming the incomplete feasibility study report as the reason behind the revision and increase in cost of the project.

A total of six projects costing Tk10,712.68 crore were approved at the Ecnec virtual meeting chaired by Prime Minister Sheikh Hasina.

After the meeting, the planning minister said Tk4,238.18 crore would be spent from the government's own funds and Tk4 crore from the implementing agency's funds for the implementation of the approved projects.

The remaining Tk6,470.50 crore will be collected from foreign sources as project assistance.

Of the six projects approved at the meeting, four are old, and the cost of each of these projects has increased.

According to the review, the Ecnec has approved amendments to the project titled Countrywide Pond and Canal Development at a cost of Tk1,757.47 crore.

Initially, the cost of the project was estimated at Tk1,334.95 crore. The cost of the project is increasing by Tk422.52 crore or 31.65 percent.

Revision of the Dhaka-Narayanganj-Demra (DND) Drainage System Development project has been approved by increasing the expenditure by 132.88 percent.

The cost of the project, which was taken up in 2016 at a cost of Tk558.20 crore, has risen to Tk1,299.91 crore.

As the work was not completed by the stipulated time frame of June, the project cost is going up by Tk741.71 crore.

At the time of commencement of the project titled Fisheries Technology Services Expansion at the union level, which was revised in the second phase by estimating the cost at Tk378.38 crore, the expenditure was estimated at Tk242.28 crore.

The deadline of the project, which started in 2015, also expired last June. Expenditure increased by Tk136.10 crore or 56.17 percent of the original allocation due to non-completion on time.

Asked about the reasons for the increase in the duration and cost of the projects, the planning minister said in a press briefing after the Ecnec meeting, "In many cases, projects are undertaken without full feasibility studies. Some more work is added to these projects at the implementation stage. This also increases the time and cost."

He said, "Government officials are responsible for some of the reasons for the increase in the cost of the projects, which can be avoided. However, due to the donor agencies' own rules and regulations, it often takes extra time to implement projects."

"Reasons for rise in costs include delays in implementation at various stages and receiving the World Bank's non-objection to procurement work, and complexities in compliance with conditions, while non-objection receipts and delays in additional funding have increased the cost of silo construction projects," the planning minister added.

When asked, Shohelur Rahman Khan, deputy chief of the food ministry, told The Business Standard the cost of construction of eight silos has increased by 89.84 percent from the original estimate.

"During the implementation of the project, the rate schedule of public works has changed twice. At that time, the cumulative inflation has been 40 percent."

What experts say

Dr Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue, told The Business Standard that no project is being completed on time as more projects have been approved than the capacity.

"As a result, it takes extra time to reap the benefits of one project. You have to spend more money to finish the work again."

Identifying it as an old problem of the country's economy, he emphasised establishing discipline in the implementation of projects.

Sylhet-Tamabil highway approved

The Ecnec has approved construction of the Sylhet-Tamabil four-lane highway project at an estimated cost of Tk3,586 crore.

The highway is 56 kilometres long and construction cost of per kilometre is Tk64 crore, with experts terming the amount very high.

Elevated road to be built in haor

After the Ecnec meeting, the planning minister said an initiative was being taken to build an elevated road titled Sheikh Hasina Elevated Rod connecting Sunamganj with Netrokona.

He said the proposal had come to the Planning Commission.

"It will be a milestone in the history of the country. Because if the project is implemented, contribution of the haor region to GDP will increase a lot."