Issues in the Management of Public Sector Projects in Pakistan

Atiq ur Rehmanatiq787@gmail.com

What intended beneficiaries needed?

What intended beneficiaries asked for?

What planners promised …in PC1

What intended beneficiaries felt…

What was delivered…

What was received by intended beneficiaries…

Aid, Governance, andDevelopment Outcomes

2007 Transactions Size Illicit Income

Rs. Billion % Rs. Bn

Bank Loans 870 10% 87

Tax Evasion 835 50% 417.5

PSDP 520 25% 130

Import of petroleum and its distribution in the domestic market 67 5% 3.35

Government current expenditure (other than debt servicing, salaries, utilities, subsidies) 94 10% 9.4

Public Utilities and Public Sector Corporations less gas companies 175 15% 26.25

Law Enforcement Agencies and Judiciary

2561 673.5

CPI and RANK

    2005 2006 2007

Pakistan CPI 2.1 2.2 2.4

  Rank 144 142 138

India CPI 2.9 3.3 3.5

  Rank 88 70 72

China CPI 3.2 3.3 3.5

  Rank 78 70 72

Fate of World Bank Projects in Pakistan 1996-01

CountryProjects

(No)Satisfactory

(%)Sustainabili

ty (%) Impact (%)

Bangladesh 23 78 57 35

India 63 73 66 51

Nepal 14 77 54 31

Pakistan 42 69 48 31

Sri Lanka 19 68 53 26

World Corruption Map

ADB Projects in 38 Countries

• Audit Reports main finding: 70% of ADB Projects are unlikely to provide long-term social and economic benefits

• Unsustainable and/or failed projects are potentially the equivalent of US$ 4.6 bn of Pakistan’s US$ 6.5 bn in ADB debt.

• All four projects evaluated in 2001 were found unsustainable

Major Problems with ADB Projects1968-2002

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     “The key is not to prioritize what's on your

schedule, but to schedule your priorities.”

 Stephen R. Covey quotes

Planning Machinery in Pakistan

Issues along Project Cycle

Generic Project Cycle

Identification

Implementation

Ex-post Evaluation

Preparation

Appraisal & approval Financing

PC-III

PC-IV

PC

-I/P

C-I

I

Mo

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ori

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& E

valu

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nPC-V

“Well begun is half done”

Mary Poppins

Project Preparation

• Feasibility studies are rarely undertaken• Lack of information practices• Lack of capacity in project planning• Lack of multidisciplinary approach• Incomplete and imprecise planning: 4Qs

• Lack of cohesion between cost and physical targets

• Lack of involvement of stakeholders in planning• Organizational designs are not appropriately

made - conflicts. • Modalities of implementation not defined• Tools are not used

Common Issues

Knowledge Management

• Completed projects offer a wealth of information on the possible impacts of and obstacles to development projects,

• Why the lessons are not learned?

Stage Specific Issues

Stage - I

Project Identification

Issues in Identification

• How projects are identified?• Basis of identification? …individualism

– Expertise basis– Will of power

• No scientific way of identification -– “knowledge-base”

• Stakeholders involvement • Duplication of activities?

Stage - II Project Planning

All projects suffer from poor preparation

(PMI)

Major Problems with ADB Projects1968-2002

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Project Cases

Bolan Medical College

• Cost of the Bolan Medical College & Hospital Complex in Quetta was originally estimated at Rs70 million but ended up at Rs750 million.

Container terminal at Port Qasim

• Cost of a container terminal at Port Qasim was estimated at Rs320 million when the project was first proposed in the early 1980s but ended up at Rs2,400 million by the time it was built in the mid-1990s.

Rice Polishing Plant

• It took more than 17 years for a rice-polishing plant in Sindh to be set up.

• When the Auditor-General of Pakistan’s office asked the project agency in question why it had taken so long, the agency said – “the operating instructions for the machinery

imported from Czechoslovakia were in the Czech language and the agency couldn’t find anybody to translate them”

Chashma Right Bank Irrigation Project (CRBIP)

• Chashma: Original cost = Rs. 1.570 billion

• By 1999: Cost escalated to Rs. 17 billion but just 15% work completed

Jagran Hydropower project

• 66.5 MW project

• 1991 Original cost = Rs. 2.616 billion

• 1994: Revised Cost = Rs. 2.603 billion

• Actual Cost =Rs. 4.401 billion

• Delay = 3 years

Establishment of Airport at Sialkot

• Project for the establishment of Airport at Sialkot was completed in just Rs. 2.7 billion.

• Private sector ensured good quality of runways and other infrastructure at lower cost as compared to other airports completed by CAA.

• It is worth comparing with proposed airport at Islamabad, wherein case estimated cost is around Rs. 24 billion.

Issues

Project Preparation

• Feasibility studies are rarely undertaken• Lack of information practices• Lack of capacity in project planning• Lack of multidisciplinary approach• Incomplete and imprecise planning: 4Qs

• Lack of cohesion between cost and physical targets

• Lack of involvement of stakeholders in planning• Organizational designs are not appropriately

made - conflicts. • Modalities of implementation not defined• Tools are not used

Conceptual Map of Project Planning

FRAMEWORK FOR PROJECT DEFINITION

Stage 1: Processes

Stage 2: Effects

Stage 3:Impact

Aim

Imp

act

Imp

act

Imm

edia

te

Imm

edia

te

Res

ult

sR

esu

lts

Activities

Eff

ects

/E

ffec

ts /

Inte

rmed

iate

Inte

rmed

iate

Res

ult

sR

esu

lts ObjectivesObjectives

Output

Pro

jec

t D

efi

nit

ion

Fra

me

wo

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De

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Philosophy: Prevention is

Better than the Cure!

Stage - III

Project Appraisal & Approval

Approving bodies

• Technical

• Financial

• Economic

• Organizational

• Environmental

• Social & Political

• Others

Techniques

• Non-Discounting Techniques– Breakeven Analysis– Detailed Profit and Loss Statement Analysis– Payback Period– Unit Cost Analysis– Simple BCR– Bruno Ratio (undiscounted): Cost of resources/forex

saved

• Discounting Techniques– Benefit Cost Ratio (discounted)– IRR– IERR– Bruno Ratio (discounted)

Stage - IV

Project Financing

• What is criteria for selection of projects for financing?

• What is criteria of allocation resources among projects?

Stage - V

Project Implementation

Nothing is impossible for the person who doesn't have to do it.

Bigger Picture

• Lack of institutional capacity

• Incompatibility with needs

• Politicization of processes

• Bureaucratization of processes

• Lack of Accountability• Others

Specific Issues

• Time Management

• Cost Management

• Scope Management

• Quality Management

• .

• Communication Mgt

Balancing Projects

• Projects are dynamic• So we need

– to manage scope throughout– to keep time in balance– to keep dollars in balance– to keep resources in balance

How can we, at a time…•turn the project to be competitive on cost, time and scope,

•keep happy all stakeholders – the people inside the org, the people outside the org, the high-ups, the audit teams, the politicians, the media and…last but not

least the Audit,

Cost and Resource Curve

Time Management

• Lack of proper planning• Activities are not properly identified• Activities are not properly scheduled• Bureaucratic procedures• Authoritative culture vs work culture

• Procurement and contract management• Staffing• Lack of ownership• Lack of coordination – intra/inter departmental• Frequent changes in policies and procedures• Poor knowledge management practices

• Monitoring

• Lack of skills:– Leadership– Communication– Negotiation– Conflict Management

Cost Management

• Cost items not properly – Identified– Quantified– Valued

• Delays in activities– Delays in approval– Delays in releases– Delays in start

• Monitoring

Scope Management

• Requirements / specifications of output not clearly and well thought-out

• Lack of futuristic approach

• Culture of confidentiality

• Monitoring

Quality Management

• Stakeholders Analysis not carried out• Power dynamics not given consideration• Cost and time planning not appropriately

done• Stakeholders not consulted• Monitoring

Key to Success???

I’m glad the hole is not in my end!

Contract Types Versus Risk

Stage - VI

Project Evaluation

Dimensions of M&E– Dimensions of Monitoring and Evaluation

• Delivery• Usage• Impact

Types of M&E

– Types of Monitoring• Process Monitoring• Effects Monitoring

– Types of Evaluation• Ex-ante Evaluation• Mid Term Evaluation• Terminal Evaluation• Impact Evaluation

Evaluation

• No culture of evaluation

• PC-V never filled and submitted

• No proper use of available evaluation studies

Stage - VII

Operations & Maintenance

LESSONS LEARNT FROM SAP

1) Programme should not be over designed. The design

should be simpler and more modest in their scope,

involving a fewer components and executing agencies.

2) Procurement capacities of the line departments

should be strengthened. There is an urgent need of

harmony in the procurement procedures of the

Government and the use of common bidding

documents of the Donors.

3) National Project Directors should be notified in the

beginning of the programme with full financial and

administrative power for its proper implementation

4)Operating manuals, both physical as well as financial need to be developed before launching a programme and workshops, for imparting training to all functionaries, top level, middle as well as lower tiers should to be organized, at frequent intervals.

5) Institutional reforms cannot be achieved by applying conditionalities only. It requires addressing the key issues relating to governance.

• 6) Political factors should be well defined along with the assessment and the judgment of risks at the time of programme formulation.

• 7) An upfront financing approach should be adopted, keeping in view the resource constraint of GoP at Federal as well as Provincial level.

• 8) Loan agreements should be flexible to match with ground realities.

Resources

• www.pc.gov.pk

THANK YOU!!!