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Towering number of projects, but implementation weak, says Finance Ministry’s monitoring unit
The Government has 385 mega projects valued at over Rs 4,627bn in various stages of execution with the Asian Development Bank (ADB) backing the largest number of foreign-funded initiatives but China heading the list for highest value.
Despite the towering number of projects, implementation remains habitually weak, the Finance Ministry’s Project Management and Monitoring Department (PMMD) says in its 2019 mid-year review of large and mega-scale development projects released recently.
The 31 ADB-financed projects have a technical evaluation committee (TEC) value of around Rs 800bn. In contrast, China is providing Rs 895bn worth of funding for 24 initiatives. Interestingly, a lion’s share of all these projects is handled by just 11 ministries. They account for 304 of the 385 initiatives, valued at a total of over Rs 574bn.
But fund utilisation, when measured against targets (as at June 30, 2019), is only 69 percent, the PMMD states. And when compared with the target of 51 per cent set for the second quarter of this year, it drops even further to an abysmal 39 percent.
Forty percent or 153 projects are being implemented “without issues”, the PMMD states, while 139 of them are “slightly behind the schedule due to minor issues” but still showing satisfactory progress. Thirty-two projects, however, are behind schedule and 56 are still in the preliminary stage. One has been halted.
Many of these initiatives face implementation issues including inadequate allocation and imprest (advances), scope change, TEC revision, procurement delays and delays in land acquisitions and payment of compensation. The poor performance of contractors has also caused lags in project completion, PMMD observes.
There was no preparedness in selection of key project staff or drawing up of detailed designs and site selection. Awareness creation and coordination among key partners and service providers was essential before signing long agreement or any contract.
There is a lack of project management capacity. Employees, particularly project directors, whose performance was poor were often retained and even selected for future programmes without assessment. A programme for building competencies among project directors is recommended by the PMMD, backed by performance-based incentives and punishments.
Procurement delays were caused by the absence of procurement committee members and erroneous documentation. Land acquisition and, specifically, valuation and compensation, was slow. Donor concurrence took time while delays were sometimes caused by utilities shifting and necessitating reconnection.
Most line ministers did not coordinate with their projects. “Adequate and regular monitoring by the line ministries and timely facilitation for smooth implementation of projects under their purview is essential,” the PMMD urges. Planning and monitoring units needed strengthening with competent staff, at least in key line ministers.
Recruitment and retention of engineers and technical staff was difficult as there was high demand for them in the private sector. There was also a heavy shortage of skilled and unskilled labour. The PMMD recommends suitable policies to address the issue in the short and medium term.
Some major construction projects were reportedly lagging because of material shortages such as sand, gravel and soil for filling as well as restrictions on explosives use. There must be proper and early planning of the supply chain in coordination with selected contractors, the PMMD says, also suggesting that alternative sources of material be found.
There was poor cooperation among institutions responsible for services, clearance and approvals during project implementation. There must be “proper communication, coordination and cooperation”.
Foreign financing provided to projects were not fully utilised. This placed an additional burden on the consolidated fund in terms of interest payments. This was the fault of project monitoring units and required cash flow management, amongst other things.
The Highways, Road Development and Petroleum Ministry (as it was called during the period of assessment) leads in terms of value with Rs 157bn spread across 44 programmes. The City Planning, Water Supply and Higher Education Ministry follows with 67 projects worth Rs 89bn. And the Megapolis and Western Development Ministry has 31 projects with a TEC value of over Rs 64bn.
The others in order of value are Power and Energy; Agriculture, Rural Economic Affairs, Livestock Development, Irrigation and Fisheries and Aquatic Resources Development; Education; Transport and Civil Aviation; Internal and Home Affairs, Provincial Councils and Local Government; Mahaweli Development and Environment; Health, Nutrition and Indigenous Medicine; and Defence.