Ensuring Value for Money in Infrastructure Projects - The Botswana way
Shawkat M.Q. Hasan, Sr. Procurement Specialist, The World Bank
Botswana is a country renown not only for its stunning 8.7% average economic growth rate achieved between its independence in 1966 and 2008, but also for its remarkable record for good governance and prudent macro-economic and natural resource management. Minerals, and particularly diamond exports, have fueled this astronomical growth and the government has sought to redistribute wealth equitably to the citizenry through investments into health, education and infrastructure development.
Botswana is especially big on infrastructure development. Over the last 10 years, the Government of Botswana (GoB) has consistently invested between 24%-31% of its total budget into infrastructure through its aptly named "Development Budget". This investment translates into some US$1.3 billion dollars in 2008, growing to just over US$2 billion dollars in 2018. Annually, not more than 12% of these amounts are from development partners or foreign sources- the government has put its Pula where its heart is: in infrastructure. Having long ago realized the need to diversify the economy away from traditional mineral exports, infrastructure development has been identified as a key enabler of the government's economic diversification drive. For example, in 1966, Botswana only had 12 kilometers of paved roads. Currently, it has over 6,000 kilometers of paved road and 12,000 kilometers of unpaved roads.
Such rapid gains inevitably come with some pain. Over the years, the GoB has built these major infrastructural projects by awarding public contracts to both local and multinational construction companies. Of late, many of these projects have faced project delivery problems. The problems include but are not limited to projects running over-budget, delays in construction, large time-overruns, and problems with quality and completion of the finished works.
Botswana's Public Procurement and Asset Disposal Board and the World Bank's Solutions and Innovations in Procurement (SIP) AFCS1 team collaborated to conduct a value for money audit of selected infrastructure. This included nine capital projects built from 2008 comprising of two schools, an airside works project, an airport terminal building, three roads projects, and two dam projects. Each project ranges in contract amount from US$50 million dollars to US$100 million dollars.
The audit segments the infrastructure delivery mechanism into the three phases of Pre-Procurement (Project Inception to Ready to Bid); Procurement (Bidding to Contract completion) and; Post Procurement (Operation) and identifies key issues under each phase as follows:
- Pre-Procurement Phase: Inadequate budgeting and scoping due to not carrying out three step process of prefeasibility-feasibility-detailed design; Compressed project schedules that in practice were unrealistic; No review of project strategies during implementation; Lack of management continuity during project implementation; Low Project Management and Project Officer skills; Absence of technical support for project staff; Inadequate design requirements leading to premature defects; Consultant Terms of Reference that lacked detail; Due to low inhouse skills, design reviews being of limited value.
- Procurement Phase: Unbundling of contracts (packaging into smaller lots) creating synchronization problems; Unclear criteria for bidder qualification; Bid evaluation reports lacking analysis and detail; projects commencing before they are truly ready; lack of enforcement of FIDIC provisions-poor communication/unauthorised staff changes/late payments; Excessive and inadequately managed variations.
- Post Procurement Phase: Unprepared users; No Post-Occupancy Evaluation being done; Inadequate Operating budgets; Inadequate Management and staffing of operating infrastructure.
The Review suggests several recommendations based on the findings as follows:
- Pre-Procurement Phase recommendations include: Moving key activities upstream to facilitate better planning; Instituting Independent reviews to assist evaluate strategies; Introducing Internal churn control; Establishing a Panel of Experts to provide support to Project Officers; Developing design standards and standard designs; Expanding the Scopes of Work and TORs for Consultants; Centralising and systematising project records.
- Post Procurement Phase recommendations include: Providing dedicated space for facilities management; where a dedicated facilities manager and staffing is not budgeted for, contract external Facilities Managers.
The review reveals that to obtain value for money, the Government of Botswana will have to take corrective actions across all the three phases of Pre-Procurement, Procurement and Post Procurement. Realising Value for money is dependent on the sum of all actions taken across the infrastructure delivery chain.