The megaprojects conundrum

  • Improving performance requires serious introspection and understanding of the reasons for the delay at the highest political level.
- Naresh Koirala

Mar 19, 2019-

Nepal’s record of delivering large infrastructure projects on time is dismal. Here are a few examples. There are many others.

The Melamchi Water Supply Tunnel Project (MWSTP) has become an ongoing saga of procrastination and failure. The government periodically announces the project’s completion date, only to postpone it with monotonous regularity.  In December 2018, Cooperativa Muratori Cementtisi di Ravenna (CMC), the contractor retained to build the project, walked out, leaving the project in a state of uncertainty. CMC was appointed after the China Railway 15 Bureau Group Corporation Contract was terminated in 2012 on grounds of non-performance. The MWSTP is still incomplete, 18 years after it started. It should have been a six-year project, at least that was what the initial expert advice  had indicated.

Similarly, in December 2012, the  Civil Aviation Authority of Nepal (CANN) contracted Constructora San Jose of Spain (CSJ) to carry out improvements at Tribhuvan International Airport over a period of three years. At the end of this period, it had completed less than one-fifth of the agreed upon work. In  December 2016, CAAN terminated CSJ’s contract and the project is in limbo.

In May 2017, the government scrapped the MOU with China Gezhoaba Group Corporation (CGCC) to construct the Budhi Gandhaki

project and announced the project would be constructed using Nepali resources. In September 2018, it changed its mind and decided to reappoint  CGCC as the contractor. The project is yet to start.

Recently the government finally announced the completion of an eight-km section of the Ring Road widening project. And while the project is one of the few undertakings the governemtn has completed, it’s lack of bicycle lanes and adequate pedestrian crossings across the road has turned the widened section into a death trap. According to Metropolitan Traffic Range Lalitpur’s records, 213 accidents, with eight deaths, took place in the widened section in the first half of 2018.  

The development of large infrastructure projects animate Prime Minister KP Oli’s economic agenda. But these developments will remain a fantasy until the planned projects are delivered on time and within budget to accepted safety and engineering standards.  

Systemic problem

A common pattern is readily identifiable. There is a protracted process of awarding the contract; followed immediately by contractor claims for extension of time and increase in cost; subsequent non-performance by the contractor;  followed by contractual disputes leading to arbitration or litigation which ends with the termination of the contract. A new contractor is then appointed and the cycle repeats itself. This suggests--all too clearly---that the means by which major construction projects are enacted are plagued by inherent systemic problems.  

Prominent Nepali engineers, practising in Nepal and from the diaspora, gathered in Kathmandu in October 2018 under the auspices of NRNA’s Global Knowledge Convention to Convention  to discuss project delivery issues. They cited a number of current project process practices that impede the delivery.  They include: lack of  “visionary planning”; lack of “credible data” on which to base a project; lack of “due diligence” during the project process; lack of a “culture of ownership” of the project; lack of “political commitment”; “excessive political representation ”; decision “flip-flops”; “inappropriate and rigid legal provisions”; “outdated procurement practices”; deficient institutional knowledge“of the complexity of projects and pervasive “rent-seeking” (bureaucratic and political corruption).

The impediments created by “excessive political representation” resulting in irrational, skewed and politically driven decision making, the lack of due diligence and associated lack of project ownership attracted much of the participants’ attention.

The decision to assign the Nepal Army to design and build the Kathmandu-Nijgadh Highway is a case in point. The Kathmandu-Nijgadh Highway  is a complex project, with an estimated cost of over US$ 1 billion. The project demands high-level skill and experience in the earth sciences; hydrology;  design and construction of a high-speed highway through difficult terrain, tall ridges and tunnels; associated lighting and serious environmental and ecological management and conservation. The Nepal Army does not possess neither the knowledge or experience and yet, in 2017, a group of politicians, who have little comprehension of the complexity of the project, assigned them to design and construct the project. This is a frightening scenario for anyone who has managed such complex projects.

Elsewhere in the world, even in countries that have built such projects successfully, the process of selection of consultants and contractor for a project of Kathmandu-Nijgadh Highway’s size and complexity would have taken at least 18-24 months.

The proponents would have been vetted for their experience and performance records in similar projects by a multidisciplinary team of experts. The construction would be subject to regular technical and financial auditing by an independent oversight authority.  

Nepal Army does not have to deal with independent oversight authority, because there is none. This may be good for the Nepal Army , but the same cannot be said for the owner of the project, or to the Nepali people. The dead and the injured in the widened section of the Ring Road speak to the hazards of engineering projects with weak oversight or without any oversight and to a culture where the sense of ownership of the project is missing. Without independent audit controls, it is difficult to be assured of the cost-effectiveness, quality and public safety standard of the Kathmandu-Nijgadh Highway when it is complete.

The way forward

The improvement in project performance requires serious introspection and understanding of the reasons for the delay at the highest political level and a political commitment to do the right thing for the people. A holistic review of the project process, from project conceptualisation to project design, to procurement of consultants and contractors and contract management is required.

The most expeditious way to start the review is to appoint a High-Level Committee consisting of professionals in various relevant disciplines to identify constraining factors (legal, financial, equipment, research, data acquisition, and others) in the current project process and recommend corrective actions to make it efficient.

The recommendations by such a committee should, amongst others,  be geared towards (i) replacing existing antiquated, rigid, procurement and contract management laws with new project delivery friendly laws, (ii) inculcating a culture of fact-based, rational decision making by people with relevant knowledge and experience, (iii) requiring the project personnel to take ownership of the project, (iv) requiring due diligence in every step of project process (v) empowering project/contract administrators to do their work without political interference; (vi) promoting partnership amongst various players in the project process including between the owners, engineers and contractors; (vii)  setting up occupational safety standards and its monitoring authority  (viii) enhancing institutional and contractor’s capacity building and (ix) forcing politicians including members of parliament to recuse themselves from involvement in decision making processes which directly or indirectly impact their personal, commercial and financial interests.

It is worthwhile remembering that the purpose of all business, including engineering consulting and contracting, is to make money. In a society where there is no accountability and where public institutions are weak, corrupt and in the grip of vested interests; contractors—domestic as well as international—do not feel obligated to be accountable. This can lead to a tendency to take advantage of the situation to maximise earnings.  A corrupt government tempts corruption from all involved. If the government legislates to require accountability and bar conflict of interest in the project process it will go a long way towards improving project delivery.  

Prime Minister Oli inaugurated the Global Knowledge Convention  conference. It is time to act on the real thing and demonstrate that he is serious in the mission of rapid economic development.  Solutions to improve project delivery are available. But they require informed, inspired, and strong leadership from the highest level of the government to implement.  

 

Koirala is a geotechnical consultant in Vancouver, Canada,  and a former consultant to the National Planning Commission.

Published: 19-03-2019 10:54

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