cost - supporting infrastructure development and good governance

8/10/2019 CoST - Supporting Infrastructure Development and Good Governance

1/16

The Construction Sector TransparencyInitiative

Petter Matthews

Director, CoST International Secretariat


2/16

Structure

International context

Overview of CoST programme

Institutional arrangements

Disclosure

Assurance Process

Multi-Stakeholder Group

Impact examples

Future trends


3/16

International Context

Growing global trend towards greater transparency and

accountability. Launch of a range of international initiatives aimed at improving

the quality of governance and obtaining better value from publicinvestment.

Renewed emphasis on investing in infrastructure to promoteeconomic growth and achieve international development goals.

Value of the global construction set to increase to $15 trillionannually by 2025 or 13.5 per cent of global GDP (GlobalConstruction 2025).

Mismanagement, inefficiency and corruption accounts for 10 to30 per cent of a construction project's value (OECD, TI).

Up to $5 trillion of investment could be lost each year by 2025unless something is done.

CoST is a response to this challenge.


4/16

Overview

CoST works with governments, industry and civil society todisclose information on public investment in infrastructure.

Promotes disclosure of project information with the aim of reducingmismanagement, inefficiency and corruption and improving

value for money.

CoST pilot project 20082011, full international programme

launched in 2012.

Registered in the UK as a not-for-profit organisation. It has a Boardof Directors and an International Secretariat.

Programmes in Afghanistan, El Salvador, Ethiopia, Guatemala,

Malawi, Philippines, United Kingdom, Vietnam, Tanzania, Uganda,Ukraine and Zambia.

National programmes steered by Multi-Stakeholder Groupscomprising representatives from government, industry and civilsociety.


5/16

Overview: Results chain


6/16

Institutional arrangements

A Multi-Stakeholder group (MSG), with representativesfrom government, industry and civil society, oversees theprogramme.

A National Secretariat is responsible to run theprogramme on a day-to-day basis.

The National Secretariat is located within a HostOrganisationthat can employ staff and enter intocontracts.

A good relationship between the MSG and the Host

Organisation is critical to the success of the programme. The CoST programme could eventually be established as

an independent legal entity.


7/16

Disclosure

Government procuring entities (PEs) are responsible fordisclosing information.

If there is no formal/legal requirement to discloseinformation, an Interim Disclosure Requirement (IDC) isestablished.

Eventually the Government should establish a FormalDisclosure Requirement (FDR).

Information is disclosed proactively(i.e. on a routinebasis) and reactively(i.e. on request).

PEs respond to questions from stakeholders.


8/16

Project phase Project information Contract phase Contract information

ProjectIdentification

Project owner

Sector, subsector

Project nameProject Location

Purpose

Project description

Procurement Procuring entity

Procuring entity contact details

Procurement processContract type

Contract status (current)

Number of firms tendering

Cost estimate

Contract administration entity

Contract titleContract firm(s)

Contract price

Contract scope of work

Contract start date and duration

ProjectPreparation

Project Scope (main output)

Environmental impact

Land and settlement impact

Funding sources

Project Budget

Project budget approval date

ProjectCompletion

Project status (current)

Completion cost (projected)

Completion date (projected)

Scope at completion (projected)

Reasons for project changes

Reference to audit and evaluationreports

Implementation Variation to contract price

Escalation of contract price

Variation to contract duration

Variation to contract scope

Reasons for price changes

Reasons for scope and durationchanges

Information for proactive disclosure


9/16

Project information Contract information

Identification and Preparation

Multi-year program & Budget

Project brief or Feasibility study

Environmental and social impact assessment

Resettlement and compensation plan

Project officials and roles

Financial agreement

Procurement plan

Project approval decision

Procurement

Contract officials and roles

Procurement method

Tender documents

Tender evaluation results

Project design report

Contract

Contract agreement and conditions

Registration and ownership of firms

Specifications and drawings

CompletionImplementation progress reports

Budget amendment decision

Project completion report

Project evaluation report

Technical audit reportsFinancial audit reports

ImplementationList of variations, changes, amendments

List of escalation approvals

Quality assurance reports

Disbursement records or payment certificates

Contract amendments

Information for reactive disclosure


10/16

Assurance Process

An Assurance Team reviews and reports on the

information disclosed to ensure compliance with thedisclosure requirement and highlight issues ofconcern.

The Assurance Team is approved by the MSG and

usually appointed by the Host Organisation. The Assurance Team is likely to be experienced

consultants or in some cases, a government agency.

It is appropriate to use a government agency whenthere is a high level of pubic trust in the agency.


11/16

Multi-Stakeholder Group

Brings together representatives from government,

industry and civil society. Usually operates on a voluntary basis to provide

oversight of the national programme.

It also has a crucial role in providing legitimacy to theCoST programme.

Some countries have opted to establish anindependent entity (usually an NGO) to coordinate

functions of the MSG and National Secretariat.

Multi-Stakeholder working has definite advantages,but it can also be time-consuming and difficult.


12/16

Impact: Cost savings in Ethiopia

Gindeber to Gobensa Road

Project, 33 km rural road, centralEthiopia

Assurance report identified anunimaginable volume of

excavation at design stage

MSG voiced concerns aboutinvestment be siphoned off

Ethiopian Roads Agencycommissioned alternative design

Original designer debarred for twoyears

Latest estimate is $3.7m costsaving on original price. CoST Ethiopia Team, Addis


13/16

Impact: Highlighting irregularities in Guatemala

Rehabilitation of Belize

Bridge, Guatemala City

Assurance processidentified irregularities inprocurement process

Special measuresintended for use duringhumanitarian disasters hadbeen used

MSG concerned that

process was non-competitive

General Directorate forRoads annulled andretendered the project.

Belize Bridge, Guatemala City


14/16

Impact: Building capacity in Malawi

Ali Hassan Mwinyi Road, Chichiri

CoST Malawi Baseline Study

identified average costoverruns of 97%

Government undertook areview of infrastructure

procurement Found that many problems

stemmed from poor projectplanning capacity

Separated BuildingsDepartment from Ministry ofPublic Infrastructure and gavepower to outsource criticalfunctions.


15/16

Future trends

Growing demand for corporate disclosure

Promotion of transparency in PPPs

Possibility of a construction transparency index

Mechanisms to avoid initiative overload


16/16

[email protected]

www.constructiontransparency.org

cost - supporting infrastructure development and good governance

Documents