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October 11, 2015 Program Management in Developing Countries: Delivering Large Water Projects in Lesotho Steve Lowry, P.E. Senior Program Manager Denver, CO

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Page 1: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70

October 11, 2015

Program Management in Developing Countries:

Delivering Large Water Projects in Lesotho

Steve Lowry, P.E.Senior Program Manager

Denver, CO

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Topics

Learning Objectives

Metolong Dam & Water Supply Program

Lesotho Highlands Water Supply – Phase II

Learning Objectives – Revisited

(Questions during presentation are OK)

2

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Learning Objectives

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Learning Objectives

1. Understand funding agency perspectives in international development programs

2. Understand management and logistical challenges facing the program team

3. Describe competing stakeholder needs and demands

4. How international approaches are applicable in the U.S.

4

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Governance of International Development Programs

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The International Development Market

Developing countries face a $2.5 trillion annual investment gap – UNCTAD; and by 2030 the OECD estimates that $70 trillion in additional infrastructure will be needed.

Governments faced with massive infrastructure programs completely overwhelm staff and systems

Large government projects suffer from schedule delays, funding shortfalls, lack of transparency and quality issues

6

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International Development Programs

Purpose and structure of programs varies widely, but “typically” there are:

Significantly larger budgets than the average project size

High political visibility

Multiple remote funding organizations

Multiple local entities with some governance role

Many other stakeholders

Many benefits to achieve – parties do not necessarily value all benefits equally

7

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Donor Governance Issues

Money goes where they earmark -

“I’ll pay for this, but not for that”

Compliance with conditions of aid

Social & environmental safeguards,

workforce capacity building

Transparency

Anti-corruption measures, audits

8

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Governance Challenges

Cultural differences among stakeholders

Multiple currencies and complicated tax structures

Lack of support infrastructure, including communication

Project and construction management maturity

Program Management approach, processes, and tools need to satisfy stakeholder objectives while being subject to the many constraints.

9

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LESOTHO – COUNTRY BACKGROUND

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Location – Metolong Dam & Water Supply Program

11

Lesotho

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Lesotho – Program Background and Overview

Health

#2 in HIV/AIDs

Infant and Child Mortality –

Ranks 161 out of 188

Topography

“Highest Low Point of Elevation” – 1300m

Highlands >1700 m

Lowlands <1700m

12

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Programs Background & Overview

LHP1 - Katse Dam (1996)

LHP1 - Mohale Dam (2002)

LHP2 - Polihali Dam (2025)

Metolong Dam (2015)

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Quick Photo Tour

14

Page 15: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70
Page 16: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70
Page 17: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70
Page 18: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70
Page 19: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70
Page 20: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70
Page 21: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70
Page 22: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70
Page 23: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70
Page 24: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70

Government Structure

Constitutional Monarchy– King has limited

powers

Democratic, parliament with two houses, since 1966

Prime minister selected from major party

Coalition government since 2013

25 Ministries (Cabinet offices) – too many for a small country

Ministry of Finance and Ministry of Water have lead roles in International Development

24

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Water Resources in Lesotho

Maluti Mountains (Highlands) catch rain, snow – up to 1m

Water is a resource, sold to South Africa per 1986 treaty

Population of 1.9m - 60% coverage of water supply

Lowlands Master Plan (2008) to provide 100% coverage

Metolong (Lowlands) identified to

serve about 500,000 people in Lesotho

25

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METOLONG DAM & WATER SUPPLY PROGRAMME

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Early Project Planning

Concept developed in late 1960’s

Provide water to Basotho in Lowlands

Cost estimate $186M in 2008 from

Feasibility Studies

Environmental, Social complexities recognized

Millennium Challenge Corporation (MCC) did Due Diligence in 2007-8

MCC recommended a Program Management (PgM) approach

27

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Project Description – Metolong

28

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Role Of MCC

Signed Compact with GoL in 2008 for $363M

“Poverty Reduction through Economic Development”

Covered Health, Private Public Partnership, and Metolong

MCC funding for Metolong was $87M to cover D-B of WTW design of Conveyance System, and PgM.

Grant for 5 years – cutoff date for funding is firm

Set up Millennium Challenge Account – Lesotho (MCA-L) to monitor the Compact and MCC contracts, including PgM

29

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Selection of PgM

MCC procurement - Quality & Cost Based Selection (QCBS)

CDM Smith brought on in September 2008 as PgMer

International experience of team

Good local partners

Broad coverage

Pool of expert personnel

30

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Initial Funding Picture

PgM refined the Cost Estimate in late 2008

New estimate was ~$400M

Gap in funding identified at Funder’s EXPO in early 2009

European Investment Bank (EIB) provided €140M (~$200M) loan

South Africa provided $6M grant

31

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Project Partnerships

Multiple funders (9) – USA, EIB, KBOSA (5), RSA, GoL

Funds not pooled

32

Republic of South Africa

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Donor Interests

KBOSA – each participant covered a different aspect or percentage of the Dam, long approval process

World Bank had overall “umbrella” interest, but only about 10% of the funding

Local currency (1 ZAR = 1 Maluti) fluctuated from 6.5 to 12.0/$

Sustainability - limited funding for training

Procurement procedures trump schedule

33

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Metolong Reservoir

Ha Sekantsi

Dam Wall, RWPS

Ha Seeiso

Metolong Ha Makotoko

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Command

Reservoir

Water Treatment

Plant; High Lift Pump

Station

Command Reservoir

Rising Main

Raw Water

Main

Metolong Reservoir

Ha Sekantsi

Dam Wall; Part of Raw Water

Main(constructed by others)

Ha Seeiso

Metolong Ha Makotoko

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Project Description – Advance Infrastructure

Pre-2008 GoL built North Access Road and 10 MVa substation

PgM managed other components needed for implementation

Land acquisition for sites & contractor camps

South Access Road for heavy Dam traffic

Water & Sanitation in surrounding villages

Operator housing for Dam, WTP

Police stations – security

Social, Environmental, Compensation programs

36

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Project Description – Advance Infrastructure

Pedestrian bridge needed for people/stock to cross reservoir

Road bridge needed for vehicles to cross reservoir

37Continues on next slide

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Project Description – 2008 to 2015

Dam: 75m high Roller Compacted Concrete $90M

38 Continues on next slide

24/7 operations

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Project Description – 2008 to 2015

Water Treatment Plant: 100 Ml/d (25 mgd), $65M

Pump Stations: 4 MW (VFDs)

39 Continues on next slide

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Project Description – 2008 to 2015

Pipelines: welded steel, 160 km (100 miles), $85M

Concrete Tanks: up to 40 Ml (10 MG), 8 total

40

Page 41: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70

Challenges: Organizational & Structure

Pleasing two lead agencies

Metolong Authority and Millennium Challenge Account

Turnover at the top

4 CEOs at MA

9 Major funding sources

multiple procurement practices

Manage ~120 contracts

5 major construction; 5 major design

D-B-B, D-B, SSS41 Continues

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Challenges: Organizational & Structural

Land acquisition / permitting

Mix of international and local contractors

Use of FIDIC (Red and Yellow Books)

Work and Residence Permits

Taxes

42 Continues

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Challenges (continued)

Cultural issues

Labor issues

Health: HIV/AIDs impact from/on workforce

Safety

43

Page 44: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70

LESOTHO HIGHLANDS PHASE II

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Location – Lesotho Highlands Phase II

45

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Phase 2 Project Description – 2013 to 2025+

$1B total cost (2014)

165m Concrete Faced Rockfill Dam

5.2m (10 ft) diameter tunnel 38km (20 mile) long

Advance infrastructure – roads, bridges, camps, communications, power

46Continues on next slide

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Phase 2 Project Description – 2013 to 2025+

40+ major contracts

Environmental, Social & Public Health actions

Relocation of many households: flooding over 5,000 hectares

Potential 1,200 MW Kobongpumped storage (additional $1B)

47

Page 48: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70

Phase I Legacy

Social and Environment issues not coordinated w Design

Land compensation inadequate, led to 50-year monetary compensation

Corruption during procurement

senior managers went to jail

international design and

construction companies

were blacklisted

48

Page 49: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70

Challenges

All of Metolong, plus

Overcome Phase I’s negative procurement, social and environmental issues

Public consultation

Funding from South Africa, but project in Lesotho

Shared design and construction $ between RSA and GoL

Competing political interests

49

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Governance – Organization of Client

Lesotho Highlands Water Commission (LHWC)

Lesotho Highlands Development Authority (LHDA)

LHDA Board of Directors

LHDA Technical Committees

Trans Caledon Tunnel Authority (TCTA)

Independent Oversight Committees

Independent Panels of Experts (POEs)

50

Page 51: Program Management in Developing Countries - … · October 11, 2015 Program Management in Developing Countries: ... gap –UNCTAD; and by 2030 the OECD estimates that $70

Solutions Greater complexity justified strong PgM control

Project Management Unit set up in 2013

Engineering and Social & Environmental tasks integrated with each other from the outset

Standardization and policies developed (procurement, design, compensation, communications, quality, SHE&Q)

Continues on next slide51

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Solutions (continued)

Anti-corruption policy established

Procurement-balanced competiveness, transparency, cost, quality and local preference (Lesotho, RSA, SADC, international)

Hiring practice followed procurement balancing

Set up Young Professional Program to train locals

52

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Solutions (continued)

Centralized Project

Controls System

53Continues on next slide

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SOLUTIONS (continued)

54

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LEARNING OBJECTIVES - Revisited

Understand funding agency perspectives “Silos;” want separate reporting

Understand management and logistical challenges Allow for time and cost to cover these

Competing needs of stakeholders Landholders vs. water users

Employment: RSA vs GoL

International approaches applicable to U.S. Respect, communicate, plan, report, be patient

55

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Questions


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