A bright spot: Govt project costs Tk 100cr less than estimate

There is a common allegation that the actual implementation costs of government projects inevitably exceed the estimated costs due to a number of reasons, including time extensions and unnecessary expenditures.

However, the Implementation Monitoring and Evaluation Division (IMED) of the Ministry of Planning has found a project standing out as an exception, for which the implementation cost was Tk 100 crore less than estimated.

The gas pipeline construction and distribution project of the Bangabandhu Sheikh Mujib Shilpa Nagar (BSMSN) lays claim to this achievement, according to an IMED assessment.

The assessment said Karnaphuli Gas Distribution Company implemented the project between May 2017 and June 2019 at a cost of Tk 305.98 crore against an estimate of Tk 406.93 crore.

Initially, Tk 367.10 crore was approved before a revision for "river crossing by Horizontal Directional Drilling etc" increased the cost by about Tk 40 crore, or 11 percent, to Tk 406.93 crore.

Due to various reasons, progress has been achieved in some aspects of the project without any additional expenditure and in some cases at a lower cost, the IMED said.

The report said in terms of land acquisition and requisition, the Bangladesh Economic Zones Authority (Beza) provided land for free for a valve station.

Besides, land previously acquired by Beza was used for construction of a 20 feet wide pipeline of Karnaphuli Gas Distribution Company and Gas Transmission Company, which meant no funds were required for land acquisition, it said.

"Besides, in case of river crossing and installation of cathodic protection system under horizontal directional drilling method on Engineering, Procurement, and Construction (EPC), the actual work required is less than the project plan estimated," it said.

Another reason behind the costs being lower is the absence of detailed feasibility studies by independent consulting firms, said the report.

Under the project, a gas distribution pipeline has been constructed up to Mirsarai industrial area or BSMSN, the report added.

As a result, infrastructure for gas supply has been created in the area and gas connections have already been provided to three industrial customers in that industrial area, it said.

Against this backdrop, the aims of the project have been achieved, the IMED said.

It also said as new industries would come under gas connection as a result of the implementation of the project, the positive impact of the project would increase.

However, the IMED said the estimated costs of various procurement packages of the project were not in line with market rates as the contractor submitted bids significantly higher than the estimated costs.

As a result, tenders had to be floated again and again, it said.

Besides, there was no feasibility study by a third party before the project was undertaken, hence the cost estimation and scope of work of various parts of the project was not proper, it said.

Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said it was a good example that the entity implementing the project could save government revenue as the Beza did not charge anything for land.

The money saved can be used for other projects, which is important during an economic crisis, he said.

However, the funds were not saved by virtue of efficiency of the implementing entity, rather it was due to Beza's generosity, he said.

He believes such a scope was available for a number development projects, which could have led the implementing entities to save funds.