The flip side of megaprojects

A megaproject is a large-scale, costly and complex venture, and its implementation usually takes several years. Often implemented under a public-private partnership, megaprojects can be undertaken in many sectors like transportation, energy, seaport, airport, bridges, mining, etc. The growing tendency of undertaking megaprojects in Bangladesh in recent years is justified by their impacts, which are higher economic growth and helping to meet basic needs of the people. By some estimates, when completed, the currently undergoing megaprojects of the country are supposed to enhance our growth potential by at least four percent. However, the huge delay and cost overruns of these projects are causing a big drain in the national budget and lowering the social benefits.

Now, what are the drivers that are pushing the adoption of so many megaprojects in the country? Analysing them will show that, besides the justification given by the economic viability calculated through cost-benefit analysis, there are four other factors that underlie the decisions to take up the megaprojects. These are: a) Technological aspect which broadly means that, globally speaking, there are proven designs, standard implementation modalities, and manpower available to implement a megaproject; b) Vested interest created by a range of stakeholders who are engineers, suppliers, bankers, consultants, and construction workers, benefiting from these projects; c) Political aspiration to undertake such a project due to the clout and image created; and d) Relative ease in spending money quickly, showing improved budget-expenditure ratio and the convenience of managing a single megaproject, instead of dealing with many regular-sized projects.

Although the justifications are many, Bangladesh has been facing a different type of reality in terms of project management and execution since it decided to go for megaprojects. There have been many issues, and lessons are being learnt constantly. Each of the megaprojects has experienced serious delays and thus caused huge cost overruns. Such cost escalations have big benefit shortfalls on the other side of the equation, reducing the impacts of these projects. People also suffer for a long period of time due to the inconveniences created during the construction period, and not receiving the services for long. This actually weakens the credibility of the government and raises questions about the capability of public institutions to execute these projects.

An analysis of the implementation performance will show that the costs have gone over the budget estimates for all the megaprojects that are currently being implemented in Bangladesh. Although their performance improved in 2019, the Covid-19 pandemic affected the progress of project implementation in 2020 and 2021.

While viewed as technologically successful, the megaprojects are being built with huge financial costs. There are various factors causing delays in project implementation. These are related to weak initial designing that require time-consuming revisions and government approval, inadequate contract negotiation skills with international bidders, time-consuming land acquisition process, problem in timely procurement of items, complicated fund release procedures, multiple players in some cases—like the Dhaka Metro Rail project—where coordination is a big issue, strict environmental and social standards required by the projects with which the authorities are not fully conversant, and weak monitoring and supervision of the work.

Let's take the 6.15km Padma Bridge, for instance: the cost of this project was estimated to be Tk 10,161 crore in 2007, but has increased to Tk 39,246 crore by now. The work on this bridge started in 2009 and was supposed to be completed in 2014. Several revisions of the cost estimate were necessary as a result of the long delay in implementation. Due to this delay, cost recovery will take longer or at a higher rate or both—thus, the social return from investment will be lower than that calculated at the time of the project's feasibility study.

To deal with increased fund requirements, the government has enhanced the total budgetary allocation of seven megaprojects from Tk 25,473 crore in 2020-21 fiscal year to Tk 37,000 crore in 2021-22. These are: Padma Bridge, Padma Bridge rail link, Dhaka Mass Rapid Transit Line 6 (Metro Rail), Chattogram-Cox's Bazar rail link, Rooppur Nuclear Power Plant, Matarbari 1,200MW coal-fired power plant, and the Payra deep seaport.

The government should properly analyse the technological, financial, coordination and management issues associated with the megaproject execution, and take lessons for the improvement of these projects, so that the delays and cost escalation could be minimised. A report published by The Daily Star on September 16 said the 1.47-kilometre Payra Bridge, which was finished at a cost of Tk 1,447.24 crore, took five years longer than the stipulated deadline and cost 3.5 times more than the original estimate. Another report by The Daily Star, published on September 24, revealed that the Chattogram Development Authority (CDA) had been implementing a Tk 5,617 crore megaproject to solve the drainage problem in the city and extended it for three more years in two phases. The various components of the project have seen a cost escalation between 8 and 38 times, while only 29 percent of the total budget has been spent so far. The reasons for delay has been mentioned in a government study: flawed feasibility study; slow pace of fund disbursement; shortage of workforce; and poor coordination between the implementing and consulting firms. Similarly, another report dated September 24 by The Daily Star said the Dhaka-Sylhet-Tamabil highway megaproject was expected to experience a two-and-a-half-year delay, and the cost was expected to double.

In order to expedite implementation, the megaproject management should draw up time-bound work plans, expedite fund release, improve communication and take quick decisions, and strengthen monitoring mechanisms. With so many resources tied up in megaprojects, we need to remember that we are foregoing other alternative uses of these scarce resources coming from our taxpayers' money. Therefore, the government needs to do its utmost to ensure timely and optimum utilisation of public resources. To this end, Bangladesh must improve its megaproject execution capacity.

Dr Nawshad Ahmed is an economist, urban planner, and a former UN official.