Why developing nations should confront stalled projects urgently

 

Homa Bay County Stadium is one of the mega projects that have not been completed by county governments. [James Omoro, Standard]

Failed or stalled projects have become a thorn in the flesh of many developing countries. Trillions of dollars have been sunk into projects that have failed to live up to their timelines or purposes owing to implementation challenges.

Some projects started decades ago have never been completed, leaving societies deprived of the services the projects were supposed to provide.

In many developing countries, it is not uncommon to find the carcasses of abandoned projects, like sun-bleached bones on the desert sand. Construction projects in the public sector are the worst hit, leaving people under-served in health, education and transport. There are various definitions of stalled projects from one country to another. Here, we shall consider projects that exist as government plan documents, made no progress and completion deadlines lapsed.

Some governments have found themselves in a dire situation of cost overruns, with rapidly degrading structures, and face the decision whether to sink additional resources into the projects or abandon them entirely.

There are various reasons why projects stall, some depend on the diversity and unique nature in different sectors. Common causes for stalling of projects in developing countries include:

First, financial, material, human and space resources are often in short supply. Skilled labour shortages, in particular, are exacerbated by labour migration from developing to advanced countries.

Second, inaccurate cost estimates result in costly overruns, delayed disbursement of contractor payments and in some cases, project abandonment. Third, many projects are planned and implemented hurriedly for political reasons. This leads to two problems: changes in the design, scope or objectives of projects, which may be necessitated on review, and, all too often, the abandonment of these projects by subsequent government administrations.

Other factors conducive to stalling of projects include corruption, poor monitoring and evaluation, and communication failure, especially between the financiers and implementors of projects in case of donor-funded projects. Stalled projects have consequences including; loss of revenue sunk in their launching and initiation and lost opportunity costs; slowed economic growth; and loss of economic opportunities that could have arisen. The latter is particularly the case with stalling of mega-ports and transport corridors. In addition, developing countries have lost donor aid as a result of stalled projects and in some cases tougher regulations are imposed by donors.

Environmental degradation is another result of stalled construction projects, which cause soil erosion and pollution choking surrounding communities. Non-payment by governments to project development companies renders them unable to meet their financial obligations, leading to bankruptcy.

Seeing that stalled projects have already cost developing countries billions of dollars, most of which are loans, what should these countries do with the projects?

A lesson may be learned here from Singapore, which applied a cure and prevention approach. Stalled projects need to be dealt with directly, while measures need to be put in place to curb further stalling.

In addition, decisions on stalled projects need to be based on a thorough evaluation to examine whether projects, especially those that have stalled for decades, would still be relevant and meet their intended objectives.

Availability of funding should be another consideration, as this has a direct bearing on the likelihood of completion. Remember, whatever decision is taken, money has already been sunk into these projects.

Some measures that can be undertaken include:

Re-tendering: governments can call for new contractors to undertake stalled projects. A number of projects have stalled because of inability of selected contractors to deliver on timelines, resources and capacity. While re-tendering will likely to result in cost overruns, it will at least deliver the project.

Holding project officers and contractors accountable. It is a common practice in developing countries to find projects completed and paid for on government reports while, in reality, they have stalled. Institutions assigned the mandate of fostering good governance and protecting public resources, in our case the Ethics and Anti-Corruption Commission (EACC), should bring the culprits to book and recover taxpayers’ money.

Governments may be forced to abandon some projects altogether. This is particularly if the projects were hurriedly started, often for political reasons. Even if they are re-designed and re-financed, they might not meet any particular objective.

Lastly, political transitions are a major cause of stalling of projects, as every regime comes up with new projects, often ignoring those begun by their predecessors. To avoid the further stalling of ongoing projects, or future projects, it is incumbent upon government policy experts and legislators to develop regulations that will govern the continuity.

These regulations should be applied to projects from planning to implementation, and cover evaluation, documentation and proper handover in the event of the departure of officers. To ensure continuity, it is essential to apply common standards when dealing with projects. In this regard, Singapore’s example is particularly instructive, in that the country adopted common data standards to facilitate information flow for building projects.

As Sir Michael Latham once said, ‘No construction project is free of risk. Risk can be managed, minimised, shared, transferred or accepted. It cannot be ignored.’ Project stalling is a risk which ought to be thoughtfully considered before implementation.