strengthening the demand-side for improved public investment

8/3/2019 Strengthening the demand-side for improved public investment

http://slidepdf.com/reader/full/strengthening-the-demand-side-for-improved-public-investment 1/19

STRENGTHENING THE DEMAND-SIDE

FOR IMPROVED PUBLIC INVESTMENT Kirsten Hommann, Sr. Economist

ICGM Conference

December 6, 2011



RATIONALE

Fundamental right

Informs voice andpolitical process

Enables accountability

Improves performancein public sector (?)

Reduces risk ofcorruption (?)

Reduces price ofborrowing

2

OBI v. Credit Ratings (Hameed, 2010)

OBI v. EMBI Sovereign Spreads (Hameed, 2010)



STARTING WITH SIMPLE CONCEPTS

Government

ServiceDeliveryAgents

Citizens

Electoral ProcessMedia

Education

Contestability of MarketsExpertise

Independence

What are the Goods inQuestion and how are they

provided?



BUDGET CYCLE: CREATING BETTER INCENTIVES THROUGH PARTICIPATORY MONITORING

Budget Formulation

Budget Review & Analysis

Budget/ExpenditureTracking

PerformanceMonitoring

Civic

EngagementParticipatory Monitoring,

Score Cards

Participatory PETS

Participatory Budget Planning

Participatory review: Do

allocations match announced

social commitments?



IMPROVING PUBLIC SERVICE DELIVERY THOUGH PARTICIPATORY MEASURES:

WHAT IS THE EVIDENCE?

Olken (2007) Community-Based Monitoring of rural roads in 600 villages in Indonesia

An average of 24 percent of road expenditure were estimated to be diverted, which

were reduced by 8 percentage points where audits were pre-announced and with

insignificant reductions where participation was carried out without the audit.

Bjoerkman and Svensson (2007) Community-Based Monitoring of Health Service Providers in 50 communities in

Uganda

Quality and quantity of health service provision improved through Citizen Report

Cards; 1.7 percent lower deaths of children under 5 in control group

Luo, Zhang, Huang and Rozelle (2010) Examined the relationship between direct elections and investments in public

goods in 2450 villages in China

Directly elected village leaders implement more public goods projects compared

to non-elected leaders



IMPROVING SYSTEMS, PROCESSES AND PRACTICES IN PUBLIC CONSTRUCTION

Value of global construction industry to increase to $12 trillion p.a. by2020 (13.2 per cent of global GDP) - Global Construction 2020

Mismanagement, inefficiency and corruption can account for 10 -30% of a construction project's value - OECD, TI

Construction Sector Transparency Initiative (CoST) : A participatory,

multi-stakeholder, multi-national framework to improve transparency andaccountability in public construction

Hypothesis (similar to Bjoerkman and Svensson): lack of reliableand structured information and organizational capacity constrainservice delivery improvements (here transparency in construction

sector) Pilot Phase: 2008 – early 2011

Country Participants: Ethiopia, Guatemala, Malawi, Philippines,Tanzania, UK, Vietnam and Zambia

Locally constituted multi-stakeholder group (MSG)oversees application of disclosure and assurance protocols



BRINGING TOGETHER TRANSPARENCY AND ACCOUNTABILITY

Disclosure

Assurance

Informed Reaction

Accountability

Improve transparency throughpublic disclosure andassurance of relevantinformation

Encourage informedreaction to createdemand for improvedefficiency and quality



COST PRINCIPLES

Promote transparency and accountability in publiclyfinanced construction projects

Implement a multi-stakeholder approach that incorporatesrepresentatives from public and private sector as well as civil

society

Collect, verify and interpret disclosed project informationalong the full construction value-chain

Disseminate information through public forums/channels

Voluntary and flexible implementation of these principles



COST PROCESS

DISCLOSURE

Procuring entity regularly discloses “Material

Project Information” (MPI).

ASSURANCE

Assurance Team is responsible for assessing theadequacy and reliability of project informationdisclosures, and identifying “areas for concern”

REPORTING Assurance Team publishes reports to disclose to

the wider public its main findings



IdentificationProgram &

BudgetDesign Procurement Implementation

Completion &Operation

WORKING ACROSS THE VALUE-CHAIN

Projectidentification,

Owner, Budget,Justification

Tenderrequest,

Designavailable

Contractaward

Updates,Variations

duringconstruction

Completiondetails

AssuranceReports



MATERIAL PROJECT INFORMATION Project purpose

Location of project

Intended beneficiaries

Specifications Budget

Engineer’s estimate

Tender process (project supervision)

Tender procedure

No. expressing interest

No. shortlisted

No. submitting tender

Tender process (main works)

Tender procedure


No. shortlisted

No. submitting tender

For Project Supervision

Name of main consultant

Contract price

Contract scope of work Contract program

For Main Works

Name of main contractor

Contract price

Contract scope of work

Contract program

Significant changes in contract (PS)

Significant changes in contract, price (MW)

Significant changes in contract, program

(MW)

Details of any reward for main contract

Actual contract price

Total payments made

Actual contract scope of work

Actual contract programOther documents

Feasibility Study

Financing agreement

Tender evaluation report

Project evaluation reports



HOW CAN DISCLOSURE HELP?

Detect possible collusive behavior


Participation of bidders

Names of winning bidders

Compare construction costs across bidders/geographic

areas

Compare efficiency of construction (time/cost overruns)

Deterrent effect



WHICH CAN RESULT IN:

Reduced corruption

Reduced construction costs

Improvement in quality

A level playing field

Increased competition (more participants)

Boost in investor confidence

Improved taxpayer satisfaction

Reduced poverty through economic growth



AVERAGE TIME AND COST OVERRUNS



ASSURANCE PROCESS IN PILOT -TYPICAL ISSUES HIGHLIGHTED FOR ATTENTION BY

ASSURANCE REPORTS



Projects finishingin less time thancontracted, 4%

Projects finishingon time, 19%

Projects finishingup to 100% over

time , 40%

Projects finishingmore than 100%over time, 19%

No information

returned, 17%

REASONS FOR TIME OVERRUNS



EngagementGaining awareness of CoST

Preparation

Country CoST program

prepared and initiated

Implementation

Project information &assurance findings disclosed – on progressive basis until sustainable as

government system

CoST Implementation Path



COST INTERNATIONAL GOVERNANCE STRUCTURE – REVISED NOV-2011

InternationalSecretariat

Delegate Assembly

ImplementingCountries

InternationalStakeholders

CoST Board

strengthening the demand-side for improved public investment

Documents