Conclusion
The last topic left to be considered in this rather extended appraisal of the management of Guyana’s public investment programme is its third and fourth phases, namely, project management and implementation and the conduct of ex-post evaluation audits of projects. This will be completed today.
I had indicated earlier on April 14 that, for analytic convenience, I would divide the management of Guyana’s public investment programme into four discrete sequential phases. The first (investment strategy) and the second (feasibility studies and project appraisals for timely project selection and sequencing of projects) have already been fully addressed. Indeed the lengthy consideration of the Amaila Falls Hydropower Project (AFHP) concluded last week was aimed at illustrating crucial issues relevant to the movement from investment strategy (Phase 1) to project choice (Phase 2).
Management, implementation
Phase 3 experiences in several developing countries indicate that effective management (along with implementation) of public projects is only possible if this is integrated into the budgetary process; especially its medium-term framework. If readers accept that Guyana’s Poverty Reduction Strategy Paper 2011 is a proxy for the country’s medium-term budgetary framework, one would find that some important projects are covered there while others are omitted. Thus of the two illustrative cases considered in this series, we find that the Amaila Falls Hydro Project (AFHP) has been properly integrated while the Marriott Hotel has not. This inconsistency is to be regretted, since studies show that those projects, which are integrated into the medium-term budgetary framework tend to perform better than those that are not. Indeed the data further indicate that this occurs because the latter escapes the fiscal and other regulatory oversight provided by the legislature, thereby opening the way for insider deals, fraud, and corruption.
In Guyana however, I find that two circumstances seem to work against the success of all public projects, whether or not they are integrated into the medium-term budgetary process. First, in the case of public-private partnerships (PPP), it is only in situations where the Government of Guyana (GoG) either directly commits public funds from the Treasury or requires some form of legislative support, that the GoG involves the legislature. Thus for example, in the case of the AFHP, the GoG responsibilities for constructing the access roads and its contingent liability for GPL’s debts have required it to involve the legislature. However, the overall level of engagement on this project is limited.
Second, for a long time now, the GoG has circumvented the Treasury by using a state-owned company (NICIL) as a special purpose vehicle (SPV) to operate what I have already labelled as government slush funds to provide off-budget financing beyond legislative oversight.
Experience elsewhere shows the greatest threats to public projects seem to arise where there is public uncertainty about the open competitiveness of the regime for obtaining and placing government contracts. In previous columns I have indicated several instances where public contracts for projects have been called into question. Furthermore, concerns have been raised as well about the considerable public subsidies given to various projects in the form of tax expenditures and regulatory relief.
Necessary but not sufficient
Research to date indicates a necessary, but by no means sufficient mechanism for keeping citizens’ control over waste, inefficiency, mismanagement and corruption in public projects, seemed to be a proper functioning Public Procurement Commission-type organisation. The standard purpose of such commissions is to promote cost competitiveness among private suppliers of goods, services, and works to the government. Indeed a fair open and transparent procurement mechanism is the only truly tried and tested means for containing fraud, collusion, corruption, waste and mismanagement in the supply of these items to government projects, whether by domestic or external suppliers.
Further, the literature on procurement mechanisms emphasizes two of their outstanding advantages. One is that they facilitate choice from among competitive suppliers. This invariably reduces cost, enhances quality, and makes for efficient time use. Secondly, they foster the growth of technical specialists in this area, which adds enormously to economically efficient GDP growth and development. Indeed the mantra for this area of expertise is value for money; timeliness; quality; transparency; fairness in public provisioning; and the development of ‘in-house’ expertise in public spending.
Post-evaluation audits
Very often the fourth and final phase of investment management (post-evaluation audits) is treated as an afterthought mainly because the project has already been chosen, constructed, and is up and running. This is to be regretted as available information suggests that after projects are up and running there are still several lessons to be learnt from their previous experiences.
In practice post-evaluation audits generally take two forms. One is to undertake these immediately after the project is completed and the other only after a pre-determined lapse in time (normally 2-4 years). The former audits focus on such concerns as 1) variations in project costs with actual costs; 2) time delays in project implementation; 3) other variations in time projected and time taken and the reasons for these. The latter (later) audits focus on such matters as 1) whether the project goals are being met, and 2) variations in project output, quality, and price.
Both types of post-evaluation audits provide opportunities for learning lessons from project experiences. The situation is rich for identifying pitfalls, difficulties, the use of corrective measures, why they work, and, most important of all, what makes for successful projects? For convenience these audits are presented as a combination of technical, financial and economic evaluations.
This leads to the most im-portant general conclusion for this series, which is, Guyana’s management of its public investment programme is weak, and effective management will only become possible after there is a considered and considerable injection of public investment into the process of managing its public investment spending.
