Prime
Govt losing Shs2 trillion in project delays
Projects such as powerlines are mentioned as some of the factors that cost billions of shillings as a result of delayed implementation. Photo / Edgar R Batte
What you need to know:
- Delay to implement projects has a huge implication on the economy, which negatively affects gross domestic product, due to loss of employment, and a low return on investment
Government registers close to Shs2 trillion loss annually in delayed project implementation due to poor designs, cost escalations, contract disputes, abandonment, overruns, and substandard quality of some completed projects.
State Finance Minister for Planning and Economic Monitoring Amos Lugoloobi, who revealed the heavy loss, noted that the implications have been huge on the economy with a negative effect on the gross domestic product, due to loss of employment, and a low return on investment.
“For a number of these projects, we have borrowed money, and the more you delay to deliver, the more interest you pay,” he said, noting there is a lot of fiscal space lost in budgets with delayed projects filling up space, which would have otherwise been used for new projects.
Mr Lugolobi explained that the money lost has been from both domestic and externally funded projects, especially roads and power transmission.
Such delays in power transmission from dams have caused government to fork out $80m (Shs297b) on deemed energy, which is power generated but cannot be consumed for lack of transmission lines, in a country suffering with power deficits in some areas.
An example cited is the Mirama Hills power transmission project meant to deliver electricity to Rwanda but has been delayed.
Last year, Monitor reported that Parliament’s Budget Committee listed that about half of 69 flagship government projects were behind schedule.
The most notable included the Kampala-Jinja Expressway, Rehabilitation of the Metre Gauge Railway, East Africa Crude Oil Pipeline and the oil refinery in Hoima.
Mr Lugolobi was delivering a keynote address during the 3rd annual Project Management Conference in Kampala yesterday, in which he said a number of externally funded projects had demonstrated decimal performance.
Some of the other challenges cited are project managers who are compromised by working with contractors instead of supervisors.
The conference sought to address some of the constraints where government has implemented a number of reforms that seek to enhance Public Investment Management Systems, including capacity building across ministries, departments, and agencies.
Ms Irene Nattabi, the President Project Management Institute Uganda Chapter, urged government to come up with the right resources and people to avoid issues of ethics and loss.
“We have advised government to come up with the right resources, so that people are skilled in project management. You have engineers, finance, business analysts but do they understand what a project is?” she wondered, explaining that if government can get the right people for work, it becomes easier to avoid the issues of ethics and skills.
Ms Nattabi also noted that it is important to have project managers accountable by a body with properly defined code of ethics.
Project viability
Proponents of capacity building say it should largely focus on the pre-investment phase of the project cycle, which evaluates project viability prior to admission into the public investment.
Mr Lugolobi argues that institutions such as Project Management Institute should build ethical standards of their engineers and all other stakeholders in the project value chain.
