For the majority of newly-bred political animals, infrastructure development projects are personal, perennial cash cows and/or trophy projects to put their names on the plaque to entice the public into re-electing them for another bite – Pic by Ruwan Walpola
Infrastructure investment is a key driver of a stronger and productive economy. Stakeholders, especially the public and the international funding agencies, demand greater transparency and scrutiny on infrastructure decision as the Government spend the funds allocated for public wellbeing, for the infrastructure projects promising the delivery of the stated benefits to the public.
It is fair to assume that the Sri Lankan Government has already formulated overall long-term goals for each public service sector and the problems preventing the reaching of goals have already been identified. However, the identification of problems is not enough because the problems must be carefully assessed also to allow the infrastructure planners to generate, assess and prioritise relevant options.
Sri Lankan politicians love implementing mega infrastructure development projects such as roads, bridges, telecommunication networks and buildings for many reasons. There was a time that Sri Lankan political corruption and thuggery was limited to the local level. Those politicians listened to the experts and they were genuinely interested of seeing benefits delivered to the public through the infrastructure projects. By doing so, it induced the necessary spark in the ailed economy to lift the standard of living of the masses.
However, for the majority of newly-bred political animals, these infrastructure development projects are personal, perennial cash cows and/or trophy projects to put their names on the plaque, to entice the public into re-electing them for another bite.
The Sri Lankan public often cries about the lack of formal education and analytical intelligence of the current crop of politicians. No doubt, it is a fair compliant as the ramifications are ubiquitous. However, the educated public themselves are guilty of not only not coming forward showing societal leadership for giving the general public a fair chance to select better representatives, but also blindly electing corrupt, incompetent and untrustworthy people to political office.
This is indeed a complex issue. There is no simple solution to a complex problem. The aim of this article is not to find the so called “complex solution”, but to comment of an alternative approach to handle this issue.
Poor infrastructure planning
The real reason for the poor mega infrastructure planning in Sri Lanka is not due to the behaviour of corrupt politicians, the short-sighted, narrow-minded political party followers or the money hungry, self-centred business persons. It is the failure of the professionals who perform as the infrastructure development planners.
These professionals include engineers, architects, strategic planners, land use planners, town and country planners, administrators, economists, accountants, development compliance officers, sociologists, etc. These professionals are not doing the job they are supposed to do, especially collectively.
In developed countries like Australia, infrastructure development decisions are not taken lightly or in haste. The Australian Federal Government has developed a series of gateways such as justification of the business need, sound business case, appropriate procurement strategy, best investment decision, proof of the readiness for service and benefit realisation plan to go through for any Federal Department which plans an infrastructure project.
Generally, a project steering committee is appointed to justify the business need and to develop a business case. This business case consists of analytical results of the assessment of alternatives and a set of basic questions and answers. In addition to the technical details including the environmental compliance requirements and the technical viability of the project, there are general questions posed for reliable answers.
The most pertinent questions are based on the do-nothing option and the social cost of not having this project. Just having qualitative answers to these question are not sufficient and the answers must finally be converted into number, rupees and or dollars. Let’s assume that the committee could justify the project proposal by assigning acceptable numbers. Then, the next series of interrelated questions would be that “what would be the cost, who pays for this and how the cost is recovered?” This is where the Sri Lankan professionals fail miserably.
Any infrastructure has two forms of ‘lives’. The infrastructure has a ‘design life’ during which it would structurally survive, provided that the infrastructure is maintained proactively and the major asset components are renewed to ensure the overall structural condition remains within an acceptable rating range. There is a misconception that if an infrastructure is properly designed and constructed, it would survive within its design life. The actual fact is that, from the day one of commissioning of an infrastructure, its structural condition goes down gradually and naturally. To arrest this condition deterioration, a range of preventative maintenance activities must be performed periodically. Although the entire infrastructure has a design life (say100 years for a bridge), some structural components have significantly lesser design lives, prompting those components replaced at the correct time to ensure the total structure survives the overall design life.
The term ‘economic life’ indicates the period that the infrastructure would give economic output to the customers, users and operators. In reality, economic life is usually less than the design life as economic life is influenced by external factors such as emerging technology, change of public expectations, etc.
What really matters to a country is the economic life of an infrastructure. If the infrastructure does not provide the intended outputs and benefits economically, efficiently and effectively, having the structure in possession means nothing to the government and the public. This is why structures are to be upgraded and modified periodically to keep up with the changes of emerging technologies and user demands and expectations. The expectation is to bridge the gap between the economic life and the design life.
In addition to the above, there are operational costs such as utility services costs (operational costs), and the demolition costs to get rid of the infrastructure when it reaches its end of economic or design life, whichever comes first. Keeping a structure beyond its economic life is a waste of resources. Hence, the total life cycle cost of the infrastructure would consist of initial capital cost, maintenance and operational cost, renewal and upgrading cost and the demolition cost. Also, the interest payments for borrowings must be added.
Sri Lankan infrastructure designers and planners do not consider this total lifecycle cost for project decision-making model. They only consider the construction and commission cost, bypassing the rest of the burden to other parties without even notifying the parties about the future transfer of the liability and also not giving them an opportunity to say “no” due to their resource restrictions to honour this future responsibility.
This underestimation of the project cost gives wrong signals to politicians and public to proceed with the project. This obscured and sugar coated decision would cost the country dearly at latter stages and by that time it is too late to reverse the impacts.
In developed countries, a professional discipline called “asset management” is practised and it deals with the lifecycle management of physical infrastructure. As an asset management specialist, this writer conducted a presentation on asset management at the Colombo Municipal Council last year to a group of senior engineering and architectural professionals. During the brainstorming session, he realised that the awareness of asset management discipline is very limited among the technical professionals. The participants commented that almost no asset management engineers exist in other organisations as well.
More than a decade ago, international professional engineering institutions have included asset management as a separate engineering discipline and it is high time for the Institution of Engineers, Sri Lanka to follow this path. It is emphasised here that asset management, like risk management, is not owned by engineers but it is a discipline which need 80% of engineering input.
Expenditure and revenue
Everyone including Sri Lanka should live within means to not end up bankrupt. If the infrastructure planners cannot identify the funding source to cover the entire lifecycle cost of the infrastructure, they should not even bother proceeding with the proposal only having initial capital funds. Even if they have identified the funding source, they should find out how to get the expenditure paid back to the coffers during the economic life of the infrastructure. Spending without having a revenue is a moronic act.
It is a myth that infrastructure projects related to public services would not generate revenue but only benefits to the public. The ultimate aim of providing public services such as governance, transport, telecommunication and other utility services through infrastructure is to enhance economic activity of the whole country to an efficient and effective level. This would generate direct and indirect income and benefits to the government via fees and charges, taxes, tariffs, local government rates, augmented foreign exchange reserves, etc. Hence, all infrastructure development projects do generate revenue for the Government. Hence, a part of this revenue should be directed to manage the total lifecycle cost of the project, including the pay-back of the capital cost with the interest payments.
Project steering committee
To steer a project, the project steering committee should have the firm control over the project activities. This would ensure the delivery of intended outputs. When intended outputs are delivered, the associated benefits to the infrastructure users would be generated automatically. Does this happen in Sri Lanka?
In Sri Lanka, very often we see the project rowing committees rather than steering committees. When the project committee is rowing, of course, the project progresses but it takes its own course. Usually the project contractor wants to progress the project the way the contractor wants. The politicians wants to complete the project according to their timeframes even when the technical requirements suggests otherwise.
When the contractors and politicians succeed in these efforts, the project steering committee effectively becomes rowers. Why cannot the steering committee members educate public and ask them to influence politicians to do the right thing? The professionals have a moral obligation to do so for the public and the country.
and project benefits
Project outputs and project benefits are not the same. For an example, an outcome would be a building structure and the benefit would be the availability of the building for holding functions. It is the responsibility of steering committee to document the expectations of project outcome users and ensure the delivery of those expectation and benefits. This process is called ‘Benefit Realisation Planning’. Do the Sri Lankan mega project planners develop Benefit Realisation Plans?
A Benefit Realisation Plan (BRP) describes how the project outputs will be managed by the project output owner, usually the Sri Lankan Government, how the project outputs are utilised by the project customers/consumers, how the asset owner changes own business processes and procedures to accommodate direct impacts from the project outcomes to the ongoing administrative systems and how the owner measures, monitor and reports on the ongoing achievement of benefits. It is always better to appoint an independent person to develop the BRP and influence the Project Steering Committee to make necessary changes to the project to ensure BRP would be concurrently implemented at the commissioning of the project.
Pre- and post-project risk assessments
There are inherent risks associated with a project to prevent the realisation of value for money. So the strategy is to identify risk and transfer risks to various parties appropriately and manage them. It seems that, in Sri Lanka, project risk assessments are not done methodically. This assertion is made by noticing so many project failures, cost over-runs and delays. While there may be other reasons for these project failures, the poor risk assessment process is a major contributory factor.
When the risks are known, project planners can respond. However, one cannot pre-plan responses to “uncertainties” rather than spending contingency funds to deal with those. If the risk assessments are not done properly, the number of uncertainties that would arise during project implementation are too many to cope up with the limited contingency funds.
This is why the Sri Lankan Parliament allocates supplementary funds to the projects which are never completed within the original budget allocation. This is akin to treat the symptoms rather than the cause. The end result is that Sri Lankan public are the gleeful owners of many white-elephant infrastructure project outputs. If, at least, post-project risk assessments are done, planners could learn from their mistakes. Instead, the same mistakes are repeated. Only insane people would expect different results doing the same over and over again.
Hence, the coup is to make the politicians irrelevant from the professional decision making of the infrastructure solution unless they behave rationally and ethically. Politicians need both the public and the professionals for their survival, not the opposite. Hence, the bargaining power rests with the professionals. They should only concentrate on educating and convincing the public on real needs of infrastructure and what must happen. To do that, we need impartial, competent professionals. Do we have such professionals? We need disciplined public who value professional judgement. Are we such a nation?
Let’s start from the professionals.
(Eng. Janaka Seneviratne is a Chartered Professional Engineer and a Fellow of both the Institution of Engineers, Sri Lanka and Australia. His mission is to share his 30 years local and overseas experience to make, at least, a minute improvement to the Sri Lankan organisations. He is contactable via firstname.lastname@example.org.)