An excellent book on efficiency of public sector investments

Design, Appraisal, and Management of Sustainable Development Projects by Nihal Amerasinghe (Asian Institute of Management, Manila, Philippines, 2015), pp. 760

The book can be purchased from the Asian Institute of Management Webstore http://www.aim.edu/books-development

Hardbound: $ 50; Paperback $ 40

By Sisira Jayasuriya

This excellent book by Professor Nihal Amerasinghe comes at a time when the efficiency of public sector investments has emerged as a key economic and political issue not only in Sri Lanka but throughout the world. 

The importance of ensuring that public investments are both efficient and well managed needs no elaboration. Inefficient public sector investments not only waste scarce resources but they are also a common source of macroeconomic instability and crises; while this is not a problem confined to developing countries, the cost of inefficient investments is greatest in developing countries that are least able to afford them.

However, even under the best of conditions, it is not an easy task to identify and effectively implement public sector investment projects that are well aligned with a country’s development objectives and deliver the highest payoff for scarce investment resources. This is an area where available analytical and technical capacity within the public sector is typically quite inadequate. 

In addition, because by their very nature public sector projects offer many avenues for political patronage and corruption, analysts and commentators outside the government should also be reasonably familiar with the relevant concepts and approaches to provide independent public scrutiny of such projects both at selection and implementation stage. 

But developing such capacity inside and outside the government has been greatly hampered by the lack of suitable courses and appropriate course material. 

Unfortunately most university and other training courses that teach the subject are not well designed. Most available course material is produced not by practitioners but by academics with little or no hands on experience in the practicalities of the subject. They are typically narrowly focused on the analytical and technical aspects of project appraisal and divorced from the practicalities involved in real world project design, appraisal and implementation. 

On the other hand, much so-called specialised-course training materials aimed at practitioners lack rigour and provide no sound basis for choosing the right tools, and making the right interpretations and recommendations. Practitioners are typically confronted with data gaps and imperfections, fuzzy project objectives, weak administrative capacity, and the need to not only blend analytical rigor and technical analysis with considerable subjective judgement, but also to communicate and defend their results, interpretations and conclusions. 

This is where this book really stands out and reflects and benefits from the unique background, skills and experience of its author. Professor Amerasinghe combines his mastery of theory and technique, expository and pedagogical skills as a teacher at many levels, and decades of experience working with projects in numerous Asian countries as a senior official of the ADB, to produce a book that succeeds admirably as a resource for students and trainees, for teachers, and for practitioners as well as for ‘intelligent laypersons’ interested in the topic. 

It is comprehensive and encyclopaedic in its coverage. It provides a compact, accessible and rigorous – but not abstract – exposition of the theoretical underpinnings (and limitations) of all key tools and techniques, illustrates their application in practical settings and using case studies, explains which are most appropriate for particular circumstances and how to interpret and communicate the technical outputs and information to policy makers and the public.

The step-by-step procedure in the exposition and the use of case studies to illustrate the concepts, tools and approaches is particularly effective; they help to highlight the importance of many issues that are typically soft-pedalled or ignored altogether in academic courses. I also very much liked the repeated emphasis on the importance of the GI-GO principle – ‘Garbage In – Garbage Out’: quality of data is often poor, sometimes non-existent, so use data and information with care and judgement, choose tools wisely and appropriately, and draw the conclusions and implications with the necessary caveats!  

The book can be used at many levels and for courses of varying duration and scope. Parts and sections of the book can be chosen to fit specific training/teaching foci. Readers get exposed to and assisted to master a range of widely used tools and techniques in both private and public project projects. 

Indeed, though the book is primarily focused on (the more complex issues involved in) public sector projects, given the shift in emphasis from the narrowly specified goal of financial profitability by the so-called ‘triple bottom line’ of financial, social and environmental goals by private firms, partly at least because of regulatory constraints and social pressures, and the increased involvement of the private sector in public sector projects both directly and indirectly, it can be used effectively in private sector project appraisal and management courses as well. 

 (The writer is Professor of Economics, Monash University, Melbourne.)