Project costs skyrocket on absence of feasibility studies

Source: Project costs skyrocket on absence of feasibility studies – NewsDay Zimbabwe August 15, 2017

The government coughed an extra $10 million on a public sector investment programme (PSIP)-funded project due to lack of proper feasibility studies, an executive with the Infrastructure Development Bank of Zimbabwe (IDBZ) has said.


IDBZ chief executive officer, Thomas Sakala said last week that a recent review of PSIP-funded projects showed extra amounts were paid due to the absence of sufficient preparation prior to the commencement of the project.

“Just as an example, recently, we undertook a review of a PSIP-funded project, which is complete and what we found was very interesting. It has been done successfully and a very beautiful piece of civil engineering work, which is going to meet some critical needs among the part of the Zimbabwean population, but there are also interesting lessons,” he said at the unveiling of the Rebel Group, which will be responsible for the construction of schools across the country.

“First of all, at the time of the commencement of this project it was estimated that it will cost just $11 million. To date, as we speak to you, the government has spent
$21 million and more on this particular project and there are reasons why. What we are doing today will help address some of the reasons that have led to the doubling of the cost on this project.”

Sakala said stoppages and interest accruals added to the eventual cost of the project.

“There was a critical component, which for a number of reasons had not been included again before the project take off and was included during project implementation. Then, because of budgetary challenges it took us longer to implement the project than was envisaged. Therefore, charges in terms of stoppages and interest added a significant amount to the eventual cost of project,” he said.

Sakala said it was realised that the project’s civil works needed more work and the project design was changed during the process, due to lack of strong feasibility studies.

The IDBZ boss said a situation where a project doubles at the end of implementation required some rethink, adding the bank was “very happy that the minister [Lazarus Dokora] and his team have given us the necessary leeway to work with them timely”.

IDBZ is playing its third advisory role and is playing similar roles on the Beitbridge-Harare-Chirundu Road, modernisation of the Beitbridge border post.

Speaking at the unveiling ceremony, Rebel Group director, Andreas Bertoldi said the company would play its role to ensure that it constructs infrastructure with value and longevity.

“Infrastructure is an expensive investment and it has long-term fiscal implications for a country. But it has to be planned properly so that it has longevity and get maximum value. Within that context we take on fully responsibility and I want to ensure you that we are committed to a rigorous process,” he said.