SA TAXPAYERS TO FOOT R205BN BILL ANNUALLY DUE TO PROBLEM PROJECTS

While good infrastructure has significant benefits
for the economy and peoples’ quality of life, South Africa has a significant
problem. According to Mace’s new report, up to 80% of large infrastructure
projects are delivered late and over-budget – and then under-delivered on
benefits.

This has a substantial cost to
taxpayers. Modelling done by Mace, the consultancy and construction company
behind projects such as the Zeitz MOCAA in Cape Town and the London 2012
Olympics, shows that if major projects continue to experience issues at the
rate they do now, taxpayers will be faced with an unexpected bill of R205bn
every year by 2030.

The new Mace Insights report, A blueprint for modern infrastructure delivery, looks at the main reasons why so many large
projects go wrong and what we can do to put it right. Nearly 40 senior
executives from around the world were interviewed for the breakthrough report
alongside a review of latest academic literature and new modelling.

Some of the main issues identified include:

Lack of clarity of outcome when deciding on which schemes to take forward.
Often decisions are driven by political pressure rather than rigorous cost and
benefit analysis.

The poor predictive abilities of project teams in their early stages, who are
pressured into providing fixed point price estimates and programmes well before
accurate predictions are possible or realistic.

Procurements based on ‘cheapest price’ rather than ‘value’. On large and
complex projects, cheapest price procurement is a false economy.

Drawn from the report, top solutions for addressing concerns with South African
infrastructure are: 

Create a department for growth
In many countries around the world, the political responsibility for planning,
business regulation, housing and transport are separate. This means that when a
mega infrastructure project comes along, it cuts across multiple policy areas
with a very wide range of stakeholders. Bringing the relevant elements together
into a coherent single government department would improve decision-making and
efficiency.

Create an independent scrutiny panel
If your project or programme is large enough or you are a government agency
with many large projects, you should create a panel of industry ‘heavyweights’
outside normal public sector structures to challenge the project scope,
timescales and costs. Their sole role should be rigorous challenge. This
independent scrutiny panel needs to have the teeth and executive support to get
the information they need for proper challenge. The London 2012 Olympics and
the Hong Kong Aviation Authority both took this approach. Governments may
choose to use this panel to challenge their top 10, 20 or 50 projects at
regular intervals.

Training academy for project ‘sponsors’ and leaders
Many large infrastructure owners are public bodies who can struggle to attract the right calibre of people to work for them due to pay constraints. Hence it makes sense to provide high-quality practical training to current government employees to try and upskill them and enhance their skills. A particular focus should be given to the understanding of probability and risk and what that means to a project alongside how to hone in on a clear outcome for a project to achieve.

Kelvin Byres, South Africa country manager, said: “The delivery of infrastructure in South Africa is key to continue to enable economic growth across the country. As population pressures on our urban centres grow, we must keep pace with our infrastructure programmes. 

“The government rightly has ambitious plans for infrastructure investment across South Africa, but if we can’t deliver them effectively, we risk huge costs for our taxpayers.”https://www.bizcommunity.com/Article/196/494/189176.html#more