Benefit Analysis of CoST Initiative to a Prison Project

Benefit Analysis of CoST Initiative Application to a Prison Project

Oba’ Aina obawemi.aina@gmail.com February 18, 2017

The purpose of the cost initiative is to increase transparency, accountability and add value for money in the procurement of publicly funded projects (CoST, 2010). It ensures that accountability, and information disclosure is part of normal project reporting process of any publicly funded project as requesting the information through the Freedom of Information Act can be protracted and expensive (McKittrick, 2010).

It also advises that where there is conflict between project constraints, the cost initiative makes it imperative to choose cost over quality, and cost over completion of protracted project delivery (McKittrick, 2010).

The application of CoST to the prison project, would aect the following construction risks areas:

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Permits

Procurement

Kickback to contractors

Consultant appointment

Facilitation payment

Budget

Corruption

Material Waste

Permits Permits are necessary before commencement of construction projects, and with this high-level regulation, the sector becomes prone to risk of bribery. Contractors need prompt issuance of permits and oďŹƒcials upon receiving bribe tend to ignore missing prerequisites. The CoST will mitigate by assessing for weakness and shoring up the vulnerable points within the process, thereby providing assurance.

Procurement The complexity of construction projects and the high volume of procurement activities involved creates opportunities for corruption, bribery, cost escalation and avenues for illicit payments. The publication of Material Project Information (MPI) as demanded by CoST on procuring entities (PE) during the tendering phase leads to financial control and monitoring.

Consultant appointment Too many consultants on public projects adds unnecessary costs to project budget, with the selection process not following due process, and lacking transparency. CoST would provide the organisation with access to experience and skills of the multi-stakeholder group (MSG) to serve as consultants, and provide access to industry support from the likes of Bechtel, Strabag and Skanska (CoST, 2016).

Facilitation payment Oering and receiving bribe is a crime (UK Bribery Act, 2010). The payment of undocumented money to expedite routine procedures opens organisations to corruption risks which CoST removes due to the high ethical standards it demands from individuals associated with it (CoST, 2010).

Budget The initiative requires a constant appraisal of project costs to determine viability or the recommendation of alternatives. While applying CoST in Ethiopia, an estimated savings of $3.7m was made on a $10m road project (CoST,2010).

Corruption CoST Initiative can be deployed as a weapon to fight corruption as witnessed in Afghanistan where it is demanded that all projects that are publicly funded are governed by the principles of the initiative, a contrary approach to what is available in post-conflict zones where construction waste is high due to corruption and lack of monitoring initiatives (CIOB, 2013). In the corruption index of Transparency International, the Uk was ranked 10th in its corruption perception for 2016. See figure 1 below.

Figure 1. UK Corruption Perception : Transparency International, 2016.

Material waste Mismanagement leads to the misuse of project resources. Applying CoST, will flag issues of funds misappropriation and the public will raise concern, thus increasing accountability (CoST, 2012).

Tender Process CoST introduces transparency in the tender process, by making public the number of organisations expressing their interest in the project, the volume shortlisted to move to the bid stage, and the number of organisations submitting final bids (CoST, 2011).

Conclusion Whilst we note the importance of CoST on project cost performance, we need to strategise on how to implement CoST to mitigate against project overrun, has research revealed in 145 sampled projects in 8 countries (see figure 2 below) that it had greatly mitigated against cost overrun but struggled to reduce schedule overrun, perhaps its due to oďŹƒcial bureaucracy and cultural propensity of the sampled countries, as its eect on schedule on UK projects are positive.

Figure 2. Average cost and schedule overrun. Source: CoST, 2011.

References C o S T ( 2 0 11 ) B r i e fi n g n o t e 5 b a s e l i n e s t u d i e s . A v a i l a b l e a t : h t t p : / / www.constructiontransparency.org/documentdownload.axd?documentresourceid=50 (Accessed: 18 February 2017).

Transparency International (2016) Corruption perceptions index 2016. Available at: http:// www.transparency.org/news/feature/corruption_perceptions_index_2016 (Accessed: 18 February 2017).

Construction manager - news (2010a) Available at: http:// www.constructionmanagermagazine.com/news/bob-mckittrick-coming-clean-costs/ (Accessed: 16 February 2017).

Construction manager - news (2010b) Available at: http:// www.constructionmanagermagazine.com/news/afghanistan-vows-fight-corruptionconstruction/ (Accessed: 16 February 2017).

Construction sector transparency (coST) initiative UK pilot baseline study (2010) Available at: http://www.constructiontransparency.org/documentdownload.axd?documentresourceid=84 (Accessed: 20 February 2017).

Why do we need coST? (2016) Available at: http://www.constructiontransparency.org/ documentdownload.axd?documentresourceid=165 (Accessed: 20 February 2017).