Corruption in projects: How effective is the Planning Commission in optimising costs?

One of the most talked-about issues nowadays is corruption in government projects. News about bureaucrats or politicians embezzling 40% of project funds, or accusations involving the relatives of top political elites, has never failed to capture the public's attention.

In Bangladesh, a culture has developed around constructing most physical and IT infrastructures—like buildings, roads, railways, and ports—through projects under the Annual Development Program (ADP).

The ADP accounts for more than one-third of the national budget. This portion of the budget is significant because it reflects the nation's progress toward achieving its development goals. The other two-thirds of the budget mainly covers government salaries, foreign debt payments, and routine expenses, the impact of which is not directly felt by citizens.

Therefore, embezzlement from these projects, funded by public money, not only has a huge impact on the country's economy but also erodes the public's trust in political leadership. This, along with other issues, can ultimately lead to the collapse of regimes.

Questions arise about who is responsible for overseeing this. Who will address the misappropriation and mismanagement?

The primary responsibility for managing projects lies with the concerned implementing agency and its ministries. However, when the implementing agency drafts the project document (DPP) and manipulates the cost estimate, it becomes difficult to expect fair practices from them.

The most important role should be played by the ministry officials. The common belief is that most of them do not engage in corruption, as they have less opportunity to benefit directly from inflated costs. However, since the ministry and the agencies work closely together, they can form an alliance and help each other engage in corrupt practices—unless ministry officials are trying to protect themselves.

After the ministry, the Planning Commission evaluates the projects, and within the Planning Commission, the IMED (Implementation Monitoring and Evaluation Division) serves as an independent monitor and evaluator.

Corruption in projects is often linked to the process of estimating the costs of project components. There is little effort from both ministries and the Planning Commission to properly analyse these costs. If lower and mid-level officials from the ministries and Planning Commission could thoroughly investigate the estimated costs, higher authorities would be better equipped to play a key role in discussions at the Departmental Project Evaluation Committee meetings, chaired by the secretary.

Specially trained personnel in each ministry, who were part of the recently abolished Economic Cadre and had received training both domestically and abroad to handle projects—many of whom were engineers—could have been instrumental in combating these practices. Unfortunately, most mega projects have escaped effective scrutiny.

With very few exceptions, senior authorities such as the secretary, head of organisations, additional secretary, and joint secretary in ministries, who serve as supervising authorities, typically lack the expertise to analyse various components of project costs. This is because they come from diverse academic backgrounds. However, it is true that if any official makes an effort to develop expertise in cost analysis, it is not particularly difficult.

In the DPP, costs are presented in a structured format that makes it easy to notice and compare unit costs with market prices. For example, in the Rooppur Nuclear Project, the prices of items like chairs, tables, and pillows could be easily compared to the market prices in Bangladesh using the cost table in the DPP.

Similarly, in the Bangladesh Water Development Board Office Construction project, the large number of air conditioning units, which had a bill higher than the electricity bill of the Bangladesh Secretariat, should have been noticed by any official, regardless of academic background.

The cost of the third Shitalakkhya Bridge over the Shitalakkhya River was six times higher than that of a similar bridge over the Karnafuli River, even though both projects were implemented under the same agency. Why was the six times higher cost of these similar projects not flagged, despite the argument that Japanese designs are more expensive, which contributed to the higher cost of the bridge?

Cost analysis should be the single most important activity in a PEC meeting, taking up the majority of the meeting's time. However, in most cases, the opposite happens—minimal time is spent on cost analysis, while maximum time is devoted to less significant issues. Additionally, they did not analyse or compare the costs of the mentioned projects.

Now, let us turn to the IMED, which also appears to have overlooked these cost issues. This oversight may be attributed to their lack of expertise in addressing cost-related matters.

On one occasion, the IMED Secretary expressed his disappointment by saying, "IMED does not need to exist." When asked for the reason, he explained that the division had no power, and as a result, no ministry or agency paid attention to or valued any of IMED's recommendations or reports.

At this point, let's take a look at the allocation of business within IMED. It includes tasks such as monitoring and evaluating the implementation of development projects, collecting and compiling project data to prepare annual and periodical progress reports for the head of the government, ministries, and other relevant entities, providing services to ministries, conducting field inspections with the help of ministries, and handling matters related to public procurement regulations.

From this, we can see that IMED has limited ability to make strong recommendations to agencies or ministries, even though many project steps cannot proceed without their approval.

One significant insight into recent corruption practices shows that large-scale corruption in so-called mega projects often goes unnoticed by lower-level bureaucrats due to their inability to understand and analyse the complex cost structures of projects like Matarbari and Rooppur. Furthermore, in many cases, political agreements with certain foreign governments force weak bureaucrats to accept these projects.

Corruption occurs at different stages of a project, including the pre-formulation, procurement, and implementation stages. Even during the pre-negotiation phase, local agents from foreign countries and development partners act as intermediaries, unofficially determining project costs. These agents are powerful figures behind the scenes, often supported by political elites, which leaves bureaucrats unaware of these activities during the early stages of negotiation.

Massive corruption is often linked to them in large-scale projects. These practices remain hidden from bureaucrats because discussions and negotiations are privately conducted by development partners and political figures. Bureaucrats fail to gain insight into these matters due to inefficiency. If they were at least aware of the cost components in projects, they could raise concerns with their political superiors, which could lead to positive changes.

In some cases, even when bureaucrats have this information, they stay silent, driven by their desire for power. Occasionally, they sacrifice national interests for small personal gains, not only out of greed but also due to a lack of understanding of the significant national interests they are compromising.

Corruption in procurement often stems from manipulated technical specifications, acceptance of lower-quality supplies, and inflated pricing. These issues occur regardless of project size. The broader aspects of technical and software specifications are outlined in the DPP, which is subject to scrutiny by the Planning Commission and the IMED.

During implementation, unethical project managers often create new scopes by expanding project scope and timelines. Many projects have a history of extended scope, delayed timelines, and increased consultancy costs, leading to double or even triple the expenditure of public funds.

The same technical and general officials who rely on consultants instead of utilising their own expertise during service often become consultants themselves after retirement or while on a lien, earning significantly higher benefits. This consultancy culture shifts responsibility from serving officials to consultants, who are rarely held accountable for their actions.

Recommendations

Ensuring transparency in estimating project costs is essential. This can be achieved by publishing the cost structure, along with other project details, on the websites of relevant agencies, ministries, and the Planning Commission. Such transparency would trigger the fear of public scrutiny and deter corruption.

It is crucial to eliminate the role of agents or middlemen who act as brokers between development partners and foreign governments. There are groups of officials, individuals, and organisations that benefit from projects. The Planning Commission should develop strategies to identify these groups and eliminate their influence.

Special training programs, conducted by experts, can effectively equip officials from ministries, agencies, and the Planning Commission to analyse project costs. Additionally, redefining the role of IMED with more authority will help ensure effective oversight. Strict compliance with the Public Procurement Act and regulations is also necessary to curb corruption.

Projects should not exceed the MTBF ceiling, as corruption often begins when this limit is crossed. Planning Commission officials attending negotiation meetings with development partners at the Economic Relations Division must be well-prepared in cost analysis. This is important because, while ERD and development partners agree on a negotiation based on an estimate in the Pre-DPP, agencies later claim that the estimated cost was previously agreed upon.

The scope for corruption in consultancy can be reduced by carefully examining the Terms of Reference, which are always outlined in the DPP. Reducing reliance on consultants and improving the capacity of agency and ministry personnel to act as permanent planners, designers, and supervisors will save the public money.

Agencies should be compelled to avoid non-schedule items, as these create a wider scope for uncontrolled pricing. Projects without proper feasibility studies are more prone to corruption, so adequate financial allocation must be ensured for feasibility studies.

At times, development partners fund unnecessary or unplanned projects, which the Planning Commission should avoid. Finally, fostering a culture of non-interference from political elements is desperately needed. While this is understood by all, it is difficult to expect from citizens who have been repeatedly disappointed over the past half-century.