Cost of seven mega projects
FROM PAGE B1
on-investment estimates are vital for project justification, yet the calculations for these mega projects often lacked the required rigour.
For instance, the report says that despite a 26.5 percent cost escalation for the Karnaphuli tunnel between the DPP (2015) and RDPP (2022), financial analyses, including the benefit-cost ratio and internal rate of return, remained unchanged.
Cost-benefit analyses for long-term projects were flawed, with costs calculated at constant prices and benefits at nominal prices, disregarding time lags in benefit generation.
Such practices demand thorough review and reform for better accountability.
Higher costs for substandard quality
The report found construction costs in Bangladesh are significantly higher compared to neighbouring countries, yet construction quality remains substandard.
For instance, the per-kilometre cost of a four-lane urban arterial road in Bangladesh is 4.4 times higher than in India and 2.15 times higher than in Pakistan.
Projects like the Dhaka-Sylhet Highway and Dhaka-Mawa-Bhanga Highway illustrated exorbitant costs, attributed to high land acquisition expenses, imported equipment, and challenging floodplain environments.
However, these factors alone fail to justify the discrepancies.
The Dhaka-Chattogram Highway Project underscores systemic issues, including inadequate feasibility studies, flawed designs, substandard materials, inaccurate traffic forecasts, and frequent project director changes, leading to cost overruns and delays.
An uneven playing field for contractors
Tenders were reportedly designed to favour specific companies, enabling collusive practices. A TIB review of 48 projects found misappropriation of over TK 50,000 crore.
Land acquisition costs, influenced by insider trading, rose significantly, exemplified by Dohazari-Cox’s Bazar Rail Track and Karnaphuli Tunnel projects.
‘Evaluate rigorously’
To address these issues, the white paper recommends several corrective measures.
One key recommendation is the need for more rigorous evaluations of the financial viability of projects, including cost-benefit analyses and sensitivity tests to assess the impact of cost escalations.
The report also called for reforms to the procurement system to encourage more competitive bidding and reduce the risk of corruption. Strengthening the capacity of the IMED and other monitoring agencies is also essential to ensuring that projects are completed on time, within budget, and with the expected returns.
The report concludes with a call for a comprehensive review of the current approach to mega projects. It stresses the need for greater transparency, improved governance, and stronger accountability mechanisms at every stage of project implementation.