Open letter regarding infrastructure projects
, 13th of February, 2018
The importance of quality infrastructure for economic growth is well established and, to a similar extent, Romania’s delays in this area. The lack of infrastructure frustrates the business environment, citizens and the authorities alike. The members of the Foreign Investors Council (FIC) – companies that hire more than 186.000 people and have a turnover that is approximately 24% of GDP – believe it is high time Romania moved beyond asking whose fault it is but focusing on what is to be done. This is the way businesses and entrepreneurs look at the problems they encounter. We decided to write this open letter because from your public statements it is clear infrastructure preoccupies you at least as much as it preoccupies us.
From our point of view a relatively easy way to unblock and accelerate some of the large infrastructure projects is to create a special project implementation unit that will be empowered and given all the tools necessary for this mission.
We decided to send an open letter because we believe there are other people and institutions with expertise that can contribute and debate our idea.
Roadblocks hampering infrastructure development
A number of major infrastructure projects have encountered delays and cost overruns resulting from:
- Technical design issues,
- Low quality tender books,
- A complex and administratively challenging procurement process,
- A lengthy and sometimes poorly co-ordinated process for obtaining the required approvals,
- Shortfall of resources during the roll out for monitoring as well as other factors.
A history of repeat errors has been noted, consequently affecting efficient and effective the roll out of infrastructure projects.
At FIC, we believe more can be achieved by taking measures to address this gap in the administrative capacity, apart from the financing aspects. We understand that this will take time, but a consistent approach will help improve capacity while, at the same time, lead to the development of better infrastructure. To address the complex matrix of factors negatively impacting the development of infrastructure, we propose steps that should be taken to
a) minimise repeat errors
b) create strong project implementation capabilities going forward.
Program implementation unit (PIU)
To improve coordination between the main stakeholders, we recommend that the Romanian Government set up a Program Implementation Unit(PIU) which could be placed within the Ministry of Transport or as a cross-ministerial body. The PIU should be responsible for supervising the implementation of large infrastructure projects, as well as identifying and supporting regional agencies in rolling out various independent financially viable projects.
This PIU must be resourced with technical (engineering, procurement, project management experts etc.), legal expertise, as well as having the appropriate financial resources. The PIU would be the overall responsible body for carrying out projects for the beneficiaries, with clearly identified responsibilities, as well as authority to ensure that:
- Consistency of performance is introduced into large projects roll out, as time passes and the unit matures.
- Benchmarking is easier and can be a tool to provide guidelines and expert support to other projects on a case by case basis as and when requested.
- An up to date and immediate project status is available and this department would facilitate addressing minimising and eliminating potential problems during the project roll out.
- Point of contact is brought to many relevant bodies as time passes.
- The department would be permanent and hence loss of knowledge would be minimised.
Recent experiences in which the Romanian Government has contracted International Financial Institutions (the World Bank, the European Investment Bank and the European Bank for Reconstruction and Development) to prepare strategic sectorial analysis, are some positive examples of good practices in outsourcing such functions. Such unit can also engage with a number of institutions including IFIs, to help it improve delivery of various projects.
- Making available to the unit their outstanding knowledge in financing large infrastructure projects (establishing the financial structuring of the projects, applying the best financial modelling techniques, identifying financing sources, financing and bringing private financial leverage etc.)
- Allowing access to their network of international experts covering practically all the area of infrastructure expertise.
- Offering best practices worldwide in planning, managing and evaluating the impact of infrastructure projects and in developing effective procurement mechanisms for projects.
Additionally, we believe there is a significant potential of cooperation with ANAP, whereby ANAP can be used as data centre providing valuable information for decision making.
The PIU should be populated only with professionals and experts which need to be remunerated accordingly and be given all the tools and empowerment necessary to speed up the implementation of large projects. Romania needs to speed up the development of its infrastructure before the lack of it starts becoming a powerful break on economic growth and performance.
We are available to meet and discuss our idea and our members are ready to contribute with their experience and expertise.
The Board for the Foreign Investors Council