2. RATIONALE
OBI v. Credit Ratings (Hameed, 2010)
Fundamental right
Informs voice and
political process
2
Enables accountability
Improves performance
in public sector (?)
Reduces risk of OBI v. EMBI Sovereign Spreads (Hameed, 2010)
corruption (?)
Reduces price of
borrowing
3. OTHER SIMPLE LINKAGES: MEDIA AND OPEN
BUDGET INDEX
100
Number of obs = 93
South Africa
New Zealand
Adj R-squared = 0.3430
United Kingdom
France
Coefficient = -.6778005***
Sweden
Norway
United States
Spearman's rho = -0.6065
80
Chile
Korea, south
Brazil
Slovenia
Germany
India Sri Lanka
Peru
Poland
Spain
60
Czech Republic Ukraine
Colombia
Mongolia Russia
Romania
Portugal
Italy
Slovakia
Papua New Guinea
Croatia Turkey
Argentina
Bulgaria
Georgia
Uganda Philippines
Ghana Serbia
Namibia
Mexico
Botswana Indonesia
Guatemala
Jordan
Macedonia Kenya Egypt
Bangladesh
Costa Rica Malawi
Tanzania Nepal
Bosnia-Herzegovina
Azerbaijan
40
Thailand
Liberia
Malaysia
Kazakhstan Pakistan
Nicaragua
El Salvador
Zambia
Mali
Timor-Leste Venezuela
Trinidad and Tobago Albania
Lebanon
Ecuador
Mozambique Morocco
Angola
Yemen
20
Afghanistan
Nigeria
Cambodia
Kyrgyz republic
Dominican Republic Vietnam
Bolivia China
Honduras Rwanda
Sudan
Congo, dem. Rep.
Burkina Faso
Senegal Niger
Cameroon
Algeria Saudi Arabia
0
Chad Iraq Fiji Equatorial Guinea
0 50 100 150
Press Freedom Rank (the lower the better)
4. STARTING WITH SIMPLE CONCEPTS
Government
Electoral Process Contestability of Markets
Media Expertise
Education Independence
What are the Goods in
Question and how are they Service
Citizens provided? Delivery
Agents
5. BUDGET CYCLE: CREATING BETTER INCENTIVES
THROUGH PARTICIPATORY MONITORING
Budget Formulation
Participatory Budget Planning
Performance Civic Budget Review & Analysis
Monitoring
Engagement Participatory review: Do
Participatory Monitoring, allocations match announced
Score Cards social commitments?
Budget/Expenditure
Tracking
Participatory PETS
6. IMPROVING PUBLIC SERVICE DELIVERY
THOUGH PARTICIPATORY MEASURES:
WHAT IS THE EVIDENCE?
Olken (2007)
Community-Based Monitoring of rural roads in 600 villages in Indonesia
An average of 24 percent of road expenditure were estimated to be diverted, which
were reduced by 8 percentage points where audits were pre-announced and with
insignificant reductions where participation was carried out without the audit.
Bjoerkman and Svensson (2007)
Community-Based Monitoring of Health Service Providers in 50 communities in
Uganda
Quality and quantity of health service provision improved through Citizen Report
Cards; 1.7 percent lower deaths of children under 5 in control group
Luo, Zhang, Huang and Rozelle (2010)
Examined the relationship between direct elections and investments in public
goods in 2450 villages in China
Directly elected village leaders implement more public goods projects compared
to non-elected leaders
7. IMPROVING SYSTEMS, PROCESSES AND
PRACTICES IN PUBLIC CONSTRUCTION
Value of global construction industry to increase to $12 trillion p.a. by
2020 (13.2 per cent of global GDP) - Global Construction 2020
Mismanagement, inefficiency and corruption can account for 10 -
30% of a construction project's value - OECD, TI
Construction Sector Transparency Initiative (CoST) : A participatory,
multi-stakeholder, multi-national framework to improve transparency and
accountability in public construction
Hypothesis (similar to Bjoerkman and Svensson): lack of reliable
and structured information and organizational capacity constrain
service delivery improvements (here transparency in construction
sector)
Pilot Phase: 2008 – early 2011
Country Participants: Ethiopia, Guatemala, Malawi, Philippines,
Tanzania, UK, Vietnam and Zambia
Locally constituted multi-stakeholder group (MSG)
oversees application of disclosure and assurance protocols
8. BRINGING TOGETHER TRANSPARENCY AND
ACCOUNTABILITY
Improve transparency through Encourage informed
public disclosure and reaction to create
assurance of relevant demand for improved
information efficiency and quality
Disclosure
Informed Reaction
Assurance
Accountability
9. COST PRINCIPLES
Promote transparency and accountability in publicly
financed construction projects
Implement a multi-stakeholder approach that incorporates
representatives from public and private sector as well as civil
society
Collect, verify and interpret disclosed project information
along the full construction value-chain
Disseminate information through public forums/channels
Voluntary and flexible implementation of these principles
10. COST PROCESS
DISCLOSURE
Procuring entity regularly discloses “Material
Project Information” (MPI).
ASSURANCE
Assurance Team is responsible for assessing the
adequacy and reliability of project information
disclosures, and identifying “areas for concern”
REPORTING
Assurance Team publishes reports to disclose to
the wider public its main findings
11. WORKING ACROSS THE VALUE-CHAIN
Program & Completion &
Identification Design Procurement Implementation
Budget Operation
Project Tender Contract Updates, Completion
identification, request, award Variations details
Owner, Budget, Design during
Justification available construction
Assurance
Reports
12. MATERIAL PROJECT INFORMATION
Project purpose For Main Works
Location of project Name of main contractor
Intended beneficiaries
Contract price
Specifications
Contract scope of work
Budget
Contract program
Engineer’s estimate
Significant changes in contract (PS)
Tender process (project supervision)
Significant changes in contract, price (MW)
Tender procedure
No. expressing interest
Significant changes in contract, program
(MW)
No. shortlisted
Details of any reward for main contract
No. submitting tender
Actual contract price
Tender process (main works)
Tender procedure
Total payments made
No. expressing interest Actual contract scope of work
No. shortlisted Actual contract program
No. submitting tender Other documents
For Project Supervision Feasibility Study
Name of main consultant Financing agreement
Contract price Tender evaluation report
Contract scope of work
Project evaluation reports
Contract program
13. HOW CAN DISCLOSURE HELP?
Detect possible collusive behavior
No. expressing interest
Participation of bidders
Names of winning bidders
Compare construction costs across bidders/geographic
areas
Compare efficiency of construction (time/cost overruns)
Deterrent effect
14. WHICH CAN RESULT IN:
Reduced corruption
Reduced construction costs
Improvement in quality
A level playing field
Increased competition (more participants)
Boost in investor confidence
Improved taxpayer satisfaction
Reduced poverty through economic growth
16. ASSURANCE PROCESS IN PILOT -
TYPICAL ISSUES HIGHLIGHTED FOR ATTENTION BY
ASSURANCE REPORTS
17. REASONS FOR TIME OVERRUNS
Projects finishing
No information in less time than
returned, 17% contracted, 4%
Projects finishing
on time, 19%
Projects finishing
more than 100%
over time, 19% Projects finishing
up to 100% over
time , 40%
18. CoST Implementation Path
Implementation
Project information &
Preparation assurance findings
Country CoST disclosed – on progressive
program basis until sustainable as
Engagement prepared and government system
initiated
Gaining
awareness of
CoST
19. COST INTERNATIONAL GOVERNANCE STRUCTURE
– REVISED NOV-2011
CoST Board
International
Secretariat
Delegate Assembly
Implementing International
Countries Stakeholders
Editor's Notes
The country CoST Program aims to establish a public disclosure process for the construction sector which is viable and appropriate to country conditions, sustainable in the medium and long-term as a government system, and which has a credible and substantial level of compliance in the relevant sector entities. It also aims to ensure that the disclosure process is effective in stimulating an active demand for accountability of construction entities and that this results in improved performance in the entities and in public construction projects.The purpose of the global CoST program is to form a partnership for countries establishing processes that allow public access to reliable information on public construction projects, create a better understanding of issues affecting value for money, and encourage interaction with stakeholders that raises the accountability of public entities for performance and integrity in public construction. The global program will administer international funds to provide technical guidance and technical support to participating countries, provide a global forum for exchange of knowledge and experience, and run a framework for evaluating and recognizing the performance of participating countries.
CoSTprovides support to governments to put systems in place that allow public access to reliable and detailed construction project information.support to multi-stakeholder groups to oversee the validation and interpretation of the information and to build the capacity of the target audiences to understand its implications. Empowered with information and understanding, stakeholders (citizens, media, parliament, oversight agencies) raise challenges over instances of poor performance, perceived mismanagement or corruption: where possible, they will demand better project outcomes, savings, and more effective and efficient governance systems for delivery.Government responds to the concerns by commissioning audits into specific projects or wider reviews into the performance of an agency or the sector as a whole: it will have information to investigate alleged incidents of mismanagement and corruption and subsequently act to sanction staff or prosecute offenders.Governments and agencies then improve corporate and project governance by building capacity in procuring entities to improve project outcomes and by improving operational procedures and regulations.These actions should encourage and enable positive changes in behaviour in procuring entities (better management and less corruption) and possibly attract new companies into the market (more genuine competition) leading to better use of public funds, lower costs, reduced time in delivery, better quality projects and improved certainty of outcomes.
CoST PrinciplesA multi-stakeholder initiative promoting transparency and accountability in publicly financed construction projects.Offering procedures that improve and broaden information disclosure .Expert verification and interpretation of information collected.Findings disseminated through public forums/channels.
Assurance team ‘assures’ ex post that project data and analysis - from the feasibility study through variation orders - are accurate, appropriate and justifiable. Ensuring that “must-have” ex post evaluation and review is present. ‘Institutional failure’ can be corrected and social trust garnered through CoST’s participatory framework.But this process must be internalized to ensure sustainability Enhances the credibility of “project preparation steps” by making info available across the full project cycle from design through implementationAdditional state-owned investigation is required to classify the ‘type’ of irregularity present
Baseline studies revealed that only half information required to be disclosed under current legislation is actually disclosed.Information on over 200 projects across 29 procuring entities was collected, verified and disclosed.Significant inefficiency and mismanagement identified throughout the construction cycle.Major causes of concern: unjustifiably long timeand high costs overruns; and low levels of competitive bidding.Current emphasis on procurement reform is a necessary but not a sufficient focus for improving efficiency and obtaining better value for money in public construction.