Why Projects Fail

WHY PROJECTS FAIL

Weaknesses in Planning Process Highlighted

and Remedies Suggested

Syed Irtiqa Ahmed Zaidi

ADEEB ONLINE

Copyright © 2024 ADEEB ONLINE

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I dedicate this book to

My Parents,

Sisters,

Brothers,

My wife,

Children,

Grand Children,

Friends

and

Former Colleagues

Contents

Title Page

Copyright

Dedication

Foreword

Preface

DEVELOPMENT PROJECTS

PROJECT CYCLE

SHABBY IMPLEMENTATION OF PROJECT CYCLE

CASE STUDIES OF SOME FAILED PROJECTS

WAY FORWARD–SOME SUGGESTIONS

COMMENTS

LIST OF ANNEXES

ACRONYMS

About The Author

Foreword

Judicious use of a country’s financial resources for economic development is one of the most important yardsticks for measuring the efficiency and performance of any Government. A major chunk of the Annual Budget is spent on financing Development Projects through the Public Sector Development Program (PSDP) worth billions of rupees. Holistic, Integrated, Coordinated, and Efficient project planning and management are imperative for the optimal and effective utilization of national resources including PSDP allocations. Unfortunately, adequate efforts were not always employed for independent evaluation of development projects by specialists to understand in depth the planning and implementation weaknesses at various stages of the entire Development Cycle.

The following facts would help to understand and appreciate this unfortunate state of affairs:

From its inception to 1983, the Chief Executive (President/PM) was the Chairman of the Planning Commission. Thereafter, the Minister for Finance was designated as the Chairman. With the passage of time, the Planning Commission was reduced to a glorified Division and an addendum to the Finance Division with their in-built limitations.

Unfortunately, many key functions assigned to the Planning Commission, under Rules of Business, were taken over by the Ministry of Finance (MoF) which effectively reduced it as a satellite of the MoF.

For almost 25 years, not a single meeting of the Commission was convened; strategic long-term thinking, in-depth planning, and effective implementation and monitoring were adversely affected.

National Economic Council (NEC) had decided in 1988 that restructuring of Planning Commission be undertaken to make it effective. However, this decision remained un-implemented till the appointment of the undersigned as Deputy Chairman Planning Commission in March 2004.

Through focused and continuous efforts and with the active support of the Federal Cabinet Secretary, the restructuring was finally achieved in 2006 with the full patronage of Aiwan-e-Sadr. The Commission was revamped and strengthened particularly through the induction of former Federal Cabinet Secretary and senior Professionals of international stature and repute as PC Members to act as the national brain-trust and provide intellectual leadership and guidance directly to the Prime Minister who became an effective Chairman of the restructured Commission.

From 1988 to 2000, the PSDP/GDP ratio had dropped from a peak of 8.7% to 2.6%, resulting in adverse effects across all sectors of the economy, particularly relating to the physical, scientific and technological infrastructure and water and energy sectors. From 2000 to 2008, the PSDP/GDP ratio increased from 2.6 % to 4.8% with a corresponding reduction in non-development expenditures. In absolute terms, the PSDP more than quadrupled in this period resulting in significantly enhanced and balanced development activity throughout the country. With further PSDP/GDP ratio projected to grow up to 7.0% till 2017, all required projects were appropriately budgeted to achieve national goals of balanced development for 7-8% GDP growth, in line with VISION 2030.

With enhanced GDP growth, the unemployment and poverty figures dropped significantly. During this period, there was a shortage in the availability of Engineers; the situation is currently disturbing on both these fronts.

In order to strengthen, the project oversight, an Implementation and Monitoring (I&M) Wing headed by a very experienced PC Member (former E-in-C Pak Army) was established. This decision helped improve the situation tremendously and the PSDP expenditures and project implementations reached around 95% satisfactory level (Reference Medium-Term Review 2008, published after my departure from Planning Commission)

Dr. Engr. Muhammad Akram Sheikh

(Hilal-e-Imtiaz)

Former Federal Minister / Deputy Chairman Planning Commission

Founding Co-Chair Global Think Tank Network (GTTN)

Islamabad, 23 January 2022

Preface

As was told to the audience during the launch of my book, Negotiating the Power Corridors, on 7 January 2020 at the Institute of Policy Studies (IPS) in Islamabad, the next book will be Why Projects Fail. There were two reasons for writing this book. First, I served in Planning Commission for 25 years on various posts and painfully observed that the Planning Process had some inherent faults. These faults could have been easily removed but unfortunately there was no will to rectify the situation. I thought it appropriate to bring out the issues which could be resolved with proper intervention at top level. The second reason was that during Advanced Management Course at NIPA Karachi in August–November 2000, while discussion on Project Management issues, I realized that majority of participants belonging to various Federal Ministries had little knowledge about Project Cycle. Majority of them were involved in implementation of projects in different capacities but they had not received any training in Project Management in domestic or international Institutions.

As a part of our training at NIPA Karachi, the group toured Islamabad and provincial capitals where some projects came under discussion, and the Planning Process was also discussed. Some very useful deliberations took place when as a group leader I appreciated the decision of Additional Chief Secretary (Development), Punjab of spending 90 percent development funds on the ongoing projects. I asked him that will he continue this practice in the tenure of political governments also. I was shocked to listen to his reply that he had been doing so because General Pervez Musharraf as Chief Executive of Pakistan had issued directives to Planning Commission and all provincial governments to finance the ongoing projects on priority basis by spending 90 percent of funds. New projects were allocated only 10 percent of PSDP funding. He said that in post Musharraf era he will not do that because no political government will like to continue this practice. He said that he is sure that political governments will reverse this decision and would issue new directive of spending more funds on new projects. Because in order to increase their vote bank, they would like to start new projects in their constituencies. I argued that by discontinuing the decision of Musharraf government of spending 90 percent of development funds on ongoing projects, country will suffer economically. He agreed that the decision by Musharraf is in the best interest of the country but since he is not elected head of State and he does not have a constituency to satisfy his voters, he can afford to do that.

I was frustrated by the remarks of Additional Chief Secretary (Development) and raised this issue at various levels during our meetings at Federal and Provincial level. I also raised this issue in Seminars conducted at public and private level. Experts vehemently supported the idea that ongoing projects should get maximum allocation of funds. However, this did not happen just because Planning Commission succumbed to the pressure by political governments to allocate more funds for new projects in their constituencies. In this book, I have tried to highlight the weaknesses of Planning Process and reasons thereof.

In the last chapter I have listed remedial measures and pointed out that no improvement could be achieved in the Planning Process unless some more challenging decisions are taken. We have already wasted much time, and the ordinary person is in extreme distress because of mismanagement and the wastage of development funds. Whether elected or non-elected, all governments have failed to provide basic amenities of life to the common man. The situation is very alarming, as the majority of people do not have:

Clean drinking water

Security

Basic health facilities

Education,

Employment,

Housing

Affordable transport.

Justice.

The biggest issue the most people face is inflation. The cost of living has gone up tremendously despite the government’s best efforts to control prices. Unfortunately, the politicians and bureaucrats at different levels may have little understanding about the basic principle of supply and demand, hence try short cuts by taking administrative measures. Nowhere in the world have prices ever been controlled through using a stick. Such measures had always been counterproductive and created scarcity of goods in the market and further increased prices. Besides increase in the prices of food articles, and other essential commodities, utility prices are also increasing. Due to increase in the POL prices in international market, the government is compelled to increase prices of fuel and energy at regular intervals as it cannot subsidize it beyond a certain limit. Moreover, people’s earnings have eroded because of unemployment due to depletion and stagnation in economic activities because of Covid 19 pandemic in Pakistan.

The solution to these issues lies in increasing productivity through efficient Project Planning and management by judicious utilization of development funds.

Syed Irtiqa Ahmed Zaidi

Islamabad, 28 January, 2022

irtiqa.z@gmail.com

Cell: 92-300-5350063

DEVELOPMENT PROJECTS

CHAPTER I

What is a Project?

The word project comes from Latin word projectum which means before an action. When the English language adopted this word, it referred to a plan of something, not to the act of actually carrying this plan out. Every project has certain phases of development. A project consists of a concrete and organized effort motivated by a perceived opportunity. It seeks realization of a unique and innovative deliverable. Each project has a beginning and end.

A project is a piece of planned work or an activity or set of activities, intended to achieve results in a specific period of time. It is a series of tasks that need to be completed in a certain time in order to achieve a specific outcome. It can also be defined as a set of inputs and outputs required to achieve a particular goal or goals. If there is one single quality which sets a project apart from routine commercial or industrial operations, it is its novelty. No two projects are ever exactly alike.

Projects are defined in different ways. The definition given in the UN Manual on Programming Techniques for Economic Development, produced under United Nations, ESCAP 1960 defines a development project as follows:

The smallest unit of investment activity to be considered in the course of programming. It will as a rule, be a technically coherent under taking which has to be carried out by a private or public agency, and which can be carried out, technically speaking, independently of other projects. Examples of projects are the building of factory, the construction of a bridge or a road, or the reclamation of a piece of land".

According to PMBOK (Project Management Body of Knowledge) 3rd edition, a project is defined as a temporary endeavor with a beginning and an end and it must be used to create a unique product, service or result. Projects are those activities that cannot go on indefinitely and must have a definite purpose. Routine activities cannot be considered as project. For instance, if your project is less than three months old and has fewer than 20 people working on it, it cannot be called a project.

From the standpoint of economics, a project is the minimum investment which is economically and technically feasible. A project is an activity on which we spend money in expectation of returns and which logically seems to lend itself to planning, financing and implementation as a unit. It is a specific activity with a specific starting point and a specific ending point intended to accomplish a specific objective. Normally it will have some geographic location, specific clientele, defined time sequence of investment and operation and a bunch of benefits which can be quantified.

Development

Projects are the cutting edge of development, they put teeth into development plans. For most development activities, careful project preparation in advance of expenditure is the best available means to ensure efficient economic use of capital funds and to increase the chances of on schedule implementation. Unless projects are prepared in substantial detail, inefficient or even wasteful expenditure of money is almost sure to result, a tragic loss in capital-short nations. Projects act as bricks for a structure