The wrong impact with projects

Editorial, Normal

The National, Wednesday 5th June 2013

 IN political speak today, the important catch phrase is “impact projects”.

Leaders talk about impact projects in their electorates while ministers talk about impact projects affecting their areas of responsibilities.

The expression entered common usage during the years when Sir Julius Chan was in Cabinet and he devised 10 impact projects throughout the country – one of which was the Lae Port extension, another  the Poreporena Freeway.

Impact projects are just plain wrong. 

Government and leaders ought to be talking about impact programmes, not impact projects.

They ought to be budgeting for programmes under which there are many projects, rather than planning for and allocating money for individual projects.

When there is a shortfall in cash flow affecting programmes, the manager can very easily trim peripheral projects and maintain core projects of the programme.

In the end, progress is made.

When the drive is for projects rather than programmes, the budget for such a project is locked in.

All the variables for the project are costed out. 

There can be no room for cash flow problems. 

If there are cost variations, they must be met or the project be abandoned. 

When a project is abandoned midflight, it becomes a very costly exercise. 

Much money has been spent in the lead-up and a lot more will be spent in legal battles over breach of contractual obligations.

Today there are few programmes, or if there are any in the Government’s plans, they are overlooked in favour of a few selected “impact projects”.

Contractors and others who successfully bid for impact projects know they have the government where it hurts. 

It is locked in place. It cannot budge and so the cost variations quickly come in and by the time the project is completed, the final cost is often very much higher than the original tendered cost.

Another glaring and common error is the increasing tendency by the executive government to circumvent Parliament altogether.

Normally all programmes of Government are approved by Parliament when it approves the budget for the next year.

Today, a huge number of projects are added which have never been approved by Parliament. 

This means that money has to be found or transferred outside of the budget approved votes to fund the project. 

That directly contravenes the Public Finances Management Act.

If and when a new project for a substantial amount of money is approved, it would usually be presented to Parliament for ratification at the next sitting. 

This hardly happens.

As a result, Cabinet today has before Treasury a number of projects that it has approved for funding but for which there are no approved funds. 

The normal ploy to legalise an obvious illegal transfer is to “find savings”.

There can be no savings in government. 

All money that is not spent within one year or any additional funds that is added during the year would normally go to the next year’s consolidated revenue and be factored in the budget of that year.

This process has gone to the head of individual ministers so that it is not uncommon today for ministers to approve payment or make pledges running into tens of millions of kina. 

There is a hierarchy of payment approvals including the ceiling for a minister before it goes up to Cabinet and even Cabinet has a ceiling beyond which only Parliament can grant approvals on. 

That hierarchy appears for all intent and purpose to have been abandoned. 

This is costing the nation dearly.