Vice President calls for cost-efficiency in projects delivery
Vice President Dr. Mahamudu Bawumia has asked public sector institutions to ensure cost-efficiency in the implementation of infrastructure projects, to reduce financial wastage and protect the public purse.
As the government looked for suitable investments opportunities to close the infrastructure gap, it was important to make the most of the expenditure on infrastructure.
He was speaking at the “value for money” conference held in Accra for experts including academics, ministers of state, captains of industry and civil society organizations.
Organized by the Vice President Secretariat, it provided the platform to discuss ways to standardize programme design and delivery for all public sector infrastructure projects.
The goal was to help curtail variations in project values in the construction of roads, schools and hospitals.
Vice President Bawumia raised concern about project costs in the country and said these appeared to be too high compared with those of other countries in the sub-region and globally.
A comparative analysis revealed that better-quality hospitals were currently built at a more cost-effective rate in places like India than in Ghana.
Ghana has been constructing 60-80 bed district hospitals for $25 million and he said if the cost was compared to the 150-bed hospital built in Accra by the African Development Bank at GH¢5.76 million or $1.3 million without equipment, the difference was stark.
“Even if we have to equip this hospital for some $1 million, the total cost cannot get to more than $3 million.
So how come we are building district hospitals for $25 million, a figure which even excludes the tax exemptions granted on equipment imported for the hospitals.”
He also cited the building of a 1,000 bed capacity hospital by for nearly under $20 million by Dangote and said “it begs the question why Ghana builds an even smaller capacity (about 400-bed facility) for nearly $300 million”.
“Something is not right here. It is therefore imperative that at the same time as we are seeking suitable investment opportunities to meet the infrastructure gap, the Government takes steps to ensure cost efficient programme design and delivery to reduce financial wastage and protect the public purse.”
Vice President Bawumia said everything should be done to make sure that the nation got value for billions of cedis invested in the construction of roads, schools and hospitals.
Infrastructure, he noted, was among the most important contributors to the economy of every country.
“It plays a significant role in generating revenue for economic development and provides support for a growing population.”
The World Bank estimates that on the average, Ghana invests approximately $1.2 billion annually in infrastructure projects.
The Africa Infrastructure Diagnostic Report in 2010 also indicated that $1.1 billion is lost each year, by the country on infrastructure projects due to project delivery inefficiencies.
For Ghana to meet its infrastructure deficit, $1.5 billion would be required every year for the next 10 years.
Vice President Bawumia pointed out that over 90 percent of corruption was related to procurement and said more attention should be paid to the procurement processes.
“Value for money is an overused phrase in public procurement. Many procurement decisions we are told, have been made with the goal of attaining fit for purpose, efficiency and effectiveness.
Yet, in the end, our infrastructure projects are typically characterised by huge cost overruns and undue delays, which eventually fail to deliver on its objectives to the ultimate beneficiaries.”
He said value for money in public procurement referred to judicious, economic and efficient use of state resources at a reasonable cost, adding that, it was not about achieving the lowest initial price but rather, the optimum combination of whole life costs and quality and arriving at best contract terms for the nation.
The Vice President spoke of the need for professionalism, transparency, competitiveness and accountability to achieve the goal of a good procurement system.
Source: GNA