Kenyans to Pay KSh.200 Billion Every Year Due to Poorly Planned and Procured Infrastructure Projects

Kenyan taxpayers will soon be faced with an unexpected bill of 200 billion shillings every year by 2030 due to 80 percent of over-budget, large infrastructure projects that are delivered late, a new report indicates.

According to the survey by Mace, the consultancy and construction company behind iconic projects such as the London 2012 Olympics, and Dubai Expo 2020 and Kenya’s Garden City among others, says that the country currently has a predicted annual infrastructure of 650 billion shillings  a year by 2030, but due to late delivery and stretched budgets, the projects have a substantial cost to taxpayers.

READ Kenya Seeks Sh368 billion Loan from China to Extend SGR, Despite Loss

Mace has indicated that major projects continue to experience issues at the rate they do now, taxpayers are in trouble.

The report dubbed Mace Insights, which paints a picture of modern infrastructure delivery¸ delved into details on why many projects fail and what can be done to salvage them.

It interviewed close to 40 senior executives from around the globe for realistic findings alongside giving a review of the latest academic literature and new modeling.

Issues Identified

• Lack of clarity of outcome when deciding on which schemes to take forward is one of the hindrances to major projects. Decisions surrounding these projects are often influenced by too much politics rather than rigorous cost and benefit analysis.

READ Leaders and Companies Mentioned in the 90 Billion Dam Scandal

• Poor predictive abilities of project teams in their early stages. The teams are often pressured into providing fixed point price estimates and programs well before accurate predictions are possible or realistic.
• Procurements based on ‘cheapest price’ rather than ‘value’. On large and complex projects, cheapest price procurement is a false economy.

SEE ALSO 6.6 Trillion Shillings Looted as Corruption Balloons in Kenya

From the report, the best recommendations for Kenya’s infrastructural projects include:

1. Creating a Department for Growth

Kenya has failed to realize that the political responsibility for planning, business regulation, housing, and transport are all separate. What this means is that when a mega infrastructure project comes along it cuts across multiple policy areas with a very wide range of stakeholders.

Bringing the relevant elements together into a coherent single government department would improve decision-making and efficiency.

2. Form an independent scrutiny panel

If your project or program is large enough, or you are a government agency with many large projects, you should create a panel of industry ‘heavyweights’ outside normal public sector structures to challenge the project scope, timescales, and costs.

Their sole purpose should be a rigorous challenge. This independent scrutiny panel needs to have the teeth and executive support to get the information they need for proper challenge.

The London 2012 Olympics and the Hong Kong Aviation Authority both took this approach. Governments may choose to use this panel to challenge their top 10, 20 or 50 projects at regular intervals.

READ County Assemblies Spent Ksh.4.90 Billion Taxpayer’s Money to Travel

3. A training Academy for project ‘sponsors’ and leaders

Many large infrastructure owners are public bodies who can struggle to attract the right caliber of people to work for them due to pay constraints. Hence it makes sense to provide high-quality practical training to current government employees to try and upskill them and enhance their skills.

A particular focus should be given to the understanding of probability and risk and what that means to a project alongside how to hone in on a clear outcome for a project to achieve.

“The delivery of infrastructure in Kenya is key to continue to enable economic growth across the country. As population pressures on our urban centers grow, we must keep pace with our infrastructure delivery,” Simon Herd, MaceYMR’s Director for Kenya, said.

Mr. Herd also added that the government rightly has ambitious plans for huge infrastructure programs across the country, but if they are not delivered effectively, the country risks huge costs for Kenyan taxpayers.

RELATED Kenya Loses Ksh.1 Trillion Every Year to Corruption – What Could 6 Trillion Stolen So Far in Jubilee Government Do?

On his part, Jason Millett, Chief Operating Officer for Consultancy at Mace said that according to the report’s calculations, unless something changes, Kenyan taxpayers will be stung with an unexpected bill of 200 billion shillings a year by 2030.

“Sadly, many large infrastructure projects do not have the right measures in place to properly plan, develop and deliver these vital schemes. This leads to cost increases, delays in completion and under delivering on the benefits they promised,” he said.

MaceYMR delivers project/program management and cost consultancy for some of the country’s largest and most high-profile developers. Completed and current projects include the Two Rivers Mall Nairobi, the Acacia Mall in Kampala, the new City Lodge Hotel in Dar and Kigali’s new I&M Bank Headquarters building.

SOURCE Africa Business Communities