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One-Month Extension Increases Costs by 0.95% in Development Projects

Industry: Development
Economic Tag: Govt.

According to a study conducted by the Bangladesh Institute of Development Studies (BIDS), the implementation of development projects experiences a 0.95 percentage-point increase in costs for every one-month extension. These findings shed light on the potential savings that can be achieved by avoiding delays in a country where Tk 246,066 crore has been allocated for the current financial year for development projects under the Annual Development Programme (ADP). The ADP accounts for 5.5% of the country’s $460 billion gross domestic product.

The BIDS study focused on 361 projects implemented by the Roads & Highways Department between 2012-13 and 2021-22, audited by the Implementation Monitoring Evaluation Division (IMED). The transport and communications sector received 28.7% of the ADP allocation in 2022-23, an increase from 24.7% in the previous year, with a minimum allocation of 23% over the past decade. The study revealed an average cost increase of 26% for the projects, with 96% experiencing time overrun. Factors contributing to the overruns included multiple revisions, insufficient budget allocation, changes in work scope, and delays in land acquisition and tender processing.

 

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