Md. Amzad Hossain Chapter-10# Project Management in Bangladesh 10.1 Project Planning Environment in Bangladesh Bangladesh is probably the only country in the world, which is for its development program, mostly dependent for its foreign exchange, on foreign aid or external grants. However, the economy and geographical conditions of the country provided a demarcated environment for the implementation of development projects. In Bangladesh, development projects are implemented at different levels. But every project is implemented at different levels. But every project has a different environment distinct from each and every other project. The hierarchy of project planning environment in Bangladesh can be shown with the following cone. The present territory that constitutes Bangladesh to day has always been pre-dominantly rural and agriculture has always been the mainstay of its economy. For centuries this region was dominated and ruled by foreign sovereigns who never attempted to make any major fundamental change for industrialization or transformation of the rural structure as well as strengthening its economy. However, immediately after independence, the then government of Bangladesh put special emphasis on the planned development of its economy and formed the planning Commission in 1972 for formulating plans for rapid reconstruction and development of the War ravaged economy. As in other developing countries of the Third World the Bangladesh Government seeks to mobilize scarce resources for obtaining the desired rate of growth through making pragmatic national development plans and setting target figures for output of each sectoral activity in different time frames. As a county of mixed economy most of the capital investment is made in the public sector and the activity of the private sector is still limited to agriculture, services, and small and medium industrial enterprises. In the eighties under the process of decentralized administration limit devolution of planning responsibilities was given to the Upazilas (Subdistrict), the unit of local government administration. The Upazilas have been given the responsibilities of planning and implementation only of the local level projects and programs. In fact, the entire responsibility of planning and administration of the country and the management of the projects are performed, through a number of institutions/ organizations with specific tasks. The central planning organization is the planning commission and the apex is the National economic council (NEC) which is the highest policy making body of the government in planning, economic matters, trade policy and development function. In order to implement the planned program, the respective ministries and executive agencies have their planning cell or planning and Implementation Cell (PIC). At the national level the Implementation of projects are monitored and evaluated by the Implementation Monitoring and Evaluation Division (IMED) of the Ministry of Planning (Khan, 1986:244). In Bangladesh, project proposals are prepared in the prescribed formats: Project Concept Paper (PCP), Project Proforma (PP) and Technical Assistance Project Proforma (TAPP) Which are considered and examined by the planning Cell of the Administrative Ministry, ultimately in the planning commission. When a project is approved by the competent authority, it finds a place in the ADP, but in reality the implementation of projects never gets done as expected. For example, during third five year Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 1
Md. Amzad Hossain plan (1990-1995) only 596 projects were completed out of 4392 projects planned. The plan implementation of the country has been suffering from the similar deficiencies. Here, it is remarkable that the five year plan and the ADP are too much ambitious, and therefore economic resources for their achievement can not be raised either from inside Bangladesh or from foreign aid. Moreover, the five year plan does not really deal with long-term issues involving the overall development of the country. Furthermore, the increase in the number of projects planned in the face of resource constraints such as-lack of economic ad administrative infrastructure, institutional constraints and lack of finance has reduced the effectiveness of ADP. In addition, political pressures and instability reflected in the planning procedure and the conflicts between the ministries and the planning ministry are also significant. Thus there is scope for a study of the procedures and problem s in planning, institutional arrangements and people s participation in respect of plan implementation and project management in Bangladesh. There are the following elements of development planning: 1. Policy planning, i.e. determination of planning perspective, goals and objectives, priorities and strategies of plan and policy measures there of. 2. Sectoral program planning, i.e. identification of the role of the various sectors of the economy in implementing the goals and objectives of plans and formation of programs to achieve the plan targets. 3. Project Planning, i.e. preparation of projects for implementation of sectoral programs. 4. Project implementation and monitoring, i.e. bestowal of authority to implement the approved development projects and review of progress of project / program implementation. 5. Evaluation, i.e. analysis of impact of project, program and plans on the economy. The formulation of a plan can be based on a top down/ centralized or bottom-up planning approach and may be formulated at different levels. In a top-down planning approach, projects and plan are prepared centrally and then disaggregated to regional and divisional level. The essential feature of bottom-up planning is to assess the needs and resources at grass-roots levels or lower levels where the micro plans are to be aggregated and integrated at the regional / divisional and national levels. But the procedure and the scope of development planning may be varied from country to country. In Bangladesh, the top-down planning process has been widely practiced and a limited devolution of planning responsibilities to local government administration has taken place. However, procedures for processing development projects vary due to investment size, sources of fund and nature of projects. 10.2 Project Classification in Bangladesh Government of Bangladesh has set up certain regulations for the processing of development projects. The central organization for the development planning is the standing planning commission. The commission sorts out different projects into various categories. The project can be divided on the basis of mainly 3 different criteria: A. Criterion 1 - Magnitude of Investment Category Investment size Level of approval authority A All projects/ schemes costing up Minister in-charge of the concern ministry on Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 2
B C to Tk. two crores or 20 million All projects/ schemes costing over Tk. Two crores and up to Tk. Five crores (Tk.20-50 Million) All projects/ schemes costing more than those included in category B Md. Amzad Hossain the recommendation of Development Project Evaluation Committee Minister in-charge of planning on the recommendation of Planning Commission Evaluation Committee. Executive committee of the national Economic Council (ECNEC) on the recommendations of the PC PEC and the planning minister. Note: All the above projects have to be included in the 5 year plan with sufficient allocation B. Criterion 2 -Project Benefits Based on benefits project can be of the following types Type X Self sustaining projects i.e., projects which earn revenue through sales of output (goods and or services). These project also colled direct productive project. Examples include projects in industrial sector. Type Y Productive but not revenue earning project i.e., projects which rise to tangible Output, benefit of which do not accrue directly to the projects themselves. Examples include irrigation project. Type Z Service sector projects i.e., projects which do not give rise to tangible output but provide service benefits to the society example- Educational institutions, Hospitals etc. C. Criterion 3 -Priority In allocation of resources, some projects are given a high priority over the others based upon their importance of the country. The Government of Bangladesh {GoB} has divided the projects in to two classes based upon this criterion: Core project Non-core project. The following points are considered to classify a project to be a core project: Only approved revised unapproved and PEC recommended projects Adequate availability of foreign or local funds Project nearing completion X type and infrastructural development projects Shorter gestation period Foreign aided projects D. Other Classifications Apart from the above main three classifications, different governmental organizations classify the projects on the basis of other criteria. For example: a. Lately GOB has classified projects as Nationally Important Projects (NIP) and non- NIP projects. The classification is based upon: Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 3
Md. Amzad Hossain i. Largeness of project (Category-c) ii. Project requiring Inter-ministerial monitoring and therefore reporting to ECNEC iii. Projects facing problems and considered to make national level impact b. External Resources Davison (ERD) categorizes the project on the basis of sources of aid e.g., World Bank, ADB, UNDP, CIDA, SAUDIAID, JAPANESE AID, US AID etc. c. Planning commission distributes the projects under the various sectors of the society e.g., social, educational, population control, industrial, energy, agricultural etc. d. Ministries divide their projects over the divisions, departments, bureaus, corporations, and other external agencies. e. Different Corporations subdivide into different product sectors. f. Implementation Monitoring and Evaluation Division subdivides the projects also on the basis of approval and implementation stages, on geographical locations and ministry/ division and agency-wise. 10.3 Types of Development Projects Development projects can be divided into three categories on the basis of their processing, cost and approval of the projects which are discussed below: Investment Project: Preparation, processing and approval of investment projects are made through some specified format e.g., Project concept Paper (PCP) and Project Proforma (PP). The contents of PCP mainly include the objectives, investment cost, implementation period, source of finance and benefits of the project. The PCP of the project is prepared by the executive Ministry / Division / Agency of the project which is primarily examined and appraised by the Planning Cell of the respective Ministry / Division and is processed to the planning commission. The copies of PCP are simultaneously be sent to the Ministry of Finance, Ministry of Establishment, IMED, Ministry of Environment and Forest and Ministry of Women Affairs for their comments. If there be any possibility of consequences of the projects on the activities of any other ministries, copies of PCP are required to be sent to the concerned Ministry for their comments. The concerned Ministry/ Departments / Agencies are required to give their comments to the concerned wings of the planning Commission within 15 days of receipt of the PCP from the initiating Ministry. If comments are not received within the specified time, it is assumed that there are no disagreements on accepting the project. However, when the Planning Commission receives the PCP from the Ministry / Division these are duly evaluated in terms of employment, production and achievement of scrotal targets through in depth technical, financial, economic and social appraisal. If necessary, planning Commission / Administrative Ministry may arrange discussion with the Ministry / implementing agency of the project. Finally the revised PCP of the project is reviewed and examined in the Pre-ECNEC / Inter-ministerial meeting of the Ministry of Planning presided over by the respective sector members of the PC. In such a meeting there are scope for representation of the numbers (in the rank of Joint Secretary / Joint Chief) from the project initiation Ministry, Ministry of Finance, ERD, Ministry of environment and Forest and Ministry of Foreign Affairs. This is to be mentioned here that if there be any inconsistency in the PCP due to the lack of information or data, with the approval of the concerned members with comments, the PCP is sent back to the initiating ministry for necessary revision / correction. The initiating ministry/ agency will have to submit the revised / corrected PCP to the Planning Commission within the period of Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 4
Md. Amzad Hossain 15 days. On receiving of the PCP from the initiating Ministry, the concerned wing / sector of the planning commission will again place the PCP to Pre-ECN EC / Inter-ministerial Meeting for recommendation and approval. The PCP of the project costing up to Tk. 10 core or 100 million will finally be approved by the planning Minister and the PCP costing more than Tk. 10 core or 100 million will be sent to the ECNEC meeting for approval. Foreign Aided Project In order to get foreign aid (such as project aid, commodity aid, food aid and technical assistance) for implementation of particular projects, the initiating Ministry / Agency will have to design the projects proposal in the Preliminary Project Proforma (PPP). The copies of the PPP have to be sent by the initiating agency to the concerned sector divisions of the Planning commission and ERD through the Administrative Ministry / Division for considering and accepting the aid proposal. All the concerned divisions of the planning Commission would send their comments to the initiating ministry and ERD within 15 days of the receipt of the PPP. If the PPP is considered to be acceptable as per the national priority and policy the initiating ministry would initiate discussion with the development partners / donors through the ERD. If commitment and confirmation of foreign aid are received, and would send the necessary copies of the PCP to the concerned authority including the planning Commission within 30 days of the receipt of the policy agreement. Project processing procedure have to be followed in the same procedure as is applicable for the PCP and PP of the investment project. This is to be mentioned that man-power and cost involved in project management / maintenance have to be worked out in the PCP and the PP of the project as far as possible. Following the approval of the project documents, all appointment of project personnel and consultant, purchase of equipments/ machineries and acquisition of land all these activities are to be accomplished by the project initiating agency as per the conventional rules within the stipulated period of time. In case of development assistance from donor countries / organizations regarding credit support, appointment of consultants, the existing rules of the government will be followed. Technical Assistance (TA) Project Technical Assistance projects/programs are generally undertaken for providing consultancy services, supply of equipment and training facilities. But TA projects are invariably aided projects where the donor s assistance constitute the cost of the project either wholly or partly. In order to ensure the effective utilization of foreign aid for Technical Assistance (TA) through institutional arrangements, a separate procedure for processing TA projects was introduced in August, 1983 under directives of the CMLA Secretarial which have been amended over time and framed guidelines about the nature, contents and procedures of TA projects. The main reasons for formulating a separate procedures for processing TA projects are to accommodate the genuine demands for Technical Assistance during a financial year which have not been anticipated or identified earlier, to avoid the lengthy procedure of investment projects and to the ensure expeditious negotiation and execution of agreement with donor(s). Since July 1989, a new procedure for processing TA projects has come into effect. As per the new guidelines, all TA projects must be prepared on an approved proforma known as a Technical Assistance project Proforma (TAPP). A project should be initiated either by the Planning Commission or the Ministries / Divisions and Agencies concerned. In all cases the Planning Commission should be consulted before a technical assistance / feasibility study is undertaken and during the various stages when design, scope, size and components are framed-up. Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 5
Md. Amzad Hossain 10.4 Determinants of Project Management Performance in Bangladesh Positive Factors: 1. Growing economy, scope for fresh and new projects, need for infrastructural facilities 2. Availability of resources 3. Abundance of manpower 4. Cheap labor cost 5. Urge for development 6. Adaptability of manpower vis-à-vis technologies 7. Wide scope for sustainable development Negative Factors: 1. Poor and very inadequate technical bases 2. Inadequacy of research & trained manpower. 3. Lack & inadequacy of infra-structural facilities. 4. Wide and deep practices of corruption 5. Very poor project planning 6. Lack of data bank and inaccuracy in data and information 7. Dearth of experienced, hardworking and honest entrepreneurs. 8. Poor general economic conditions & low per capita income (about $500) 9. Small market size & buying capacities. 10. Uncongenial legal framework 11. Absence of good governance 12. Unfriendly administrative mechanism 13. Weak & ineffective capital market 14. Irrational market behavior 15. Inefficient monitoring of banking structure & banking policy 16. Loan default culture 17. Absence of business ethics 18. Lack of political will 19. High political risk including instability 20. Majority of the population lives below poverty level.(48 %) 21. Uncertain law & order situation 22. Low savings - GDP ratio (6.0 %) 23. Dependency on foreign grant 24. Lack of foreign direct investment 25. Classification of Bangladesh as high risk country. 26. Low literacy rate & lack of civic sense, patriotism, and sense of belongingness. 27. Unhealthy distribution of income and concentration of most of the wealth of the country in the hands of several thousands. 28. Absence of social values, social capital, and social justice with its serious erosion 29. Inadequacy of physical resources 30. Growth of population 31. Wrong conception about religion & week socio-cultural institution, of which family is the weakest 32. Uncomfortable custom formalities 33. Very low contribution of service sector 34. Imbalance between direct and indirect tax structure Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 6
Md. Amzad Hossain 35. Very loose boarder and smuggling 36. Very wide trade gap that is unfavorable balance of trade & balance of payment position (Export earning is about 40% import bills) 37. Ineffective balance of growth of agricultural & industrial sectors 38. Initial industrial base was planned on the basis of different geographical dispersion and market 39. Inadequacy of basic, heavy and mother industries 40. Irregular flow of foreign funds. 41. Lack of interdepartmental, inter ministerial coordination & ineffective sectoral adjustment. 42. High frequency of natural calamities and disaster. 43. Serious impacts of ozone unbalancing, warming up of atmosphere, increase of sea level, probable flood and erosion of landscape 44. Serious problem of time and cost overruns of project implementation. 45. Lack of motivation in implementation of projects with serious snags. 46. Political unrest impedes projects implementation & absence of network analysis or project scheduling is hardly pursued. 47. Impacts of open market economy & formation of regional economic blocs. 48. Ineffective & corrupted financial structure 49. High degree of propensity to incur unproductive expenses out of project funds both in public and private sectors 50. Trading mentality of entrepreneurs 51. High degree of irresponsibility, callousness & indifference on the part of project managers of public sector projects. 10.5 Planning Commission The Bangladesh Planning Commission is the central planning organization of the country. It determines objectives, goals and strategies of medium and short-term plans within the framework of long-term perspective and formulates policy measures for the achievement of planned goals and targets. Its activities include the following elements of development planning: Policy Planning: determination of goals, objectives, priorities, strategies and policy measures for development plans; Sectoral Planning: identification of the role that the various sectors of the economy are required to play in the context of the Plan objectives and goals; Programme Planning: formulation of detailed resource allocation to realize the Plan objectives and goals; Project Planning: appraisal of projects embodying investment decisions for the implementation of the sectoral plans; and Evaluation: impact analysis of projects, programmes and Plans on the people s living standard. About Commission Rapid improvement of living standard of the masses was the prime goal of Bangladesh liberation struggle in 1971. This vision for higher living standard for the masses has been enshrined in the Bangladesh Constitution. The state of Bangladesh through its Constitution (article-15) committed to a higher living standard for its people by providing basic needs to all its citizens through planned development. With this objective of planned development for the country, the Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 7
Md. Amzad Hossain Bangladesh Planning Commission was established in January 1972.The Bangladesh Planning Commission had its roots in pre-independence Bangladesh. In the mid 1950s a Provincial Planning Board was established under the United Front Government of the then East Pakistan (present Bangladesh). It was an important agency for formulating investment programmes and for negotiating with the Central Government of Pakistan for an adequate share of the financial resources for the development of East Pakistan. The Planning Board undertook the task of appraising and evaluating East Pakistan development projects of a certain size. Later the Bangladesh Government in exile during the war of independent in 1971 established a Planning Cell, which was an embryonic start of the present Planning Commission. The Planning Cell established during the war of liberation was mainly concerned with formulating a programme of reconstruction and rehabilitation of the economy of post-independence Bangladesh. One of the first decisions the Bangladesh Government made after returning from exile was to establish the Planning Commission and to appoint the Deputy Chairperson and members of the Commission in 31 January, 1972. The Cabinet Decision in establishing the Planning Commission laid down ten functions for the Commission. This can be brought down to three broad sets of functions. to prepare the short and mid-term and long-term plans viz. Annual Development Programme, Five Year Plan and Perspective Plans; to make recommendation as well as being involved in the process of deliberation on a range of policies and institutional changes which were necessary for the implementation and realisation of the Plan objectives; and to co-ordinate the economic policies, both short and long-term, to be under taken by the various ministries. In addition the Planning Commission was to serve as the Secretariat for major economic policy questions and for initiating the appraisal of development projects and programmes by the National Economic Council (NEC). The NEC was created to serve as the economic mini-cabinet, consisting of the main economic ministers of the cabinet and headed by the Prime Minister. Functions of the Bangladesh Planning Commission in more concrete terms are: Formulation of country s medium-term (5 years) macro plan within the framework of long-term (15-20 years) perspective. Formulation of the Three Year Rolling Investment Programme (TYRIP) in consistence with the Five Year Plan. Formulation of Poverty Reduction Strategy Paper (PRSP). Preparation of Annual Development Programme (ADP) within the framework of TYRIP and Five Year Plan. Appraisal of project proposals for the Executive Committee of National Economic Council (ECNEC) and the Minister for Planning. Evaluation of Plans and their impact on the economic development. Undertaking and promotion of research to support development planning. Organizational Structure The Prime Minister is the Chairman of the Planning Commission. The Minister for Planning are the Vice-Chairman of the Commission. At the policy level, the Commission consists of Vice Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 8
Md. Amzad Hossain Chairman and five Members. Secretary Planning Division acts as the Member Secretary of the Commission. The Planning Division provides the administrative and Secretarial support to the Planning Commission. Under the Members there are six Divisions, which are further sub-divided into thirty functional Wings (Chart-1). Two of the Divisions deal with the general macro issues of the economy viz. General Economics Division and Programming Division. The other four Divisions deal with the planning and policy issues of different sectors of the economy. The Planning Commission officials below the Members belong to the Bangladesh Civil Service BCS (Economic) cadre, administered by the Planning Division. Chiefs headed the Divisions and Wings are headed by Joint Chiefs. Wings are further sub-divided into Branches and headed by Deputy Chiefs and Desks are manned by Senior Assistant Chiefs/Assistant Chiefs of the Planning Commission. ECNEC The ECNEC Wing is in charge of coordinating meetings of ECNEC and monitoring the decisions taken at the meetings. ECNEC Wing is headed by Joint Chief, who is supported by 2 Deputy Chiefs and 2 Assistant Secretaries. The primary functions of the ECNEC Wing are the following: to call meetings among members of NEC, ECNEC and other relevant officials prepare minutes of meetings, distribute them and publish them from time to time monitor decisions taken at the meetings The composition of NEC and ECNEC along their respective members and functions are below: Executive Committee of the National Economic Council (ECNEC) Composition of the Council 01. Prime Minister Chairperson 02. Minister, Ministry of Finance Alternate Chairman 03. Minister, Ministry of Planning Member 04. Minster, Ministry of Agriculture Member 05. Minister, Ministry of Labour and Employment Member 06. Minister, Ministry of Water Resources Member 07. Minister, Ministry of Commerce Member 08. Minister, Ministry of Communication. Member 09. Minister, Ministry of Shipping Member 10. Minister/State minister of the concerned Ministry Member Supporting Officials 01 Cabinet Secretary 02 Principal Secretary / Secretary, Prime Minister s Office Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 9
Md. Amzad Hossain 03 Secretary, Economic Relations Division 04 Secretary, Finance Division 05 Secretary, Planning Division 06 Secretary, IMED 07 Member, General Economics Division, Planning Commission 08 Member, Programming, Planning Commission 09 Secretary, Concerned Ministry/Division The Functions of the ECNEC: 01 To consider and approve project concept papers for all investment projects. 02 To consider and approve public sector projects having investment expenditure of above Tk. 25 crore with prior recommendation of PEC meeting. 03 To review the progress of implementation of development projects. 04 To consider proposals for investment companies as private, joint ventures with foreign participation. 05 To monitor the economic situation and review over-all performance of the economy and related policy matters. 06 To consider the performance of statutory corporations and especially their financial performance. 07 To consider rates, fees and prices of public utility services or products of public enterprises 08 To consider and approve yearly target of foreign aid, expansion of trade, export of manpower as well as to review the progress of the yearly targets. Meeting of ECNEC is held as and when required Planning Division provides secretarial services to the ECNEC. NEC The NEC along their respective members and functions are below: National Economic Council (NEC) The National Economic Council (NEC) is the highest economic policy-making body of the nation. Composition of the Council Prime Minister Chairperson Ministers of the Council of Ministers Member Supporting Officials Cabinet Secretary Governor, Bangladesh Bank All Members, Planning Commission. Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 10
Secretary, Concerned Ministry/Division Functions of the NEC: Md. Amzad Hossain To provide overall guidance at the stage of the formulation of Five Year Plans. Annual Development Programmes and Economic Policies To finalize and approve plans, programmes and policies. To review progress of implementation of development programme. To take such others decisions and actions as may be considered necessary for socioeconomic development; and To appoint such committees as deemed fit to assist the NEC in the due discharge of its responsibilities. Lecturer, DBA, IIUC, website: www.mahiiuc.weebly.com 11