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Enhancing the Quality of Public Capital Investment Panel session Tuesday April 4, 2006

Enhancing the Quality of Public Capital Investment Panel session Tuesday April 4, 2006. Why is this important?. Capital investment is vital Good projects: create economic benefits and growth create confidence in a country create value for money solutions thus minimising tax-take

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Enhancing the Quality of Public Capital Investment Panel session Tuesday April 4, 2006

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  1. Enhancing the Quality of Public Capital InvestmentPanel sessionTuesday April 4, 2006

  2. Why is this important? • Capital investment is vital • Good projects: • create economic benefits and growth • create confidence in a country • create value for money solutions thus minimising tax-take • Bad projects: • create ongoing liabilities for many years • big projects = big risks • failure is often high profile: nationally and internationally • can undermine investor confidence in the country • can make the good projects unaffordable

  3. Common Issues Project selection Weak Objective Setting Weak Option Appraisal Weak Cost/Benefit Analysis (CBA) Political rather than economic decisions No Transparency or competitiveness in selection! Project budgeting No Identification of recurrent costs Under estimation of Capital costs New projects ‘crowd out’ existing projects No Transparent and fair Procurement processes Poor project Management Weak project data, and reporting mechanisms Limited Post project Evaluation and Audit Projects never come to completion Project implementation Inability or unwillingness to hire appropriate expertise Fear of peer review Corruption ‘Bad’ projects OVERALL

  4. Questions • Which of the following do you think poses the biggest problem in capital investment management? • Project selection, budgeting, management and monitoring? • What is the major problem in the project selection process? • What do you think could be done to address this problem? • What is the major problem in the project budgeting process? • What do you think could be done to address this problem? • What is the major problem in the project management and monitoring process? • What do you think could be done to address this problem?

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