Govt develops format for project feasibility studies
The government has framed a format on feasibility studies to put an end to a decades-long practice of including projects in the development programme without proper assessment and economic viability in order to get rid of delays and cost-overrun.
As there is no specific format for carrying out a feasibility study in Bangladesh, many projects face time and cost over-runs.
Sometimes, locations for a project are not identified and the land is not acquired. This means implementing entities face problems in embarking on implementation after the approval of the development project proposal (DPP) by the Executive Committee of the National Economic Council.
With this backdrop, the government is preparing a template on the feasibility study for development projects.
"The DPP contains a short brief on the feasibility study for proposed development projects, but it is not sufficient to understand them properly," said Planning Minister MA Mannan.
He was addressing a workshop on finalising the draft feasibility study format at the conference room of the National Economic Council in Dhaka yesterday.
"I go through projects in details. I notice there is a paragraph as a feasibility study report in the DPP which is very weak and insufficient," he said.
Many people, including the prime minister raised questions about undertaking projects before carrying out any feasibility study, he noted.
Around 1,800 to 1,900 projects are implemented every year.
The feasibility study of projects costing more than Tk 50 crore must be conducted before the implementation begins. Otherwise, the planning commission will not place the project proposal at the Ecnec.
Talking to The Daily Star, Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said there was a trend to include projects in the annual development programme (ADP) without proper feasibility studies.
"This creates challenges for the implementation of the projects as it causes delays and raises the cost," he said.
The economist said cost and social benefit assessment was needed before undertaking a project for better outcomes. But projects are taken without proper assessment. Sometimes, implementing entities prepare projects based on a general idea.
"For these reasons, the targets of projects are not achieved and this wastes the taxpayers' money," Moazzem said.
For instance, the Chattogram-Cox's Bazar Railway Project was undertaken 12 years ago without any feasibility study, said a number of planning ministry officials.
The officials also said most of the projects, except the mega ones, were included in the ADP based on paperwork and without a feasibility study.
The new format of the feasibility study will provide an explicit definition of the problem to be addressed, identify the likely causes of the problem and give a brief insight of the likely consequences if no intervention is made, according to the draft document.
It will justify the need for the proposed project by linking the proposed goals, outcomes and outputs with global or national development plans or policies.
The feasibility study report must identify the components of the cost and benefit and transfer them in monetary value. It will identify the direct, indirect and associated cost and benefit components.
Besides, it will illustrate the social benefits and point out the net benefit that the project would bring to society, the draft document said.
"The flow of the cost and benefit throughout the project life is uncertain. Given that uncertainty, considerations have to be given to the cost that risk implies," the document said.
The feasibility study will describe the interventions that need to be undertaken by the government through the proposed project. It will specify the economic and environmental effects.
The study report will describe the evacuation plan, institutional arrangement for shutting down utility services and general procedures to be followed by individuals during disasters.
It will give a description of the location of projects. Availability of land is a key aspect. Evidence has to be provided that the land is owned by the organisation, which has the full title to use it, or the land has to be purchased through acquisition or requisition process.