Cost-escalation provision added to ADP guidelines
Thursday, 8 November 2007
Shakhawat Hossain
The government has brought about changes in the annual development programme (ADP) guidelines by incorporating a cost-escalation provision into the same, sources said.
The cost-escalation provision, however, will be applicable to more than one-year old ADP projects, said a Ministry of Planning directive that was issued late last month.
The new provision allows increase of a project cost up to 10 per cent over the original cost of a project. But the implementing ministries and agencies might increase a maximum of 20 per cent cost of a single component of a project.
The rising inflation has forced the government to bring about the changes in the existing ADP guidelines adopted in 2005.
Various ministries and agencies have been facing problems because of the rise in the costs of projects due to domestic and external factors.
The planning ministry has long been pleading for inclusion of necessary provision in the ADP guidelines to allow increase in projects costs on genuine grounds.
The planning secretary held a series of meetings with Chief Adviser Fakhruddin Ahmed last month on the ADP implementation and was able to convince the former of the need for inclusion of such provision in the ADP guidelines, sources said.
According to the directive, the implementing ministries and agencies will, however, need prior approval of the planning ministry for increasing the cost of a project or a component thereof.
The directive of the planning ministry might have an impact on the overall cost of some 850 projects included in the ADP worth Tk 265 billion for the current fiscal, said the ministry officials.
Although 896 projects are included in the ADP in the 2007-08 fiscal, only 41 are new and technical projects and the rest are ongoing projects.
But the officials, however, could not say the possible financial involvement because of the new provision.
The government has brought about changes in the annual development programme (ADP) guidelines by incorporating a cost-escalation provision into the same, sources said.
The cost-escalation provision, however, will be applicable to more than one-year old ADP projects, said a Ministry of Planning directive that was issued late last month.
The new provision allows increase of a project cost up to 10 per cent over the original cost of a project. But the implementing ministries and agencies might increase a maximum of 20 per cent cost of a single component of a project.
The rising inflation has forced the government to bring about the changes in the existing ADP guidelines adopted in 2005.
Various ministries and agencies have been facing problems because of the rise in the costs of projects due to domestic and external factors.
The planning ministry has long been pleading for inclusion of necessary provision in the ADP guidelines to allow increase in projects costs on genuine grounds.
The planning secretary held a series of meetings with Chief Adviser Fakhruddin Ahmed last month on the ADP implementation and was able to convince the former of the need for inclusion of such provision in the ADP guidelines, sources said.
According to the directive, the implementing ministries and agencies will, however, need prior approval of the planning ministry for increasing the cost of a project or a component thereof.
The directive of the planning ministry might have an impact on the overall cost of some 850 projects included in the ADP worth Tk 265 billion for the current fiscal, said the ministry officials.
Although 896 projects are included in the ADP in the 2007-08 fiscal, only 41 are new and technical projects and the rest are ongoing projects.
But the officials, however, could not say the possible financial involvement because of the new provision.