Financial Implication Of Project Management In Public Sector Construction Essay

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Many projects of the Mauritian Government though completed are not to the standard that is expected of them, especially after having invested so much money in these projects. Scarce resources are wasted with its negative consequence on utilization and distribution of national wealth. In order to find out why there is such weakness, an investigation was carried out through the examination of the various steps involved in project management as guide and the consequences it had on the projects. Various factors such as lack of financial discipline of the managers and sponsors of the projects, poor project management and the lack of understanding of the rudiments of project management formed major framework for the flaws. It was recommended that no matter the size of a project, the basic steps of project management must be followed and government must maintain financial discipline. Deliberate efforts must be made to ensure that only persons who have the professional expertise and experience are saddled with its planning, costing and execution.

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Characteristics of a Project

A Project is an interrelated set of non-repetitive activities that has definite starting and ending points, which result in a unique product. A project must be goal oriented, has definite beginning and end, has particular set of constraints and measurable output and also be able to covert one situation to another. The activities are one at a time and they can be distinctly subdivided to have definite beginnings and ends with definite sequential relationships. Each activity can be defined with respect to every other activity as either preceding or simultaneous or succeeding or independent and each activity time can be determined. (1)

2.2 Project Management

Project Management is part of a unique, self-regulating, accountable, commercial arm of government that delivers demonstrated value for money at competitive rates. World class project management systems, ensures that projects delivered must be comparable with the best the industry can offer, providing quality, budget and schedules management at competitive prices.

2.3 Planning

A long range approach to planning investment projects is a necessary requirement of a sound financial management system. With a grounded investment plan, Government will be able to assess future financing requirements, assess the impact of investment project in meeting the goals, and provide a basis for rationally allocating scarce resources.

Project proposals have to be presented by Public Bodies to the Project Plan Committee (PPC) as per the Project Request Form (PRF). A project will be taken into consideration after assessment and recommendation by the PPC and approval of cabinet.

2.4 Project Plan Committee (PPC)

The PPC is set up in the Ministry of Public Infrastructure, Land Transport and Shipping. The Permanent Secretary of the Public Infrastructure Division or his representative shall be the chairperson of the Committee.

The Committee shall consist of representative(s) of the following Ministries:

Ministry of Public Infrastructure, Land Transport and Shipping (Public Infrastructure Division )

Ministry of Finance and Economic Development

Ministry of Renewable Energy and Public Utilities

Ministry of Housing and Lands

Ministry of Local Government

The PPC may co-opt representatives from other Public Bodies to assist the Committee in discharging its functions.

The functions of the PPC are as follows:

Assess whether project proposal meet the infrastructure needs of the country.

Examine feasibility and cost benefits of infrastructure project proposals.

Make recommendations on investment projects for inclusion in the project pipeline.

Examine and review specifications.

Advise Public Bodies on the appointment of Project Managers.

Give clearances on projects whose pre-tender cost estimates exceed the approved cost estimates.

Review the progress of investment projects above RS 100 million or any priority.

The PPC may defer a request for future consideration or deny a request and propose alternative, if any.

Each Public Body will develop an investment plan in comprising a list of projects that would support the delivery of the output necessary to achieve the goals and objectives in the strategic plan.

All investment infrastructure project proposals above Rs 25 million will be reviewed by the PPC, in consultation with implementing agencies and other concerned Public Bodies prior to the development of a Pipeline of Projects.

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An investment Project Proposal estimated at below Rs 25 million does not require the approval of the PPC but shall be submitted to the Ministry of Finance and Economic Empowerment (MOFEE) for approval. If during the pre-bid phase, the project estimated increases beyond Rs 25 million, the project shall be considered in the next investment budgeting cycle, of if there is urgency; it shall require the concurrence of the PPC and the Public Sector Investment Programme Unit for consideration as an amendment to the Investment budget.

2.5 Public Sector Investment Programme (PSIP) Unit

The PSIP Unit is a unit set up in the MOFEE. It consists of all projects with particulars for implementation in the next 10 years prioritized in line with national sector strategies, programmes and Macro Economic framework.

Investment Projects to be included in the PSIP are prioritized based on state of preparedness, affordability, and financing secured in the form of foreign loan, grant facility, and so on. Public Bodies have to prepare a project brief for each investment project to be included in the PSIP document.

The Project brief shall include, inter alia, the following:

Project Title

Project Rationale

Project Description and Objectives

Estimated Cost by component

Project Status

Financing Options

Proposed Disbursement Schedule over the Medium Term

2.6 Project Phases

POST CONTRACT PHASE -OPERATION/ MONITORING COMPLETION

Any investment project passes through a number of distinct phases, the nature of which usually varies according to the type of project and the time required for each phase. A summary of the processes is shown in the diagram below:

APPROVAL PHASE

INITIATION PHASE

BIDDING PHASE

PRE-BID PHASE (PLANNING)

PHASE

2.7 Project Initiation and Users’ Requirement Phase

It is the responsibility of every Public Body to :

Identify the infrastructure needs as per its sector, for example, through research activities, funding opportunities, overall planning process and so on.

Carry out feasibility and cost benefit analyses for infrastructure project proposals; and

Make proposal for inclusion in the investment project pipeline.

2.8 Preliminary and Feasibility Study

A preliminary study is required for all projects above Rs 25 million. For projects above Rs 100 million or projects of high priority, Public Bodies are required to conduct a feasibility study.

Key to success of any investment project is a clear, accurate and specific understanding of the facility need/problem to be addressed and a thoughtful analysis of the options to meet the need or solve the problem.

Completion of the preliminary or feasibility study is an important step in acquiring funding for the design and construction of the proposed solution. After preliminary or feasibility study has been finalized and approved by the Public Body it will be referred back to the PPC for inclusion in the project pipeline.

A preliminary study or feasibility study provides a number of benefits:

Long â€"term planning with complete information on requirements helps Public Bodies make more specific decisions leading to less changes and avoidance of wastage.

An opportunity to uncover alternatives that had not been previously considered.

Internal programme planning and cost or schedule issues not previously known can be explored before large sums of money are invested.

Risk can be identified and minimized through a more rigorous process

An opportunity is afforded to review total project budgets prior to the design phase

Better planning also offers a potential for cost savings.

Assessment of contractor on registration

A private contractor submits his application for registration as contractor with the MPI. The MPI will accept to register the contractor on the basis of the contractor’s capabilities to undertake capital works on behalf of the Government. MPI will assess the capacity of the contractor and a grading will be given to the contractor. The contractor will have to confirm the number of skilled and unskilled labour under permanent employment with the company and the experience of the contractor and the plant and equipment owned and used by the contractor.

Supervision

Projects in progress must be supervised especially by the MPI with the Project Manager of the client.

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