Why Infrastructure Megaprojects Overrun: Policy and Financing Constraints in Pakistan

Abstract

Megaprojects have always been center of attraction for researchers and practitioners due to the associated resources, costs and benefits for the economy and society. Timely completion within allocated budget and required qualitative aspects render any project a success, whereas, additional costs and delays of time of completion make a project failure. Due to these factors megaprojects of infrastructure development have attracted research in recent decades. Investment of huge resources and capital require Government to initiate and own megaprojects in many of the developed and developing countries. Pakistan being a developing country face difficulties in planning, and financing of megaprojects. In Pakistan, plenty of megaprojects for infrastructure development fail to follow timelines and costs estimated for the project due to various reasons. This study adopted behavioral approach by analysis of subjective thoughts of those involved in development projects to identify underlying reasons that lead to overruns of costs and time. For this purpose, qualitative interviews of public sector officials from Planning Commission, Finance Division and highway authority have been conducted. Data from the interviews had been transcribed for analysis while maintaining the anonymity of the participants for confidentiality. Analysis of the transcribed data revealed various factors that contribute to delays in infrastructure projects where major causes are problems in land acquisition and payment issues for land, problems in relocation of facilities from project site, late payments to contractor for completed work, issues in getting credit from local and international agencies, and lowest bid award system for contractor selection as it leads to selection of contractor with limited capacity of project execution. These factors could be grouped into prime themes of overruns in Pakistani megaprojects as scarcity of funds, difficulties of arranging finance by internal borrowing, and from international sources due to bad reputation of the country.