(February 8, 2008) Pakistan suffers from a dearth of infrastructure in the water, irrigation, power, and transport sectors. The report calls for urgent measures to strengthen the country’s capacity to undertake major infrastructure projects.
Facts: - Pakistan is one of the most water stressed countries in the world - The country will face severe power shortages of around 6,000 megawatts by 2010 - Transport sector inefficiencies cost the economy between 4-5 percent of GDP - Pakistan has to invest almost Rs60 billion (US$1 billion) per year in new large dams and related infrastructure over the next five years
The report concludes that the construction industry does not have the capacity to deliver the Government’s planned infrastructure program. The major challenges to delivery of infrastructure are a lack of required human resources both in terms of adequate skills and numbers, and the inefficient processes in the business environment. These challenges which can only be addressed over the long term, while gaps in materials availability and efficient equipment (machinery) could be rectified in the short to medium-term. If Pakistan wants to deliver on the planned critical mega infrastructure, there is an urgent need to re-engineer the construction industry and the processes typically followed in delivering such mega projects.
Chapter 1: Background and Rationale for Assessment
After the lost decade of the 1990s, Pakistan’s economy has bounced back and has been exhibiting growth rates of above seven percent in recent years. This, coupled with population growth rates of over two percent, places an acute demand on basic and advanced infrastructure. The recent power shortages are a classic example of the rapidly growing economy’s aging and deficient power infrastructure which is failing to cope with burgeoning demand and resulting in an energy crisis in the country. Therefore, heavy investment in physical infrastructure is needed to improve delivery of social services and to enhance its internal and global competitiveness.
The assessment is based on a study approach that utilized balancing industry perceptions against primary research and analysis. The entire public implementation processes and business environment both in Pakistan and in a few selected countries was evaluated. In order to understand and address the issues which typically prevail in the industry, extensive analytical work, assembled around four broad based thematic areas—business environment, human resources, materials, equipment and machinery—was undertaken. The study process included perception surveys and focus group meetings with stakeholders and industry leaders were engaged to guide the study process by forming a consultative group. The assessment includes the entire set of industry stakeholders comprising of public sector clients, contractors and consultants (the industry).
Chapter 3: Literature Review, Surveys & Technical Analyses
This chapter presents the findings from the literature review, stakeholder surveys and the several technical analyses carried out under the study. It includes, among others, a review of the construction industry, perceptions surveys of local and foreign stakeholders, analysis of the business environment and cost of doing business, and local and international case studies.
Developing infrastructure requires more than just allocating finances. It requires vision, strategic planning, human and physical resources, complementary institutions and a conducive business environment. There is no doubt that infrastructure investments will pave the path for future growth and poverty reduction in Pakistan. This chapter argues that in order to ensure that the Government meets its goals and delivers on major infrastructure projects, it must take stock of the current bottlenecks and pay heed to the concerns of the stakeholders. Construction efficiency is presently constrained due to the segregated processes through which they are generally planned, designed, constructed, operated and maintained. These processes reflect the fragmented structure of the industry which contributes to a contractual and confrontational culture promoting inefficiencies.
Immediate, short term and medium to long term reforms and initiatives required to help deliver on the planned large infrastructure projects are suggested in this chapter. These include policy, financial, legislative and regulatory interventions, each of which needs to be ‘projectized’ and urgently undertaken. For large mega projects the risks have to be made manageable and traditional roles have to be collapsed to end the ‘us’ versus ‘them’ adversarial relationships. Partnering and framework agreements, which are becoming increasingly used by the best firms in place of traditional contract-based procurement and project management, should be used. There is a need to integrate the process and the team around the end product.