Public Investment Projects Research Articles

Factors Affecting Contract Compliance and Execution of Public Works in the Executing Unit: Special Project Huallaga Central and Bajo Mayo in Peru, 2022

Cost overruns, delays, and poor quality are frequent in public investment projects under the contract modality, executed by the Executing Unit: Special Project Huallaga Central and Bajo Mayo (PEHCBM). The purpose of this research is to identify the factors that affect the fulfillment of contracts for the execution of public works in the PEHCBM. This research includes the determination of the most influential factors using the relative importance index (RII), as well as surveys administered to a sample of 25 experts. A total of 91 articles from 48 academic journals were selected. With the application of the RII, 21 factors were determined, distributed among the dimensions of cost, time, and quality, and validated by the experts with a Spearman’s coefficient of value 0.521. In the case study, seven relevant factors were determined in PEHCBM execution contracts, identifying overtime between 4.7% and 524.2%, as well as a cost increase between 8.8% and 52.2%. Similarly, adverse situations detected by the Comptroller’s Office were determined, with an accumulated economic damage of about PEN 19 million, determining the high influence of the cost, time, and quality dimensions on them. In conclusion, this study shows the high overtime and the deficient quality of the works carried out by the contracting modality, which generated economic damage to the State.

Efficiency in Municipal Management: Participatory Budgeting and its Relationship with Public Projects in Rural Areas in Peru

The Participatory Budget is a key tool in public management that seeks to improve transparency and efficiency in local projects. The objective of the study was to analyze the relationship between the Participatory Budget (PP) and the Public Investment Projects (PIP) in the Municipality of Anco Churcampa, Huancavelica, during the year 2020, to evaluate how citizen participation influences the effectiveness and efficiency of publicly funded projects. For this purpose, a quantitative correlational approach with a cross-sectional design was used. A structured questionnaire was applied to 42 participants, among whom were municipal authorities and representatives of civil society. The collected data were analyzed using Spearman's rank correlation coefficient, which allowed the association between the PP and PIP variables to be evaluated. The results showed a positive and significant correlation between the dimensions of the PP, such as preparation, consultation, coordination and formalization, and the perception of success in the PIP. It was observed that the average levels of perception in the PP corresponded with average levels in the perceived effectiveness of the PIPs, which underlines the importance of well-structured participatory management. In conclusion, the study highlights that the PP is a fundamental tool to improve the transparency and effectiveness of the PIPs, highlighting the need to strengthen citizen participation in decision-making to promote more equitable and sustainable local development.

Evaluating the Effects of Public Debt on Sri Lanka’s Economic Growth: A Short-term and Long-term Perspective

Aims: The objective of this paper is to examine whether public debt enhances economic growth in Sri Lanka by separating debt into domestic and external debt. Study Design: The paper adopts the Keynesian demand-side model to estimate GDP on demand-side and supply-side factors such as domestic debt, external debt, gross fixed capital formation (investment in short), labour force, general price level, money supply, government spending and trade openness. In a model where debt causes investment, public debt effects are netted out from investment by removing the estimated investment effects of domestic and external debt. Duration of Study: quarterly data from Q1 2010 to Q1 2023 are utilized to trace the long-term and the short-term effects of domestic and external debt on GDP. Methodology: The ARDL method of estimation is used and the model is estimated in double log form so that estimated parameters reflect output elasticities. A general to specific modelling approach is adopted to find the best suited model. Results: Variables such as government spending, money supply, general price level and labour force are not relevant while domestic debt, external debt, investment (debt effects netted out) and trade openness are significant in describing GDP. The long-term domestic debt elasticity of GDP is 0.588 while short-term domestic debt elasticity (sum of contemporaneous and lag effects) is about 0.63. The cumulative effects of domestic debt on GDP tappers off to 0.60 in the long-run. The result suggests negative impacts (-0.272 and -0.254) of external debt on the economic growth in short-term and long-term respectively. The negative effect of external debt can be justified if recent external borrowings have been used to repay loans taken to finance war and unproductive projects. Conclusion: The paper finds that the domestic public debt creates relatively strong positive effects on GDP in the short-term and the long-term. Contrary to the expectations, the effects of external debt on GDP have become negative both in the short-term and the long-term. The paper also finds that debt effects on GDP have been significantly reduced when debt effect-ridden investment variable is included in the regression in place of debt-effect netted out investment. Thus, this study recommends researchers to carry out further research on why the effects of external debt on GDP become negative. Further, it recommends policy makers to use both domestic and external debt to finance public investment and productivity enhancement projects rather than borrowing merely for the purpose of consumption and repaying of existing debt.

Estimating social discount rate for government investment projects in Russia

The article explores methods of estimating discount rate for investment projects financed with budgetary funds and aimed at creating social benefits. Social benefits often do not have a direct monetary value, so the methods for determining the discount rate for such projects differ from market ones. Spending budget funds on investment projects means that society gives up consumption at the current moment in time for the sake of future return on investment. The discount rate should reflect public preferences regarding the distribution of consumption between the current and future periods. The method for estimating these preferences is called the social rate of time preferences. Another approach to determine the discount rate allows one to consider the alternative possibility of implementing a project in the private sector (social opportunity cost of capital). The article describes the development of methods for evaluating the social discount rate and discusses the possibilities of their application for Russia. The value of the social rate of time preferences, equal to 2.5%, and the value of the social opportunity cost of capital, equal to 4.4—5%, are substantiated for short-and medium-term public investment projects in Russia. Rates are given in real terms.

Cost-Benefit Methodology in Public Investment in the Peruvian Educational Sector of Invierte.Pe. a Practical Case

Objective: The purpose of the research is to show a specific process to perform the cost/benefit analysis in the social evaluation of public investment projects in the education sector, applying the net present value (NPV) and internal rate of return (IRR) profitability indicators, taking into account that the approach of the National System of Multiannual Programming and Investment Management (Invierte.pe) applies a different methodology as the cost/efficiency analysis, where it uses criteria such as the Present Value of Costs (PVC) and the Cost Efficiency Indicator (CEI). Theoretical framework: In order to present our proposal, we used as a theoretical framework, mainly the directives, instructions, procedures, and methodological guides proposed by the Ministry of Economy and Finance of Peru, which can be improved by considering the results of investment in education. Method: The research proposes a technique to evaluate investment projects in the education sector through the cost/benefit methodology instead of the cost/effectiveness methodology. Within the materials and methods, an education sector investment project approved by Invierte.pe was used, and we added cost/benefit analysis to estimate the profitability indicators NPV and IRR to carry out the social evaluation of the project. Results: The results show that the education project has a net present value of S/. 794,874.30 at social prices, and an internal rate of social return of 9.56%. Finishing the research, it can be concluded based on the results obtained that it is possible to incorporate the cost/benefit methodology in the formulation and evaluation of standard, simplified technical sheets and studies at the profile level of public investment projects in the education sector. Conclusions: It can be concluded that it is feasible the social evaluation of investment projects in the educational sector of the Peruvian state, through the cost/benefit methodology in the region and the country, by means of the profitability indicators NPV and IRR, obtaining a higher internal rate of return.

Challenges in evaluation standards for public investment projects (PIP) in Lao PDR: Evaluation of quality of life by a combination of OECD, ADB, and PCAP evaluation approaches

Minority people are living in society in Laos, and the Lao government is struggling to promote their lives. In rural areas, minority people are having difficulties accessing good food and safe drink intake (GFSDI). In this survey, the author 1) investigated the GFSDI of minority people by using logistic regression and to find the effectiveness and efficiency of the PIP projects via the result of GFSDI; 2) used an evaluation approach modified from OECD, ADB, and PCAP, which is called the mixed economic evaluation ‘ECEVA’, to find the effectiveness and efficiency of the PIP projects by employing ECEVA and AECEVA. The author used the primary set of data collected from the field survey by interviewing 518 villagers who were minority people and worked with the PIP projects in 11 provinces. As a result, the AECEVA showed that PIP projects were quite effective and efficient in supporting the quality of life of minority people in rural areas. Interestingly, the result of logistic regression also showed that the GFSDI of minorities could demonstrate the effectiveness and efficiency of the PIP projects in Laos.

Essential strategies for embracing Building Information Modeling (BIM) in public investment projects: a case study in Vietnam

Building Information Modelling (BIM) has been accepted as an advanced technology in the construction sector in many developed nations due to its numerous benefits. However, its applications in developing countries, including Vietnam are limited. In particular, the effective application of BIM is largely dependent on the implementation strategies of various countries and organizations due to the differences in legal systems, finances, human resources, and so on. Therefore, this study aims to analyze and proposes implementation strategies for embracing BIM in public investment projects of a government organization, utilizing a combination of Strength – Weak – Opportunities – Threat (SWOT) and Analytic Hierarchy Process (AHP) tools to evaluate available resources, capabilities as well as upcoming obstacles. The data used in this research were identified by three different methods including online-survey, face-to-face interviews, and a review of previous studies. As a result, the study clarified and ranked factors in order to assess the level of influence among those factors in each category within SWOT matrix. Subsequently, five BIM implementation strategies with specific solutions for public investment projects of the organization were proposed based on the SWOT – AHP analysis.

ОЦЕНКА ЭФФЕКТИВНОСТИ ГОСУДАРСТВЕННЫХ ИНВЕСТИЦИОННЫХ ПРОЕКТОВ

The evaluation of the effectiveness of public investment projects mainly focuses on the research of evaluation index systems, evaluation methods and evaluation management. Taking into account the current situation in assessing the effectiveness of public investment projects, guided by the relevant basic theories and based on the mechanism and principles of the formation of evaluation indicators, a system of evaluation indices suitable for evaluating the effectiveness of public investment projects is proposed and discussed.

Effective governance of projects: A mainstay of good public investment

Large infrastructure projects (if successful) have a significant effect on societies and can boost long-term economic output, but they are also problematic if they fail. Massive amounts of public money can evaporate in a few projects, and that can destroy the public finances of a small economy. A large public investment project, which usually involves national pride, produces little or nothing of value compared to its investment. At the same time, it prevents the rise of small projects and sucks up resources for a very long time. In an effort to understand how large infrastructure projects are being prepared in Ethiopia, the author has previously conducted an inquiry into the country’s project preparation and decision-making processes. The results of the study indicated many shortcomings: limited or no use of a formal project governance system, a top-down approach, a culture of overlooking project-related risks, exaggerating project benefits, and optimism bias. In this study, the author further examines the previous findings, presents an improvement option for the country’s project governance system, and recommends that, no matter how eager we are to transform the country, there is no need to rush to implement large and complex infrastructure projects with several unclear risks and consequences ahead. Priority should be given to setting up political and technical gatekeeping mechanisms, (go/no go) stages, that can stop wrong projects before conception. Parallelly, such mechanisms enable valuable project concepts to be selected, implemented, and linked with other prime streams of development.

Formulation of technical files and public investment projects in a municipality of La Libertad

Formulation of technical files and public investment projects in a municipality of La Libertad

The rate of discount on public investments with future bias in an altruistic overlapping generations model

A typical approach to evaluating public investment projects requires an appropriate rate for discounting future benefits and costs. In many developed countries, the practical discount rate for benefit–cost analysis has been calculated using the Ramsey formula in an optimal growth model, stretched back to the pioneering work presented by Frank Ramsey in 1928. Intergenerational altruism that is widely observed in our society generates future bias. Therefore, elected governments under democracies are future-biased. In such cases, the Ramsey formula is no longer valid. This paper derives a modified Ramsey formula for an appropriate social discount rate to be applied instead of the conventional Ramsey formula. We also examine properties of equilibrium policy. The degree of future bias depends on the political power of young people relative to elderly people. Demographic effects such as population aging negatively affect public investment through decreasing future bias effects. This paper contributes to the optimal theory of public investment for calculating an appropriate social discount rate, both theoretically and practically.

Valuation attributed by project practitioner to the integration of sustainability criteria in Public Investment Project (PIP) in Peru.

All countries are committed to Sustainable Development Goals, seeking a balance between economic growth, environmental conservation, and social welfare, however, it seems that there is a risk of not achieving them or making very little progress by 2030. Public investment projects (PIP) due to their high impact, could be the engines to achieve them; and PIP practitioners play an important role as agents of change. The present study; quantitative, cross-sectional, and descriptive, carried out through self-administered surveys; sought to answer, from the perception of experienced practitioners, the following questions concerning PIPs in Peru: 1) To what extent are sustainability criteria considered? 2) Do the criteria corresponding to any of the dimensions of sustainability tend to be more considered? and 3) What are the main barriers to the integration of sustainability criteria?
 The results show the ranking of the 12 criteria considered in the study, of which the criteria of the social dimension are taken into account more than the criteria of the economic and environmental dimensions. Likewise, the main barriers identified for the integration of sustainability criteria in PIPs were grouped into the following topics: Regulatory framework; Corruption, bribery, and transparency; The investment system; Capacities and competencies; and Promotion, dissemination, awareness, and values. This study represents a contribution as a baseline for the action of the State, organizations, and academia.

The scope of project maturity issues in Cameroon

Cameroon, located in Central Africa, plays a leading role in terms of trade, with about half of the GDP of the Central African Economic and Monetary Commission area. Yet, the quality of public expenditure in Cameroon is said to be one of the grievances plaguing its economic growth. This underperformance is generally linked to project management, an essential lever for the country's development. The construction of infrastructure is one of the challenges of Cameroon's development policy. This lack of stakeholders in the knowledge and practice of maturation has an enormous impact in the votes consumption and the execution of projects that inevitably leads to the abandonment of projects, the multiplication of amendments, poor workmanship and the lack of satisfaction on the part of the beneficiaries. Hence, this study, after performing a SWOT analysis on project management maturity in Cameroon public projects, explores 17 projects undertaken over the past decade, in order to probe the impact of problems caused by the immaturity of projects on schedule and costs. The results revealed that the general maturity level for this study was 68%. Out of the ten hypotheses stated, seven were accepted. It was also found that the level of maturity of a public investment project in Cameroon positively affects its delivery whereas, some of the maturity variables do not significantly explain the costs with its parameters but impact others. Recommendations for a better project management in the country are thrown.

Oil and Non-Oil Determinants of Saudi Arabia’s International Competitiveness: Historical Analysis and Policy Simulations

To achieve sustainable economic growth, Saudi Vision 2030’s target is to improve Saudi Arabia’s ranking on the Global Competitiveness Index from 25 in 2015–2016 to within the top 10 by 2030. Saudi Arabia also aims to increase the share of non-oil exports in the non-oil GDP from 16% in 2016 to 50% by 2030. For policymakers to make informed decisions to achieve these goals, they need to understand the driving forces of Saudi Arabia’s competitiveness. To this end, we consider the real effective exchange rate (REER) as a measure of external price competitiveness, as it captures domestic and global price changes. We then examine the REER using a two-stage modeling framework. First, we estimate the REER equation, which allows us to assess the impacts of the determinants and evaluate currency misalignments as a competitiveness indicator. Second, we extend the KAPSARC Global Energy Macroeconometric Model (KGEMM) with the estimated equation, which provides a framework for simulating the competitiveness impacts of the theoretically formulated determinants and other variables relevant to policymakers. The framework also allows us to account for feedback loops. We conduct a policy scenario analysis to quantify the competitiveness effects of the Public Investment Fund’s (PIF) new strategy for 2021–2025. We derive the following policy insights. Authorities may wish to implement initiatives boosting future productivity and, thus, competitiveness, such as PIF investments. Policymakers should be regularly informed about currency misalignment. Government consumption and public investment projects should consider substituting imports with locally produced goods and services. Local content development would also help to diversify the Saudi economy. Finally, attracting more foreign investment and other assets from the rest of the world may lead to technological development and improvement in the economic, financial, and social infrastructure and business environment, all enhancing competitiveness.

On seperating the content of compensation, support, resettlement and site clearance from public investment projects: Some comments to the law on land law relating to special mechanism of Ho Chi Minh City

One of the proposals in the draft of the revised Law on Land to reduce the number of suspended plans is a provision on separating compensation, support, and resettlement activities from investment projects. However, it is necessary to look deeply and objectively at the causes leading to the state of suspended planning to give a comprehensive and specific direction. It is obviously a new direction, posing many challenges to the drafters and the promulgation of laws to build a more effective mechanism than the former mechanisms of compensation, support, and resettlement. In particular, for Ho Chi Minh City, it is necessary to have a pilot mechanism and take the lead in this work to minimize the negative impacts of suspended planning on economic development and social stability and, at the same time, as a motivation for other localities to learn and apply this regulation effectively. In this article, I focused on analyzing the advantages and disadvantages of separating compensation, support, and resettlement from public investment projects. At the same time, the article mentioned the applicable conditions in Ho Chi Minh City, proposing some recommendations on the draft amended Land Law relating to separating the contents of compensation, support, and resettlement as well as for Ho Chi Minh City.

Public investment project audit: Vietnam state audit case study

Public investment project audits aim to confirm the completed settlement report and point out shortcomings and limitations in managing and implementing public investment projects to help the audited entity exercise accountability and improve management efficiency. The study aims to explore the priority strategy of the State Auditor's approach to audit investment projects. The study used document analysis, interviews, and data analysis of 362 public investment projects from 2016-2020. Research results indicate that state auditors pursue a results-oriented audit approach instead of confirming financial information of investment projects. The primary motivation of the auditors is to detect deviations in investment projects instead of ensuring the overall information of investment projects to provide more reliable information to users. This motivation mainly depends on the characteristics of the investment project, the size of the investment project, and the level of interest of the owner and the user of the audit report. In addition, the research results provide a more scientific basis to help users of investment project audit reports understand whether the purpose of the audit report is to provide a degree of confidence in the information or to contribute to increased accountability.

Planning and implementation of public investment projects in the face of unstable macroeconomic conditions

Purpose – The aim of the article is to draw attention to possible limitations and potential difficulties related to the implementation of public investment projects in the face of crisis phenomena and in particular the possible impact of macroeconomic factors on public investments. Research method – During the research, the method of critical analysis of the literature as well as analytical and descriptive methods were used in relation to the source data obtained during the empirical research, which allowed determining the impact of changes in macroeconomic factors on the planning and implementation of public investments. Results – Theoretical and empirical studies prove that macroeconomic instability has a significant impact on the course of investment processes in the public sector. The increase in inflation and interest rates of central banks has become a major threat to development processes; it may limit investment activity and reduce the effectiveness of public spending. Originality / value / implications / recommendations – The article discusses the current issues of planning and implementing investments in the face of changes in macroeconomic factors in crisis conditions. The recognized instability of investment processes in the public sector requires a detailed analysis of the current conditions and the impact of potential threats on long‑term economic development. The research shows that there is a need for a thorough and extensive analysis of macroeconomic conditions and their potential influence on the conditions of implementation, including the financing of public investment projects in the future.

Development and resistance. Public investment projects in the Istmo de Tehuantepec, Oaxaca

Public investment projects are "proposals for change that, based on specific investments, policies and action strategies, seek to expand people's opportunities and options for development" (Bobadilla et al. 2012). Among the most common are nuclear power plants, hydroelectric and petrochemical facilities, industrial zones, large economic and public transportation corridors. This research will refer to the main public investment projects implemented in the Isthmus of Tehuantepec region, with emphasis on the Interoceanic Corridor. The purpose of this is to analyse the impact of public investment projects that have been carried out in the Isthmus of Tehuantepec region on the promotion of local development. Thus, the historical results of the public investment projects were analysed according to the dimensions of local development, comparing them with each other, in order to later analyse the historical results and in future research project the impacts of the interoceanic corridor through its design, to confirm the social relevance of said project, whether it will be different or not and that it satisfies the axes of local development.

Delays in public investment projects

The returns from public investment, especially during periods of scaling up, are often lower than expected. To understand the mechanisms behind this regularity we exploit original information on investment projects obtained from World Bank project reports to document the extent and the drivers of time delays in project implementation. We find that almost 60 percent of investment projects are delayed by at least one year. Time overruns are common across sectors and countries. A sound planning and preparation matter for the timing of project execution. Country characteristics also play a role, as projects undertaken in countries with weaker institutions and in periods of public investment scaling up are completed with longer delays.

A Monte Carlo Simulation for the Improvement of Drinking Water and Sewerage Services in a Northern Settlement in Peru

Clean water and sewerage systems are essential for global and local development. In Perú, even though most of its urban population has access to these services, it does not mean that those services are enough for the population's necessities. Moreover, they usually do not have acceptable quality. Consequently, it is necessary to invest public funds to provide clean water and sewerage systems to the possible people. However, it does not mean spending money carelessly on projects that might not fulfill people's demands. Then, the current research applied a Monte Carlo-based risk analysis for a public investment project seeking to improve those services in a poor human settlement on the northern coast of Peru. Hence, the Monte Carlo simulation was employed along with its sensitivity analysis. The research found that the project had an excellent chance of being sustainable. Still, it was necessary to make real improvements in the service to meet the population's needs, for instance, by improving the water quality or expanding the hours of clean water supply. Also, due to the investment's quantity, the project's sustainability depends on population growth and public expense efficiency. Finally, the importance of correctly maintaining the works to keep and improve those services was highlighted.