2007年-世界发展银行全球_Business_Environment_and_Cost_of_Doing_Business_38页_600kb

Pakistan Infrastructure Implementation Capacity Assessment (PIICA) - Technical Note 4: Business Environment and Cost of Doing Business

Core Content Overview

This technical note is part of the Pakistan Infrastructure Implementation Capacity Assessment (PIICA) study, aimed at understanding the business environment and cost of doing business in the infrastructure sector. It maps out the business processes involved in infrastructure projects, identifies inefficiencies and bottlenecks, and evaluates the regulatory framework. The study also examines the impact of delays on project costs and explores the role of external and internal processes in hindering project execution.

Main Objectives

• To map the business processes involved in delivering infrastructure projects.
• To identify the factors contributing to delays and inefficiencies.
• To evaluate the regulatory environment and its impact on the construction industry.
• To provide recommendations for improving the business and regulatory environment.

Key Findings

1. Business Environment Complexity

• The business environment in Pakistan is complex and often inefficient, with numerous steps and procedures that can delay project completion.
• The lack of a single point of entry for information and guidance creates confusion for new entrants.
• There is no centralized repository for reliable and updated information on ongoing projects, contractors, and consultants.
• The absence of a clear and proactive business framework contributes to inefficiencies and cost overruns.

2. Project Life Cycle Mapping

• The life cycle of an infrastructure project is divided into three zones:
  • Defined Core Processes: These are the formal and planned steps in the project.
  • Outer Processes: These involve interactions with external agencies and are not fully anticipated.
  • Unofficial "Dark" Zone: This includes corrupt practices that are often accepted as "necessary" to expedite project execution.

3. Delays and Their Impact

• Delays are common and have a significant impact on project costs.
• Delays increase the direct cost of materials and other inputs due to rising prices.
• They also lead to increased fixed overheads and imputed financial costs of idle or partially used plant and equipment.
• Delays affect the overall capacity of the construction sector, as resources remain tied up beyond planned durations.

4. Regulatory and Taxation Issues

• The regulatory framework is fragmented and lacks a centralized system for project management, monitoring, and reporting.
• Taxation structures are not well-aligned with the business environment and can lead to additional financial burdens.
• There is a lack of clarity and consistency in the regulatory procedures, which can create inefficiencies and increase the time and effort required to complete processes.

5. Challenges for New Entrants

• New entrants face greater challenges due to complex registration and pre-qualification processes.
• They often lack access to reliable information and face duplication of efforts due to unclear responsibilities and weak regulations.
• The study highlights that some processes are not well-documented and are not included in contract documents or project plans, making them difficult to manage.

Main Methodology

• The study was based on a hypothesis that the complex business environment in Pakistan is a major inhibitor of infrastructure project execution.
• A list of 15 construction and consulting organizations was selected, with varying experience in large infrastructure projects.
• Information was gathered through confidential meetings and interviews.
• A questionnaire was developed to focus discussions on key areas of business processes.
• A case study was conducted on a water reservoir project that was planned to be completed in two years but took six years.
• The project life cycle was mapped into three zones: defined core processes, outer processes, and the "dark" zone of unofficial practices.

Key Recommendations

• Develop a comprehensive contract document that includes internationally accepted best practices (e.g., FIDIC).
• Improve the clarity and consistency of project documentation and procedures.
• Incorporate risk analysis and management into the planning phase of projects.
• Establish a centralized information system for project tracking, contractor performance, and regulatory compliance.
• Address the root causes of delays, including weak regulations, lack of accountability, and duplication of efforts.
• Improve transparency and reduce reliance on unofficial practices by strengthening the regulatory and contractual framework.

Identified Bottlenecks

• Inefficient processes: Delays occur due to inefficient execution of defined processes.
• Unrealistic project planning: Unrealistic timeframes and poor planning contribute to delays.
• Weak documentation: Inadequate documentation leads to delays and increased costs.
• Lack of responsibility and accountability: Poorly defined responsibilities and weak regulations cause bottlenecks.
• Unofficial practices: Corrupt practices in the "dark" zone are often necessary for project success and can significantly increase costs.

Conclusion

The study underscores the need for a more streamlined and transparent business environment to improve the efficiency and attractiveness of the infrastructure sector in Pakistan. It highlights the importance of addressing both internal and external processes, strengthening regulatory frameworks, and reducing the reliance on unofficial and corrupt practices to ensure timely and cost-effective project execution.