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Public sector investments contribute to economic growth and enhance the productivity of a
country. According to the Central Bank annual report 2020, the Government of Sri Lanka
spends around 30% of total annual expenditure on capital investments. The project planning
process plays a crucial role in selecting projects and allocating resources with optimum capital
efficiency. However, public investment planning in Sri Lanka does not consider returns on
investment or technical specifications, resulting in low value for the cost. It also lacks expert
consultations or in-depth evaluations of project need. As a result, implementors often fail to
adhere to the process of selecting capital-efficient ventures.
It is important to comprehensively evaluate projects at the planning stage and select the most
cost-efficient options. This analysis of the current project planning process in Sri Lanka is
undertaken based on selected case studies of road and rail transport infrastructure investments.
Sri Lanka allocates a share of its public capital investment for land transport infrastructure
projects. This research aims to examine the planning process for public sector capital
investment projects, identify its implications for capital efficiency and propose efficiency
improvements to Sri Lanka's public sector capital investments.
Standard operating practices in Australia, Canada, Germany, Hong Kong, India, and Vietnam
were compared with Sri Lanka. This comparison revealed that Sri Lanka's public project
planning process does not provide standard operating practices for initial screening of projects,
clientele analysis, probabilistic risk analysis, or post-project evaluation.
Context analysis from rail and road infrastructure investment projects revealed that most
projects in Sri Lanka do not follow the current project planning process. Instead, project
proponents bypass the process and seek direct Cabinet approval. On average, projects that
receive such direct approval have higher investment costs associated with them. In-depth
interviews with industry experts revealed that the causes of capital deployment inefficiencies
were the unclear institutional role entrusted by the Department of National Planning, political
influence, lack of transparency throughout the process, and gaps in the operation manual.
Upon summarising all gaps and identified issues, the study proposes appropriate mitigation
measures. These measures recommend developing an Act of Parliament to introduce an
authoritative body to implement the planning process and adopt centralised guideline with
Standard Operating Practices. The proposed centralised guideline was validated through two
rounds of expert consultations. Future research could evaluate the proposed centralised
guideline by applying them to specific projects and expanding their application to encompass
irrigation, port, and airport infrastructure investments. |
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