The Total Project Cost Management System was established in 1994, aimed at enhancing the productivity of fiscal spending and the quality of facility construction work executed with government funds according to the project implementation stages.
Given the huge size of public financed infrastructure projects in the national budget, the successive operation of the Total Project Cost Management System will lead to high productivity of fiscal spending.
However the average increase rate of the total project cost between 2000 and 2008 is estimated to 0.7%, especially the total cost of 58 projects out of 1,145 projects has increased more than two times as of October 2009.
This report focused on finding out the reason why the total project cost keeps increasing more than being planned. In general, the total project cost is underestimated at the beginning, and then rises during the project implementation. In addition, there is no clear and consistent priority in terms of budget allocation, which leads to extension of the project period owing to procurement failure.
In order to fulfill the goals of the Total Project Cost Management System, the monitoring of the National Assembly should be strengthened and the transparency in the Total Project Cost Management System is keenly needed. These calls for a comprehensive amendment of article 50 of the National Finance Act. This amendment should include such measures as obligating the head of a competent department to submit relative materials to the National Assembly when a revision to the total project cost occurs.
Given the huge size of public financed infrastructure projects in the national budget, the successive operation of the Total Project Cost Management System will lead to high productivity of fiscal spending.
However the average increase rate of the total project cost between 2000 and 2008 is estimated to 0.7%, especially the total cost of 58 projects out of 1,145 projects has increased more than two times as of October 2009.
This report focused on finding out the reason why the total project cost keeps increasing more than being planned. In general, the total project cost is underestimated at the beginning, and then rises during the project implementation. In addition, there is no clear and consistent priority in terms of budget allocation, which leads to extension of the project period owing to procurement failure.
In order to fulfill the goals of the Total Project Cost Management System, the monitoring of the National Assembly should be strengthened and the transparency in the Total Project Cost Management System is keenly needed. These calls for a comprehensive amendment of article 50 of the National Finance Act. This amendment should include such measures as obligating the head of a competent department to submit relative materials to the National Assembly when a revision to the total project cost occurs.