Inadequate project preparation, poor project quality-at-entry, and poor project execution cause delays and changes in project scope and raises costs in the course of implementation. All of these significantly reduce the project's value and hamper the attainment of project objectives.
To address this problem, the following policy reforms2 shall be implemented:
● Strengthening the capacity of NEDA and other government agencies in Value Engineering/ Value Analysis (VE/VA) and Risk Analysis and Management to ensure that infrastructure projects are not overdesigned or overspecified and to minimize cost-overruns, project implementation delays, and changes in scope of works;
• Incorporation of VE/VA and Risk Analysis in the guidelines and processes of the NEDA Investment Coordination Committee (ICC);
• Development of Model Transaction Documents/Contracts that may be uniformly applied to PPP projects of national government agencies (NGAs) and LGUs3; and
• Monitoring, management, and evaluation (MME) of PPP projects for the immediate mitigation of potential problems during contract implementation, while maintaining clear lines of accountability between contracting parties and the oversight agency.
To assist agencies in project preparation, a fund to support the conduct of feasibility studies may be established. This fund will ensure that feasibility studies are undertaken in a timely and correct manner.
With regard to PPP projects, NEDA-ICC approval of business cases shall be secured before proceeding to a full feasibility studies to save on project preparation costs. This shall include the "go or no-go" decision on a project at an early stage and shall be required of all PPP projects irrespective of modality.
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2 These reforms were recommended under the 2009 Philippines-Australia Partnership for Economic Governance Reforms (PEGR)-funded Reform Agenda 006-07 on Institution Strengthening of the NEDA and other oversight agencies on value engineering, contract preparation, and performance monitoring of infrastructure projects
3 Specific BOT/PPP model transaction documents/contracts have already been developed for four subsectors namely: (a) urban mass rail; (b) bulk water supply; (c) solid waste management (SWM); and (d) ICT. A contract drafting tool which aims to encompass all other projects and sectors not covered by the four model contracts has also been developed. The model contracts and the contract drafting tool are both posted on the NEDA website under the "Programs and Projects" section.