Latin America registers cost overruns of 48% in infrastructure works

On average, there has been a cost overrun of 48% in infrastructure projects developed in Latin America in almost a century, according to a study conducted by the Inter-American Development Bank (IDB).

In the framework of the ninth edition of the PPP Americas 2019, another IDB specialist, Roberto de Michele, said that the biggest source of corruption is construction.
In the framework of the ninth edition of the PPP Americas 2019, another IDB specialist, Roberto de Michele, said that the biggest source of corruption is construction.
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From a sample of 806 projects around the world, the Latin American region has the highest prices in the world, and the trend has been bullish.

The works most susceptible to this situation are the dams, whose initial cost on average has doubled, and records an overrun of 103%, followed by the railways with a surcharge of 59%, the roads of 53%, while the cost overruns from power plants have reached an average of 36%.

The report notes that the IDB measured this situation in the projects financed with its resources and found that 82% had cost overruns that represented an additional 22% of the initial price at which the project was projected.

In the works financed by the World Bank, the cost overruns affected 53% of the projects, and on average they represented 17% of the total costs of the projects. "At first glance, it can be concluded that cost overruns are omnipresent since they appear in most projects," says the report "Better spending for better lives: how Latin America and the Caribbean can do more with less", carried out by the multilateral.

But the leader of Public-Private Partnerships of the IDB, Gastón Astesiano, points out that the cost overrun is not necessarily synonymous with corruption, but also with a poor feasibility design and planning studies that flow in a hurry. Also on certain occasions "as we do not have the project completely finished preparing, later we changed it. That technically is not about an extra cost, it is that we actually made a change to the original project, we added a port, a curve, an extension".

The projects, especially those of infrastructure, are long-term, not only in their permanence over time but also because of their planning and construction time. Only the design of a work of this type can take between 20 and 36 months, which often is the despair of governments.

Source: Diario Libre

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