Transport infrastructure project planning process and capital deployment efficacy implications : evidence from Sri Lanka

Abstract

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.