The Power of Public Investment Management
This article is an extract from "The Power of Public Investment Management," a publication by the World Bank
The uncertain socio-economic prospects and tight fiscal conditions increase the need to get higher value for money and greatest benefit for public spend.
The drivers of an inefficient Public Investment Management are:
Weak inter agency coordination projects driven by political considerations
Projects needing multiyear commitment with weak budget system
Large projects requiring problematic, site acquisitions, consideration of environmental safeguards and complex procurements resulting in delays and cost overruns
Increasing need for large investments in human and physical capital and economic infrastructure and poverty reduction
The critical features of a Public Investment System are:
Investment guidance, project development and preliminary screening
Formal project appraisal
Independent review of appraisal
Project selection and budgeting
Project implementation
Project adjustment
Facility operation
Basic completion review and evaluation
The first two features are key to enhance public value and wealth creation by selecting, and designing projects with positive net benefits
The change themes to improve Public Investment Management require careful thought and sequencing depending on the strengths and weaknesses of the existing Public Investment System. The potential themes to inform the change programme could be:
Focus on better implementation first
Focus on better planning first
Establish a centre of excellence
Establish a centre of power (e.g. politicians)
Decentralise or centralise
Legal change first (change the law)
Increase transparency (of information to the public)
The Public Investment System needs to be able to cope with uncertainty. We cope with uncertainty by:
Not being risk averse or overly optimistic
Engaging key stakeholders including users
Using contingency approvals
Stopping projects if they are no longer needed or viable
Allow agencies to adjust the pace and nature of implementation