BSMSN Project: An exemplary cost-efficient government initiative

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Bangladesh, BSMSN

Traditionally, government projects in Bangladesh often exceed their estimated costs due to time extensions, unforeseen complications, and unnecessary expenditures. However, the Bangabandhu Sheikh Mujib Shilpa Nagar (BSMSN) project stands out as a rare exception. The project, executed between May 2017 and June 2019, managed to save BDT 1 billion from the revised estimate, a remarkable achievement considering the usual trend.

The Implementation Monitoring and Evaluation Division (IMED) of the Ministry of Planning has highlighted the gas pipeline construction and distribution project at BSMSN as an exemplary case. This project, overseen by the Karnaphuli Gas Distribution Company, was completed at a cost of BDT 3.598 billion, significantly lower than the initial estimate of BDT 4.693 billion.

The initial approved cost for the project was BDT 3.671 billion. A subsequent revision, which included additional costs for “river crossing by Horizontal Directional Drilling,” raised the estimate by approximately BDT 400 million, bringing it to BDT 4.693 billion. Despite this, the actual implementation cost was significantly lower, reflecting efficient management and execution.

Several factors contributed to the cost savings observed in the BSMSN project. One of the primary reasons was the provision of land by the Bangladesh Economic Zones Authority (Beza) at no cost. Beza provided the land required for a valve station free of charge and utilized previously acquired land for the construction of a 20-feet wide pipeline by Karnaphuli Gas Distribution Company and Gas Transmission Company. This eliminated the need for additional funds for land acquisition, which is often a significant expense in such projects.

Moreover, the IMED report noted that the actual work required for river crossing and the installation of the cathodic protection system under the Horizontal Directional Drilling method was less than initially estimated. This discrepancy between planned and actual work further reduced the overall expenditure.

Another noteworthy aspect highlighted in the report was the absence of detailed feasibility studies by independent consulting firms. While this might typically be viewed as a shortcoming, in this case, it contributed to cost savings. The lack of feasibility studies meant that the project’s cost estimation and scope of work were not as precise, resulting in a more conservative approach to spending.

Despite the cost-saving measures and reduced expenditures, the BSMSN project successfully achieved its primary objectives. The construction of a gas distribution pipeline up to the Mirsarai industrial area (BSMSN) has been completed. This infrastructure has facilitated gas supply in the area, with gas connections already provided to three industrial customers. The successful implementation of this project is expected to have a positive long-term impact as more industries come online and benefit from the gas supply infrastructure.

Khondaker Golam Moazzem, the research director of the Centre for Policy Dialogue, commended the project for its cost-efficiency. He noted that the savings achieved could be redirected to other projects, especially critical during economic crises. However, he emphasized that the savings were not necessarily due to the efficiency of the implementing entity but rather due to the generosity of Beza in providing land at no cost. Mr. Moazzem suggested that similar opportunities might exist for other development projects, allowing for further cost savings across the board.

While the BSMSN project is a commendable example of cost savings, the IMED report did identify some challenges. The estimated costs of various procurement packages were not in line with market rates, leading contractors to submit bids significantly higher than the estimated costs. This discrepancy necessitated multiple tendering processes, causing delays and inefficiencies.

The report also highlighted the lack of a feasibility study by a third party before the project’s commencement. This absence likely contributed to inaccuracies in cost estimation and the scope of work. Moving forward, it is crucial for future projects to incorporate detailed feasibility studies to ensure more accurate planning and budgeting.

The BSMSN gas pipeline construction and distribution project serves as a beacon of hope in a landscape often marred by budget overruns and inefficiencies. The successful completion of the project under budget demonstrates the potential for cost savings through effective management, strategic partnerships, and a bit of fortuitous circumstance. As Bangladesh continues to develop its infrastructure, lessons learned from this project could pave the way for more efficient and cost-effective implementations in the future.

This achievement not only underscores the importance of meticulous planning and execution but also highlights the potential benefits of collaborative efforts between government entities and regulatory bodies. The savings realized from this project provide a valuable resource that can be reinvested into other critical development initiatives, driving further economic growth and prosperity for the nation.

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