Take project management away from govt agencies
Take project management away from govt agencies
Robert J. Cochrane, Former Strategic, Development Consultant,
Asia Development Bank
As corruption shows no sign of abating under decentralization
it is a gloomy picture indeed despite the best intentions of
President Megawati Soekarnoputri's government. The World Bank,
the Asia Development Bank, the International Monetary Fund and
other agencies are stopping projects, and private democratic
country based investors would rather deal with China, a communist
country!
Then there is the recent situation with the Rp 144 trillion
"problem" with Bank Indonesia, the momentary glimmer of hope with
respect to the use of a foreign audit firm, and the subsequent
dashing of that hope. Ministers have a very hard task to break
the cycle of corruption, but drastic situations call for drastic
solutions. As an old auditor, and still a current certified
practicing accountant, who has worked as a consultant in aid in
Indonesia, I offer the following suggestions:
* Take procurement and project management away from the
ministries and into the private sector, and have the ministries
involved only as project designers, and customers of a
procuring/project management private firm.
It is at the procurement stage of projects that corruption
starts, and it is completed in implementation by the same
procuring "group" authorizing payment. At present, what we have
in old auditing terms is a simple lack of control through poor
separation of functions.
In effect in a directorate general one person can be the
"Czar" in relation to aid project design / specification,
procurement, implementation/ project management, and payment
authorization. It is then easy to see why a ministry should be
seen as one individual for control purposes.
Because very lowly paid ministry employees owe their "extra
money" to the "Czar's" success, this "one person effect" in a
directorate is real. It effectively comprises a set of many
people in collusion.
Private firms should be appointed to carry out the procurement
of services or goods, and then supervise the implementation by
contractors. These firms must have credentials that are
recognized by the international community as impeccable -- e.g.
Price Waterhouse Coopers, KPMG, Ernst & Young. Contracts for
"procurement and project management" should be for one year only.
Each firm must be audited by a peer firm (e.g. PWC's by KPMG
etc.).
* Scoring of procurements for the technical winner through
panels selected by the private firm should not have any current
members of the customer (ministry) on the voting panel. Panel
members should be changed periodically within a process without
notice.
This scoring, as at present can be easily twisted to suit a
colluding contracting party, but if you continually change the
panel members, and the organizers and controllers of the panel
are non public servants who are paid a living wage (i.e. people
like KPMG), then you have a much better chance of clean
procurement than at present.
* In the modern corporate audit world it is taboo to have one
individual control all the processes -- separate people handle
all four of the above stages of a project.
By splitting the procurement, and project management /
implementation away from ministries it dramatically improves
control. It also gives the government someone to sue if things go
wrong!
This control change will allow the ministries to be the
visionaries and project owners, and to reduce staffing levels --
they can then pay their remaining staff better salaries, and the
public can perhaps begin to expect these better paid public
servants to serve them rather than serve themselves.
Corruption could be significantly reduced because the firms
will employ well-paid people to be the project facilitators, and
procure in a true and fair way.
Most importantly however this change would be seen as a great
step forward by the aid providers and by investors -- and be a
good first step in gaining some significant good publicity for
the government.