When I wrote my piece last week on the 2014 government budget, many of the commentaries I received were directed at the slow pace of implementation of public projects. So what, they say, if oil revenues or budget outlays are in the trillions, if they are not quickly translated into tangible results?
Some readers cited their own unfinished pet projects, such as housing programs, metro systems and railroad networks, which they used as yardsticks for government performance.
Readers echoed the comments Custodian of the Two Holy Mosques King Abdullah made on Dec. 23, when the 2014 budget was announced, when he said, “What matter are not budget figures, but what they represent in reality as quality projects and services that people can feel and enjoy.”
There have been notable successes over the past years in government agencies’ ability to translate budget figures into actual achievements. Examples include the well-publicized new university campuses, hospitals, and some rail lines. However, the chronic delays in other previously announced projects have raised skepticism about the ability of some departments to carry out the tasks assigned to them. Judging by the volume and intensity of reactions to my piece last week, it appears that many citizens have become skeptical, even cynical, about the prospects of improving their lives as new projects are announced, only to be delayed. Only through drastic, high-level intervention could things improve, they asserted.
King Abdullah has been often publicly critical of the slow pace of project implementation. On Dec. 23, 2013 he called on “all ministers and heads of government agencies to implement the projects and programs for which they are responsible, and perform their duties, with precision and dedication, and without delay or dereliction.” He also instructed supervisory authorities to “report to us regularly about the pace and quality of performance, and any impediments on the way.”
Public officials no longer deny that project timetables have been difficult to meet, but cite reasons beyond their control for those delays. They express frustration that they are not given credit for the projects they finish and instead the focus is on unfinished projects.
Government officials and private contractors have traded accusations as to who is to blame for the delays. Contractors like to blame government policies for their delays. They cite complicated government procurement and tendering procedures and labor regulations. They also claim that late payments force them to stop or slow down the implementation because of limited liquidity, and refer to the contracting companies that had to fold because of late payments.
On the other hand, government agencies believe that some contractors are not qualified enough to carry out the projects they bid for and try to cut corners at the expense of quality. Shoddy implementation causes delayed payments and endless legal wrangling leading inevitably to delays in project completion.
You need only to look at the level of government outlays over the past several years to appreciate the size of the problem. Since 2006, Saudi Arabia has spent or allocated over $1.36 trillion in its general budgets, plus scores of billions more in special additional programs. It is planning to spend another $228 billion during 2014. That is a total of around $1.6 trillion. It has launched thousands of projects during those years. In 2013 alone, the Ministry of Finance reviewed 2,330 projects valued at $48 billion. For the coming 2014 fiscal year, the government plans to launch projects valued at over $66 billion.
With so many projects started, administrative and technical capacities of both government agencies and the private sector have been stretched beyond their limits. As results thousands of projects are running behind schedule.
According to official estimates, projects “under completion” are worth about $533 billion, which indicates a backlog of several years, because annual project outlays are usually in the $50 billion range. They point out that projects are not implemented according to timetables, “because of great pressures on contractors.” They also point to critical shortages of qualified contractors, whether local or foreign, that can be assigned some of the projects.
There are no published precise figures of the number of unfinished projects, and that is one of the main complaints of Saudi economists and other professionals trying to assess the pace of implementation of government plans and come up with solutions to delayed and failing projects.
High-level committees have looked into the problem for some time, but delays have persisted. Now it is good news that there will be soon an authoritative compilation of unduly delayed or failing projects, as per the royal instructions I cited.
Once that compilation is completed, and hopefully made public, solutions could be found. If it is true, as contractors often posit, that government regulations are to blame, then those regulations may be due for a revision. If it is a shortage of qualified local contractors, foreign contractors could be invited and encouraged to take part. The problem may boil down to capacity limitations, at the government and private sectors. We may not have enough qualified contractors to carry out the mammoth projects we have planned. Saudi economy has doubled several times over the past decade, but private sector abilities have not kept pace.
In addition, the technical and administrative capacities of line ministries as well as supervisory and regulatory agencies may not be a match for the tasks at hand. While annual budget outlays increased nearly five-fold over the past decade, technical and administrative capacities have not been scaled up to match that jump. Nor have government regulations and procedures adapted to the requirements of fast-paced developments.
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