Corruption in Large Government Projects Not Only Inflates the Budget But Reduces Managerial Effectiveness

Abstract

Research on operations analytics has focused on the design and execution of processes and projects. For projects in particular, the emphasis is on factors such as plans, stakeholders, and uncertainty; and their effects on the outcomes of projects. Little attention is paid to a variable of considerable importance: ethical behaviour, particularly corruption in large projects. This matters because studies of corruption have shown that corruption inflates project budgets (by sometimes 30%) and thus imposes an unproductive tax. This chapter builds on an original dataset of 38 very large government projects in Nigeria to demonstrate that corruption not only inflates project budgets but also distorts decisions, rendering other project management success drivers less effective. The chapter demonstrates that corruption has negative interactions with the positive effect of project success drivers and illustrates on a detailed case example what these interactions look like in practice.

Appendices

Appendix 1: Project sample

Table 5

Appendix 2: Questionnaire

Numerical questions were asked about planned and actual start and completion dates and planned and actual budgets. All other questions (except Q2a, which has a text answer) are answered in 7-point Likert scales.

• 1. The project had a well-defined supervision structure (e.g. a combination of clear oversight by a government body with an external execution supervisor).

• 2. Outline the decision hierarchy structure (e.g. “minister–project officer–supervising consultant–main contractor”). Likert: The composition of the supervision structure remained stable throughout.

• 3. The supervision structure provided oversight on a regular basis throughout the project.

• 4. The supervision structure provided clear guidance when it came to grey areas.

• 5. All key decisions were approved by the supervision structure.

• 6. The supervision structure was regularly kept informed of key aspects of the project.

• 7. The supervision structure met regularly.

• 8. The credentials of the members were subject to due diligence prior to membership.

• 9. The supervision structure regularly uncovered difficulties in the project.

• 10. The supervision structure regularly uncovered irregularities in the project.

• 11. The supervision structure provided adequate guidance for resolving problematic aspects of the project.

• 12. Significant gratification in any form was present in this project.

• 13. The primary contractor was selected through a selection process appropriate for projects of this scale.

• 14. The selection process was rigorous and open.

• 15. The selection process considered contractors’ demonstrated experience in similar projects elsewhere.

• 16. Details regarding planning for the project received wide visibility, for example, through a website.

• 17. The public were able to ask questions regarding the project.

• 18. Key stakeholders outside the narrow decision circle had visibility and input before the approval processes of the project.

• 19. The goals of the project were clearly understood by all parties.

• 20. The goals were clearly measurable.

• 21. The prioritization among the most important goals was clear.

• 22. The project was created with a demonstrated business case defining the goals and public benefits.

• 23. The benefits of the project to the economy or society were clear and measurable at the start of the project.

• 24. The project goals and business case were subject to risk scenarios to capture the risks of outcomes.

• 25. The primary contractor had strong capability to deliver a project of similar characteristics and scale.

• 26. The primary contractor had strong prior experience in similar projects with a track record of successful delivery of similar projects.

• 27. The primary contractor and the supervising party had clearly defined roles.

• 28. The primary contractor and the government’s assigned project supervisor (see Question 2) worked together constructively when problems occurred in the execution.

• 29. Sub-contractors: Taken together, the sub-contractors had strong capability to deliver a project of similar characteristics and scale.

• 30. The project had formal plans for managing stakeholders outside the project.

• 31. The plans were actively used to positively influence stakeholders.

• 32. Stakeholder views were used to make changes that improved the viability of the project.

• 33. The project was adequately resourced (in terms of funds) for its initial size.

• 34. The project funding was renewed/maintained when the project needed the funds to proceed.

• 35. The project had an adequate supply of skilled staff on the government side.

• 36. The project had adequate logistical support, for example, for delivery of materials or personnel.

• 37. The timeline of the project plan was realistic.

• 38. The project had a well-defined risk plan.

• 39. The risk plan was comprehensive in the management of risks that did occur.

• 40. The quality of the risk plan was consistent with similar plans used in projects of this magnitude worldwide.