MR. EDITOR:
The figures published by the Infrastructure Policy Council (CPI), prepared using data from the Concessions Directorate of the Ministry of Public Works, are concerning. They show that the average time between award and the start of works went from one year and two months between 1992 and 2010 to two years and seven months since 2011 — more than double.
From an economic perspective, these longer timelines are not harmless. They mean not only that construction is delayed, which has economic and social relevance and effects, but also that guarantees and financing must be maintained for longer, expected cash flows are postponed, and exposure to variations in costs and market conditions increases. Added to this is the fact that delays in commissioning mean postponing the benefits these works provide to the country.
Reversing this trend also requires a perspective from public policy, aimed at restoring capacity in the development, management, and preparation of projects. At the same time, proper risk allocation, greater engineering maturity, and early economic evaluations can reduce uncertainty and prevent it from ultimately translating into higher costs, delays, and disputes.
Karina Araya V.
Partner, GEDD Consultores
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DEAR EDITOR:
The figures published by the Infrastructure Policy Council (CPI), based on data from the General Directorate of Concessions of the Ministry of Public Works (MOP), are worrying. They show that the average time between award and the start of works went from one year and two months between 1992 and 2010 to two years and seven months since 2011 — that is, more than double. From an economic perspective, these longer timeframes are not harmless. They mean not only that construction is delayed, which has significance and effects economically and socially, but also that guarantees and financing must be maintained for longer, expected cash flows are postponed, and exposure to cost variations and market conditions increases. Added to this is the fact that delays in commissioning mean postponing the benefits these works deliver to the country.
Reversing this trend also requires a perspective from public policy, aimed at restoring capacity in the development, management, and preparation of projects. At the same time, proper risk allocation, greater engineering maturity, and early economic evaluations can reduce uncertainty and prevent it from ultimately translating into higher costs, delays, and disputes.
Karina Araya V.
Partner, GEDD Consultores
More about: Public policies, Risk allocation, Trend