Effectiveness of infrastructure service delivery through earmarking: the case of highway construction in China
✍ Scribed by Xu Honggang; Ali N. Mashayekhi; Khalid Saeed
- Publisher
- John Wiley and Sons
- Year
- 1998
- Tongue
- English
- Weight
- 460 KB
- Volume
- 14
- Category
- Article
- ISSN
- 0883-7066
No coin nor oath required. For personal study only.
✦ Synopsis
Cost overruns in Chinese highway construction projects arise both from poor construction quality and delays in completion. As a result of the lack of an eective control mechanism linking project initiation with funding availability, new projects are initiated without sucient budget to support completion as planned. Project managers are forced by the budget constraints either to sacri®ce construction quality or to slow down the pace of construction. This paper develops a system dynamics model to understand the cost overrun problem in Chinese highway construction projects. Three policy options, (1) introduction of feasibility studies, (2) loan ®nancing of the cash-strapped projects, and (3) the raising of user charges, are evaluated using this model. The introduction of feasibility studies has the potential to be an eective policy, yet it is impossible to implement because of organizational constraints. Loan ®nancing leads to dependence on loans rather than sustaining service delivery. The raising of user charges is found to be the most eective policy, although it is politically not very attractive. *