Promoting Transparency in Construction Sector: CoST Initiative

1. CoST Construction Sector Transparency Initiative (CoST)Bethan Grillo, CoST international secretariat IACC, 1 November 2008

2. Introduction • CoST is an international multi-stakeholder initiative supported by DFID and implemented in partnership with the World Bank • CoST is designed to increase corruption in the construction sector • Two year pilot across seven countries • Represent the international secretariat, based in London

3. Why is CoST necessary? • Corruption occurs at all stages of the project cycle • Distortion of decision making • Waste of public money – “bridges to nowhere” • Unsustainable projects • Health and safety issues

4. What is CoST setting out to do? • Pilot countries: Tanzania, Zambia, Philippines, Vietnam, United Kingdom, Ethiopia, Malawi • Purpose: “Get what you pay for” • Process: disclosures, project selection, assurance

5. Disclosures Analysis / Interpretation Assurance Team Reporting MSG CoST process • Preparation • Commitment by government • Appoint CoST champion • Establish MSG • Produce Country Work Plan • Establish thresholds • Establish project information template • Appoint Assurance Team Operation Review of Design by Procuring Entities by MSG

6. National and international CoST structure • Structure: • National - Political champion, MSG, assurance team • International - Secretariat – capacity building, TA, lessons International Advisory Group (IAG) • Assurance is key

7. Construction industry stakeholders In-country Exchange of ideas and experience International CoST structure Multi-Stakeholder Group CoST Champion Assurance Team Donors • Capacity buildingsupport • Practical guidance • Facilitate shared experience • Informal quality assurance

8. Agreement on Project Information Templates Development of Country Work Plan Appointment of Assurance Team A A A Project Project Appointment of CoST champion Constitution of Multi- Stakeholder Group Project R Project Project Project Project Main contractors Project R Commitment to piloting CoST A Project Procuring entities Public disclosure consistent with templates Publication of CoST reports Analysis and Interpretation by Assurance Team Review of Outline Design = represented on MSG = approved by MSG Illustrative implementation process

9. Importance of multi-stakeholder approach • MSG is at heart of process • Framework for working • Communication • Transparency is only the beginning – stakeholders must be equipped to act

10. Challenges • Precedent setting • Comparisons with EITI – complex exercise, each project unique, asymmetry of information • Legitimate reasons for changes in specification – requires careful analysis and judgement • Role of technical audits • Timeframe – many projects will not be completed • Value added of CoST • Ensuring multi-stakeholder approach is genuine • High public expectations • Earliest stages of development – we do not have all the answers!

11. Potential benefits of CoST • Improving transparency and accountability on true price and quality • Competitive firms better positioned to win contracts • Reduces reputational risks for governments and companies • Improved investment climate • Greater role for civil society in governance of construction sector • Fewer defective buildings