Manage projects carefully during implementation to avoid cost increases. Pay careful attention to contingencies – both the amount of funds set aside and the utilization of the contingency fund: Ensure the contingency amount set aside in the compact budget is sufficient to cover the project risks. Insist that contingency funds are not touched during implementation for purposes other than covering increased costs related to the approved scope of the associated works contracts, even when tempted. Ghana is an example of where contingency funds were needed to cover the costs of legitimate variation orders and claims while the monies had been drawn down to cover cost of new work, approval of which had not gone through appropriate channels.
Cost trackers and good contract management are important: The Feeder Roads Activity’s construction firms were often late in submitting variation orders for approval. These orders often included extra bits of road works here or there, usually side road kilometers connecting nearby areas. Those kilometers added up and contributed to the increased costs.
Face claims early to keep costs down: There were increased costs to the N1 Highway Activity due to site access issues, resulting from delays in completing re-settlement implementation such that the contractor had to accelerate to complete the works before the end of the compact. Ensure that the Engineer (and supporting project management consultant) are equipped to deal with claims in a timely manner (as called for in the contract).