The validity of budget estimates for infrastructure projects, especially in landlocked countries, must be fully investigated to avoid cost overruns. At the time of project design and implementation, MCC had not yet adopted the more rigorous approach of involving and supporting subject matter experts in the due diligence studies. The result was a project where the costs were significantly under-estimated and, as a result, cost overruns affected much of the compact. MCC’s early investments in roads faced similar challenges where engineering reports were not being produced early in compact development. However, once engineering reports were produced more systematically and earlier in compact development, cost estimation for roads projects improved greatly. While MCC has clearly improved its practices in these areas, it is worth re-stating that the costs of not conducting the full suite of studies during development, including detailed design studies, are substantial and real.
Lesson Learned