Action Seminar for Member companies

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• Action Seminar for Member companies
• Construction Sector
• Transparency Initiative
• (CoST)
• Christiaan J. Poortman
• Chair, CoST International Advisory Group
• Director, Global Programmes, Transparency
  International

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Construction Sector Transparency Initiative (CoST)

• Critical Role of Engineering and
• Construction Industry
• At the apex of global growth and sustainable
  development
• At the forefront of the current global agenda
• Climate change and alternative energy development
  
• Stimulus and recovery from global crisis

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Construction Sector Transparency Initiative (CoST)

• Definition of Corruption
• The offering, giving, receiving or soliciting of
  anything of value to influence the action of an
  official in the procurement or selection process
  or in contract execution
• (World Bank Sanctions Committee, 2003)

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Construction Sector Transparency Initiative (CoST)

• Construction and Corruption
• Corruption in construction is widespread
  creating estimated losses of 15-30, directly
  and indirectly
• Construction contracts are particularly prone to
  corruption because of size, technical complexity,
  extensive approval process and easy concealment
  of sub-standard quality
• Corruption allows unnecessary, unsuitable,
  unreliable and overpriced projects to go ahead
• Corruption in construction undermines economic
  and social returns and impedes the delivery of
  sustainable solutions to global challenges
• Corruption in construction can be instigated by
  many actors contractors, consultants,
  suppliers, as well as procuring agencies

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Construction Sector Transparency Initiative (CoST)

• Benefits of Fighting Corruption
• in Engineering and Construction
• Reducing corruption yields benefits for final
  users of construction outputs, in terms of
  quality and price
• Reducing corruption also yields benefits for the
  global engineering and construction industry
• Raising professional standards
• Reducing financial risk
• Enhancing access to more favourable funding
• Awarding contracts on competence rather than
  bribes
• Critical role of consultancy and engineering
  companies in reducing corruption leakages and
  direct funding to projects that are sustainable

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Construction Sector Transparency Initiative (CoST)

• UK Championing of New Global Initiative
• UK consultancy and engineering companies are
  promoters of integrity management in
  construction
• FIDIC as a key promoter of BIM across the globe
• ACE as founding member of UK Anti-Corruption
  Forum
• UK has been selected as a pilot country in a new
  initiative, CoST, that is targeted to bring
  greater integrity to the global construction
  industry
• UK CoST pilot provides FIDIC members with a
  unique opportunity to champion this important
  global intiative

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Construction Sector Transparency Initiative (CoST)

• What is CoST?
• CoST is a multi-stakeholder initiative designed
  to promote transparency and accountability in
  publicly financed construction projects
• CoST is supported by the UK Department for
  International Development (DfID) and the World
  Bank
• It is currently being piloted in the UK, as well
  as Ethiopia, Tanzania, Malawi, Zambia, the
  Philippines and Vietnam.
• The pilot phase closes on 1 October 2010

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Construction Sector Transparency Initiative (CoST)

• CoST Principles
• Construction projects should promote
  sustainability
• Governments must be accountable
• Management of engineering and construction
  projects should be transparent
• Disclosure will improve value for money
• Transparency promotes investor confidence
• Multi-stakeholder involvement enhances
  credibility

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Construction Sector Transparency Initiative (CoST)

• CoST Institutional set-up
• CoST relies on cooperation between stakeholder
  groups to observe public construction and to
  highlight differences between specification and
  delivery
• Stakeholders are organised within
  Multi-Stakeholder Groups (MSG), to include
• Procuring entities
• Public financial management bodies
• Construction companies and associations
• Civil society
• The MSG is supported at a high level by the
  national CoST Champion

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Construction Sector Transparency Initiative (CoST)

• How does CoST work?
• In each country, CoST provides for the disclosure
  of information on public construction projects to
  the MSG, such as
• A description of the project, its purpose and
  location
• The original project specification, completion
  data and budget
• The built project specification, completion data
  and budget
• Disclosures will be reviewed by an independent
  assurance team who will interpret the data and
  advise the MSG of its findings
• The MSG will release the findings to wider
  stakeholders Are you getting what you paid for?

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Construction Sector Transparency Initiative (CoST)

• What are the expected outcomes of CoST?
• It is not the role of CoST to make accusations of
  corruption
• Stakeholders will receive accurate information,
  understand what it means and act upon it as
  necessary
• Some specific outcomes
• Enhanced transparency of procuring entities and
  contractors
• Improved management of public finance
• Greater efficiency in public procurement
• Increased access to information and empowerment
  to demand accountability
• Global programme will create a level playing
  field for the engineering and construction
  industry within and across countries

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Construction Sector Transparency Initiative (CoST)

• What support is available to CoST countries?
• Technical support and lesson sharing
• CoST Secretariat provides coordination, advice,
  templates and research
• The International Advisory Group (IAG) provides
  guidance and offers a forum for lesson-sharing
• Financial support
• Each country receives funds towards the cost of
  implementing CoST

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Construction Sector Transparency Initiative (CoST)

• The UK CoST Pilot
• National CoST Champion has been appointed
  Minister of State, DfID
• Multi-stakeholder group has been formed,
  including two private sector representatives
• A public consultation event was held in London on
  September 11, 2009
• Inform stakeholders in the UK about the CoST
  initiative
• Seek their views on the UK pilot
• Request support and participation
• Initial project selection process started

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Construction Sector Transparency Initiative (CoST)