Public Sector Governance and Accountability Series: Budgeting and ...

Capital Budgets: Theory and Practice 99
TABLE 3.2
(continued)
Functional area
Issues
some cases, they are centralized, with the
consequence that payments are delayed.
In some cases, the payee may be compensated
for the delays through interest payments.
In most cases, however, arrears in payment
are common, revealing a failure of the
expenditure management system.
Reporting
Cost escalation
Year-end unspent amounts
A distinction needs to be made between
financial reports for internal management
and reports for macroeconomic management.
The latter include national income accounts
and government financial statistics, both of
which involve a readjustment of budgetary
categories and some imputations (such as
depreciation).
A common feature of most projects is the
substantial difference between the initial
estimated cost and the completed cost. Variations
are due to delays in the acquisition of
sites, gaps between estimated and completed
costs, major changes in the design of projects,
and delays in funding. This difference in
costs poses new policy issues for cost
recovery. Furthermore, in some cases,
projects may prove to be less remunerative
than estimated.
The lapsing of budgetary funds at the end of
the fiscal year induces many a project authority
to engage in a spending spree. To minimize this
behavior, some countries appropriate budgets
that last until the project is finished. Elsewhere,
governments attempt to carry forward the
unspent amounts.
5. Evaluation The implementation of each project offers its
own lessons of experience for the future. Evaluation
is undertaken to ascertain the lessons.
For the most part, this practice remains an
undervalued exercise.
Source: Author’s compilation.