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156 Diagnosing Corruption in Ethiopia
Box 4.6
Calculating Total Variance in Borehole Construction
To estimate total measured versus invoiced variance in borehole construction,
three key indicators of construction standard (depth, diameter, and materials)
were weighted and then combined to give an overall measure of variance. The
weights assigned to each indicator were based on their relative costs, drawing on
the cost data for shallow boreholes previously discussed in box 4.5.
Three scenarios were used to construct weights: (a) drilling short by 50 percent;
(b) using cheap casing of 50 percent of the invoiced value; and (c) drilling a narrow
diameter borehole wide enough to install casing but too narrow to accommodate
gravel pack. These scenarios and cost figures give the following weights: drilling
short has the highest weight (60 percent), diameter (15 percent), and materials
(25 percent).
What results does this calculation produce for the current sample? The costweighted
approach to measuring the construction-invoicing difference indicates
that 10 percent of the boreholes have high variance that is likely to be caused by corrupt
practices. A further 20 percent have moderate variance that may be the result
of corruption and deliberate short-drilling but could also be caused by poor construction.
Extrapolating beyond the current survey to look at the overall investment in
shallow boreholes needed to meet UAP targets (as previously shown in table 4.1),
these results would imply that 2,000–6,000 shallow boreholes (10–30 percent of
the 20,000 required) could be compromised over the next three years of the plan
period. Using the cost breakdown previously presented in box 4.5, and assuming
that each compromised borehole is drilled to 50m instead of 60 m, corruption costs
attributable to short-drilling could run between US$1million and US$3 million.
However, given the small sample size of the study and difficulties confirming with
absolute certainty the identities of all boreholes, such projections are tentative.
Variation between drilled and invoiced depth. However, the results presented
in the annex, table 4A.1, also indicate that for a significant minority
of boreholes (some 35 percent), the actual measured depth was
10 percent less than that reported in the completion document and
claimed in the invoice.
Figure 4.3 indicates that, for two boreholes, the difference was particularly
large but that there was also a cluster of boreholes where the
variance was 10–25 percent. For the entire sample, the total variance of