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274 Diagnosing Corruption in Ethiopia
• High design standard. Both the design standard of the road and the
degree of quality control observed during an unannounced site visit
exceeded what would normally have been expected under such
circumstances in other countries.
• Use of open tendering. Bidding contractors may not have known whether
they were competing against 2 other contractors or 10. As a result, they
may not have invested in a proper site visit when preparing their bids.
This may have led them to assume worse site conditions than those
that existed.
• Unfair contract terms. The contract was described as assigning all risk to
the contractor. As a result, bidding contractors would have made provision
for all such risks in their prices.
• Lack of confidence in procuring entity. RRAs have relatively little
experience as procuring entities as well as a reputation for refusing to
honor some written contract provisions. 13 Again, these factors may
have caused bidding contractors to increase their rates.
• Lack of experience in pricing bids. Some contractors in Ethiopia seem
unaccustomed to pricing bids in the conventional manner, which entails
building up projected unit rates for specified bill items. Instead, bids are
apparently priced on the basis of rates used on previous contracts, irrespective
of whether it may be possible to bid more competitively.
In discussing unit costs with staff from the RRA responsible, it was
clear that the authorities were both aware of and deeply concerned about
what they perceive to be excessively high bid prices for rural roads. They
referred to another road project on which the bid evaluation had been
completed, but they had decided not to award the contract because value
for money was not being achieved.
The unit costs generally accepted by ERA for the nearest equivalent
standard of unsealed federal road is understood to be approximately
US$230,000 per kilometer. On this basis, the RRA gravel road cost of
US$140,000 per kilometer appears more reasonable. However, international
comparisons and comparisons with local costs built up from unit
rates both suggest that road costs in Ethiopia are higher than would be
expected in a truly competitive market.
Infrastructure Unit Costs in Sub-Saharan Africa
Concerns about high and rising unit costs in the road sector are not
unique to Ethiopia. A comprehensive 2008 study, drawing on data from
24 countries including Ethiopia, looked specifically at the reasons for