Imagine that you are planning next year’s budget and identifying the projects to be contracted. The community is excited about the upcoming projects. Construction gets underway, but before long, you must deliver unwelcome news—these projects will require more time and prove more expensive than originally anticipated, leading to considerable dissatisfaction among the population. Ultimately, they are successfully completed, but not long after, you face a new challenge: following a period of heavy rainfall, these projects experience malfunctions that disrupt essential services, triggering conversations about the potential damages and human casualties that could occur in the event of a major disaster caused by natural phenomena.
This hypothetical scenario is one in which those involved in infrastructure development often find themselves in. Consider the following statistics: globally, more than half of cities with a population exceeding 500,000 are highly vulnerable to at least one type of natural hazard (e.g., flooding, earthquakes, or hurricanes), and Latin America and the Caribbean stands as the second most disaster-prone region due to natural phenomena, with an average direct loss of around 26% attributed to infrastructure impacts. Recent inspections by the IDB in hospital projects determined that one of the main causes of cost overruns and project failures is linked to the lack of technical quality in preliminary studies. Given this context, it becomes imperative to mphasize the importance of conducting robust technical studies during the feasibility stage of infrastructure projects.
What is included in the technical studies?
The technical studies of an infrastructure project are all those aimed at determining the project’s construction specifications and its technical, economic, financial, institutional, social, and environmental feasibility. These are essential to ensure the sustainability of the investment and must be carried out in the early stages of design, that is, in the feasibility stage. Typically, they include:
- Contextual characterization studies (climatology, geography, environmental and sociocultural factors, natural hazards)
- Topographical survey
- Geological and geotechnical studies (soil mechanics)
- Hydrological and hydraulic studies
Depending on the project’s typology and context, other studies may be necessary to determine:
- Natural hazards assessment and the options to reduce risk, especially for infrastructure that provides basic services and for key civil works
- Precise location of water and wastewater services, electricity, telecommunications, or gas
- Coverage capacity of service providers to assess the need for additional works
- Possibility of effluent discharge into the sewer system or the need for prior treatment.
A preventive approach in project planning: reducing cost overruns and risks
In project management, a project is considered successful when it accomplishes the intended scope within projected costs and schedules, meeting the predefined quality standards, implementing effective risk management, and ensuring overall customer satisfaction. The scope of a project is defined during the feasibility stage of an infrastructure project, encompassing all that is necessary for the project to be executed and fulfill its purpose. This involves a thorough analysis of various factors within the project area, with technical studies serving as the most valuable tools in this endeavor.
Due to the urgency in project procurement, developing robust studies based on scientific and technical evidence obtained through local research may not always receive an adequate amount of attention. On occasion, these studies are conducted superficially, or they employ outdated data that no longer reflects the current conditions in the project area. In other cases, there is a reliance on the contractor to conduct supplementary studies and make design adjustments during the construction phase, as needed. In the worst-case scenario, there is a lack of proper technical due diligence or of a traceable project document archive, which hampers effective project management and decision-making.
The lack of quality in technical studies leads to high uncertainty, frequently increasing the likelihood of project failure or cost overruns. Projects then become susceptible to impromptu decision-making in advanced stages, typically making it less feasible or efficient to implement necessary corrective measures.
Having this information available in the initial project phases facilitates well-informed decision-making, mitigating the risk of budget overruns, delays, and the potential for future disasters resulting from planning and execution deficiencies. Poor execution or outdated use of these studies can lead to:
- Project redefinition (alterations to scope and contracts)
- Timeline extensions (delays due to project revisions and the need for additional execution time)
- Increased costs (changes in the budget)
- Quality impacts resulting from the rush to meet deadlines
- Conflicts with project communities
- Penalties for environmental impacts
- Inadequate management of project risks, improvisation in environmental and social management, including disaster risk and climate change impacts
- Material and/or human losses stemming from disasters
Disasters are not natural: reducing exposure and vulnerability
Technical studies are not only necessary to avoid cost overruns but also to ensure a resilient project.
The increasing impact of natural phenomena in Latin America and the Caribbean teaches us a valuable lesson: human development cannot proceed while disregarding the natural environment. Natural events, in themselves, often have minimal adverse effects on ecosystems and may even yield positive outcomes, such as the fertile floodplains following floods. However, these natural phenomena transform into disasters when they affect human lives and vulnerable livelihoods.
The magnitude of the consequences associated with disasters significantly hinges on the degree of exposure and vulnerability of the infrastructure, assets, and activities we carry out in a territory. Therefore, comprehensive risk management is essential throughout the project cycle, with an emphasis on planning and design phases founded on two pivotal principles: reducing exposure (essentially, what type of construction or activity we develop and where we place it) and reducing vulnerability (how and with what characteristics). it is advisable to prioritize avoidance (opting for locations with minimal hazards and steering clear of complex design decisions, favoring low-regret solutions), followed by minimization (designing in accordance with well-defined and well-characterized requirements). It is also recommended to design projects with a focus on ease of maintenance and operation, as well as emergency preparedness, response, and recovery.
The IDB has the Disaster Risk and Climate Change Assessment Methodology available for use beyond the Bank’s operations, serving as a reference toolbox for technical teams and decision-makers in infrastructure projects. This document not only offers proportional methods for risk analysis but also guidance on risk identification through the use of map viewers, approaches to climate change concepts, incorporation of proven resilience measures in project design, and development of disaster risk and climate change management plans.
Informed and timely decision-making
At the onset of a project’s lifecycle, even when the level of risk and uncertainty is relatively high, the cost of implementing changes to the project is significantly lower than making the same changes in a more advanced stage when uncertainty has diminished or risks have materialized.
Therefore, to minimize and/or mitigate any uncertainty associated with increased risks, it is imperative for studies to be an integral part of the early stages of infrastructure project design.
In the countries of the region, financing these studies is already a priority. At the IDB, we support their execution through credit lines specifically designed to fund feasibility studies and provide knowledge based on successful cases in the region.
Our objective is to transform the hypothetical scenario presented initially into a more favorable one. One where projects are successfully concluded as planned, within prescribed timelines, adhering to the allocated budget and specified quality standards, while encountering minimal challenges. The process has been technically robust and inclusive, resulting in the community benefiting from valuable, secure, and resilient infrastructure. The outcome: a successful project and a sustainable investment that will stand the test of time.
How does the Inter-American Development Bank use its blog to communicate with the public and stakeholders?
The Inter-American Development Bank (IDB) utilizes its blog as a platform to effectively communicate with the public and stakeholders in several ways:
1) Sharing Insights and Analysis: The IDB’s blog serves as a space where the bank can share insights, analysis, and research findings on various topics relevant to its mission and the region it serves. By providing thought leadership and expert commentary, the IDB engages its audience and fosters a deeper understanding of key issues.
2)Highlighting Projects and Initiatives: Through its blog, the IDB showcases the projects and initiatives it supports across Latin America and the Caribbean. By spotlighting success stories and innovative solutions, the bank demonstrates its impact and commitment to sustainable development in the region.
3)Promoting Dialogue and Collaboration: The blog facilitates dialogue and collaboration by inviting feedback, comments, and discussion from readers. By encouraging interaction, the IDB builds a sense of community around important development issues and fosters partnerships with stakeholders.
Overall, the IDB’s blog serves as a dynamic communication tool that helps the bank engage with the public and stakeholders, share knowledge and expertise, and advance its mission of promoting economic and social development in the region.