Infrastructure investment has played a crucial role in Bangladesh's economic development. The expansion of roads, bridges, electricity, ports, and urban transportation has improved communication systems and facilitated easier access to production, trade, and markets. Bangladesh has demonstrated its capability in implementing large and complex infrastructure projects. However, more infrastructure investment is needed in the country. The important question now is how effectively public investments are being transformed into efficient infrastructure within the specified time and at a rational cost.
This matter has become more significant due to increased pressure on the government's financial capability. There are many demands on public funds, but revenue collection is weak. Every additional expenditure caused by poor project preparation or delays reduces the opportunity for spending in other critical areas. Therefore, efficient project implementation is not just an administrative issue; it is also part of proper management of public funds.
There are clear signs of weaknesses in project implementation. According to the Implementation Monitoring and Evaluation Division (IMED) data, the financial implementation rate of the Annual Development Programme (ADP) in the 2025-26 fiscal year was 67. 52 per cent. In the first two months of the 2026-27 fiscal year, this rate was only 1.85 per cent. Although expenditure rates do not fully reflect actual project progress or work quality, slow implementation indicates project management issues.
A major weakness in Bangladesh is visible in the pre-approval stage of projects. If feasibility studies are not of sufficient quality, if designs are incomplete, if land acquisition is not finalised, or if utility relocation arrangements are not made, problems arise during implementation. At that point, design and contract modifications, time extensions, and additional costs become necessary. Another issue is initiating too many projects relative to limited resources. When funds are divided among many projects, important ones do not receive adequate allocation, leading to prolonged implementation and unfinished projects burdening future budgets.
Not all cost increases are results of poor management. Project costs can also escalate due to currency devaluation, inflation, and rising prices of machinery and construction materials in international markets. These external factors need to be distinguished from cost increases caused by weak design, land acquisition delays, procurement issues, or lack of coordination.
Another challenge in project implementation is a lack of required professional skills and inter-agency coordination. Large and complex projects require managing various aspects such as government procurement, finance, contracts, legal, environment, and risk management alongside engineering. Deficiencies in these capacities can affect the pace and quality of projects. Similarly, weak coordination among relevant agencies during land acquisition, utility relocation, or obtaining various approvals can delay the entire project if one agency lags.
To address these issues, Bangladesh doesn't need to start from scratch. Several policies and institutional arrangements are already in place. The government's Public Financial Management Reform Strategy 2025-2030 identifies weaknesses in feasibility studies, cost-benefit analysis, project preparation and monitoring, and cost and time extensions. The Planning Commission has also developed guidelines for government investment management, cost-benefit analysis, and development project proposal preparation.
Reforms have been made in public procurement as well. Through the Public Procurement Rules 2025, various measures including e-GP have been strengthened. Digital systems have increased opportunities for transparency and oversight. Therefore, the main challenge is not merely the absence of rules but the consistent application of existing rules and guidelines from the start to the end of projects.
After graduating from a least developed country, project financing and its proper use will become more critical for Bangladesh. Not all concessional development financing will cease immediately upon graduation. The terms of loans from institutions like the World Bank and ADB depend on factors such as per capita income, repayment capacity, and debt sustainability.
However, as Bangladesh's income and financing situation evolves, the country may gradually need to rely more on less concessional and market-based financing, involving higher interest rates and relatively stringent repayment conditions. Thus, the decision on which projects to undertake becomes significant. In this reality, the question is which tasks will be prioritised?
Firstly, full preparation needs to be ensured before selecting and approving the right projects. Major projects should not be approved without adequate preparation of feasibility studies, detailed designs, land requirements, environmental issues, financing, and procurement plans. Not only construction costs but also economic and social benefits and future maintenance expenses should be considered.
Secondly, priority should be given to completing important ongoing projects by controlling the number of new projects. Instead of spreading limited funds across many projects, sufficient allocation must be ensured for projects with high economic and social benefits. Less important, poorly prepared, or long-inactive projects should be reevaluated.
Thirdly, project and contract management must be made more professional. Large projects should have qualified and experienced project directors and teams with necessary technical and management competencies. Frequent changes in key officers, including project directors, should be avoided. Contractors' and consultants' past performance, timeliness, and contract implementation records should be considered when awarding future work.
Fourthly, inter-agency coordination and decision-making must be expedited. The roles of different agencies in land acquisition, utility relocation, and obtaining various approvals should be clarified before starting projects. Measures should be in place to resolve coordination issues within a specified timeframe for large projects.
Fifthly, outcome-based accountability needs to be increased. The original and revised costs of large projects, scheduled and revised completion times, and actual and financial progress should be regularly disclosed. If there are significant cost or time increases, the reasons should be evaluated. Experiences from avoidable problems should inform future project management and contractor selection.
Finally, more emphasis should be on the effective implementation of existing policies and rules rather than creating new ones. Bangladesh has various mechanisms in place for project evaluation, government investment management, procurement, and digital monitoring. Now what is needed is consistent application of these mechanisms and linking accountability to project outcomes.
Bangladesh will need more infrastructure investment. However, the main objective ahead should be maximising development benefits from every invested taka and every borrowed dollar.
*Fahmida Khatun is Economist and Distinguished Fellow, Centre for Policy Dialogue (CPD)
*The opinions expressed here are the author’s own.
#This article, originally published in Prothom Alo print and online editions, has been rewritten in English by Rabiul Islam