With cost overruns more than tripling to allow the New Providence Road Improvement Project (NPRIP) to be completed, lender the Inter-American Development Bank (IDB) has been prompted to scrutinize what led to those unexpected increases.
In its 2012 Development Effectiveness Overview report, which looks at whether the IDB has made "sound investment decisions", the Washington, D.C.-based IDB points to The Bahamas as a "small country with big lessons" for how similar projects are conducted by the bank elsewhere in the Americas.
It stated that based on its analysis of challenges in executing the road project in New Providence, construction costs for the NPRIP were "underestimated because risks were not properly identified and quantified."
There were also delays in the project's implementation due to the original contractor ending up bankrupt.
"[This] contributed to the cost overruns being magnified. Rising construction costs are one of the biggest challenges to building infrastructure in urbanized and densely populated areas: The need to accurately estimate these costs in a complex environment where works will have to be adapted to changes in site conditions," the report stated.
To mitigate against such problems in the future, the IDB has suggested expanding its technical assistance for agencies in countries implementing similar projects, to ensure that risks are properly identified, measured and given to the best party to manage.
Despite the setbacks, NPRIP is expected to reduce traffic congestion, improve road safety, decrease pollution and lead to "a better quality of life on the island". Traffic accidents and road fatalities are also expected to drop by 15 percent upon completion of the project.
"So the benefits outweigh the problems -- but addressing those problems is critical to ensure that such projects proceed more smoothly and rapidly in the future," according to the report.
In 2001, the IDB supported the government's plan to "expand the country's road network and strengthen the institutions governing the transport sector". It called for the construction of 15 kilometers of new roads and repair of another 7 kilometers in a heavily urbanized area.
"Shortly after the start of the civil works, the contractor went into receivership and all construction work stopped. After two failed tenders to hire a new contractor, the government changed the bidding terms to take on some of the construction risks and the project finally resumed in 2007 after a new contractor was hired to complete the unfinished work," the report also stated.
"By then, costs had increased and additional civil works were added to the original plan, such as drainage and water pipes along the roads to prevent flooding. So, in 2008, the IDB approved a supplemental loan and construction works resumed."
And last year, the IDB approved a second supplemental loan for the project, bringing the bank's total financing for the project since 2001 to $270 million, more than triple the original cost estimate.

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