New Standards and Mechanisms are Needed to Improve the Efficiency of Budget-Funded Projects

15 april 2016

At the request of the Finance Ministry, the Analytical Center took part in preparing a report on key ways to improve the efficiency of budget spending in Russian regions. The Analytical Center's experts were responsible for preparing the section titled Improving the Budget Policy in the Area of State Support of the Real Sector of the Economy and Implementation of Investment Projects.

To get a variety of opinions on the issue the Analytical Center held a round table on the problems with implementation of investment projects in Russian regions. The participants included representatives of the Finance Ministry, the Accounts Chamber, Governments of 10 Russian regions, and expert organizations specializing in assessment of investment projects. Taking into account their proposals, the Analytical Center experts carried out a detailed analysis of the issue and drew some conclusions that were then included in the report.

The experts concluded that in order to improve the efficiency and quality of investments it would be advisable to optimize the timeframe for the preparation and implementation of investment projects. This policy should include, among other things, a requirement for approved project documentation for each investment project by the time the draft federal budget is completed. If no approved project documentation is available, the project in question should be excluded from the federal investment program. A project can only be included in the federal investment program without any approved documentation on a provisional basis for the period being planned for. Assessment must be carried out of the efficiency of the use of federal budget funds spent as capital investments.

Also, in order to improve efficiency, requirements must be imposed for improving the quality of project preparation and project implementation processes. Since there is no mechanism for disqualifying or dismissing companies that offer project documentation assessment services as well as technology and pricing audit services, oftentimes extremely misguided decisions are made that lead to gross violations of health and safety requirements, the experts believe.

For more on these and other proposals read the Report.

Photo: publicly available source