Renewable Energy Development Sector Investment Program

The cost overruns indicate the importance of sound engineering design and value engineering that can (i) support more accurate cost estimates; (ii) preclude or minimize minor changes in the project’s scope or variations to contracts during construction; and (iii) set a more reasonable and realistic implementation schedule. Factors that contributed directly to the cost overruns include the higher cost of labor and materials than estimated at appraisal, the significant JPY depreciation, the inadequate program preparation, and the incomplete engineering design. Further frequent contract variations and minor changes during implementation also increased the costs.