The CoST Working Paper Series¹ is intended to support the rollout of CoST and transparency in the construction sector more generally. This note summarizes the series.

Why worry about the construction sector?

The global construction sector is worth somewhere between US$2 and US$5 trillion per year.² Between 1984 and 2003, government spending accounted for about 78 percent of this investment.³ Recent studies have shown that corruption in public construction is widespread - for instance, it is estimated that corruption costs the infrastructure construction sector somewhere between US$18 and US$66 billion per year.

A significant amount of taxpayer money that is intended for constructing infrastructure is being misappropriated - resulting in at best overpriced, but all too often substandard, nonexistent, or even dangerous infrastructure assets. There is good evidence that poor governance disproportionately affects the poor, as they lack resources for alternatives. Since investment in infrastructure is a critical driver of economic growth; poor governance, mismanagement, and corruption in construction projects can undermine social and economic development outcomes, and serve as a structural brake on sustainable development.

What is the Construction Sector Transparency Initiative?

The Construction Sector Transparency Initiative (CoST) is a multi-stakeholder initiative to increase transparency and accountability in the construction sector.

What does CoST aim to do?

CoST intends to ensure that national governments, affected stakeholders, and the wider public get what they pay for in public construction projects.

CoST aims to increase value for money by increasing transparency

Greater transparency-through greater disclosure of project information - will yield benefits to government, industry, civil society, and ordinary citizens. Enhanced transparency will deter a range of poor practices, some of which may be the result of corrupt activity.

How will CoST increase transparency?

CoST countries will publish a set of “material project information” (MPI) about public construction projects. Since disclosing data on its own is unlikely to achieve greater transparency, the CoST process also involves:

• Engaging a third party overseer to evaluate the publication of MPI, and (in select cases) to make sure the MPI is an accurate reflection of the “situation on the ground”
• Supporting community oversight so communities are able to effectively monitor resource expenditure on public construction projects in their communities.

What is the “Working Paper Series”?

The four papers that make up the Working Paper Series are intended to support improved governance in construction and the rollout of the CoST initiative by:

• Providing a foundation paper to better inform governments, stakeholders, and citizens think about the linkages between poor governance, corruption, and transparency in the construction sector (Working Paper 1)
• Guiding governments on the critical information on public construction projects to publish in order to increase transparency (Working Paper 2)
• Guiding governments and stakeholders on how to use independent oversight to increase transparency and value for money in public construction projects (Working Paper 3)
• Guiding those who plan and benefit from public construction projects on how to use community monitoring to increase transparency and value for money in public construction projects (Working Paper 4).

What stages of the construction cycle are vulnerable to governance failures?

Governance failures (including corruption) in construction happen at all stages of the project cycle (see Working Paper 1). Yet this Working Paper Series, and the CoST initiative, focus on the period between the award of the construction contract award the final handover of the project.

Why do the Working Papers focus on “project implementation”?

Of course, corruption and inefficiency can be problems at all stages of the construction project cycle - design, procurement, and implementation. However, there is already a wealth of information on good procurement practices, while there is relatively little that is focused on improving value for money and reducing corruption during implementation. Furthermore, stakeholders may be more motivated and better able to reduce poor practices during project implementation, as it is during this stage that poor practices begin to physically “show” (in the form of poor construction materials, practices, or management resulting in poorly built or incomplete - or, at the extreme, non-existent-infrastructure).

Focusing on increasing transparency and oversight during implementation may not only uncover existing poor practices, but also deter future corruption by reducing the scope for contractors to cut costs in the implementation stage to fund bribes in the procurement stage.

1. The CoST Working Paper Series forms part of a study commissioned by the World Bank, and carried out by Castalia (www.castalia.fr) and GHK (www.ghkint.com).
2. Estimates from presentations by Pootman, C and Samiullah, Y (2009) at the “Opening Sessions Presentation”, Construction Sector Transparency Initiative International Advisory Group (IAG) meeting, 29 - 31 January 2009, Manila, Republi of the Philippines.
3. Kenny, C (2007) “Construction, Corruption, and Developing Countries” World Bank Policy Research Working Paper 4271, Washington, DC: The World Bank.