Is The Need For Cost-Benefit Analysis Lost On Us?

In the course of making most practical business decisions good managers rarely bypass the simple but ubiquitous tool of cost-benefit analysis. It helps: accountants determine which issues are of material relevance thus warranting reporting; city authorities decide whether or not to build a new airport; improve water supplies, etc. This writer is surmising whether the foregoing thought is lost on government officials and civil servants, in their zeal to promote openness and accountability. The goals are lofty, but the processes used in achieving them must not neglect the importance of a tool such as cost-benefit analysis. Sometimes the processes are even more important. A special case in point are two adverts on page 19 in today’s issue (February 22, 2002) print edition (FT Europe), announcing invitation for bids for supply, installation and commissioning of computers, LAN system and power generators, under IFB NO: RJD/PEPTA/COMP/01/2002 and IFB NO: MOJ/PEPTA/COMP/01/2001 respectively.

To the best of this writer’s knowledge, the cost of the equipment under each of the above projects hardly exceeds US $100, 000 (excluding services). The advert space however, is no less than 1/3 (or 8/24) of a page! This is not the first time such adverts (paid for by local taxpayers, even if the credit facilities originate from the IDA) are appearing in the international press.

Many Ghanaians agree with the need to have more transparency, but the material costs and benefits of doing so deserve attention as well. Bids for projects as “big” (in terms of contract value and how lucrative the deal is for potential bidders) as in the Sahara Oil case call for advertising in the international press. Do US $ 100, 000 value projects need the same treatment? There are enough qualified accountants and finance experts in government to ensure the overall goals and objectives are achieved at minimal cost. Wake up, the good bean counters and financial gurus. All good meaning Ghanaians would agree that the country’s taxpayers deserve better shareholder-wealth-maximizing decisions.

In the course of making most practical business decisions good managers rarely bypass the simple but ubiquitous tool of cost-benefit analysis. It helps: accountants determine which issues are of material relevance thus warranting reporting; city authorities decide whether or not to build a new airport; improve water supplies, etc. This writer is surmising whether the foregoing thought is lost on government officials and civil servants, in their zeal to promote openness and accountability. The goals are lofty, but the processes used in achieving them must not neglect the importance of a tool such as cost-benefit analysis. Sometimes the processes are even more important. A special case in point are two adverts on page 19 in today’s issue (February 22, 2002) print edition (FT Europe), announcing invitation for bids for supply, installation and commissioning of computers, LAN system and power generators, under IFB NO: RJD/PEPTA/COMP/01/2002 and IFB NO: MOJ/PEPTA/COMP/01/2001 respectively.

To the best of this writer’s knowledge, the cost of the equipment under each of the above projects hardly exceeds US $100, 000 (excluding services). The advert space however, is no less than 1/3 (or 8/24) of a page! This is not the first time such adverts (paid for by local taxpayers, even if the credit facilities originate from the IDA) are appearing in the international press.

Many Ghanaians agree with the need to have more transparency, but the material costs and benefits of doing so deserve attention as well. Bids for projects as “big” (in terms of contract value and how lucrative the deal is for potential bidders) as in the Sahara Oil case call for advertising in the international press. Do US $ 100, 000 value projects need the same treatment? There are enough qualified accountants and finance experts in government to ensure the overall goals and objectives are achieved at minimal cost. Wake up, the good bean counters and financial gurus. All good meaning Ghanaians would agree that the country’s taxpayers deserve better shareholder-wealth-maximizing decisions.