Development consultants/practitioners in Dhaka's project appraisal sector are trapped in a conundrum, often acknowledged in private but rarely exposed in public: the outcomes of many studies are fixed before the first survey or data collection is even undertaken. Working under constant pressure from concerned ministries and political patronage, project directors/managers approach consultants not with open-ended questions, "Is this project economically, technically, socially viable?", but with an implicit directive of making it viable. This uncomfortable truth is not solely based on personal conviction formed over years of professional engagement in the sector, but is corroborated by the findings of a series of white papers published during the post-July interim government period.

An anatomy of feasibility studies

In Bangladesh, especially in the public sector, feasibility study reports for development projects are prepared in accordance with the Planning Division's prescribed format. The standard yardsticks for evaluating the viability of any project are Net Present Value (NPV), Internal Rate of Return (IRR), and Benefit-Cost Ratio (BCR). When applied objectively and correctly, these are powerful metrics for decision-makers to determine whether the concerned investment proposal will generate sufficient public value or merely consume public resources. Contrarily, when applied under duress, these very indicators become what statisticians labelled "GIGO-Garbage In Garbage Out."

However, the distortions made with these indicators are rarely crude but subtle, sophisticated, and deniable. For instance, demand projections are inflated by applying optimistic growth multipliers or utilisation rates without adequate sensitivity testing. Land acquisition costs are understated by excluding full costs of resettlement, litigation and administrative delays. Construction timelines are squeezed to flatter BCR. To produce more favourable economic indicators, benefit streams are front-loaded while risk factors are discounted minimally. In isolation, each assumption may appear defensible, but in aggregate, they can turn a marginal or even unviable project into one that appears economically compelling on paper.

Development practitioners well acknowledge the structural incentives underpinning this behaviour. On the demand side, implementing agencies seeking project approval are under pressure to launch projects and secure funding, with virtually no reward for exercising fiscal caution.  On the supply side, consultants who refrain from indulging unrealistic assumptions risk not only losing the contract but also being labelled "uncooperative" and excluded from future opportunities. In such an atmosphere, in essence, the project appraisal mechanism gradually shifted from an exercise in objective evaluation to one of manufactured justification.  

A feasibility study is not a bureaucratic formality. It is considered the cornerstone for investment decisions regarding billions of dollars in the public sector, which may incur debt obligations to future generations.

The tragedy is that the institutions that serve as the gatekeepers of public investment are the ones most harmed by this practice. Feasibility studies serve as the primary source of technical evidence for the Planning Commission and the Executive Committee of the National Economic and Development Authority (ECNEC). When systemic rigidity allows only reports accompanied by a positive economic assessment being presented to other decision-making authorities, the objectivity of the appraisal process erodes. This brings to light an institutional paradox in which the approval mechanism transcends into a procedural endorsement, as decision-making authorities are unable to filter out genuinely sound investment projects from those primarily driven by political expediency or bureaucratic aspiration.

The problem of a uniform discount rate

The single most important marker of systemic rigidity is the use of 12% discount rate for project appraisals as mandated by the Government of Bangladesh. The discount rate, particularly in public sector projects, is not merely a routine spreadsheet input, but a proxy of social valuation through which future generational benefits are weighed against immediate fiscal costs.

Modern project finance theory holds that the discount rate to be used in any project appraisal should reflect the sector-specific opportunity cost of capital, risk, the concessionality of available financing, and the social rate of time preference when non-monetary benefits are involved. Projects, especially those with the potential to generate returns gradually over long time horizons, across generations, and cannot be fully captured through market prices, such as investment in public health, education, and ecosystem resilience, typically warrant a lower discount rate. Conversely, commercially structured infrastructure development projects such as power plants, roads, highways, expressways, bridges, and flyovers, financed through sovereign loans at commercial terms, warrant a higher discount rate that reflects actual borrowing costs, market conditions, and exposure to currency and operational risks.

The dogmatic adherence to a uniform discount rate, therefore, systematically under-values socially transformative projects while simultaneously providing false comfort to mega-infrastructure projects. As a result, departments pursuing investment proposals with diffuse but substantial social benefits often find themselves in an analytical trap in which obtaining ECNEC's approval becomes nearly impossible.

The domino effect of manufactured data: Bangladesh's mega project record

The shortcomings in the project appraisal ecosystem create anomalies that are not confined to technical reports, spreadsheets, or committee rooms but are embedded in the reality of Bangladesh's majority of mega-projects, with a consistent story. In many cases, political imperatives overshadowed analytical integrity, cost overruns transferred fiscal burden to future generations, and overly optimistic benefit projections slumped when exposed to ground realities.

What highlights these cases is not the incompetence in execution but a culture of obfuscating candour at the appraisal stage. When feasibility studies are instrumentalised as a medium of approval rather than a toolkit for informed decision-making, the institutional domino effect compounds at every subsequent phase of a project's lifecycle. However, the irony is that the final invoice is invariably paid by the general people daily through taxes, user fees, and constrained public spending in critical sectors like health and education. The institutional insufficiency is such that neither the agencies that manufactured numbers nor the consultants who rubber-stamped them get any penalties.

Structural asymmetry, incentives and politics of clientelism

Although it is tempting to hold consultants accountable for acknowledging their technical incapacity or professional negligence in producing flawed feasibility studies, this approach is largely inadequate. One must understand the structural asymmetry and the incentive mechanism within which consulting firms in Bangladesh operate.

The consulting industry in Bangladesh operates in a market where a lion's share of revenue comes from public-sector contracts. Even though formally, the selection of firms for feasibility or related studies is done in strict compliance with Public Procurement Rules, in practice, informally, reputation, political inclination, relationships, and unspoken mandates to produce findings that align with the client's expectations dictate the rules of the game.

However, this is not unique to Bangladesh. Consulting markets in developing or emerging economies worldwide suffer from what economists call "confirmation bias for hire." Where Bangladesh stands out is the absence of meaningful ex post evaluations for projects.  As the apex bodies at the upstream, the ECNEC and the Planning Commission greenlight projects, but rarely glide back into a formal retrospective review of the projects they approved. The Implementation Monitoring and Evaluation Division (IMED) under the Ministry of Planning conducts real-time monitoring of fund disbursement and the progress of physical infrastructure in accordance with the Development Project Proposal (DPP). Impact evaluations conducted 3 to 5 years after a project is operational are rare, under-resourced, and frequently outsourced back to the same consulting ecosystem.

International development partners such as the World Bank, ADB, JICA, and others have their established appraisal methodologies, review processes, and safeguards that nominally impose analytical discipline. But they, too, face institutional pressure to disburse funds and to demonstrate portfolio performance to shareholders, boards, and taxpayers. Once a project enters implementation, the alignment of interests between the borrower government and the lender often suppresses rigorous mid-term review, eventually failing to eliminate the incentives that favour project approval over project rejection.

Way forward for ensuring integrity in the project appraisal ecosystem

To restore integrity and transparency in the project appraisal and approval process, the first step is acknowledging the systemic loopholes. First, the government should, in lieu of a one-size-fits-all 12 per cent discount rate, introduce a range of rates calibrated to the nature and category of the project under consideration. A structural decoupling is needed, in which sponsoring ministries must be relieved of the authority to commission and approve their own feasibility studies. A slight reform to the procurement rules for consultants should be introduced by placing a portion of the feasibility fees in escrow and releasing them only upon a favourable independent audit. Concurrently, a statutory but independent ex-post evaluation unit, including universities, research institutes, professional bodies, and civil society organisations, needs to be established to compare actual outcomes with initial projections, triggering the mandatory deregistration of firms demonstrating systematic optimism bias.

A feasibility study is not a bureaucratic formality. It is considered the cornerstone for investment decisions regarding billions of dollars in the public sector, which may incur debt obligations to future generations. It must be built on evidence, objective evaluation, and utmost integrity, not on engineered numbers and overtly optimistic assumptions designed to secure approval.

M. A. Shaleh Sadiq is a PhD scholar at the South Asian University, New Delhi.

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