Is National Action Plan (NAP) a plan?

ANDREW Grove, one of the founders of Intel, is considered the pioneer of the semiconductor industry and of modern management practices. In one of his books, High Output Management, he talks about “management by objectives” (MBO), a method of creating meaningful plans that disciplines thinking, focuses efforts and gives direction to those involved in their implementation.

This method had earlier been popularised by the founder of modern management, Peter Drucker, but Grove brought it to an even wider audience. Reportedly, Google, DuPont and Intel all use this method. MBO can be used to create and analyse the effectiveness of a plan, whether by a company, sports team, individual or country.

Our government came up with the National Action Plan (NAP) some time ago. It tries to address the important issues this country faces. The purpose of this article is not to analyse the plan from a political or public-policy standpoint but, rather, to evaluate it in the light of MBO.

Any meaningful plan needs to list not only its objectives, but also the milestones (or key results) that must be pursued along the way in order to achieve those objectives. According to Grove, MBO helps answer two questions: first, where does one want to go, ie the objective and; second, how to measure whether one is getting closer to one’s destination, ie milestones or key results. NAP, however, refers only to objectives and has no mention of key results that will help measure progress. For example, the objectives listed in NAP include revamping and reforming the criminal justice system but it does not state which milestones or key results need to be achieved in order to be able to do this.

The aforementioned objective also gives no indication of the duration in which this task is to be completed. Plans need to be time-bound. Grove gives a good example: “I want to go to the airport to catch a plane in an hour. This is my objective. I know that I must drive through towns A, B and C on my way there. My key results become reaching A, B and C in 10, 20 and 30 minutes respectively. If I have been driving for 20 minutes and haven’t yet made town A, I know I am lost.” Key results need to be time-limited so that they can be effectively tracked.

Neither does NAP give direction to those in the government’s machinery responsible for the execution of its objectives. It is important that objectives are further broken down across the government’s chain of command, down to the individual level, so that the relevant people in the national and provincial echelons know what their responsibilities are.

If objectives are clearly defined at all levels we then clearly see, as Grove notes, a “nesting hierarchy of objectives, so [that] if a subordinate’s objectives are met the supervisor’s will be as well”. Without this nesting hierarchy, everyone is unsure of their roles in the grand scheme of things and this may result in inaction and a lack of meaningful progress towards their goals. Even a partial implementation of the nesting hierarchy, in which most of the available resources are ineffectively and incompletely utilised, will fail to yield fruitful results.

NAP also contains no measures of success. Key results need to be measurable so that there is no ambiguity upon completion. If the objective of a waste management authority is to reduce waste in Karachi, for example, then one of its key results could be to increase the waste collection coverage by 10pc in south Karachi by May 2017. Similarly, merely stating the intention of revamping the criminal justice system is not enough — we ought to know what we are aiming for and how much of an improvement we expect.

Any plan or objective must have a mechanism for review, how frequ­ently one is conducted and by whom. There also must be in place a process whereby objec­tives and key results are periodically refined. While some degree of failure is reasonable, it is important to make correc­tions to a plan upon subsequent evaluations.

A plan is susceptible to vagueness and failure without specific objectives, key results, time limits, clear direction, measures of success and concrete criteria for monitoring. Good plans require a lot of thinking, something that, unfortunately, cannot be outsourced. Good plans also foster good communication, which in turn can expedite implementation and give a sense of purpose.

Of course, thorough planning is a daunting task, and it’s understandable that making progress on large national plans takes time, consensus and much coordination. With determination and seriousness of purpose, however, this can be achieved. The need has never been greater to make progress towards big and audacious national goals such as better education, expanded healthcare and increased national security.

This opinion was published in the Dawn on November 9th, 2016. 

Delusional Development in Pakistan

Delays in the completion of mega-projects have become the norm in our country. Hydropower projects and construction of highways, sewage treatment plants and airports, for example, are being delayed, and delays cost money. Islamabad airport has seen a cost overrun of Rs 19.39 billion; the cost of the sewage treatment plant in Karachi jumped nearly five times. Delays and cost overruns in development projects are a concern for a debt-ridden developing country such as ours, because they lead to inefficient allocation of resources and the waste of scarce capital.

According to research conducted by Dr. Bent Flyvbjerg of Oxford University, cognitive biases, poor planning, political pressure, strategic misrepresentation and the lack of outside expertise best explain delays and cost overruns. These factors lead also to the building of inferior projects. The dream of pro-people development is shattered while our impoverished country has to bear these burdens.

Various studies have suggested that decision-makers (e.g. politicians) fall prey to cognitive biases, and have a tendency to exaggerate their talents. Overconfidence affects us all. In a 1981 study, Ola Svenson found that 93% of American drivers rated themselves as better than the average driver. According to Flyvbjerg, politicians are not immune to this over-optimism bias, or to the illusion of having control. They believe that things that go well are their own achievements, while things that don’t go well are others’ failures. They think they are in control and ignore the rare and worst-case scenarios. When project promoters become excited about a project, they focus solely on success scenarios and rarely talk about the associated risks. Sadly, we don’t have policies in place that take such biases into account. The Treasury of the UK instituted policies to ensure that funding is available only for projects that factor in cognitive biases. We need to take similar measures.

Poor planning and inaccurate cost-benefit forecasts also cause delays and cost overruns. Properly-planned projects depend on rational and thorough cost-benefit analyses (CBA), and the foundation of a good CBA is conservative and thoroughly-vetted forecasts. A CBA can easily be tainted due to improperly analyzed-forecasts, making unfit projects look good on paper. Incorrect forecasts project unrealistic revenue and erroneous payback estimates, as assumptions are never questioned. Sadly, the issue of incorrect forecasts isn’t currently part of the discussion in our planning and development process. We should discourage and even penalize incorrect forecasts, as their repercussions are so damaging for our developing country. Further, forecasts should be subject to public scrutiny, peer reviews, and citizen juries.

Political pressure to develop and finish projects within the political term and strategic misrepresentation further cause delays and cost overruns. Planners, who create forecasts, work for powerful politicians and bureaucrats, a group among which the cost of raising dissent is high. Planners actually find incentives for positively accentuating their forecasts, since, due to political pressure (as well as a lack of independent analysis and the ex post facto evaluation of projects), exaggerated forecasts are never questioned. This creates a culture in which tainted forecasts are considered fine. Eventually, we end up with piles of projects with incorrect estimates.

Additionally, Flyvbjerg notes the phenomenon of strategic misrepresentation, which best explains cost overruns. He cites studies in which planners admitted that they had to “cook” their estimates to make projects look good on paper so that they could secure funding. Due to political pressure, as well as to scarce funding, competition is stiff, so project promoters pressure forecasters to underestimate costs and overestimate benefits. More transparency in the planning process can help ease political pressure and prevent strategic misrepresentation.

The problems of cost overruns and delays are also aggravated by the lack of outside view. Getting objective outside feedback, keeping experiences and expectations in check and learning from the outcomes of similar projects in past are part of an approach termed outside view. For an outside view, Nobel Laureate Daniel Kahneman has recommended a method called “reference class forecasting”. It is used by governments in the UK, the Netherlands, Denmark, Switzerland and elsewhere, and has been proven to curb cognitive biases and help reduce delays and cost overruns. As Kahneman notes, an outside view becomes even more important when a project has never been attempted before (like an urban rail project), because that’s when cognitive biases are greatest.  

I went through both the Manual for Development Projects and the Handbook of Planning Commission (both are published by the Planning Commission) and didn’t find any mention of “reference class forecasting”, or any method that deals with cognitive biases or the other problems in our planning and development process. This needs to change and it cannot happen without strong political determination and backing as rightly pointed out by Dr. Khalid Ikram in a podcast with Dr. Nadeem Haque (both are Planning Commission veterans and noted economists). We need to modernize our planning process to protect future public funding and to thwart the paradigm of delusional pro-people development.

This opinion was published in the The News on 31st October, 2016.