Can Project Preparation and Execution Efforts Be Linked?

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Dec 2019
This paper assesses the link between the effort to prepare investment projects and the effort to implement them. Effort is measured as the total number of staff hours devoted to the project preparation or execution stages. The analysis uses a pooled cross-sectional data set of Inter-American Development Bank investment projects approved after 2007 and closed by December 2018. The estimates show the association between preparation and execution effort controlling for project characteristics and country, sector, and time effects. Although one would expect, all else being constant, that more effort during the preparation stage would translate into less effort during execution, the estimates display a counter-intuitive positive relationship between preparation and execution effort. The conjecture in this paper is that the set of control variables fails to capture the effect of project-specific factors that may generate the co-movement between preparation and execution effort. Identifying, measuring, and accounting for these factors remains an open task.