Linking Contracts to Actual Spending on Government Projects

To enhance the monitoring of government project expenditures and ensure that spending aligns with the various stages of project completion, a document reviewed by Al-Qabas revealed that the Ministry of Finance is finalizing a new system. This system will enable government entities responsible for implementing projects, regardless of their type, to include their budgets in the general budget preparation process and track actual spending data for each project phase.

The document further indicated that the Ministry of Finance has required companies bidding to win the project to provide a new automated system capable of housing both financial and non-financial information regarding government contract and project budgets. This system must allow for the completion of actual spending data for each phase within the Oracle Projects system, thereby facilitating its use in planning, budget preparation, and monitoring.

Regarding project budgets, the document clarified that the ministry aims to integrate project budget preparation into the general budget process and monitor associated projects, while providing an integrated platform that supports long-term financial planning for projects implemented by ministries, government entities, affiliated bodies, and independent institutions. The Ministry of Finance identified capital projects and contract planning as primary areas that must be covered by the proposed solutions, alongside operational expenses, revenues, human resources, and cash flow forecasting. The requirements also include the system’s ability to prepare capital budgets based on future growth plans and proposed projects and services, by obtaining revenue, cost, and service data from sectors and project management departments through system integration.

On actual spending, the document stated that the company expected to win the bid and install the new system must ensure its platform consolidates financial and non-financial information related to project and contract budgets, while enabling the completion of actual spending data across implementation phases. This will support the continuous monitoring and updating of figures within the system. The document further required the system to generate reports comparing project-specific plans with actual spending and execution figures, highlighting variances, their percentages, and gaps related to delays or progress ahead of the scheduled timeline. Additionally, the system must allow authorized government employees to navigate between aggregated and detailed data when reviewing information.

Requirements also include extracting actual data directly from the government financial management system according to specified timeframes and the ministry’s needs, alongside providing reports, dashboards, and analytics within the system.

Regarding fund transfers, the document included the technical capability to execute financial transfers between cost centers or from one project to another, whether at the account level or aggregate level, as part of the capabilities required to support budget preparation and review. The ministry also aims, through contracting with the new company, to enable the approval of monthly cash flow plans to monitor estimated funding gaps and support fund transfer and allocation operations to various entities and projects at different levels. This includes preparing plans that outline expected incoming and outgoing cash flows on a monthly basis, for submission to the relevant financing authority within the Ministry of Finance for approval or rejection.

The documents emphasize the integration of contracts and procurement, and stress the necessity of achieving coherence between the new system and other interrelated systems involved in budget preparation, including contracts, procurement, and human resources. This involves establishing work processes in accordance with the ministry’s procedures and the responsibility matrix for operations covered by the project. Through this integration, the ministry aims to improve the collection and exchange of information among participating entities, and to provide flexible reports that allow budget analysts more time to study data, rather than spending extended periods compiling it.

On the level of future estimates, the documents require support for preparing and updating multi-year revenue and expenditure forecasts based on actual figures from previous periods, alongside analyzing various scenarios for financial projections. Incorporating project budgets and monitoring their expenditures within a broader framework aims to enhance the preparation and oversight of the general budget, improve the linkage between planning and actual data, and prepare the system for a gradual transition to program and performance-based budgeting.

Regarding the definition of responsibilities, according to the documents, the Ministry of Finance is implementing this project to create a work system that clearly defines responsibilities and establishes clear performance indicators. This may help suggest stricter monitoring mechanisms and potentially reconsider certain administrative or contractual structures for projects that have repeatedly encountered delays. These moves come in the context of addressing implementation imbalances in projects, aligning with reformist trends, rationalizing expenditures, and ensuring maximum benefit from executed projects.

Six measures before launching new construction projects: The Ministry of Finance’s circulars emphasize several measures for government entities before launching new construction projects within their budgets:

1. Do not request any new construction projects for which the Kuwait Municipality has not previously allocated a site.

2. It is necessary to conduct feasibility studies for major construction projects, in coordination with the Ministry of Finance, and to provide copies of these studies.

3. When requesting approval for new construction projects, feasibility studies for these projects must be prepared, prioritized according to developmental priorities and the relative importance of each project within the entity’s portfolio.

4. Do not include financial appropriation estimates for any construction projects that lack adequate prior studies, whether regarding technical aspects such as designs and engineering drawings, or economic and social returns.

5. When proposing new projects, beneficiary entities must ensure coordination and integration between these projects and the availability of required services for their operation, which are implemented by other entities.

6. For new projects requiring consulting offices for design, the request for their appropriations should initially cover only the value of consulting fees for the project design, with total implementation costs determined after the project design is completed.