Iraq Reconstruction CPI 13 Sept 05

Building Under Fire …..One Year Later

The True Story

Source: Coalition Provisional AuthorityFactory workers celebrate June 28th, 2004, the handover of power to Iraqis two days early

The Perfect Challenge

Rebuild a country’s infrastructure . . .

• Using U.S. taxpayers’ money

• Under wartime conditions

• In a country 7000 miles away with a struggling economy

• During an election year in the USA

4 Hurdles

1. Size and Complexity of task at hand

2. Terrorism

3. Resources

4. Media

USA: $18.44 out of the $56.1 billion

The United Nations and World Bank estimated in 2003 that the cost to repair the infrastructure of Iraq after 30 years of neglect under Saddam, sanctions since 1991, and looting during the war, would be $56.1 billion.

The United States is contributing $18.44 billion to this effort –

the country’s largest donation ever to a reconstruction effort

The remaining gap in funding required will come from donor

nations and revenue generated by Iraq.

Source: United Nations/World Bank Joint Iraq Needs Assessment, Oct 03

Three Basic Goals

1) To improve the infrastructure in Iraq

2) To boost Iraqi employment

3) To build capacity

IRRF II: Program beginsTime DescriptionSummer, 2003 Inspections reveal infrastructure in far worse

state of neglect/disrepair than any gov’t/org estimated–investment must come from outside

Aug, 2003 Program Management Office created

Nov, 2003 Iraq Relief and Reconstruction Fund (IRRF) passed by US Congress

Jan. 2004 Program created in 45 days

First report to US Congress 5 January

Feb, 2004 First major funds received – money provided in tranches by category

Funds to be apportioned over 2 years

Mar, 2004 $5 billion awarded in open competition format

May, 2004 Major construction contractors mobilize

June, 2004 Construction begins in some areas

It’s not all construction• It’s not all construction

• 1/3 for goods, services and capacity building– $1.8 billion for capacity building– $4 billion for goods, training and services

• 2/3 for construction in several sectors

Revised in August and October 2004

The Story

July, 2004: Iraqi troops in formation at dedication of Al-Kasik military base which could house 6,000 troops (part of US-led reconstruction funding)

What went right?

1. Saddam is gone (history will reveal the horrific stories)

2. Infrastructure priorities are in order

3. Working with Iraqis

4. Capacity building in Ministries

5. Sovereignty on time

6. Successful elections on time

7. Over $9.6 billion in projects complete or equipment or assistance delivered!

Size and Complexity

• 2800 projects going simultaneously

• Thousands of non- construction line items (requirements, procurement and issue)

• Started with only scopes of projects

• Peacetime cost contracting

• Integration with other donors efforts

The Model - Leverage

• Private Sector – Owner’s cadre

• World class Program Management

• Transparency

• Full and open competition

• Fast start and rapid execution using many execution agents

Political Aspects

• Washington interplay• Iraqi involvement• Coalition partners• Donors• Sovereignty

Environment

• Security – from benign to hostile

• Logistics – constraints

• Shifting objectives

– Reconstruction to jobs to security

Oversight

• Two full-time auditor groups

• Many in the wings

• Results good to date

• Someday accountability will be more important than “expenditures”

One year later

• Construction Projects over one-half completed

• Significant Iraqi involvement in decisions and construction

• Program transitioning to USACE for completion

• Significant non-construction items delivered

One year later (continued)

• Commissioning problems appearing

• Program has shifted from construction to non-construction

• Private sector revitalization recognized as important

• We are no better prepared to conduct a program like this in the future than we were in 2003

Results – Progress as of SEP 2005Metric Description

2,700 Construction Starts - “dirt has been turned”

The number of sites at which we have moved from design phase to build phase

1,700+ Project completions

$10 billion Completed work-in-place or delivered goods

$17.2 billion Commitments (Amount of money earmarked for specific projects)

$14.3 billion Obligations: Amount of money actually contracted in open bid format to firms to perform the work

$8 billion Disbursed: Amount paid out for work complete

122,000+ The number of Iraqis employed

Much accomplished in spite of challenges!

Benchmark this to the Marshall Plan!

Future Considerations

1. Planning in advance

2. Organizational Design: clear chain of command

3. Adequate, timely resources (people, money)

4. Unified program management mechanism

5. Clearly defined metrics

6. Continuity in management

7. Realistic expectations

8. Effective stakeholder communications

9. Integrated military, political, civilian action

10.Agility, but stay the course

Iraq – Opportunity or Morass?

• Abundant Resources

• Highly educated population

• Growing economy

• Democracy

• Business friendly

• Historic challenges and advantages

• Geographic advantage

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Bottom line – Truly a bright future