Wrong scale

There was a realization during the 1980s that scale was an issue. But it seemed that the scale had to be big, because the problems were so huge.

When I started to write “privately” about performance of development early in the 1980s one of the issues that I wanted to see addressed was the question of scale. Schumaker wrote his classic “Small is Beautiful” and he made the case very well for “appropriate scale”

In the 1980s and the 1990s big projects were failing. There were references to White Elephant projects reflecting not only the inappropriateness of the project but also the scale. But the projects were not only failures in themselves, they were also creating economic side effects that were damaging. In the 1980s I wrote something along these lines:

I have become convinced that “big” projects are failing because of size, and the distortion that this size has brought to the economy, the society, the the private and government institutions. I have tried talking about “distortion” with the experts but have never found any of the UN staff or the World Bank staff I have worked with having any interest or understanding of this issue.

But it was worse. I started to realize that the World Bank economists were very much committed to the idea of economy of scale, and did not understand much about underlying technical and management realities.

In the fisheries sector in Yemen (PDRY) there were several World Bank financed fisheries projects.

One in particular was a fish meal factory in Markala. It was started as a pilot with two fishing vessels and a rather small fish meal production plant. After a year the fishing vessels failed to catch an adequate amount of fish, and the plant was losing money rather dramatically. The World Bank experts solved the problem by increasing the number of fishing vessels and increasing the size of the fish meal plant at very considerable capital cost expecting everything now to be OK because of economies of scale. Of course more fishing vessels cost more to run, and caught far less fish per vessel than when there were just two vessels. The big fish meal plant was still only able to operate at a fraction of its capacity. Net net the project now had a very much bigger capacity to lose money, and that is what it did.

Project management does not scale simply. Typical World Bank projects are totally unmanageable because they are big and complex.

I did a review of a big education project in Latin America. I tried to draw a corporate style management schema and organization chart to do the management accounting for the project. It was hopelessly complex. The project read well because everything imaginable was going to be addressed. In reality nothing was going to get done well. Funds were going to disappear into the project account, disbursements were going to be made against approved vouchers, and nothing would every be reported in a way that allowed anyone to see what was going on.

I knew this project had the potential for huge rip-off. It was beautifully designed to leak everywhere. The World Bank staff had no idea how the design had evolved into a disaster waiting to happen. Needless to say when I raised the possibilities, I was treated with contempt and ignored. How could I know anything. I did not work for the World Bank!