This Policy Research Working Paper by the World Bank South Asia Region and Sustainable Development Department just released in July 2011 takes a look at Nepal's efficiency in public procurement for transport infrastructure.

Transport infrastructure is among the most important driving forces for economic growth. In Nepal, about 20 percent of rural residents have to spend more than 3 hours to go to the nearest marketplace or agriculture center. Over the world, about 900 million rural dwellers are estimated to have no access to all-weather road within two kilometers―typically equivalent to a walk of 20-25 minutes. Public procurement is an important policy instrument to use resources wisely and efficiently. This paper addresses a series of policy challenges in public road procurement, from procurement planning to contract management and project quality assurance. Important, these issues are interrelated to each other. Therefore, the issues need to be addressed in concert. Using data collected from 155 rural road upgrading contracts in Nepal, five questions are addressed:

• How do bidders determine their bidding strategy, i.e., bid prices, in competitive bidding for rural road contracts?
• How do they decide whether to participate in the procurement market?
• What are the main determinants of efficiency in contracting road works?
• Why ex post contract amendments, such as cost overruns and delays, happen?
• Which factor is important to ensure the quality of roads delivered by the project? 

Download this working paper to read more about the identified challenges and the conclusions from the authors.