Peruvian Audit Finds 32 Public Works Projects Significantly Exceeded Cost and Timeline
Peru's General Comptroller's Office (CGR) has identified 32 public infrastructure projects that experienced substantial cost overruns and execution delays. These projects, primarily in the education sector and focused on prevention and reconstruction from the El Niño Costero phenomenon, collectively saw their costs increase by 140.7% and execution timelines extend by 332.6% beyond initial projections. The total executed cost for these 32 projects reached S/ 2029 million by December 31, 2025, significantly higher than the initial contracted amount of S/ 843 million. The projects were initially managed by the Authority for Reconstruction with Changes (ARCC) and later transferred to the National Infrastructure Authority (ANIN), utilizing a Government-to-Government (G2G) model with NEC3 contracts.
The audit highlights significant cost and schedule overruns in Peruvian public infrastructure projects managed under a G2G framework with NEC3 contracts. The extensive use of 'compensable events,' such as design modifications and unforeseen site conditions, suggests potential weaknesses in the initial scope definition and risk assessment phases. While the NEC3 contract model allows for flexibility, its application here appears to have shifted considerable financial and temporal risk to the contracting entity, impacting over 78,000 citizens through delayed infrastructure delivery. Future G2G initiatives might benefit from more robust pre-contractual due diligence, clearer scope definition, and potentially alternative contract structures that better balance risk allocation between parties to enhance predictability and public value.
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