Finance ministry warns accounting officers over project costs

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All government accounting officers have been urged to adhere to the approved scope and project cost estimates approved at the feasibility stage.

In the circular dated April 27, 2026, finance ministry permanent secretary, Dr Ramadhan Ggoobi, says it has been observed that project costs and scope at procurement initiation often deviate from those approved at the feasibility stage.

“This is largely due to unauthorised changes in scope, including unnecessary design reviews. The practice undermines project affordability and leads to over-commitment of the development budget,” he stated.

He also told the accounting officers that all procurements shall be strictly based on the scope and cost estimates approved at the feasibility stage, warning that any deviation without prior approval shall not be permitted.

Ggoobi, who is also Secretary to the Treasury, says design reviews have been viewed as a major source of cost escalation and shall be strictly controlled.

“Designs approved at feasibility shall be deemed valid for a reasonable period (up to five years). Design reviews shall only be undertaken where there is verifiable and justifiable need. Any approved design review shall form part of the cost variation and must be contained within the permissible limits set out below,” he says.

Ggoobi also says the variation between the estimated project cost at feasibility stage and at procurement initiation, if necessary, shall not exceed 15% of the approved feasibility cost, inclusive of any design reviews.

“Where the threshold is exceeded, the accounting officer shall comply with Section 7.3 of the Development Committee Guidelines and reappraise the project in accordance with the Public Investment Management process. Procurement shall not proceed prior to completion of such reappraisal,” he writes.

According to the Public Procurement and Disposal of Public Assets Authority (PPDA) Act, a single contract variation shall not exceed 15% of the original contract price, and cumulative contract variations shall not exceed 25% of the original contract price.

Ggoobi directed that all variations must be fully justified in line with the PPDA Act, Cap 205, adding that accounting officers will be held personally accountable for any breach of these instructions.

According to the instructions, design reviews shall only be taken where there is verifiable and justifiable need.

“The Public Procurement and Disposal of the Public Assets Authority shall monitor compliance with approved project scope and cost under the Public Investment Plan and report to the secretary to the Treasury,” he added.