Wastage & Extravagance in Infrastructure Development

Introduction

Infrastructure development through construction sector contributes significantly to the economic growth of any developing nations, so much so that it provides multiplying effects to other economic sectors such as manufacturing, agriculture, services and the like. Hence, it is crucial to properly plan and evaluate project proposals in establishing reasonable budget to be spent that fulfills the project functions and requirements, and more importantly addressing any wastages and extravagances.

This article discusses the differences of wastage and extravagance as highlighted in Shariah and innovative role of value management as one of the management tool to highlight those unnecessary elements, specifically in infrastructure developments.

Wastage and Extravagance

In order to determine difference between wastage (tabzir) and extravagance (israf), both shall be defined in accordance to the primary source of Shariah. Allah says in the Qur’an:

“O Children of Adam! Put on your adornment (decent proper dress) when you attend your Masjid at the time of every prayer. Eat and drink, but do not be extravagant; surely He does not love the extravagant”.[7:31]

 

“Indeed, the wasteful are brothers of the devils, and ever has Satan been to his Lord ungrateful”.[17: 27]

Based on the above Quranic verses, scholars distinguish major contrast between wastage and extravagance as follows:

i) Extravagance is to spend more than necessity in those avenues in which spending is permissible. It means exceeding the limits in various issues; it is contrary to that of moderation. It also means an overreaction and surpass from a median and a normal behaviour. For example, eating is necessity of life and spending in it is permissible. However, by over-spending in eating it is called extravagance (or lavishness).

ii) Wastage is to spend in those avenues wherein spending is not permissible and unnecessary. Wastage is used when wealth is simply wasted without specific reason. For example, buying liquor for drinking, regardless of its value.

Value Management Addresses Wastages and Extravagances

It is noted that VM’s core ability is to define and classify functions of a project into basic, supporting and unnecessary functions. In most cases, the findings were exposed in a disproportionate manner that is called ‘value mis-match’ where costs or budget are not proportionately assigned (including over-costed and in some cases under-costed) to the respective established functions. Thus, the technique can determine the level of wastages and extravagances for a particular project and eventually determine a more sensible and reasonable project cost to be spent.

A project example is illustrated below to signify the importance of understanding the real purpose of spaces in an infrastructure project based on the original proposal prior to actual development using VM as an assessment tool thus addressing if there is any excess spending (extravagance) and/or wastages, which shall then be removed or further reviewed.

Space Function Original

(before VM)

Revised   

(after VM)

Is Original Wastage / Extravagance?
Classroom/s Accommodate students $500,000

(500m2)

$490,000

(490m2)

No
Auditorium Congregate people $300,000

 

$330,000

 

No
Dance Hall Facilitate mixed-group dancers $50,000 $40,000 Yes
Circulation area Connect spaces / facilitate access $300,000

(300m2)

$150,000

(150m2)

Yes

 

Table above denotes that two (2) spaces have neither wastage nor extravagance in the original design. The actual required classrom area is about the same to the original proposal, considering the optimum number of students (current and probable reasonable forecast). Auditorium needs an additional component to fulfill its basic functions. As such, minimal cost is expected to be increased from the original one.

Unlike the other two (2), each has its own wastage and extravagance in the light of Shariah. Although the space required for dance hall has been optimised and the cost is relatively small, it is considered as a wastage in Shariah due to its existence in promoting non-permissible activity in Islam; mixing male and female students in a group at one time for dancing lessons. As for the circulation area, it is undoubtly extravagantly designed for which only to cater for the said functions, not to mention the operation & maintenance costs to be borne by the users in the future, thus considered as a wasteful spending.

Should the above project is approved based on original proposal, it has certain Shariah issues with regards to spending (capital and operational expenditures) which eventually tantamount to millions of dollars. Imagine if not just one, but many of the like regardless of simple, moderate or complex design put forward for the sake of infrastructure development without any scrutinity and thourough analysis prior to approval.

Conclusion

Shariah recognises economic growth and its sectoral developments including infrastructure, provided that those activities are in accordance to the Shariah principles and objectives. Wastage and extravagance are among the negative attributes that need to be wisely addressed and dealt with. Value management is a proven methodology that can be of good assistance in addressing wastages and extravagances while managing infrastructure developments, all in all to promote efficiency and effectiveness in projects. The initiative has to be consistently applied and the reward that Islam acknowledges does not reach its peak and account just in this life, but rather this life and the hereafter.

 

References & Bibliographies

Alhaadi (2007). The difference between Israf (extravagance) and Tabzeer (wastage). South Africa: Madrasah Taleemuddeen.

Che Mat, M. M. (2002). Value Management: Principles and Applications. Petaling Jaya: Prentice Hall.

Economic Planning Unit (2011). Panduan Pelaksanaan Pengurusan Nilai dalam Program / Projek Kerajaan. Putrajaya: EPU.

Khan, N. A. (2016). Wasteful Expenditure (Israf): The Brothers of the Devils. [Retrieved from: Nouman Ali Khan Video Lectures].

Lahsasna, A. (2010). Q&A in Islamic Finance. Kuala Lumpur: CERT Publications.

Sadr, S. K. (2015). Islamic Economics. Kuala Lumpur: INCEIF.

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