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Brazilian catch: initial x final cost

image credit: Rafael Herzberg
Rafael Herzberg's picture
Consultant energy affairs Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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Brazilian catch: initial x final cost

Our cultural profile points to a systemic preference: to privilege only the initial cost.

This is true from a list of projects sponsored by the government. Two classic examples:

* Starting public projects at a "contracted" price and over time paying a higher price
* Stop the execution of these projects (there is a multi-billion dollar stock in USD, of these cases).

The background of this situation is the permissiveness with which the final cost ends up being higher than the initial one. There are contractual clauses that open the door to this "escalation".

At the same time, the "blatant" lack of official planning and control intensifies the problem.

When will we adopt the winning strategy of countries that achieve and maintain a more planned final cost?

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Thank Rafael for the Post!
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