Print Edition - 2015-04-25 | MONEY
Most construction jobs not completed on time: OAG
Apr 24, 2015-A majority of government construction jobs are not completed on time pointing to the inefficiency of both the government agency awarding the contract and the contractor, the Office of the Auditor General (OAG) has revealed in its 52nd annual report.
According to the report, 55.83 percent of the contracts missed the deadline and the government agencies had extended the time limit. Of the total 3,025 contracts awarded by the 16 agencies that were audited, the deadlines of 1,689 contracts were extended. According to Clause 56 of Public Procurement Act 2007, contract deadlines can be extended only in the case of circumstances beyond one’s control, government agencies failing to provide the promised goods and services on time and other justifiable reasons. Besides the delays resulting from deadline extensions, they have led to cost overruns, the report said.
According to the OAG report, of the 1,689 contracts whose deadlines were extended, 507 projects got time extensions of more than 100 percent. Likewise, 487 projects got deadline extensions of 50-100 percent and the rest got extensions of up to 50 percent of the original time limit.
Government officials said that delays in land acquisition and the tardiness of contractors after taking the mobilization advance were among the reasons behind the large number of deadline extensions.
Tulasi Prasad Sitaula, secretary at the Ministry of Physical Infrastructure, said completion of the projects has been delayed due to tendency among contractors to take multiple contracts at a time without being capable to do so. “More than 80 percent of the ongoing work has been delayed due to contractors while the rest owing to the government’s failure to acquire land in time and delay in getting forest clearance,” he said.
He, however, said a new ordinance on public procurement has provisions that contractors could get additional work only after having adequate technical capacity to complete the first contracted project.
Another anomaly seen in public sector contracts is variation, the additional cost paid to contractors when extra tasks which are not stated in the contract are carried out.
The Public Procurement Act has made a provision that a variation order should be issued only after confirming technically that there has been a variation. However, the report said that variation orders had been issued even when issues were predictable. As a result, the cost of projects has gone up immensely.
For example, cost estimates had been made for removing 600,000 cubic metres of landslide debris in the four contracts for the Dangle-Baglung section of the Mid-Hill Highway. Later, other jobs were inserted in the contract so that there would be no price reduction since it was found that the contractor would not have to remove the landslide debris. This resulted in a cost rise of Rs15.8 million. Similarly, in the contract for Maitighar-Tinkune road section, the cost increased to Rs253.3 million from Rs238.8 million due to variation. Another anomaly pointed out by the report is confining the contractor for limited competition. As per the Public Procurement Act, the work should not be fragmented to limit competition. However, there is a trend of fragmenting the work to enable the office to conduct direct purchase where there is no competition. Goods and services can be purchased without a tender for jobs worth less than Rs1 million.
According to the report, jobs under 15 ministries worth Rs1.01 billion were broken up into 1,124 jobs and purchases were made directly.
Likewise, the Physical Infrastructure and Transport and Urban Development ministries were found to have not maintained a proper record of contingency costs although they had mentioned such costs of Rs772 million and Rs67.7 million respectively.
As per the Public Procurement Regulation, offices can maintain 2.5 percent as staff cost and another 2.5 percent as other miscellaneous expenditure while preparing the cost estimate. “As these ministries didn’t maintain records, it could not be established whether the expenditure made in the name of contingency expenditure was within the limit fixed by the regulation,” the OAG report stated.
Published: 25-04-2015 09:09