Designed to Fail!

Costly blunders? Blundering the nation's coffers?

Some shocking facts about contractors who were awarded government projects:

• They lack expertise. Incompetent.
• Too ready to make a quick buck.

Projects in the spotlight recently:

• Middle Ring Road 2: Cost - RM120m (it actually cost RM238.8mil); an extra RM70m to pay for repair work paid by the govt even though it was contractor's fault.
  
• Navy Recruit Training Centre (Pularek): Cost - RM198m; extra RM13m needed, 7,032 defects and paid by govt even though it was contractor's fault.
  
• Matrade Building: Cost - RM287m; the cost kept rising until it reached that amount. Original contract value is RM167m. The extra RM120 mil is paid by govt.
  

It may sound astonishing; even ridiculous. But it is true.

Reasons for these blunders was revealed by Second Finance Minister:

(1) Projects were awarded to contractors who do not have the expertise whatsoever.

(2) Projects given to those who do not have the financial means to complete the projects.

(3) Bumi contractors sold the project for quick bucks.

(4) Consultants' grossly incompetent.

(5) The actual builder is ultimately the sub-sub-sub-sub-sui contractor. (A $200m award to the maincon becomes $80mil when it was passed down to the ultimate builder.)

Incompetent contractors, delays, cost overruns, failed projects: Lessons learnt?

The government has put in place mechanisms to avoid delays in project completion and ensure cost effectiveness. Referring to the New Sunday Times report yesterday on cost overruns in projects due to the incompetence of contractors and consultants, Minister in the Prime Minister’s Department Datuk Seri Mohd Effendi Norwawi said the mechanisms
would ensure only competent contractors were given government jobs.

He said the government had drawn valuable lessons from case studies of failed projects, as well as the successful ones.

“We have put in place new initiatives to streamline our procurement processes and to ensure projects are delivered efficiently and cost effectively.”

These, he said, included:
• Ensuring projects are awarded to competent contractors; and,
• Installing systems to monitor projects on near real-time basis to spot any delivery problems early and resolve problems immediately.

Read more HERE

MRR2 Repair: RM70 mil

Repairs to MRR2 flyover cost RM70m

Compiled by ROYCE CHEAH, BEH YUEN HUI AND A. RAMAN
1st February 2007, The Star

THE Public Accounts Committee (PAC) has revealed that repairs to the MRR2 flyover in Kepong cost more than RM70mil, Utusan Malaysia reported.

PAC chairman Datuk Shahrir Abdul Samad said the figure was high compared with its construction cost – RM120mil.

He was quoted as saying that this reflected “shoddy design and construction concepts” that were approved by the Government when projects were given to contractors.

“There is no point in spending more and not being able to use it,” he said, adding that it was difficult to pinpoint who was responsible for the mistakes in such a project.

“As an example, the MRR2 project has the contractor and concessionaire constantly pointing fingers at each other. The problems were with the design and construction.”

Shocking? It was originally estimated to be RM20 million.

More shocks? The government is paying the bills. The MRR2 is a Design-Built-Turnkey contract and the contractor has to give an absolute guarantee to the government for the design and construction.

Much more shocks? Wait!!!!