Huge delays, cost overruns ... and no penalties

Reconstruction and asphalting works on the Rabat road leading to Mount Carmel Hospital in Attard took 33 times longer than planned and cost nearly 40 per cent more than the initial budget.

This emerged from a scathing report on road construction and restoration contracts, issued by the National Audit Office and tabled in Parliament on Friday.

The report showed that this contract took 934 days to complete, instead of a mere 28 days, and cost Lm444,406 instead of Lm318,720.

The report pointed out that the Roads Directorate lacked a coherent project-planning approach and adequate internal control systems in financial and technical matters.

The NAO carried out an analysis of the time and cost variation of 11 contracts started and completed between 1998 and 2002 - none was finished in the stipulated timeframe and practically all of them exceeded the original budget.

The report concluded that there was no evidence that penalties were being levied for late delivery of works covered by the 11 reviewed contracts.

The report contained some shocking revelations, among them the fact that invoices amounting to Lm700,000 were not found, and that fiscal receipts amounting to Lm2.6 million out of a total of Lm3.8 million were missing.

This meant that the directorate had failed to observe tax legislation in that it did not ensure that suppliers duly forwarded a fiscal receipt following payment.

However, the report did note that after this oversight was pointed out, the directorate managed to obtain the missing fiscal receipts.

Another project under the NAO's spotlight was the contract for the resurfacing works at Mdina Road, Qormi which took 670 days to complete instead of 56 days and cost seven per cent more than initially forecast.

Apart from that, another contract on this stretch of road between Qormi and Zebbug, for road construction and servicing, took six times longer, though the contractors succeeded in cutting the cost by one per cent less than originally estimated.

Another project which exceeded its original cost by nearly 60 per cent was the contract for road works on Hompesch Road and the Marsascala Junction in Zabbar.

The budget, as established in the letter of acceptance, was first set for Lm132,112, yet the final bill amounted to Lm210,614. Completion of works was also delayed by 10 weeks. Works on the new access road to Pembroke did not fare any better and it took five times longer than the original estimated time and also cost 29 per cent more.

Living up to their original commitments does not seem to be a forte of contractors. Those responsible for the works at Rabat, on the southbound route, exceeded the completion date by 59 weeks and ran up 57 per cent more costs.

The analysis of these 11 contracts indicated that the directorate "managed each project in an unstructured and informal manner and failed to apply a standard project management approach", the NAO said.

This apparent lack of consistency was reflected in the recurring problems, such as the fact that contractors were not issued with the required designs and drawings when told to start work.

Progress reports were scarce, project files lacked timetables and the departmental files included scarce evidence of surveillance by directorate officials on contractors' work.

Architects involved with the project management of these reviewed contracts were interviewed and they indicated that the project managers were not always capable of controlling the performance of contractors.

Other evidence shows that contractors working in the road construction industry lacked the professionalism needed to deliver: insufficient skilled labour, inadequate equipment, and cash flow problems were just a few of the troubles.

The report concluded that the directorate should strengthen the control mechanism through better segregation of duties to allocate clear and specific responsibilities, effective authorisation and approval of payments, and accounting checks, including reconciliation exercises.

It was also suggested that due to the unpredictable nature of road construction, the directorate should modify works planned for the future to cater for unforeseen eventualities.