'Italian' roads budget overshoots by €8m

The cost of the construction of roads under the fifth Italo-Maltese financial protocol overshot its budget by Lm3.4 million (€7.92 million) - from the originally-allocated Lm12.9 million (€30.05 million) to Lm16.5 million (€38.43 million).

Speaker of the House Louis Galea yesterday laid on the table of the House the Auditor General's report to Parliament on an inquiry requested by the House Public Accounts Committee on control mechanisms deployed by the Transport Authority in managing variations in the road construction projects partly financed through the Italian protocol.

The inquiry consisted of an evaluation of the control mechanisms and an outsourced technical expert evaluation of the relevant tender and supporting documents.

The Auditor General noted the timely completion of the projects, and a marked improvement in the planning process.

However, the report said that approval by the Ministry of Finance for the authority to manage the projects outside the most commonly-applied provisions in the public sector procurement regulatory framework did not take into account extra-budgeted expenditure.

It said that treating the projects as a departmental tender resulted in safeguards afforded by the public procurement regulations being replaced by new, untested systems. The Auditor General said that bypassing "the tried and tested public procurement regulations in cases of urgency of task completion may seem, but is not, the ideal solution to expediting projects".

He recommended that for the future, the proper form of contract, with properly-defined roles and responsibilities corresponding to the procedures and authorities that are required by law or regulation, needed to be selected before publishing a tender.

The authority delegated project management responsibility to (external) supervisors who had been nominated by the contractors. The report said no evidence was found to prove that the ADT abided by Ministry of Urban Development and Roads instructions to maintain its own controls.

Checks by the National Audit Office on a sample project revealed that the ADT had adopted an unorthodox payment process where the contractor account was at times in credit.

Errors encountered in bills had gone undetected for some time before being adjusted, and in one instance the error went unnoticed.

Issues arose with the manner in which the ADT adopted a modified version of the model of contract, with all the implications of such modifications.

The report said that the role of the supervisor was not correctly defined and the perception of transparency, effectiveness and accountability was clouded by the perceived link between contractor and supervisor. The various roles assigned to the supervisor within the contract blurred this separation further.

The Auditor General also recommended the introduction of better systems of underground services documentation necessary to ensure that designers of such projects could have a better picture of the existing situation. This would have "less surprises" once the works were started.

The report can be found on www.nao.gov.mt.