Infrastructure projects undertaken by the government are prone to posting cost overruns, according to the National Economic and Development Authority (Neda).

In the latest data from the Neda Project Monitoring Staff, agencies with the biggest cost increases were the Department of Public Works and Highways (DPWH), Department of Transportation and Communications (DOTC), National Irrigation Authority (NIA), Bases Conversion and Development Authority (BCDA) and the Light Rail Transit Authority (LRTA)-—which handle the major infrastructure projects of the government.

“Insfrastructure projects are more prone to cost overruns due to changes in scope. This may encourage another round of questions, like why do projects need changes in scope. What we’re doing right now is we are trying to find out why infrastructure projects experience cost overruns,” Neda Deputy Director General Rolando Tungpalan said.

Among the projects that have the biggest cost overruns is the BCDA’s Subic-Clark-Tarlac Expressway (SCTEx), which incurred a total cost increase of P6.48 billion, or 24.61 percent of the initial project cost approved by the Investment Coordination Committee (ICC).

Also with a big cost increase, among ongoing projects, is the New Iloilo Airport Development Project being implemented by the DOTC. The Neda data showed that it incurred a cost increase of P2.57 billion, or a 41.58-percent increase over the ICC- approved cost.

For the DPWH, the project with the biggest cost overrun is the Arterial Road Links Development Project IV. This incurred P3.29 billion worth of cost increase, which represented a 53.62-percent increase from the ICC-approved project cost. The project was being funded by the Japan Bank for International Cooperation (JBIC) and its loan agreement recently expired on March 28, 2008.

The NIA, on the other hand, reported its largest cost increase in the irrigation component of the Casecnan Multipurpose Irrigation and Power Project worth P1.33 billion and represented an increase of 22.73 percent over its ICC-approved project cost.

For the LRTA, its cost increase was only for one project, the Line 1 Capa-city Expansion Project Phase II. The project incurred a P1.12 billion worth of cost overrun, which represented 14.04 percent of its ICC-approved cost. 

Meanwhile, Tungpalan said the President has already approved measures to prevent implementing agencies from incurring cost overruns such as the en banc presentation of their justifications for cost overrun proposals to the Neda Board which is chaired by the President.

The Neda Board recently announced that it will now require implementing agencies to not only justify the cost overruns for projects to the  ICC  but also to the board, the highest policymaking body of the Neda.

Neda Acting Director General Augusto Santos said implementing agencies must also be able to ensure that projects are still economically viable even with cost overruns. Otherwise, he said, implementing agencies will be asked to downscale the projects.

Further, projects with cost overruns will no longer be processed by the Neda without a budget strategy coming from the Department of Budget and Management (DBM).

Budget Secretary Rolando Andaya said the budget strategy will be implemented because cost overruns are already “bigger than the budget of a government agency.”

Andaya added  cost overruns cannot also be dealt with with one single requirement. He said there is really a need to harmonize rules, even for cost overruns.

He explained that foreign-funded projects are difficult to monitor due to the difference in policies. However, Andaya hopes that with the approval of the Implementing Rules and Regulations-B, there will be a means to harmonize the government’s procurement document and manuals with official development assistance partners.

ENVIRONMENT Secretary Lito Atienza has advised Oceana Gold Philippines Inc. to proceed with the construction of its Didipio mine in Kasibu, Aklan, saying the company is operating within the bounds of the law.

Infrastructure projects undertaken by the government are prone to posting cost overruns, according to the National Economic and Development Authority (Neda).

CITY OF SAN FERNANDO—A temporary restraining order (TRO) was issued by the Regional Trial Court here on Tuesday regarding the implementation of Pampanga’s  Ordinance 176, otherwise known as “An Ordinance Provi-ding for the Equitable Distribution of Shares of Fees/Taxes Imposed by the Province of Pampanga for the Extraction of Quarry Materials and for Other Purposes.”

PROJECTS with cost overruns will no longer be processed by the National Economic and Development Authorioty (Neda) without a budget strategy coming from the Department of Budget and Management (DBM).

A THREE-DAY conference on wastes among local officials and their representatives ended Thursday with green groups pushing for the application of innovative solutions to the garbage problem to help reverse global warming and climate change.

THE Cebu Business Month (CBM)  activity of the Cebu Chamber of Commerce and Industry (CCCI) next month will hold the first Philippine Open Source Summit at the Cebu International Convention Center.

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LOCAL seaweed producers has projected that the volume of carrageenan exports for this year may go down by 50 percent to 80,000 metric tons (MT), from 160,000 MT, as production of seaweed slows due to poor harvests and increasing cost of manufacturing carrageenan.

DECRYING the incomparable costs of living against the increase in cost of basic commodities and utilities, militant group Bagong Alyansang Makabayan (Bayan) urged Thursday the scrapping of “unjust charges” to reduce power rates.