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THE
government may end 2008 with an additional of five more
projects with cost-overruns, according to the 2007
Official Development Assistance (ODA) report released by
the Project Monitoring Staff of the National Economic
and Development Authority (Neda).
These
projects are the Metro Iligan Regional Infrastructure
Development Project, Rural Road Network Development
Project III, Central Mindanao Road Project, Urgent
Bridge Construction Project for Rural Development and
Iloilo Flood Control II.
However,
the Neda report did not yet give an estimate as to how
much cost overruns could be posted by these projects.
Neda officials also said the possible list of projects
with cost overruns could become longer.
Among
possible projects that could be included in the list is
the Northrail project. Neda officials, however, could
not yet give figures since it has yet to receive a
detailed report from the concerned line agencies.
Meanwhile, these projects will now add to the 21
projects that have incurred cost increases worth P33.5
billion in 2007. The bulk of the cost increases, or
around 39.64 percent or P13.279 billion, were due to
projects implemented by the Department of Public Works
and Highways (DPWH) for five roads, one bridge, and four
flood-control projects.
However,
the highest ODA cost increase was that proposed for the
Banaoang Pump Irrigation Project, which is funded by the
Chinese government and implemented by the National
Irrigation Administration (NIA). The project posted an
88.17-percent increase in cost, or an addition of P1.182
billion to P2.522 billion from an original cost of
P1.340 billion.
The DPWH-implemented
projects with the biggest cost increases are the Laoag
River Basin Flood Control and Sabo project, which had a
cost increase of 75.25 percent or P2.02 billion to
P4.704 billion from an original cost of P2.684 billion;
Second Magsaysay Bridge and Butuan City Project, which
proposed a cost increase of 57.63 percent or an
additional of P980.36 million to P2.681 billion from an
original cost of P1.701 billion; and the Arterial Road
Links Development Project IV with a cost overrun of
53.62 percent, or P3.293 billion to P9.434 billion from
an original P6.141 billion.
Other
agencies which posted the cost increases were the
Department of Transportation and Communications, which
accounted for 20.14 percent, or P6.747 billion of the
total cost overrun for three airports and feeder port;
the Bases Conversion and Development Authority with
19.34 percent, or P6.478 billion for the Subic-Clark-Tarlac
Expressway; the NIA with 12.59 percent, or P4.218
billion for four irrigation projects; the Philippine
Ports Authority with 4.49 percent, or P1.654 billion
for the Batangas Port II; and the Light Rail Transit
Authority with 3.35 percent, or P1.123 billion for the
Capacity Expansion Project.
Around
18 of the projects with cost overruns were funded by the
Japan Bank for International Cooperation, which amounted
to P28.634 billion worth of additional costs or 85.47
percent of the total.
This is
followed by cost overruns posted by projects funded by
Korea, the World Bank and China, which accounted for
7.37 percent, 3.63 percent, and 3.53 percent,
respectively.
The main
reason given by agencies for cost overruns in 2007 is
the increase in prices of labor, materials and
equipment/price adjustment/price escalation which
accounts for 28.97 percent or P9.705 billion of the
total cost overrun amount.
Other
reasons are the changes in scope or variation
orders/supplemental agreements, which accounted for
24.68 percent or P8.268 billion of the total; high bids,
21.62 percent or P7.241 billion; value-added tax and
other taxes, 10.07 or P3.373 billion; foreign exchange
movement, 5.98 percent or P2.004 billion; increase in
consulting service costs, 4.54 percent or P1.522
billion; administrative costs, 3.76 percent or P1.261
billion; and increase in right or way or land
acquisition, resettlement costs and price adjustments,
0.32 percent of P106.06 million.
Meanwhile, in the hope of preventing other projects from
incurring cost increases, the Neda report said the
government has already set up standards.
These
standards include deeming projects by implementing
agencies which have not submitted requests for
reconsideration and conducted full presentations of the
justifications for the cost overruns to the Neda Board.
Other
guidelines include banning agencies from availing of
loans for projects if they continue the project without
seeking Neda Investment Coordination Committee (ICC)
approval; requiring agencies to implement infrastructure
projects on a 24-hour basis with three shifts to
fast-track implementation and avoid price and interest
rate increases; and monitoring expropriation cases for
infrastructure projects with the Judiciary.
The Neda
ICC will also report to the Neda Board issues that are
keeping the remaining ODA projects with cost overruns
from being approved at the ICC level and impose a
one-week deadline for implementing agencies to obtain an
approved budget strategy for project cost overruns. |
