Getting impatient
Hala kayo… someone is getting impatient about infra projects and he is not a nagging columnist. He is no less than President Rodrigo Duterte.
Last Friday, the President said he will hold Public Works and Highways Secretary Mark Villar accountable for delayed and failed projects. Nakakahalata na si Presidente and he is being outspoken about it. He is seeing nothing much specially in the provinces.
“So I would like to call the attention of the secretaries, especially Secretary Villar, that if there is any slippage of any work of any kind by the national government. If you delay or if I see tomorrow, beginning tomorrow…
“Kaya sinasabi ko sa inyo… Yang project mo pagka pumalpak, I will hold the Secretary responsible,” he added.
The President’s impatience showed just after the Commission on Audit (COA) issued a disappointing report on the performance of DPWH under Villar. According to COA, DPWH implemented only one-third of its P663 billion budget for farm roads, school buildings, flood control projects.
This is a continuation of the department’s poor record in maximizing the massive annual budget of DPWH in the last two years –utilizing only P185.12 billion of its P542.23 billion allocation in 2016 and P148.23 billion of its P435.58 billion budget in 2015 during the past administration.
The DPWH was given a much bigger budget under a stricter condition of a one year validity period for its allocations. Undisbursed funds would go back to general fund after the end of the year. This was in response to the Duterte administration’s desire to usher in a Golden Age of Infrastructure through Build Build Build.
But COA noted: “Management (Sec Villar) was not able to effectively manage the increasing amount of funds entrusted to the agency due to low physical delivery of target projects and activities.” COA noted that Villar failed to rescind or terminate contracts even after the contractors have exceeded the 10 percent allotted period to finish the projects.
COA said mismanagement starts at the preliminary engineering stage where managers and consultants failed to consider key factors affecting the viability of the DPWH projects such as right of way issues, lack of coordination with uncooperative local government units, lack of permits and basically inept contractors. COA said management should have resolved these problems before bidding out the projects.
An old hand at DPWH told me: “This is only half of the story! An average of P400 billion per year was undisbursed in the past three years. On the other hand, P610 billion or 92 percent of the 2017 budget of P660 billion was obligated! (obligated doesn’t mean spent or projects completed). The DPWH must be hard put producing physical accomplishment of projects, claiming obligated is a means of manufacturing accomplishment reports.”
“The 334 defective projects costing P34 billion in 2017 is puny. Watch out for the accomplishment reports on the rest of the P400 billion projects reported as obligated.”
“Close inspection will likely show not only defective but substandard, overpaid, even ghost projects. This can be widespread because the DPWH budget not only has been increased four-fold. Villar also increased the approving authority of district engineers to a whooping P100 million per project!
“I doubt if all districts have the capability to design, implement, even monitor and evaluate and acquire ROW for such projects! Am sure they have the capacity and the chutzpah to submit accomplishment reports. But who will inspect and evaluate all of these? Infra spending may reach seven percent of GDP albeit for substandard projects!”
Apparently, President Duterte knows what’s going on. The President told his audience last week that many of the local contractors are conspiring with district engineers and each other, are undercapitalized and not capable of delivering quality projects.
“Alam mo kasi ang problema diyan, ‘yung walang mga pera—laway lang ‘eh. Laway ang bribery. Is the laway... ‘di matapos, ‘o sige lowest bid. Sige bigyan kita. Kaya ang deterioration, proyekto napuputol. Tignan mo doon sa ano—mag landing ako—sabi ko maglanding tayo sa ano, ‘Sir, maiksi ang airport doon,’” Duterte said.
That is why the President wants to change the system from lowest bid. He wants a Swiss challenge.
Actually, BCDA led by its chairman Greg Garcia and president Vince Dizon did something even better. The new Clark Airport Terminal is being built by Megawide on a turnkey basis. This means money is advanced by Megawide and payment will only be made if the final delivery is accepted by BCDA.
I understand most of Clark New City is also turnkey with commercial and office buildings partly PPP and joint venture. This minimizes risk for government.
Turnkey does away with progress billing... one of the biggest reasons for delays and corruption. The old system brought about what President Duterte was describing – the syndicates of local contractors just passing on projects to each other... Turnkey will weed out fly by night contractors because of larger capital requirements.
In a turnkey system, the private contractor has the incentive to deliver the project on schedule and with the right quality in order to get paid. We see what government is paying for before payment is made.
Of course not all projects can be done in this manner. But it seems to be a better system.
The complicated Procurement Act has already been subverted by crooked contractors, specially at the regional level. No matter how tough the safeguards are in the Procurement Law, it only delays implementation of vital projects but is unable to stop the crooks from raiding the Treasury.
I am glad they are planning to use the turnkey approach for all the big ticket BBB projects funded by ODA. That will assure timely completion and at specified quality.
One final point… since Sec Villar isn’t inclined to sign any contract out of fear of landing at Sandiganbayan, a turnkey approach should be welcome for him too.
Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco.