AG’s Report says management of hotel’s new wing project ‘not satisfactory’

KUCHING: The AuditorGeneral ( AG) has found the management of the new 18-floor new wing of Riverside Majestic Hotel construction project ‘unsatisfactory’.

In an audit that was conducted between November and December last year, the AG found that the project was not completed even though seven extensions of time (758 days) were approved for the contractor to complete the project.

“The construction cost of the hotel had increased by RM8.07 million or 13.5 per cent of the original project cost,” the AG said in the first series of the AuditorGeneral’s Report 2016 published yesterday.

Additionally, the AG pointed out that the liquidated and ascertained damages ( LAD) were not imposed on incomplete work period of 148 days, besides stating that the term of the ‘ Performance Bond’ was not extended and no new additional contract for new work was issued.

Based on the National Audit Department’s calculations, the damages that should be paid to the owner of the hotel Sejadu Sdn Bhd between July 22 last year and Jan 31 this year amounted to RM2.09 million.

A feedback from Sejadu Sdn Bhd – a subsidiary of Sarawak Economic Development Corporation (SEDC) – dated Feb 13 this year, stated that after the certificate of incompletion of works was issued on July 21 last year, the rate of damages imposed had been taken into account - totalling RM1.76 million (from July 22 to Dec 31 last year).

However, Sejadu said the contractor had made an appeal for the LAD deduction to be postponed while waiting for the approval on their extension of time application.

Besides that, the percentage of physical progress for March last year was lower than that recorded in July 2015, due to works based on newly approved extension of time schedule.

The National Audit Department viewed that the project implementation performance was ‘not satisfactory’.

The AG proposed for SEDC, Sejadu and the consultant to further improve on their management of the project.

“SEDC should comply with the requirements as well as contract terms, prepare supplementary contract for additional works and extend the term of performance bond to protect the interest of SEDC/Sejadu Sdn Bhd and the public. The value of the performance bond must be based on the overall cost including the cost of additional scope.”

The AG also said SEDC/Sejadu and consultant must implement careful monitoring and control in every level and ensure that the works would be implemented according to schedule.