Treasury puts its foot down on project delays

The Star

By SARBAN SINGH

SEREMBAN: No more unnecessary extensions.

The Treasury, irked by delays in the completion of several government projects in recent years, wants projects delayed for more than three months to be immediately transferred to more competent contractors.

And to safeguard the Government’s interest, negligent contractors would have to pay damages for any delays to the project.

It said this should also be clearly spelt out in the contract.

Treasury secretary-general Datuk Dr Wan Abdul Aziz Wan Abdullah, in a directive dated May 16, said this was to ensure that all projects planned under the Ninth Malaysia Plan were carried out as scheduled.

“The practice of giving repeated extensions to contractors has to be stopped.

“It should only be allowed if the reasons for the delays are genuinely beyond the contractors’ means,” he said.

He said if the delays had caused major monetary losses to the Government, the officer monitoring the construction would have to pay a surcharge.

The most notable delayed government project in recent years was the construction of the Matrade building in Segambut, Kuala Lumpur.

Originally meant to cost RM167mil, it took 12 years and RM287.5mil at the final count.

Dr Wan Abdul Aziz said extensions could only be given under these circumstances:

l DUE to force majeure (this clause is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations;

l EXTREME weather conditions;

l DELAYS due to new directives from the implementing agency;

l DELAYS in handing over the construction site;

·STRIKES organised by workers’ unions; and

l DELAYS that are not directly related to the project, such as the appointment of sub-contractors/suppliers or changes in drawing plans.

Dr Wan Abdul Aziz said contractors would be asked to pay compensation if they were negligent, causing the completion of the project to be delayed.

“Contractors will have to pay liquidated and ascertained damages (or what is termed LAD) to the Government as stated in the contract,” he said, adding that all these provisions should be included in the contract.

Dr Wan Abdul Aziz said projects that are 30% or three months’ behind schedule are categorised as “sick.”

“When this happens, the relevant ministry or authority should take immediate steps to terminate the contract and appoint a new contractor,” he added.

Earlier this year, the Audit Department revealed that some government projects were delayed as consultants appointed by contractors were grossly incompetent, or work was given to those who did not have sufficient financial means to complete the job.