Home / TOP STORY/ Government to check cost overruns in mega projects

Government to check cost overruns in mega projects


Comments / {{hitsCtrl.values.hits}} Views / Thursday, 14 June 2018 00:03


By Chathuri Dissanayake 

The Government has decided to set up a special Cost Estimate Review Committee, in a bid to avoid cost overruns and discrepancies in Total Cost Estimates (TCE) and actual cost in infrastructure projects. 

The Committee is expected to review TCE and contract cost variation variances of infrastructure development projects falling under Cabinet Appointed Procurement Committees (CAPCs) value threshold. The Committee is expected to curtail a recent trend observed, where cost overruns have been accommodated in projects, often without any upper ceilings. 

Proposing to set up the Committee, Finance and Mass Media Minister Mangala Samaraweera informed Cabinet that a large number of contracts have been awarded over and above the engineers’ cost estimates, and instances of upward revision of cost occurred during the implementation state have become a frequent occurrence.  A number of reasons, including lack of due consideration given to the initial project preparatory works, incomplete and inaccurate project design drawings and plans, resulting in unrealistic cost estimation, errors and omissions in the engineers’ cost estimates, faulty tender documents and discrepancies among documents, and lack of proper prefeasibility studies lead to cost over runs, the Minister explained. The Review Committee would consist of respective officers under the Ministry of National Policies and Economic Affairs, and they would review projects under the authority of the CAPCs. 

The Cabinet of Ministers approved the Finance Minister’s proposal to appoint Former Ministry of Transport and Civil Aviation Secretary Nihal Somaweera as the Committee Chairman, and five other members to sit in the Committee. 

The Committee will be tasked with carrying out the prior review of cost estimates, limiting margin for variations to 10% between the substantially responsive lowest evaluated bid price and the engineer’s estimate. Setting up the Committee will also limit the authority for handing contract cost variations by Heads of departments and Project Directors, who are currently responsible for the matter. 


 

 


Share This Article


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

The rate of exchange, capital flight and the Central Bank

Friday, 21 September 2018

The Central Bank (CBSL) exists for the sole purpose of price stability. Its controls on the financial system and monetary policy exist to maintain price stability. As put forth many times by the Governor, the failing of the CBSL to control inflation


Red flag over the Sri Lankan Navy

Friday, 21 September 2018

Shocking story Rusiripala, a former banker in Sri Lanka, who has taken to writing in Daily FT, is perturbed by the red flag I have raised (Daily FT article 18 September) over the shocking charge that our Navy had operated a ransom gang that had abduc


The bald truth about fake news, etc.

Friday, 21 September 2018

In its most innocent forms, we may all enjoy a bit of ‘fake news’ and go to bed with a lighter heart and clean conscience. A meme on Facebook urging social media consumers to caution – “You can’t believe everything you read on the internet


Withholding Taxes – What, why, when?

Thursday, 20 September 2018

The tax regime in Sri Lanka historically imposes WHT on both domestic as well as cross border payments. WHT on domestic payments eases revenue collection (e.g.: PAYE) while WHT on cross border payments are adopted by most countries to ensure that the


Columnists More