The Cost of building roads in Papua New Guinea has increased by over 900 percent because contractors are able to set extravagant fees and authorities do not stop them...
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According to Lae based regional Works manager Brian Alois, contractors are able to impose whatever costs they want to and many times the road construction work goes beyond the completion dates and costs get blown out beyond the allocated budgets.
"We have been accepting whatever costs imposed to us by the industry as true simply because we have no database to show, otherwise, there is no proof that road projects can be done at a lesser rate," he said in his paper on the country’s road network system presented at the recent Huon Seminar.
He said the authorities’ willingness to tolerate this practice is impacting on the delivery of rural services as PNG’s road networks fall deeper and deeper into disrepair.
He said implied in his paper that the current costs submitted by contractors were unrealistic.
Citing an example he said between 1994 and 1996, the cost of upgrading and sealing 1km of the road from the Malahang industrial centre to Bumayong in Lae cost K100,000.
Today, it would cost K1 million which is a massive increase of 900%.
To show that this massive rise of 900% bears no relation to the rise of cost of living in PNG, he said a 10kg of rice that cost K10 in 1996 today costs K45 – an increase of only 350%.
"Yes, the cost of living has increased but as we can see, thee increases bear no relation to each other and are not proportionate at all, yet we have accepted them.”
"So when rates are falsified, exorbitant, less kilometers of road are improved. Then, we have to look for more money, we have to readjust the priorities in the budget to facilitate progress and in the end communities living at the very end of the line will continue to wait, and wait, and wait.”
At the same time contractors can work on priority roads for indefinite periods of time, charging the state for the blowout in costs meanwhile the feeder roads in the districts are ignored and become almost impossible to use.
He added: "We have proof that in the road construction industry, there is an imbalance in the market where 50% of the road contracts have been awarded to only one company.”
"These are symptomatic and symbolic of the collapse in the industry. In a bid to counter this problem in the industry another problem is created; bigger contractors bid, are awarded the contract, then engage small-time contractors as sub-contractors to do the job.
"What that means is that in order to accommodate the cost of the sub-contractor and still maintain their profit margin, these big contractors are increasing their bids.
"In these situations the effective cost to implement the projects are not the rate imposed by the main contractor but those applied by the sub-contractor.
"I strongly believe that the Government should consider an intervention into the road industry to improve the delivery of these projects and any future project for that matter."
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