COA flags 184 DPWH projects exceeding approved budget

MANILA, Philippines — The Commission on Audit (COA) has flagged 184 projects of the Department of Public Works and Highways (DPWH) for exceeding allowable contract costs amounting to P431.93 million.

State auditors found that the projects’ costs went over the approved budget for the contracts, which the COA used as reference values for determining the allowable cost.

“Contract cost of 184 projects implemented by different DPWH offices were found excessive by the COA technical audit specialists for a total of P431,933,006.20 due to contract costs that exceeded the COA allowable cost,” the state audit agency said in a 2019 report on the DPWH.

Various deficiencies

The COA said evaluation or review by its technical audit specialists in various DPWH offices found “various deficiencies such as excessive costing and overestimated quantities of some items,” which resulted in the huge variance.

The projects were found nationwide and involved the construction or improvement of roads, bridges, flood-control projects, schoolbuildings and multipurpose buildings.

The total contract cost of these projects reached P6,574,329,268.57, but the technical audit specialists placed the evaluated cost of the projects at P6,142,396,262.37, or a variance of P431,933,006.20.

“This deficiency between the contract cost and COA estimate cost should have been corrected and rectified during the bid evaluation conducted by the bids and awards committee-technical working group on the bid price of the contractors prior to declaration of the lowest calculated bid,” the COA said.

The state auditors recommended that the concerned DPWH offices deduct the P431.933 million from the succeeding claims, retention money or other securities posted by the contractors involved.

Of the 184 projects, a flood-control system in Tubay, Agusan del Norte, under the DPWH Caraga office, had the highest contract cost, P437,248,186.31.

The COA’s evaluated cost for the project was P416,628,952.60, a difference of P20,619,233.71.

The reported cause of the variance was “excessive costing of steel sheet pile.”

Biggest variance

Found to have the biggest variance between the contract cost and the COA evaluated cost was the retrofitting of the CP Garcia Bridge on C5 Road in Pasig City under the DPWH regional office in Metropolitan Manila.

The project had a contract price of P182,621,203.51 but state auditors arrived at an evaluated cost of P146,319,465.87, a variance of P36,301,737.64.

State auditors said the variance was due to “overestimation of quantities of items of works.”

While some engineering districts agreed with the findings, some offices justified the higher contract cost, citing, among other reasons, updated labor rates and smaller quantities of work items turning out to be insufficient.

Some projects were also delayed in implementation due to residents’ complaints of inconvenience, unavailability of certain materials, such as steel sheet piles and sand and gravel.

In addition, the COA found that the completion or implementation of 2,411 projects worth P101.69 billion were delayed because of inadequate detailed engineering due to lack of coordination with local governments and other government agencies, and failure to establish the technical viability of the projects during the feasibility and preliminary engineering study.

This includes P65.989 billion for 1,740 projects that were not completed within the specified contract time, P31.051 billion for 550 projects that were suspended, and P1.44 billion for 40 terminated projects.

Factors not considered

But this is apart from 81 projects worth P3.206 billion that have not started at all, the COA said, and technical defects worth P376.138 million have been found in 461 projects.

The COA said the DPWH and its consultants failed to consider factors such as typhoons, peace and order, road right of way, government permits, lack of equipment and scarcity of materials, late release of funds and modifications.

“It should be pointed out that out of the 1,740 delayed infrastructure projects, 54 projects with contract amount totaling P607,810,946.99 have incurred delays that exceeded the allowable 10 percent of the specified original/revised contract time,” it said.

In addition, the DPWH did not rescind or terminate the contracts or impose liquidated damage to the contractors concerned, the COA said.

In response, the DPWH said it had sent demand letters and notices to contractors to expedite the completion of projects.

It said it was coordinating with contractors to rectify reported defects as well as the collection of liquidated damage.