COA hits DPWH for uncompleted projects, ballooning loans

Over P5 billion worth of locally funded road projects gathered dust in 2010 because the Department of Public Works and Highways (DPWH) failed to perform essential measures needed to complete the projects, the Commission on Audit (COA) reported.

At the same time, the Commission On Audit said the DPWH completed only one out of 12 foreign-funded projects that were worth P1.151 billion.

In its yearend report, the COA urged the government to step up its availment of Official Development Assistance (ODA) funds for infrastructure projects that have already broken ground or moving in the pipeline as it warned that delays in the past eight years have caused such foreign loans to balloon by more than a quarter of a billion pesos due to penalties.

In its 2010 report on the DPWH, the audit agency said the department should not start the public bidding to find contractors for projects unless it had completed all of the preliminary steps necessary to ensure that the construction would flow smoothly.

It found that 64 locally funded projects worth P5.17 billion were not completed during the contracted time because the DPWH did not conduct the necessary detailed engineering investigations, surveys and designs, and the acquisition of the road right way.

These uncompleted projects consist of 10 infrastructure projects worth P323.523 million that were awarded to contractors but were not yet started, and 54 projects worth P4.847 billion that were suspended at different stages of implementation.

The delay in the projects led to lower fund absorption capacity of the DPWH because the funds for these projects were kept afloat and unutilized, the COA said.

It also said the uncompleted projects that lay idle for long periods of time deteriorated instead of providing convenience and benefit to the public.

“Not only that the general public was inconvenienced by the unfinished and unimplemented projects, the other government agencies also suffered setback in the delivery of basic social services due to the absence of these infrastructures. In the provinces, nonimplementation and delay hampered the accelerated social and economic development in the particular region,” it said.

Increase in costs

It further said this led to increased costs for manpower because of the changes in the project and cost overruns.

The delays also led to the expiration of all risk insurance submitted by the contractor even before the completion of the project.

The COA noted that under the procurement law, the bidding or award of contracts for infrastructure projects should not be conducted unless the detailed engineering investigations, surveys and designs, as well as the road right of way acquisition, have been carried out.

The COA said that had the DPWH complied with the requirements of the procurement law, the reasons for the suspension and delay of the projects could have been addressed much earlier and prior to the procurement activities. It could also have immediately detected and addressed the problems had it used the monitoring mechanism of the Regional Project Monitoring and Evaluation System, the audit agency added.

The DPWH, in response, told the COA that some of the reasons for the suspension of the projects are beyond their control, and they are doing their best to address it.

As for the foreign funded projects, the COA said that only one of 12 infrastructure projects were completed under the Road Improvement and Risk Mitigation component of the National Roads Improvement and Management Program.

Because of this, the loan utilization was only P368.44 million out of a projected disbursement of P1.151 billion.

Aside from stepping up spending of ODA funds for faster infrastructure development, COA likewise pushed for closer coordination with the Department of Budget and Management to achieve immediate allocation/appropriation as well as timely release of the peso counterpart funds.

Originally posted at 11:14 pm | Wednesday, October 12, 2011