Africa-Press – Eswatini. While major construction projects are a must for the growth of the economy, they have in recent years become too costly for the country.
This has been evident in that most of them have come with ridiculous cost overruns, forcing government to go out in search for loans, thereby increasing its public debt. It was not surprising that during the Sibaya People’s Parliament held at the Ludzidzini cattle byre, the issue of the ballooning costs of construction and capital projects in recent years became part of the many that were raised. It was not just the members of the public who raised the issue but even some of the panellists, who interestingly formed part of the previous Cabinet did. One of them was former Minister of Economic Planning and Development Dr Tambo Gina, who admitted that government was losing a lot of money through budgets that exceeded the budget.
Gina, who is a Member of Parliament (MP) for Lubulini Inkhundla, submitted that while development projects were needed a in the country, control measures needed to be effected to manage budget allocation for such. The MP said some projects came with added costs for different reasons, one of which was failure to complete them within the stipulated time. He suggested that for projects to go well, feasibility studies should be conducted and proper calculations done so that government could grant fixed-price contracts to avoid exceeding the budget. A fixed-price contract is defined as one where the agreed-upon price for the job is unchanged throughout the project. It doesn’t matter if more time, materials or labour must be used than first estimated, the price stays the same. Also, it is regarded as one of the more straightforward construction contracts.
Also speaking on the issue was former Prime Minister Cleopas Sipho Dlamini who submitted that the exercise of awarding contracts for major construction projects needed to be properly controlled. The former PM admitted that the country had lost millions through projects with costs that kept on ballooning or stretching. Following the submissions, this publication engaged experts and consultants in the construction industry. The consultant first mentioned that sticking to fixed-price contracts alone will not solve the issue. “What first needs to be understood is that cost overrun is an unexpected change in the project budget that ends up increasing the total project cost. There could be different reasons for the increased costs. The reasons could be technical,” the consultant said.
Another expert argued that while fixed-price contracts came with a guarantee, chances that a project might go beyond the defined scope of tasks and responsibilities will always be there.
“Fixed-price contracts typically provide a well-defined process complete with specific phases and deadlines. But the fact of the matter is that there are different causes of construction project schedule overruns. They are causes that are client related, causes that are contractor related, causes that are consultant related, causes that are material related, causes that are equipment related and others that are labour-related and external factors related causes,” the expert said. He mentioned that for the Kingdom of Eswatini, the cause of the cost overruns could be slowness in the decision-making process, reworks due to errors during construction and delay in approving major changes in the scope of work.
An example of a project that has seen its costs ballooning with each passing year is the ICC/FISH currently being constructed in Ezulwini. When this project commenced in 2012, government estimated that it would cost around E370 million; with the ICC expected to set the taxpayer back by E290 million and the FISH anticipated to be completed for the amount of E80 million. Then, the FISH was referred to as the Millennium Hotel. During the financial year (2012/2013), E65 million and E80 million in local funds for the ICC and Millennium Hotel were released, respectively. By the year 2021, the project was still ongoing and the cost was far beyond the E370 million. The ICC&FISH project stands on land said to measure 40 000 square metres and the convention centre will host up to 4 500 delegates; while the five-star hotel linked to it currently has about 283 rooms on six floors.
The money for the project began to escalate during the 2015/2016 financial year, when the estimated cost rose to E1.255 billion and the name of the Millennium Hotel changed to FISH.
For that year, an amount of E412 million was budgeted for both the convention centre and the hotel. The following year (2016/2017), the projected cost of the project increased to around E1.9 billion; an amount of E479 million was released for the payment of consultancy fees, professional fees and works. In 2017/2018, the project’s total estimated cost went up to E2 489 590 000; and an amount of E721 800 000 was released for payment of consultancy fees, works and purchasing of land for the ICC&FISH. In the financial year 2018/2019, the total estimated cost was hiked to E4.8 billion; with E522 million being released to pay for the ICC’s civil works, consultancy fees, furniture and fittings; and E989 million went to FISH. Then in the financial year 2019/2020, the estimated cost of the project was first maintained at E4.8 billion; with the ICC set to cost around E2.5 billion and the FISH at approximately E2.3 billion.
A total of E1 235 880 000 was released for construction, consultancy fees, and payment of Value Added Tax (VAT) for the ICC. For the FISH, E634 million (E170 million and E464 million) was released for construction of the hotel, payment of land acquisition, construction fees, design and supervision, civil works and landscaping, and VAT. At the E4.8 billion cost, the ICC&FISH was already set to become the most expensive building in the entire African continent. The Ministry of Economic Planning and Development then revealed later that year in its second quarter performance that the project would cost E5 473 195 950. This was an increase of E636 015 950 from the E4 837 180 000 projected in the Book of Government Estimates for that year. According to that performance report from the ministry, the ICC cost had been revised to E1 902 441 160 while the FISH was set to cost E2 347 042 318.
Source: times
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