Kong Choy should explain why Transport Ministry terminated DRB-Hicom as the main contractor for the RM2.6 billion civil and infrastructure works for the Ipoh-Rawang electrified double-tracking because of DRB-Hicom’s RM700 million Variation Order (VO) claims but is prepared to recognize and pay for the RM700 million VO if UEM World takes over the unfinished 12% of contract for RM1.1 billion
by Lim Kit Siang
(Petaling Jaya, Saturday): A week after the Transport Ministry’s statement last Saturday announcing that the government had removed DRB-Hicom Bhd as main contractor of the RM2.6 billion civil and structure works for the RM4.6 billion Ipoh-Rawang electrified double-tracking rail project, the country is none the wiser about the whys and wherefores to the biggest failure of Datuk Chan Kong Choy in his two-year stint as Transport Minister as well as the biggest PMC (Project Management Consultant) failure to date.
One of the first challenges assumed by Chan when he took over as Transport Minister from the former MCA President, Datuk Seri Dr. Ling Liong Sik, in mid-2003 was to announce a “fast track” programme to complete the Ipoh-Rawang double-tracking project which was already two years behind the original schedule, i.e. to be completed in 35 months in June 2003 from the commencement of the contract in July 2000.
In September 2003, Chan announced a “fast track” programme to complete the Ipoh-Rawang double tracking project before October 2005 for the new train service to start in early 2006.
The dynamo of this “fast track” programme was a steering committee which Chan formed and headed by the Transport Ministry secretary-general Datuk Zaharah Shaari to look after the progress of the project. Chan said the steering committee would meet weekly with the main contractors to solve the problems faced in the course of implementing the project. However, instead of meeting weekly, Chan’s “fast track” high-powered steering committee had not met for the past one year!
Chan’s “fast track” programme was even slower than during Liong Sik’s stewardship of the Transport Ministry, achieving only some 42 per cent of the construction pace of the previous period. In the 39 months from July 2000 to September 2003, some 72% of the project was completed or an average rate of 1.8% completion of the project per month. However, in the 21 months of “fast track” under Chan, only some 16% of the project was completed, bringing the total completion of the civil works to 88 per cent, or an average rate of 0.76% completion of the project per month under the “fast traick”– which is only 42 per cent of the rate during Liong Sik’s time.
When Chan took over as Transport Minister, the Ipoh-Rawang double tracking was two years behind schedule. Now, there is a four-year delay, with the RM4.6 billion project ending up costing more than RM6 billion. This is because of the sharp jump in the costs of both the two packages of the RM4.6 billion Ipoh-Rawang double-tracking project – the RM2.6 billlion civil works by an increase of RM1.1 billion while the RM1.9 billion systems works awarded to Mitsui & Co. Transport System increased to RM2.4 billion with media reports of Mitsui’s RM450 million variation order claim.
It is clear that the main reason why the Transport Ministry has terminated DRB-Hicom as the main contractor for the civil and infrastructure works for the Ipoh-Rawang electrified double-tracking is because of the unresolved dispute over DRB-Hicom’s RM700 million Variation Order claims, which was submitted before Chan’s “fast track” programme.
DRB-Hicom had claimed that the RM700 million Variation Orders were valid and legitimate as they were made on the advice and instruction from several government agencies, including the Transport Ministry and the Public Works Department. This is however contested by the Ministry of Finance.
If the DRB-Hicom’s RM700 million Variation Order claims had been approved, Chan’s “fast tracking” of the Ipoh-Rawang double-tracking rail project would have remained on track, i.e. completion before October this year for the new service shortening the Kuala Lumpur-Ipoh journey to two hours and 15 minutes with all scheduled stops (an express rail journey will take one hour and 50 minutes) to begin early next year.
Without going into the merits or otherwise of the dispute over DRB-Hicom’s RM700 million variation order claims, Parliament and the Malaysian taxpayers are entitled to a full explanation from Chan Kong Choy why the government has taken the extraordinary position clearly against public interest of refusing to recognize the RM700 million Variation Order claims by DRB-Hicom, but yet prepared to recognize and pay for the whole Variation Order claims if the contract is taken over by UEM World, at a cost of RM1.1 billion (inclusive of the disputed RM700 million Variation Order claims) for the balance of the 12 per cent of unfinished portion of the contract.
Malaysians must find this most strange and inexplicable – why the government refused to recognize and honour DRB-Hicom’s RM700 million Variation Order claims which would have ensured that Chan’s “fast track” programme would have succeeded, and yet prepared to recognize the RM700 million Variation Order claims if the UEM World takes over the contract at an additional cost of RM1.1 billion for only 12% of the uncompleted portion of the project.
* Lim Kit Siang,
Parliamentary Opposition Leader, MP for Ipoh Timur & DAP
Central Policy and Strategic Planning Commission
Lim Kit Siang, Parliamentary Opposition Leader, MP for Ipoh Timur & DAP Central Policy and Strategic Planning Commission Chairman