It
is imperative at this juncture to clarify some of the key issues surrounding
the road projects before we talk about corruption. From a technical point of
view, cost is one of the key variables throughout the project management life
cycle regarded as the driving force of project success. Despite its proven
importance, it is common to see a construction project failing to achieve with
the cost parameters. Cost variation is a very frequent phenomenon almost
associated with nearly constructing roads including highways. Due to many
reasons, the total cost of a project can significantly vary from the initial
estimated cost. When said, cost as a concept may encompass not only the cost on
physical construction. It also includes initial professional disbursements on
feasibility studies, architectural and engineering services, quantity surveying
and management services. It may even be inclusive of compensation to the masses
affected by the project and costs on the delivery of local government authority
services. At glance, the reasons could be changes basically in the original
scope of work or changes in the quality, performance and workmanship otherwise desired
at the beginning. Variation orders are created when changes occur and when they
are raised; they bring several negative effects to both the client and the
contractor. More particularly, the magnitude of these variations varies
considerably from project to project. Hence, variations orders bear great
importance right from the inception to completion.
Case
studies have revealed that the causes in the local context differ from those in
the international context. Of them the poor estimation is the most dominant.
Estimation involves guesswork, thumb rules and technical and economic
assumptions that warrant some scientific approach. For example, without adequate
investigations, the actual requirements may not be capable of precisely
articulating. Further, clients do not have in their in-house teams capable
professionals to carry out estimating. Therefore, the tendency is to under
estimate the project resulting in subsequent cost overrun when the actual
eventualities are dealt with.
Arguably,
variation orders may be seen as counter to the principle of waste reduction.
The more the variation orders implant on a project, the greater the likelihood
that they become time consuming, costly and disputed. When a variation order
occurred, the contractor tends to charge higher rates for variation items which
in turn affect the client’s budgetary arrangement. If the variations are
unavoidable, at least, their impact on the budget must be minimised. However, factors influencing the occurrence of
variation orders and their adverse impact on project performance again vary
from one project to another. Factors include the nature of work, the complexity
of the project, and the procurement method. Though it is likely that variation
orders cannot be avoided completely, they can be minimized or prevented, as
stated, if their origin and causes can be known. In nutshell, the successful
execution of construction projects and keeping them within the estimated cost
and prescribed schedules depend on methodology that requires sound engineering
judgment.
Let
us now look at the ways in which corruption can take place in the supply chain.
Corruption can occur where decision takers choose a project primarily for their
own illicit profit. This may occur, for example, where an airport project is
commissioned when it is not necessarily a national priority. Also, a power
project could be approved while imposing tariffs far in excess of the
population’s ability to pay back. In project financing, corruption can occur
where project owner or funding agency corruptly secures a financing arrangement
for the project, by way of bribery or fraud. For example, a bank may pay a
bribe to a senior official of the project owner, possibly through an agent, in
return for the bank being awarded the contract to finance the project at
enhanced interest rates. A representative of the funder may be entitled to a
performance bonus if a funding transaction is completed. In order to ensure
that he receives bonus, he may conceal adverse project data which would have
prevented the funder’s board from approving the contract. Further, the project
owner may pay a bribe to the funder’s consultant to issue an engineering report
which conceals adverse site, social or environmental data in relation to the
project. The funder may then make a decision on the viability of the project on
the basis of false advice.
In
planning and design, the project owner may bribe a local authority official in
order to obtain planning permission. A government official may extort bribes as
a condition of his approval of the project, for example, he may require cash
payment, shares in the project owner, or the use of his own company to provide
construction services or supplies to the project owner. On the other hand, a
bidder may bribe the consulting engineer to specify a design which improperly
favours that bidder over the others. For example, a certain technology which is
only possessed by one of the bidders may be specified, even though other
technologies may be preferable or cheaper. This would normally result in those
bidders who do not possess the specified technology being kept off the
pre-qualification list, or being rejected as non-compliant at tender stage. A
tenderer may make a donation to the ruling political party, in return for which
a party official ensures that the tenderer wins a contract, or obtains a
preferential treatment. Unfortunately, the politician’s acumen on these aspects
has now been found to be none other than mud slashes.
During
the execution, a bidder may have bribed the project owner’s representative to
persuade him to award the contract to the bidder. These two parties may also
have agreed that the cost of the bribe would not be included in the tender
price, but would be fraudulently included in the cost claimed for a large
variation during execution of the project. Deferring recovery of the cost of a
bribe until after the appointment of the contractor can be an effective means
of concealment, since there is normally no competitive tender for variations,
and post-contract award variations attract much less scrutiny and publicity. A
contractor may bribe the project owner’s representative to persuade him to
issue an unnecessary variation which materially increases the contractor’s
scope of work and which has an inflated price. A contractor may bribe the
engineer to persuade him to issue an extension of time to the contractor, which
is not properly due. A contractor may bribe the project owner’s quantity
surveyor to persuade him to approve the interim bills. A contractor may bribe
the project owner’s works inspector to persuade him to approve defective or
non-existent work. Conversely, contractors may agree with contract
administrators to account for off-site materials which are not properly
designated and set aside for the project in question. They may also offer
bribes to facilitate approval of claims for additional money, or time where
such claims are not properly justified. I again say, unfortunately, the politician’s acumen on these aspects has
now been found to be none other than mud slashes.
At
the end, corruption is concealed to try to avoid detection and prosecution. For
example, a bribe paid to have an inflated contract claim approved must remain
secret otherwise the contract claim will be rejected. A bribe paid to secure
planning permission must remain secret otherwise the planning approval will be
set aside. The payment of a bribe may be made direct by the payer to the
ultimate recipient who executed the dishonest act. However, it is common for a
bribe to be paid through intermediaries, so as to make it more difficult to
detect that a bribe has been paid. A company bidding for a contract which
wishes to hide the payment of a bribe may appoint an agent who has contacts
with a representative of the project owner or with the government of the
country concerned. The company will enter into an agency agreement with the agent
which purports to be an agreement for legitimate services. However, the scope
of those services will often be false or exaggerated and the size of the
payment due under the agreement will often be significantly in excess of the
value of the legitimate services specified in the agreement. The payment may
sometimes be expressed as a percentage of the contract price and the agent will
normally receive the payment when the company is awarded the contract. The
agent may then pass the whole or part of the payment to the representative of
the project owner or government who has dishonestly ensured that the company
would win the contract. The payment is often made in foreign currency into an
offshore bank account. I reiterate, unfortunately, the politician’s acumen on
these aspects has now been found to be none other than mud slashes.
Coupled
with the deliberate failure to act on these charges against the ministers and
state officials and their cronies, a question arises as to why the general
public should shoulder these pains any longer. While corruption is very
difficult to trace mainly because the involved parties only deal with hard
cash, it has become a ‘technical’ cancer not easily detectable. It is more and
more arduous, if not impossible, when it is connected with the supply and demand
side of the construction means, processes and procedures. The most pathetic situation
is that, with the political mud slashes, the real culprit goes unattended by
the law enforcement agencies in the country.
