By Khairul Khalid
Other than whopping management fees, lack of open tenders and non-transparent selection, issues of accountability also undermine the government’s much-criticised PDP model in huge infrastructure projects.
One of the main arguments put forth by the government in favour of engaging project delivery partners (PDPs) is that they assume the complete risk ownership and accountability for project delivery from conceptualisation until completion.
But are PDPs truly held accountable if and when things go horribly wrong?
The PDP model is increasingly used for Malaysia’s massive infrastructure projects such as the mass rapid transit (MRT), light rail transit, the Penang Transport Master Plan and Pan Borneo Highway, all involving billions of public funds – a whopping RM105 billion for just these four projects.
According to one of the PDPs, MMC-Gamuda, they become the primary backbone of the project, interfacing with contractors which can run into the hundreds, depending on the scale of the project, while ensuring targets for the project’s cost, workmanship quality and completion schedule are achieved.
Other than delivering the project on time and within budget, PDPs are also evaluated on safety matters. But are they being stringently appraised and penalised for non-performance?
For example, there have been numerous deaths in the construction of the MRT. Of course, none of these mishaps were intentional. So far, there is no proof that PDPs have been negligent. But as the PDP provides a single point of accountability for the whole project, shouldn’t they be made to pay or compensate in these matters?
Fatal accidents at MRT worksites this year include the deaths of foreign workers at the Tun Razak Exchange and Semantan working sites.
Another high-profile accident last year was when three foreign workers died at the Kota Damansara MRT site when a 690-tonne concrete span collapsed, pinning them underneath.
Azhar Abdul Hamid
MRT Corp’s then-chief executive officer Azhar Abdul Hamid had tendered his resignation to take responsibility for the fatalities at its Kota Damansara site, but the company rejected his resignation and he was allowed to stay on.
Initial investigations showed that there was a breach of safety procedures at the work site. Some engineers and project managers from the PDP and its consultants subsequently resigned. More safety managers were employed after the incident. MRT Corp said that a lack of supervision had caused the tragedy.
Ultimately, the PDP MMC-Gamuda, its sub-contractors and consultants were identified as possibly sharing the responsibility for the accident. Azhar also said that one of the possible actions include removing or blacklisting contractors and consultants. The sub-contractors were barred from future MRT projects.
Shouldn’t the PDP be blacklisted too, or at least be heavily penalised financially as a result of these accidents? Otherwise, they bear minimal risks in safety offenses.
Shouldn’t the buck stop with the PDPs?
Much is made of zero tolerance safety policies at these worksites. According to the Occupational Safety and Health Act 1994, those responsible, if charged and found guilty, face a fine not exceeding RM50,000 or a maximum jail term of two years or both. The fine is just a drop in the ocean compared to the billions that the PDPs receive in management fees alone.
The government as the project owner should come down hard on the PDPs and hit them where it really hurts – in their profit and loss accounts.
Heavier fines should be imposed. As safety is one of the main KPIs, perhaps a substantial amount should be deducted from their management fees. The PDPs, not just contractors and subcontractors, should also be blacklisted if accidents occur repeatedly.
The other major issue, also related to the accountability, is conflicts of interest between PDPs and contractors.
For example, on top of being named the PDP, MMC-Gamuda also won the RM8.2 billion tunnelling job for the first MRT line between Sungai Buloh and Kajang.
Apparently, according to MRT Corp, the MMC-Gamuda bid was the best evaluated tenderer at the lowest price. But how can we expect MMC-Gamuda the PDP to monitor MMC-Gamuda the tunnelling contractor?
MMC-Gamuda as the PDP is supposed to be the main overseer, monitoring hundreds of contractors, whipping them into action and reprimanding them if need be. In this case, oddly (or conveniently) enough, one of the contractors is themselves.
Will MMC-Gamuda as the PDP punish MMC-Gamuda the tunnelling contractor if there is any transgression or mistake?
Will MMC-Gamuda as the PDP turn a blind eye if there are cost overruns by MMC-Gamuda the tunnelling contractor?
One can expect minimal impartiality simply because they are policing themselves.
These fatal flaws in the PDP model confounds, because such projects of national interest require not just the financial muscle and technical know-hows of corporations but also the strong regulatory hand of the government to keep everything in line.
It underlines why there is a deep public scepticism in the current opaque and inconsistent way that the PDPs are appointed. The clamour for more transparency and accountability in their selection is not just for good governance but also in the best public interest.
Until then, there will always be the perception, right or wrong, that these PDPs are chosen more for political expediency, rather than exceptional technical merits.
GRRRRR!!!
Yesterday: Improving the PDP model
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