Sunday, November 14, 2004

Project Failures - Samy Bares All

PMC puncanya, bukan JKR

"Dari tahun 1979 saya jadi menteri tidak pernah jadi macam ini"


Utusan Online, 14th November 2004.

Datuk Seri Samy Vellu finally had finally the guts to come out in the open to bare all the viruses and worms that had plague the projects and had infected and infiltrated the whole Kitchen Cabinet.

Who was responsible for all the fiascos of project failures?

According to Samy Vellu, it is none other than the KSU, the Secretary general of the Finance Ministry who is the most powerful person in regards to decisions on project award.

This is what Samy says:

Tetapi orang yang bertanggungjawab itu ialah Ketua Setiausaha kementeriannya. Ketua Setiausaha saja yang memberi arahan dan dia selalu tidak boleh menerima pandangan lain. Dalam satu-satu mesyuarat kalau ada para pegawai dari JKR untuk menjaga kepentingan teknikal, dia selalu malukan mereka. Dia kata, kalau tidak tahu tutup mulut."

"Beliau sedar bahawa semua masalah itu hanya muncul setelah perkhidmatan Perunding Pengurusan Projek (PMC) diperkenalkan oleh Kementerian Kewangan pada tahun 1990-an."


This is what Samy says:

"Ia ditubuhkan oleh Kementerian Kewangan pada tahun 1990-an. Peranannya ialah untuk memansuhkan projek-projek JKR. Ada kepercayaan bahawa sekiranya projek-projek itu diberikan kepada PMC ia boleh disiapkan dengan lebih awal, lebih cantik dan macam-macam lagi. Malah projek yang mereka siapkan itu sebenarnya lebih mahal."

According to Samy, In the early 1990s, Mahathir's Govt had decided to engage the service of a Project Management Consultant (PMC) which are a composite cartel with faces and looks that resemble a contractor, may look like consultant and had shown interest as property developers and that entity is registered with the Ministry of Finance. The set up of PMC was meant to hijack all JKR's mega projects. It was claimed by the PMC that they are more efficient, more cost effective and can do a better job than JKR. The results speaks of itself: - Computer lab projects, Matrade Building, Hospital Sultan Ismail di Pandan, Johor, Kangar Hospital, Cameron Hospital, Langkawi School projects, et al; all these projects are now reverted back to JKR for reorganization and restructuring - to mitigate the damages done, and the multi million loses incurred; all tax-payers money.

As revealed by Samy, the PMC is a private entity who had only 2 officers manning the company - a managing director and a deputy managing director, and NO others. The Government, via the Ministry of Finance had entrusted and delegated the power to this PMC to appoint and select any contractors, design engineers, consultants, and nominated sub-contractors for all projects parked within their jurisdiction or those within the jurisdiction of the Ministry of Finance.

Snip from the interview:

Q: "Sebenarnya apabila Kementerian Kewangan sudah memberikan sesuatu projek itu kepada sesebuah kontraktor, tanggungjawab saya sebagai menteri hanyalah mengarahkan JKR supaya melantik kontraktor itu. Saya memberikan kuasa kepada Ketua Pengarah JKR untuk melantik kontraktor itu untuk harga yang telah ditentukan. Itu saja.

Ini bermakna Kementerian Kewangan mempunyai kuasa yang lebih besar walaupun Kementerian Kerja Raya mempunyai pakar yang boleh memberikan nasihat?"


Q: Siapakah yang memeriksa PMC?

SAMY: TIADA SIAPA. (believe it? NObody manages or control or audit the PMC!!!)

Q: Kerajaan ada JKR tetapi kenapakah kerajaan memilih untuk memberi kepercayaan kepada badan swasta mengendalikan projek yang bernilai berjuta-juta ringgit? Apakah rasionalnya?

SAMY: Ada satu jawapan saja kepada soalan ini. Kata mereka, kerja-kerja itu boleh disiapkan dalam jangka masa yang cepat.

Q: Tanpa mempedulikan soal kos?

SAMY: Ya, tanpa mempedulikan kos. Apabila JKR membuka tawaran bagi setiap bilik darjah dengan harga RM55,000, ada juga pemaju yang bersedia menyiapkannya. Tetapi sebuah bilik darjah yang ditawarkan melalui PMC ada yang berharga RM95,000 dan ada juga yang mencecah sehingga RM120,000.

Kosnya sekarang sudah jadi berganda. Apabila kita tanya kenapa harganya jadi begitu tinggi mereka nanti akan beri berbagai-bagai penjelasan.

Sekolah-sekolah yang dibina dengan harga yang tinggi itu memang cantik-cantik. Tetapi siapa yang hilang wang? Kerajaan.

Q: Adakah pemaju-pemaju itu dapat menyiapkan projek-projek berkenaan dengan cepat seperti yang dijanjikan?

SAMY: Tidak juga. Ada sekali itu JKR telah diminta supaya mengeluarkan satu tawaran untuk pembinaan 500 buah sekolah dan kita sudah memilih lebih daripada 200 pemaju untuk melaksanakannya.

Tetapi apabila sampai masa kita hendak mengeluarkan surat niat, JKR telah diminta supaya menarik balik semua tawaran itu dan menyerahkannya kepada PMC. Semudah itu saja.

Q: Apa yang istimewanya tentang PMC ini?


Believe what you hear from Samy? PMC is stronger than Ministry of Works?

Is this the Government we had? That even the MINISTRY can be overruled by a PMC?

How is it that this can happen?
How is it that the Government had developed a dinosaur from a lizard within such a short span of a few years that is capable to destroy the Works Ministry and billions of dollars of project?
Who is behind the PMC?
Who's the GODFATHER behind it?
It cannot be the Jews?
Only UNMO can answer it; TRUST me!

Thursday, November 11, 2004

PWD: "You can Manage MATRADE Project NOW"



On problems affecting the Malaysian External Trade and development Authority building in Jalan Duta, Samy Vellu said the contract was not awarded by the PWD. The contract had been given to Syarikat Perangsang International Sdn Bhd and it had been refusing to allow PWD officials into the project since the first day.

Now, the Public Accounts Committee (PAC) has directed PWD to complete and handover the building within 21 months from the date of receiving the funds from the Government. Why? It took 10 years for the Ministry of Finance to get the project to its current state of affairs and PWD is only given 21 months to finished up the mess? I believe, it must had been a promised made by the Director-General of PWD Tan Sri Zaini who had requested RM32 million from the Treasury for PWD to complete the project. Is 21 months & RM32 million sufficient to get the project completed? I hope it does; if not, Zaini will have to burn his ass to answer for it.

During the meeting attended by PAC, the Board of Architects and the PWD represented by Tan Sri Zaini, PWD promised to take legal action against the errant contractor and recover some of the losses. What???? PWD to take legal action? Samy Vellu said the contract is not awarded by PWD; how then can they take legal action against the errant contractor? Is Samy Vellu and Zaini talking about the same subject and same contract? According to Samy, Matrade was not awarded by PWD; then how can PWD take legal contractual action? Are our Ministers and D-G going NUTs? or, are they misleading us??? Please clarify!!!!!! My God, Please sent Tan Sri Zaini back to law school!!!!!

Monday, November 8, 2004

More Regulatory Bodies Formed

WPISB Posted by Hello


In Malaysia, whenever the Government wants to improve it's administrative efficiency, instead of utilising existing collosal of human resources that were available, they always choose the easy way out - set up another regulatory body and get the industry players to pay for it.

CIDB was one of them. It was set up to improve the quality and standards of the construction industry and to provide the necessary integration of industry and governmental information, communication, knowledge, expertise, and statistics that the industry players will be difficult to achieve if they were to act alone. CIDB charges 0.25% of the project value for each and every projects that is valued above $500,000 in contract sum. Each year, the government spends more than $20 billions for projects and the private sectors also spends many billions on projects. Work out the arithmatic, and you will know how much CIDB had pocketed. But what had the industry players benefitted from CIDB? What is the major activity of CIDB? India, Sri Lanka, Vietnam - they are there!!!! What were they doing there? CIDB became just another contractor whose interest is to get turnkey projects in India and Sri Lanka and Vietnam. They collected billions of ringgit to fund their salaries and to invest in India.

Real Estate and Housing Developers Association (REHDA) has submitted a memorandum to the Government proposing the suspension of the 0.25% levy on contract value paid to CIDB as it has failed to fulfill its role in meeting the construction industry needs. In its memorandum, REHDA said suspending the levy would help ease the industry’s financial burden.

Betty Chew, the MP for Melaka and State Assemblywoman for Durian Daun made a public statement as follows:

"Apa gunanya menyumbangkan 0.25% nilai projek kepada CIDB bila pemaju tidak menerima faedah yang dijanjikan? Kerugian RM150 juta sebulan adalah jumlah wang yang besar. Oleh itu, adalah lebih baik wang RM400 juta yang disumbangkan oleh pemaju sendiri kepada CIDB dikembalikan oleh CIDB kepada pemaju sebagai satu bentuk bantuan kewangan. Ini akan membantu menggerakkan balik industri pembinaan dan juga membantu ekonomi negara."

Recently, the Selangor Government imposed new requirement to all developers requiring them to register with Lembaga Perumahan dan Hartanah Selangor (LPHS) and pay a registration fee of 0.1% of their gross development value. Developers are already registered with the Ministry of Housing and Local Govt and an additional layer is unnecessary. The new requirements also include regulations on Bumiputra lots to be predetermine by LPHS on the developer’s layout and building plans while another ruling requires the developers to deposit 40% of the overall development cost of a project in a bank before approval is given for land conversion.

New regulations and requirements slapped by Selangor’s authorities are costly, duplicative and bureaucratic, as builders already face enough Federal legislation, the Real Estate and Housing Developers’ Association (REHDA) said.

“Malaysia’s housing industry is already one of the most regulated in the world,” said Datuk Jeffrey Ng Tiong Lip.

Now, it's Telcos turn!

The Federal territory Ministry has appointed Wilayah Persekutuan Infrastructure Sdn Bhd (WPISB) as a one-stop centre for development of telecommunications infrastructure in KL and Putrajaya.

WPISB has been authorized to coordinate all applications for the setting up of new base transceiver (BTS) and also to legalize existing ones.

WPISB is owned by Yayasan Wilayah Persekutuan and Ingres Software Sdn Bhd (a shareholder of Konsortium Jaringan Selangor Sdn Bhd). WPISB is also expected to have a role in the advancement of the Government’s plan for telecommunication companies to share transmission infrastructure.

WPISB intends to charge a flat fee of $2,500 for processing each application for setting up a New Base Transceiver(BTS). Apart from the $2,500 application fee, telcos will also have to pay $2,000 for the setting up of each BTS and also charges for an annual audit fee of $2,000 per BTS for auditing the structural integrity and safety, mechanical and electrical, & radiation level of each BTS. There are 1,152 telco towers in Kl and Putrajaya.

Base on the fees, the telcos will have to pay WPISB about $2.3 million in audit annual fees, and multi-millions for processing and application fees annually.

The industry players are said to be unhappy with the fees charged since the company was not willing to take responsibility for the structural integrity of the telecommmunication towers.

“We are unhappy with the appointment because the WPISB intends to charge a flat fee of $2,500 for each application, but like all other Government-back intermediaries, they cannot guarantee if the applications will be approved by the authorities, namely KL City Hall and Putrajaya Corp,” a telco executive said. integrity of the towers.

So, the setting up of such a body is to collect money, do some paper works and send those papers to the authorities for approval. Other that these, WPISB do not provide any form of productive service.

Then, why is there a need to add another layer to the existing many layers of red-tape? Why can't the telcos be allowed to communicate and liaise directly with the relevant authorities? Is middleman management a necessity in Malaysian Culture or UMNO culture?

But the telcos prefer to deal directly with the local authorities rather than go through another company!

Whatever it is and what is going to happen, the additional costs incurred by the telcos will be passed on to the consumers, similar to the CIDB fiasco. Is it what the Government prefers? Looks like, that's only thing they know how to do - COMPETENCY in creating cost and expenditure!
That's the price we pay for electing the NUTs into office.

Malaysia Boleh lagi!

Thursday, November 4, 2004



The Simpang Pulai-Cameron Highlands stretch of the East-West Highway will be closed daily after sunset until further notice. The closure was ordered by the Cabinet today after engineers recently found that the stretch was too dangerous for motorists. It was earlier reported that water had seeped into the slopes along the highway and some movement had been detected, especially between Pos Slim and Kampung Raja. Samy Vellu had also said that there was some movement of between 0.3m and 0.45m.

On the 4th Feb 2004, The Star reported that the 282mil highway from Pos Slim to Kampung Raja in Cameron Highlands is completed but PWD has refused to issue a safety certification for the road. The PWD feels that it’s dangerous for use as km22.5 and 25.5 is too steep and prone to landslides. The slope gradient was not constructed in accordance to the PWD standard. The PWD is of the opinion that the construction has not met its requirement.

On 17th October 2004, The Star again reported a statement from the State Director of Perak PWD, Datuk Dorairaju. “We know the road was not really completed when we opened it in February. It was opened after pressure from the people in Cameron Highlands who were affected by a landslide near Ringlet,” commented Datuk Dorairajoo.

According to Samy Vellu, the Works Ministry was considering closing the highway in order to facilitate the construction of a proposed new tunnel which will be 1.5km long. The tunnel is expected to cost between $30-50million.

QUESTION: Why was the tunnel not designed and built by the earlier Turnkey Contractor? Is it a question of design omission, or a failure of the PMC & design consultants to take into consideration the fundamental requirements during the earlier contract? Is there a Failure of Duty of Care, Professional Negligence and can TORT actions be taken? Or, did the Turnkey contractor failed to comply to the requirements stipulated in the Need Statement of the contract? The project was a Design-Built-Lump Sum contract from point A to point B (as per the need statement from PWD). How could it be that we now say we will need a tunnel when the designers had not deemed necessary at the point of the contract been made? Was the designer over-ruled? Did the contractor short-change the Government? PWD and Works Ministry had to answer it point blank and not hide behind the maxim of Act-of-God again. Infact, ACA should be as pro-active as they had been with the Karak Highway investigation, by investigating this problem. Coincidently, both the problematic highway (Simpang Pulai- Kampung Raja and Karak Highway) were constructed TURNKEYED by MTD Capital.

The problem that have surfaced now and more to come in the future was predictable and known-knowns. It is just that our Ministers choose to side-step the issues that were raised before it happen (before the contract formation), and hope it doesn't happen (after the contract completion). JKR Perak knew of the problem. They couldn't talk out loud as they may lose their job and income.

Well, Murphy's Law again: If you think it can happen, It will happen! & The solution to a problem breeds new and more virulent problems. Problem begets problem. Inefficiency breeds inefficiency.

Datuk Seri Samy should admit his delinquency and work towards an effective solutions, even if it has to be painful to vindicate himself. He should not be shielding incompetencies and the incompetent contractors. He must wake up, and for once, solve those problems he had allowed to happen when he concurred on those decisions with his fello cabinet ministers, of which he shall have to accept responsibility and the consequences for the last 20 years of folly and political patronage.