Khato cut cost of multimillion pula project
Monkagedi Gaothobogwe | Friday August 23, 2019 13:53
It was also tabled before Cabinet way before the tender award was announced, the documents revealed.
The documents also established that when the award of the tender was announced, Khato’s winning bid was put at P781 million or USD 65 million, while the Ministry’s own project estimate later surfaced to be P900 million. Critics questioned the price hike and blamed the contractor for the ballooning of the project budget.
However, the Ministry’s document tabled for Cabinet approval reveals a total of P191, 466, 813.28 as contingencies and project overheads estimates by the implementing entity and not the contractor.
It has also been established that the P900 million request was signed off by Cabinet on July 4, 2019 some weeks before the award to Khato Civils joint venture of P781 million was announced towards end of July, last month, and before negotiations about new prices relating to purchase of materials and other escalations could begin.
Khato Civils and its joint venture had bid P781 million, and were cheaper than the next best bidder, a Chinese company by over P217 million at the time of bidding. It has also surfaced that contrary to allegations that WUC engineers had initially estimated the total cost of the project at P400 million, documents reveal that WUC’s own latest estimates for the project is 900 million Pula, according to client’s own project cost break down as submitted to Cabinet.
In WUC’s own estimate, the cost of their preferred 1000mm DI pipes alone, which are ideal for carrying high water pressure is P332, 050, 000 (Three hundred and thirty two million and fifty thousand pula), making the alleged P400 million total project budget, just a rumour. According to the WUC estimates, other high expenditure components of the project include isolation & washout Chambers, estimated at P124, 193, 598, while hunching, padding and blanket are estimated to cost P89, 997, 000 and excavation and backfilling at P61, 184, 928.
Other items independently estimated by the ministry to be costly include in-suite & bedding at P13, 772, 000, selected fill material at P12 million, testing and pre commissioning at P13 million, radio links at P10 million, reinstatement of top soil at P8+ million, amongst others.
WUC’s initial project cost estimates of P708, 503, 186.72, further reached the 900 million Pula after client added 15% for project overheads (P106, 275,478.01), and a further 10% addition as contingency (P81, 447,866.47), while another additional P3, 743,468.80 was added to round up the P896, 256,531.20 figure to P900 million. Khato Civils price offer had a 10% annual escalation clause from the year of the tender and that the revised price was still being determined through fresh assessment of cost of material at current prices, amongst others.