Having a project delivery partner (PDP) will help keep the cost of constructing Pan Borneo Highway’s Sarawak portion within its RM16 billion budget.
“It should not be a problem (in terms of keeping to the budget). Reputable companies have won the jobs and the contract documents are clear,” said the source.
Contracts for the Pan Borneo Highway were awarded in recent weeks, with a consortium between Gamuda Bhd and Naim Engineering Sdn Bhd accepting an RM1.57 billion contract for the development of the Pan Borneo Highway’s Pantu Junction to Btg Skrang stretch.
Mudajaya Group Bhd also accepted an RM1.33 billion contract for the development between the Sg Arip Bridge and Sg Kua Bridge.
The flourish of contracts, in which companies like WCT Holdings Bhd, KKB Engineering Bhd, Hock Seng Lee Bhd, Cahya Mata Sarawak Bhd, Shin Yang Shipping Corp Bhd, Zecon Bhd, Naim Cendera Sdn Bhd and Samling Group are awarded and accepting is in line with the need to complete the project in six years starting from 1st July 2015.
The source noted that having a PDP allows for more control in the costing of the Pan Borneo Highway. Coordination from design to construction management will be led by experienced personnels in the construction business, giving clarity to the cost of the various stages of the project.
While there are concerns that the Pan Borneo Highway contractors may not make a profit just like some of the contractors involved in the construction of the MRT network, the source revealed that the contractors had convinced the committee which selected them that they can complete a portion of the highway for the price of the contracts.
In fact, concerns on the levelling of the roads to a three percent gradient of the hilly stretches, which is expected to be pricey due to geotechnical work, was already incorporated in the project’s overall cost.
The cost of procuring raw materials was also studied, said the source. Notably, cost comparisons between having the contractors source the raw materials and a centralised procurement system showed that there was no major differences in the costing of the raw materials between the two models.
“The contractors are comfortable with getting the raw materials themselves,” he said, noting that cost certainty for the project’s raw materials has been locked in for the next five years.
For the Pan Borneo Highway, the cost of constructing a kilometre of road was budgeted at about RM20 million since the development and upgrading work will be carried out on around 800km of roads. The cost includes the building of bridges and the expensive relocation of facilities running through the Pan Borneo Highway.
Concerns of ballooning costs emerged as recent big projects, like the construction of KLIA2 blew their original budget. According to the source, the PDP format was selected to avoid similar issues and while the Pan Borneo Highway is a toll-free road, it is expected to translate to a better economic performance for Sarawak.
Mangalesri Chandrasekaran, Editor at PropertyGuru, edited this story. To contact her about this or other stories email mangales@propertyguru.com.my
