No cost overrun for Pan Borneo - Business News | The Star Online


No cost overrun for Pan Borneo

The PDP will ensure project is kept within RM16bil budget

PETALING JAYA: The cost of constructing the Sarawak portion of the Pan Borneo Highway will be kept within its RM16bil budget despite concerns that expenses will exceed the projected cost.

Having a project delivery partner (PDP), the same method used in building the mass rapid transit (MRT) network for the Klang Valley, would help keep cost within budget, said a source.

“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,” the source said.

Contracts for the Pan Borneo Highway have been dished out fast in recent weeks, with a consortium between Naim Engineering Sdn Bhd and Gamuda Bhd accepting an RM1.57bil contract for the development of the Pantu Junction to Btg Skrang stretch of the Pan Borneo Highway yesterday.

Mudajaya Group Bhd yesterday too accepted the award of an RM1.33bil contract for the development between Sg Kua Bridge and Sg Arip Bridge.

The flourish of contracts where companies such as KKB Engineering Bhd , WCT Holdings Bhd , Cahya Mata Sarawak Bhd , Hock Seng Lee Bhd , Zecon Bhd , Shin Yang Shipping Corp Bhd , Samling Group and Naim Cendera Sdn Bhd are being awarded and accepting is in response to the need to complete the project within six years from July 1 last year.

The source said having a PDP oversee the construction of the Pan Borneo Highway allows for more control in the costing of the project. Coordination from design to construction management is led by experienced personnel in the construction business and that gives clarity to what the cost of the different stages of the project would be.

Although there were concerns that the contractors of the Pan Borneo Highway may share the fate of those who are involved in the construction of the MRT network, where a number of contractors did not make a profit, the source said the contractors convinced a committee which selected them that they could complete the sections of the highway for the price of the contracts.

Concerns over the levelling of the roads to a 3% gradient of the current hilly stretches, which will be costly due to geotechnical work, was incorporated in the overall cost of the project.

The source said procuring the raw materials to build the road was also studied. Cost comparisons between a centralised procurement system and having the contractors source the raw materials themselves was looked at and studies found there was no big difference in the costing of the raw materials needed between both models.

“The contractors are comfortable with getting the raw materials themselves,” he said, adding that cost certainty for raw materials for the project has been locked in for the next five years in building the road.

The cost of building a kilometre of road for the Pan Borneo Highway was budgeted at around RM20mil, as the upgrading and development work would be carried out on about 800km of roads. That cost includes the expensive relocation of utilities that run through the Pan Borneo Highway and the construction of bridges.

Concerns of ballooning costs were raised as recent big projects, such as the construction of KLIA2, had blown their original budget. The source said the PDP format was chosen to avoid such issues and although the Pan Borneo Highway is a toll-free road, the highway would translate to a better economic performance in Sarawak.

pan borneo highway , costs , development