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Road contractors weigh in on controversy over consultation fees for Penang road project


  • Nation
  • Tuesday, 4 Jul 2017

PETALING JAYA: The consultation fees paid by the Penang government for three road projects for the proposed undersea tunnel are generally higher than normal, say road contractors.

A road contractor who declined to be named said if the consultation fees of RM120mil was 32% of the total construction cost of RM377mil for the 10.53km Tanjung Bungah-Teluk Bahang paired road, it would be deemed “way too high”. 

“There is a scale for engineering fees of 3.2% of the total construction cost which here clearly shows that the amount has ballooned to 10 times the total cost,” he said, adding that if a higher margin was given for the consultation it would only reach a maximum of 5%.

He said that the engineering scale was a guideline used by contractors to not overpay or underpay consultants.

“There is a maximum and a minimum (of how much you can charge). The figure is negotiable but it cannot go beyond that,” he said.

He also claimed that the total RM209mil in pre-construction feasibility consultancy fees for the three roads totalling 20km in length should be paid progressively until the project was completed.

It was previously reported that the Penang government had paid the full amount of RM209mil for the consultation fees which does not include the Detailed Environmental Impact Assessment (DEIA).

“For the total amount to be paid fully without construction done is unheard of. This is not common practice as the paymaster will hold back some payment as a check and balance to ensure that the consultant was performing, if not then they can be terminated,” he said.

Another road contractor also added that the listed consultation fees of the three roads and the tunnel were “unreasonable”.

“This is because there is a discrepancy on the fees listed which is not consistent, one of them is 32% and that is too high,” he said, echoing the statement of the previous contractor that the guidelines on the scale of fees from the Board of Engineers of Malaysia (BEM) should be followed.

However, the contractor said that the full payment of the pre-construction fees of RM209mil was considered “reasonable”.

He said this was probably due to conditions in the contract but said partial payment should instead be considered until the project is completed.

Another contractor disagreed that the consultation fees of RM209mil should not have been paid in full, saying it would hinder the DEIA being approved.

“You cannot get a DEIA approval if you did not submit the feasibility and detailed design studies. You will need to submit all these together with it,” he said.

The contractor also said that although 32% was on the high side, the construction details, scope of the job, which includes for example the length and width of the road, bridges or even the total elevated structure, should be considered.

“We need to ask what agreement they made with these people. If they follow the normal engineering terms of reference it can’t be allowed, but you may have a different term of reference, so I don’t know,” he said.

The controversy over the pre-construction consultancy fees for the RM6.34 billion Penang tunnel and three roads project started after the Barisan Nasional Strategic Communications Team alleged the RM209mil pre-construction fees already paid by the Penang Government for only three roads totalling 20km in length was excessive.

On June 22, 2017, Federal Works Minister Datuk Seri Fadillah Yusof had also commented that the fees were over the limit. 

None of the three roads have started construction as yet.

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