PETALING JAYA: IJM Corp Bhd and Sunway Construction Group Bhd are among five construction giants in the running for an RM2bil job to construct viaducts in the Mass Rapid Transit line 2 (MRT 2) project.
“Each of the viaduct packages is worth not less than RM1bil and these are for the northern side of the MRT 2.
Tender submissions have just been closed and construction jobs from MRT 2 are expected to be awarded from next month onwards,” a source said.
A viaduct is a bridge composed of several small spans and is commonly used as the basic infrastructure for rail projects.
MRT 2, with an RM28bil price tag, will start from Sungai Buloh before going through Serdang up to its final stop in Putrajaya with a total of 36 stations.
According to officials familiar with the tendering process, any packages to be awarded worth more than RM200mil would need consensus from the Finance Ministry in a meeting to be chaired by the Prime Minister himself.
“As the economy is slowing, the Government is giving priority to public infrastructure projects to stimulate the economy. The top brass is looking into the progress of the MRT 2 project closely,” said an official.
CIMB Research in a recent report said it was maintaining its “overweight” recommendation on the construction sector although the Government has decided to revise the 2016 gross domestic product forecast to 4% from 4.5% for 2016.
But it is also important to note that the construction industry is looking at a 10% increase in labour cost and a 2% increase in overall cost due to the newly revised foreign worker levy.
The source also said that the most expensive package, namely, the tunnelling contract with an estimated value of more than RM12bil, would be awarded in April.
“The frontrunner is the MMC-Gamuda joint venture, which is also the project delivery partner for MRT 2. Like the MRT 1 project, the tunneling job will be awarded on a Swiss Challenge basis,” said the source.
Under the Swiss Challenge system, MMC-Gamuda will have the first right of refusal to do the job at the lowest bid plus a small percentage of the margins.
Foreign rail experts such as Strabag Rail, Hyundai and China Railway Engineering Corp are vying for the tunnelling job.
The tunnelling job for MRT 1, which was undertaken by MMC-Gamuda, is nearing completion.
Other interested foreign companies for the tunnelling job include Vinci Construction from the United Kingdom, Taisei Techno from Japan, China Railway Construction Corp and China Communications Construction Company.
These parties are eager to submit their bids for the job,
“The race has attracted many because it is seen as the most lucrative aspect of the project,” said the source.
Qualified foreign bidders for the tunnelling job are allowed to put in joint bids or set up a consortium not exceeding three parties, but must name a lead partner.
The 13.5km tunnelling job is longer than the first line which was 9.5km.
The tunnelling cost of the first line was RM8.2bil.
Apart from having a more expensive tunnel, MRT 2, also known as the Sungai Buloh-Serdang-Putrajaya line, will offer more main civil engineering and construction packages from the first line.
It has been reported that the new line will offer 10 main packages compared with eight in the first line.
In light of cheap oil prices leading to the recent recalibration of the country’s budget, the implementation of major public transport infrastructure projects such as the light rail transit 3 (LRT 3) and MRT 2 still remain a priority for the Government.
In the 11th Malaysia Plan, the Government will continue to spend on high-impact construction work, particularly rail projects, that will boost the country’s economic growth from 2016 to 2020.
The MRT 2 and LRT 3, totalling RM37bil, are expected to be rolled out this year onwards.