Lebuhraya Borneo Utara optimistic of RM2bil savings for highway project

  • Business
  • Tuesday, 02 Apr 2019

KUCHING: Lebuhraya Borneo Utara Sdn Bhd (LBU), the project delivery partner (PDP) of the Pan Borneo Highway for the Sarawak portion, is optimistic that it could achieve some RM2bil savings on the mega project.

The project’s total construction cost is currently projected at about RM15.13bil compared with the original RM16.488bil (Phase 1).

The anticipated savings is a result of efficient design as well as cost and change control management, LBU said in its latest update on the project. The report titled “LBU - Delivering Pan Borneo Highway Sarawak below target cost”.

Breaking down the figures, LBU said savings from design management and optimisation alone is about RM553mil.

“When other savings are included (mainly due to re-measured quantities based on actual site conditions), the total savings achieved to-date is around RM1.5bil.

“However, since the (project) owner – federal and state governments – has instructed additional works to be carried out, especially with regard to strengthening the pavement structure, the current net savings stand at around RM1bil.

“A further RM1bil savings are expected from allocated contingency not likely to be expended in view of the cost and change control measures undertaken for the project,” it added.

LBU said the savings arising from design management and optimisation were made in compliance with the design brief and with no compromise on standards or quality of highway, including design speed.

The Pan Borneo Highway, Sarawak’s most ambitious infrastructure project, was awarded in 11 work packages. The overall works progress now is about 38%, and full completion is expected by 2021.

Most of the work packages involved joint ventures between Sarawak and Peninsular Malaysia-based listed construction companies.

“Keeping a lid on construction costs is important for the PDP, whose performance is measured against two key performance indicators (KPIs).

“As PDP, LBU is required to deliver the project within the agreed target cost (KPI 1) and by the agreed completion date (KPI 2).

“While these KPIs sound simple but the task is challenging. Pan Borneo Highway Sarawak Phase 1 has a road alignment that spans 786km, via 11 work packages comprising 25 road sections across the length of Sarawak,” said LBU.

According to the company, the project is to be completed within a brief five-and-half years construction timeline till end-2021, and with post-award target cost of RM16.12bil.

The first work package stretching 32.77km from Telok Melano to Sematan in southern Sarawak has been completed in January this year. The job, undertaken by Miri-based Samling Resources Sdn Bhd, is the shortest of all packages and the only package with a two-lane dual carriageway.

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