Sharing ACC’s Experiences …Enhancing Efficiency and Accountability

Presented at

5th Engineering Conference

Royal Banquet Hall

22 April 2009

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

BackgroundBackgroundWorldwide, construction sector isWorldwide, construction sector is

corruption pronecorruption proneWastage of funds in APR – 30-35%Wastage of funds in APR – 30-35%Bhutanese scenario is no betterBhutanese scenario is no betterIn the Tenth FYP, total outlay 145-160 billionIn the Tenth FYP, total outlay 145-160 billionTaking 25% as construction outlayTaking 25% as construction outlayTaking wastage at conservative estimate of 10-20%Taking wastage at conservative estimate of 10-20%Bhutan may lose ~ 1 billion/annum to wastage/leakageBhutan may lose ~ 1 billion/annum to wastage/leakage

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Bhutanese ScenarioFrom audit reports, concerns raised by ACC and MoWHS, the following are the main problem areas:

- Faulty design, drawings and unrealistic BoQs

- Excess and illegitimate payments

- Excess consumption of materials and labor

- Execution and acceptance of sub-standard works

- Cost escalation, abnormal delays… abandonment

- Poor/lack of supervision

- Unethical practices

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Bhutanese Scenario… contdThe problems associated with the construction sector show the symptoms of larger malaise in the system on:

- Planning and coordination

- Preparing designs, drawings and BoQs

- Contract administration

- Contract preparation

- Contract award

- Contract implementation

- Capacity building, incentive structure

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Planning and coordination

- No larger stakeholders consultation

- Not much interaction among architects, engineers

- “Compartmentalized” working system

- “Prototyping” and “Stereotyping”

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Knowing the laws for deterrence

From ACA 2006, some corrupt practices are:Misuse of trusted authorityMisuse of public resourcesGiving or enabling to receive preferential treatmentLeaking revenue, privileged informationDelay decision/action deliberately for wrong motivesWithout due diligenceWith conflict of interestFacilitation of payments

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Knowing the laws for deterrence

Penalty from Penal Code of Bhutan 2004Official misconductMisdemeanor If convicted, termination as per BCSR 20061-3 yearsNo need to prove that you have taken moneyRestitution of loss to government

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Contract preparationSCC/PCC

Inclusion of arbitrary clauses in contrast to GCC

“The form of bid should be filled up completely without leaving any blank spaces”…otherwise on the spot rejection of bids

Guideline says (SD II)“When one incorporates SCC, on must amend and/or supplement the provisions of GCC”

“A responsive bid is one which conforms to the terms, conditions and specifications of the bidding documents without material deviation or reservation”

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Tender opening• No authentication of the corrections/over-writing

• No proper BORS

• No minutes of the meeting

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Bid evaluation- Non-uniform application of

correction of arithmetical errors

- Non clarification of AE, discrepancies in writing

- No MoM

Contract document says

…the employer may, at the employer’s discretion, ask any bidder for clarification ... in writing to confirm AE or discrepancies

…material deviation and reservation

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Discrepancies/AE

Contracts awarded without clarifications

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Bid Evaluation Non-scrutiny of documents

- Work in hand

- Bank guarantee

- Work experience Must be done by a committee MoM must be kept Must mention salient features Calculation of cost index –BSR

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Contract Implementation Material at site advance without materials Mobilization advance without performance bond

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Contract Implementation - Supervision No regular site supervision No site order book No site hindrance register No enforcement of staff and equipment deployment at site Poor quality of work Abnormal delays

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Contract Implementation – Enforcement of T&C No due diligence in general contract administration Laxity in enforcement of contract provisions Specifications become the first casualty Non-uniform application of contract provisions Preferential treatment of contract firms Payment made on manipulated measurements Excess and illegitimate payments Cost escalations

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Where do we stand? – Self assessment! Faulty contract document Poor quality of work Abnormal delays Excess and illegitimate payments Cost escalations Corruption….

Must heed the “writing on the wall” – strive for better way forward!

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Cause and Effect

Poor S

Poor W

Poor CA

Strict supervision

Improved work quality

Professionalize CA

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Way forward –Build capacityBuild capacity on Procurement Manual/SBD Impart mandatory training to all Procurement

Officers and engineersAll staff involved in contract administration should

be taught MKP of laws, rules, manualsProvide periodic refresher courses

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Way forward – Operationalize PCEPrepare and operationalize engineers’ code of ethics Institute Engineers’ Association to provide platform

for collective voice, to nurture belongingness, for collective growth, peer pressure/review

Encourage declaring conflict of interests

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Way forward – Free Engineers’ timeDo not bog down engineers with “other” worksPlan and program their work through work planProvide mobilityReduce paper work wherever possibleProvide technical support by resource pool

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Way forward – Enhance transparency & accountability Disclose estimate Disclose evaluation processes and resultsDisclose a time frame for hearing grievancesDeclare and institute a surprise supervision systemPrepare a supervisory check list All supervisory instruction must be recorded in the

site order bookAll site documents must be maintained

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Way forward – Peg performance with incentivesSynchronize fast track promotion with proven

performance and integrity Institute awards for best quality construction work Institute awards for clean engineers

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Way forward – Plug system loopholesReduce opportunities for corruptionReview obsolete rulesSimplify and reduce proceduresThink “out of the box”Review the whole system of contract management

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

ConclusionIn conclusion, let me present a tool to remind you against wrong actions

It is called the “Sunshine test” – a simple test

As the text imply, an action committed yourself, in secrecy, darkness, when exposed must not create or bring the sense of wrongdoing, inappropriateness, or public opinion against it

Sharing ACC’s Experiences …Sharing ACC’s Experiences …Enhancing Efficiency and AccountabilityEnhancing Efficiency and Accountability

Conclusion… Sunshine test

Failing the sunshine test has moral, public and even legal liabilities

Anything you do in contract administration should pass the sunshine test to exonerate oneself from any liabilities