KUALA LUMPUR, March 28 - The
Project Delivery Partner (PDP) for the new KL MRT, Gamuda-MMC, will be have
to pay financial penalties if the project experiences any delays or cost
overruns said the Land Public Transport Commission (SPAD) today.
It also said that if Gamuda-MMC bids for the MRT tunnelling works, it cannot
be part of the tender evaluation committee.
SPAD, however, also came out in defence of the appointment of the Gamuda-MMC
consortium as the PDP, saying that having an experienced contractor as a
project manager offers significant benefits. This comes as critics have
questioned the selection of Gamuda-MMC as the government’s partner without
an open tender and whether the consortium would gain an advantage over other
vendors when bidding for the tunnelling works.
ASPAD CEO Mohd Nur Kamal acknowledged that the size and complexity of the
MRT project carries significant risks of delays and cost overruns, but the
government has planned to take the delivery risk, including timing and cost,
out of the project to protect public interest.
He added that the PDP concept is an enhancement of the project manager role
with certain built-in incentives and penalties that are designed to align
the interest of PDP with the government
“In the case of the PDP, the risk of delays and cost over-runs is now borne
by the PDP for a fee,” said Mohd Nur in a statement to the media. “The PDP
provides a single point of accountability to deliver the entire project
within agreed time and cost targets, or face financial penalties, something
a pure engineering consultancy has no financial capacity or management
capability to bear.”
The commission’s chief said that as the risk takers and the party
responsible for the overall health of the project, it was “crucial” that
MMC-Gamuda as the PDP be vested with the necessary authority to carry out
its responsibility of managing all aspects of the project including
packaging of works, calling for tenders, evaluating the bids, recommending
the contractors and jointly awarding of contracts and ensuring the
performance of each and every contractor appointed — even the powers to
step-in and take-over delivery of contracts that are behind schedule where
necessary to ensure targets are met.
He assured the public, however, that there will be additional oversight and
that MMC-Gamuda would only act within agreed guidelines and in consultation
with the government and the government’s appointed
VMS (Value Management
Study) Consultant, McKinsey, who will scrutinise project plans and
specifications to ensure optimum value and cost efficiency.
An independent checking engineer (ICE) will also be appointed to monitor and
perform verification works to ensure the project is delivered according to
plans and specifications. “Ultimately, the government will have the final
say,” he stressed.
Nur Kamal also addressed fears that MMC-Gamuda would have an unfair
advantage over other contractors when bidding for the tunnelling works,
which is the only portion of the MRT project that it is allowed to bid for.
Analysts such as CIMB Research had said in December last year that
Gamuda-MMC has an edge in the bid for the RM13-14 billion tunnelling portion
of the work especially since the prime minister had highlighted that an
exception should be made in the case of awarding the tunnelling works and it
is the only local contractor with experience.
He said that all works packages will be subject to competitive bidding and
all bidders will be given the same project information and evaluated on the
same basis including technical expertise, track record and financial terms.
“The PDP would have the opportunity to bid as it is the only Malaysian group
with the expertise and track record to do so,” he said.
“To bar the PDP from bidding, though it has the capability, would mean that
only foreign contractors will be involved, which is not necessarily in our
The head of the commission also said that the appointment of experienced
contractors for large and complex projects is a common global practice,
especially for project owners that have not built up internal capabilities
to manage large projects.
Among the global projects cited by Nur Kamal were the US$12 billion (RM36
billion) Crossrail project managed by Bechtel/Systra, the US$10 billion
London Olympics managed by Laing O’Rourke and the US$16 billion Korea High
Speed Rail project managed by Bechtel/Hyundai.
Nur Kamal also said that a large experienced contractor had advantages over
pure engineering consultancies as they had better competency in commercial
procurement strategies, highly developed skills interfacing and co-ordinating
many different contractors, strong tender management and award skills,
well-developed supply chain management skills and sufficient balance sheet
strength to take on the risk of cost overruns and delays.
“Allow me to reiterate the government’s commitment to closely scrutinize the
costs and delivery of this crucial national infrastructure project for the
benefit of the Malaysian public,” he said.
MMC-Gamuda had first mooted the idea of a MRT system for the capital city in
the middle of last year and the Najib administration later adopted the
proposal as part of the 10th Malaysia Plan.
It was later appointed as PDP following its proposal to be project manager
for the entire system.
The KL MRT has been touted as the country’s most expensive construction
project but is also seen as a much needed initiative to help the city catch
up with its regional rivals in terms of city rail investment and relieve
The project’s plans are now on public display and comment can provided via
email to email@example.com or through the SPAD toll-free line at
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