How UNRA blew billions in roadworks

Delayed payments to contractors, under-valuation of quantities, delay in handing over contract sites to contractors, and paying contractors in foreign currencies for projects funded by the government have cost taxpayers billions of shillings in road construction, a value for money audit report for the year ending June 2022 indicates.

The report that has unearthed a cocktail of anomalies further sheds light on Uganda’s expensive road construction works, which Auditor General (AG) John Muwanga says surpasses similar construction works in the East African region.

For example, the audit report says inadequate estimation of quantities for the different projects audited shows project costs spiraling almost out of hand by the time the construction starts.  The underestimation resulted in variations in cost and time. Tirinyi-Pallisa-Kumi road constructed by the Arab Contractors at a cost of Shs321.8 billion had its cost rise by between 42 percent and 62.2 percent due to huge variations for items between quantities submitted by the design consultant and the design review report.

Pallisa-Kamonkoli (Shs243.4 billion) had huge variations for items ranging from 45 percent to 59,055 percent between quantities submitted by the design consultant and the design review report, while Kigumba-Bulima had an increase by 572 percent during implementation. The report says the design reviewer underestimated items resulting in an increase of value of works by 17.93 percent. Kampala Northern Bypass had an increase by more than 38 percent during implementation.

While the Uganda National Roads Authority (Unra) explained that the underestimations had been done by external consultants, and that the roads body has since reinforced its design department to either undertake designs in-house or better check the designs by the consultants for adequacy and completeness, which is already showing positive results, the AG advises the authority to institute penalties for those consultants whose negligence in omitting obvious elements results in high cost variations for the projects during implementation.

The audit report also faults Unra for delaying to grant access by the contractors to the project sites, and in the proces losing billions of shillings for no work done.   The report found that access to sites for six of the nine projects was not achieved as required by the different contract arrangements.

“This was especially the case where the contracts required the employer to handover a minimum of 30 percent of the land required for permanent works within three months of the commencement and the balance within 12 months of commencement. Access was not timely achieved and resulted in multiple extensions of time and in some instances costs relating to the time obligations,” the report said.

For example, for Kapchorwa - Suam road project, the access to the site delayed from 21 days to 441 days, while Tirinyi –Pallisa-Kumi access to site delays led to payment of Shs4.6 billion for time related obligations, and Pallisa - Kamonkoli road site access delays led to payment of Shs1.1 billion for time related obligations.

Kitala–Gerenge road, due to delayed land acquisition of right of way, and Rukungiri-Kihihi/Ishasha road, initially had a delay of 70 days and later increased due to non-compensation of project affected persons. For the Kampala Northern By-pass project, access to site was achieved five years into implementation.

However, Unra said it was not practically possible to issue commencement orders with fully accessible sites because there was a time limit within which to commence the contract after signature and delays in land acquisition due to inadequate funding and late releases.

Delays in completion of design reviews

Several roads, according to the value for money audit report, had delays in completion of design reviews, which delayed timely issuance of instructions to contractors. For example, the Kapchorwa-Suam road project had its design review report submitted 24 months after the expected date and Unra took more than seven months before final review. Kigumba-Bulima road project had the design review report delayed by 24 months. Rukungiri-Kihihi-Ishasha/Kanungu road project had the final design review report delayed by 16 months, while Kampala Northern Bypass had the design review report delayed by six months.

The delays, according to Unra, were caused by missing components such as hydrology, increased scope of services, and delayed investigations due to un-acquired road corridors without which a submission could not be made.

Also of concern was use of outdated specifications for prefabricated culverts, which affected quality of work. The report says on tests were undertaken on all the nine selected road projects for audit, whereas all the materials largely followed the specification requirements, prefabricated culverts used on all projects were outdated, with BS 5911-110:1988 specification being used.

It was discovered that on Mpigi Town roads, the outdated codes for testing of prefabricated culverts were used, Kitala-Gerenge road had only cube tests done on concrete forming the culverts and later proof loading tests used outdated specification. On Rukungiri-kihihi Ishasha/Kanungu road, outdated specifications were used.

The report says the use of outdated specifications led to manufacturing of substandard pipe units, which will lead to rapid failures of road infrastructure as the loading requirements during testing in the outdated specifications are lower than what the updated ones require.

A number of roads also expirienced delays in achieving completion of works in time. The report says with the exception of Mpigi Town roads that were completed within the initial contractual timelines, all the remaining projects were not completed in time and had time extensions, which delayed the availability of the upgraded roads to the users.

Kitale-Gerenge road had three time extensions but had not been completed after the third, while for Rukungiri-Kihihi-Ishasha/Kanungu, there was a progress lag of 14 percent at the time of audit, and for the Kampala Northern Bypass, the project that was initially intended to last three years ended up being implemented in seven and a half years.

Unra attributed the delays in implementation to land acquisition delays, adverse weather conditions, increases in scope, inadequate mobilisation of personnel and equipment by contractors, among others.

The AG advised Unra to verify the capacity of contractors to execute the works and ensure accessibility of sites for timely implementation of the projects.

“Any delays should also be penalised with liquidated damages,” he said.

During the year under review, the government incurred an addition of more than Shs2 billion for the delays in payment of interim payment certificates (IPCS). The report says the  delays in payments of IPCS lead to interest payments and affect the contractor’s cash flows in project execution.

The report says Kapchorwa-Suam road project delays resulted in an interest payment of Shs1.1 billion. The same project also received an overpayment of Shs20.6 million, while for Tirinyi-Pallisa-Kumi road, IPCs were delayed, resulting in a certified interest of Shs453.9 million and financial loss of Shs54.8 million due to acceptance of erroneous base value.

For the Palisa-Kamonkoli road project, delays were observed on IPCs 1 to 7, resulting in a certified interest of Shs284 million and financial loss of Shs40 million due to acceptance of erroneous base value.

In Mpigi Town roads, the adoption of a split currency ($-Shs) contract for a Government of Uganda-funded contract led to a loss of approximately Shs15.5 billion in foreign exchange. This was after the Ministry of Finance had issued a circular that all Government of Uganda-funded projects be paid in local currency. However, Unra did not heed this call, causing huge financial loss to the government.

“I found that for the Mpigi Town roads project, the contractor was paid in part foreign currency despite a government directive against the practice for solely Government of Uganda-funded projects.  $11.2 million was paid out to the contractor at an exchange rate of Shs2,282.1 for $1, which meant that government incurred an extra cost of more than Shs 15.5 billion to acquire this amount of dollars considering the average USD exchange rate was Shs3,667.16 during the contract execution period,” the report says.

The same project also saw irregular advancement of Shs2.3 billion to the contractor in regards to materials on site without any contractual basis, and received an overpayment of Shs127 million.

For Kampala Northern Bypass, payments were delayed and interest paid for all payments up to June 2020. The project also received an overpayment of €47,469.01 (Shs187.8 million), which Unra could not explain.

Environmental, social and safety concerns

The report took issues with the environmental, social and health safety safeguards on the nine road projects The audit found out that on the Kapchorwa-Suam road project, a single unsegregated toilet was being used by female and male workers at RHS quarry, poorly maintained vehicles with no reverse or brake lights, non-functional indicators, and non-working AC. There was also no enforcement of personal protection equipment (PPE) for workers, and limited access provisions for communities.

On the Kigumba-Bulima road project, the audit team found no signage for heavy vehicles turning at the quarry and camp sites,  no traffic control persons at quarry access, no speed calming measures at quarry and town roads.

The team also found unfenced borrow pits with deep excavations at sites, partially fenced quarry and asphalt plant, no valid hazardous licences for waste storage or transportation, no licences for petroleum operations for quarry and asphalt plants and other mini camps with oil operations, and no National Environment Management Authority (Nema) permit for the quarry at Ntooma.

Elsewhere, on the Rukungiri-Kihihi-Ishasha/Kanungu project, there was poor waste management; poor management and storage of used oils, poor mechanical conditions of trucks, lack of adequate PPEs, especially footwear; unrestored borrow pits. The site also had unserviced fire extinguishers, first aid kits and essential drugs.

“The project also didn’t have a number of permits and licenses such as hazardous waste storage licence, fuel storage and operation licence, work permits for some foreign nationals, etc,” the report says. 

Failure to negotiate rates

The report points out that Tirinyi-Pallisa-Kumi and Pallisa-Kamonkoli road projects contracts were overpriced compared to similar projects in the region.

“I found out that for these projects, the rates, especially for the time related obligations, were abnormally high. For Tirinyi-Pallisa-Kumi, and Pallisa-Kamonkoli, the time related obligations were on average 521 percent higher than the contracts within the region,” the report said.   

The roads authority defended the pricing, saying it was a competitive bidding process where the best evaluated bidder was determined by comparing their prices.  

The authority, according to the report, also failed to amend contracts where terms were amended. The AG said for Tirinyi-Pallisa-Kumi and Pallisa-Kamonkoli roads, a number of changes made through addendum pertaining to schedule of adjustment data, construction period, and attendance upon the engineer, among others, during the bidding process were not amended in the signed contracts, which could result into unforeseen contractual issues.

For the Kampala Northern Bypass project, there were inadequate feasibility studies in the initial designs and feasibility assessments prior to tender.

The report says there was also lack of a comprehensive review of designs and a feasibility study report before tender, which led to multiple variations and increases in works cost during implementation, for example, following the design review by supervisors representative.

The report says it was discovered that in the initial designs, a slip road between Gayaza interchange and Bombo road interchange was missed and the supervisor representative recommended the design of this slip lane, which would inevitably require design and construction of a retaining wall at Gayaza interchange for an additional cost of €179,285.59 (Shs710 million).

It was also discovered that consultants hired by Unra for designing roads deliberately misled the authority, which ended up issuing bid notices with incorrect information. For example, the AG in his report says for Rukungiri–Kihihi-Ishasha/Kanungu road project, the draft and final design review reports by the consultant lacked a comprehensive and detailed review, and it misled the employer to issue bid documents with insufficient information to the bidders, leading to introduction of new items and increased quantities during project implementation.

It is not clear if the anomalies the AG found in the value for money audit have been corrected. Whereas Unra had told the audit team that some of the issues had already been corrected and others were due to be worked on, we were unable to get the latest progress from the authority.

Mr Allan Ssempebwa, the head of communications at the roads authority, told Daily Monitor on Tuesday that the authority had nothing more to add since all their responses were contained in the audit report.