Failing financial management – Infrastructure projects: these costly variations that cannot be undone

Despite commitments announced by the Department of National Infrastructure and the Road Development Authority to minimize financial variations on projects, it is clear that this problem remains deeply rooted in these initiatives.

Examinations carried out by the National Audit Office revealed variations of several hundred million rupees on different achievements and projects. For example, the agreement concluded since 2016 between the Mauritian government and the Korean Expressway Corporation, as part of the Road Decongestion Program, for the construction of separate junctions at Pont Fer/Jumbo/Dowlut and Link Road A1-M1, stipulated initially that no variation would be requested from the Mauritian government. However, the Road Development Authority (RDA) ended up paying additional costs of Rs 106.56 million, failing to meet this initial commitment.

Likewise, the adoption of a new design for the A1-M1 bridge (Section 2) due to the instability observed in the Grande-Rivière Nord-Ouest cliff (GRNO) resulted in additional costs of Rs 155 million . Thus contradicting the initial policy of no cost and time overruns.

Concerning the grade separated junctions at Pont Fer/Jumbo/Dowlut and Link Road A1-M1, the costs increased from Rs 3.5 billion to Rs 4.1 billion. Initially, the RDA had awarded a contract to a contractor in a joint venture situation for a non-revisable lump sum amount of Rs 3.55 billion on February 23, 2018. However, this amount was revised upwards, reaching Rs 4.1 billion ( excluding VAT). As of October 2023, payments totaling Rs 3.8 billion (excluding VAT) have been made to the contractor, representing 92% of the total revised contract price.

This situation raises concerns about the management of public infrastructure projects in Mauritius, highlighting the need for more rigorous monitoring and stricter cost management to avoid financial overruns and delays.

The taken procedures

Despite the persistent challenges posed by financial variations in national infrastructure projects, a protocol has been put in place to better control additional claims made to the bodies responsible for overseeing the construction and implementation of these projects, notably the RDA . However, the effectiveness of these measures is being questioned in light of harsh criticism from the Audit Office.

To optimize the tender process and reduce variations in projects, the RDA board of directors has established a control mechanism with several measures. In accordance with this established protocol, the internal tender committee carries out a rigorous evaluation of the offers and makes recommendations to the general manager and/or the board of directors. In addition, a representative of the Finance section sits on the bid evaluation committee to ensure effective financial management.

In order to limit disadvantageous fluctuations in exchange rates, the GDR generally favors the use of local currency for payments, particularly for local supplies, so as not to disadvantage local entrepreneurs. At the same time, best practices in project management, planning and design are instituted to ensure effective project execution.

The established protocol also provides that negotiations on variations between the contractor and the project engineer of the RDA or consulting company must be conducted in a transparent manner, in accordance with applicable legislation, regulations and guidelines. . Decisions concerning variations are taken by a negotiating committee designated and validated by the general director or the board of directors, comprising at least three members, including a representative of the Finance department. The results of these negotiations are presented to the RDA board of directors after having been analyzed by the Finance Committee.

Finally, close monitoring of quantities is exercised to avoid any potential collusion and deter fraudulent practices, even with regard to the quantities certified and recommended by the consultant or resident engineer.