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Mega Projects
August 2, 2007

Big-ticket projects incur cost overruns
Twenty one big-ticket projects funded by foreign donor aid have incurred cost overruns totaling P36.8 billion (US$805 million) as of July 16 this year.

In a report, the National Economic and Development Authority (NEDA) attributed the cost overrun, which comprises 34% of the total project cost, to changes in projects' scope, high bids costs, increase in unit cost of labour, materials and equipment, foreign exchange movement and value-added tax and other taxes, among others.

It said of the total 21 projects, 10 projects being implemented by the Department of Public Works and Highways (DPWH) have cost overrun amounting to P13.01 billion.

These projects include among others the Arterial Road Links Development Project IV; the Arterial Road Links Development Project V; the Lower Agusan Development Project, Stage 1, Phase II; the Agno River Flood Control Project, Phase II-A and II-B; and the KAMANAVA Area Flood Control and Drainage System Improvement Project.

Another four projects, each undertaken by the Department of Transportation and Communications and the National Irrigation Authority, also incurred cost overruns of P6.97 billion and P4.42 billion, respectively.

These are the Laguindingan Airport Development Project, the New Iloilo Airport Development Project, the Selected Airports Development Project (New Bacolod-Silay), the Casecnan Multipurpose Irrigation and Power Project and the Bohol Irrigation Project, among others.

The P26.3 billion Subic-Clark-Tarlac-Expressway Project has also cost overrun of P6.48 billion; the Line 1 Capacity Expansion Project Phase II, P4.1 billion; and Batangas Port Development Project Phase II, P1.83 billion.

The Japan Bank for International Cooperation (JBIC) will be shouldering bulk of the cost overrun of P31.90 billion; China, P1.24 billion; Korea, P2.47 billion; and World Bank, P1.22 billion.

The NEDA said the Investment Coordinating Committee's approval will be required for projects incurring cost overrun of more than 20 per cent of its total cost while ICC's notation is needed for those with cost overruns of less than 20 per cent. PNA

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