PERFORMANCE AUDIT REPORT ON ROAD WORKS · 6.3 Conditions for transparency ... Controller and Aud tor General Dar es Salaam, March 2010. ... The aud t scope was n t ally l m ted to

�Performance Audit Report on Road Works

PERFORMANCE AUDIT REPORT ON ROAD WORKS

The Ministry of Infrastructure Development and TANROADS’ Performancein Controlling Road Construction Time, Cost and Quality

A REPORT OF THE CONTROLLER AND AUDITOR GENERAL OF THE UNITED REPUBLIC OF TANZANIA

March, 2010

Controller & Auditor GeneralNational Audit Office

Samora Avenue/Ohio StreetP.O. Box 9080,Dar es Salaam

TanzaniaTelephone: +255 22 2115157/8

Fax: +255 22 2117527E-mail: [email protected]

Website: http://www.nao.go.tz

�� Performance Audit Report on Road Works ��Performance Audit Report on Road Works

TABLE OF CONTENTS

PREFACE...................................................................................................................................................iii

ABBREVIATIONS................................................................................................................................... v

LIST.OF.TABLES.AND.FIGURES................................................................................................. vi

EXECUTIVE.SUMMARY.................................................................................................................vii

Chapter.One....................................................................................................................... 1

Introduction................................................................................................................................................ 1

1.1 Background............................................................................................................................... 1

1.2 Focusoftheconductedstudy.............................................................................................. 2

1.3 Auditscopeandperformance.............................................................................................. 3

1.4 Structureofthereport............................................................................................................ 6

Chapter.Two....................................................................................................................... 7

The.Road.Works.System........................................................................................................................ 7

2.1 Responsibilityandpolicy..................................................................................................... 7

2.2 Theoperativesystem............................................................................................................. 8

2.3 KeyplayersoutsideMoID/TANROADS...................................................................... 11

2.4 Additionaltimeandcosts................................................................................................... 13

Chapter.Three.................................................................................................................. 17

Time.variations.in.Road.construction.projects.......................................................................... 17

3.1 Original,revisedandactualtimeofroadprojects...................................................... 17

3.2 FactorsContributingtodelays.......................................................................................... 21

3.3 ConsequencesoftheDelays.............................................................................................. 25

Chapter.Four.................................................................................................................... 26

Cost.Deviation.and.Cost.Overrun.................................................................................................... 26

4.1 Introduction............................................................................................................................. 26

4.2 Originalandrevisedbudgetsandactualcosts............................................................. 26

4.3 Revisedbudgetandactualcosts....................................................................................... 29

4.4 Requestedandgrantedrequestforadditionalcosts.................................................... 30

4.5 Factorscontributingtocostoverrun................................................................................ 31

Chapter.Five..................................................................................................................... 34

Quality.Control.of.Road.Works........................................................................................................ 34

5.1 Generalstandardsforplanningandconductingroadworks.................................... 34

5.2 Thesystemofqualitycontrol............................................................................................ 35

5.2.1 The design phase .............................................................................................................. 35

5.2.2 The construction phase ................................................................................................... 35

5.3 Qualityassuranceinpractice............................................................................................. 37

5.4 TANROADSanditsengagedconsultants..................................................................... 41

5.5 Consequences......................................................................................................................... 42

Chapter.Six....................................................................................................................... 43

Conclusions................................................................................................................................................ 43

6.1 Organizationofthework.................................................................................................... 43

6.2 Managementandqualitycontrol...................................................................................... 44

6.3 Conditionsfortransparencyandselfimprovements.................................................. 45

6.4 Workingsystemstoaddressdelays,costoverrunandqualityproblemsofroadconstruction.............................................................................................................................. 45

Chapter.Seven.................................................................................................................. 47

Recommendations................................................................................................................................... 47

7.1 Institutionalimprovements................................................................................................ 47

7.2 Projectplanninganddesign............................................................................................... 49

7.3 Projectmanagementandqualitycontrol........................................................................ 50

REFERENCES.............................................................................................................................................. 52

APPENDICES.......................................................................................................................................... 53

Appendix 1: Genaral Information of the Audited Projects................................................. 54

Appendix 2: Organization Structure of the MoID................................................................ 55

Appendix 3: Organization Structure of TANROADS............................................................ 56

Appendix 4: Time Variations........................................................................................................ 57

Appendix 5: Reasons for the Delays.......................................................................................... 58

Appendix 6: Reasons behind revision of programme of works for each road project61

Appendix 7: Reasons behind cost increase for each road project audited.................... 62

Appendix 8: Partial Deductions of Liquidated Damages................................................... 62

Appendix 9: Cost Variations........................................................................................................ 65

Appendix 10: Reasons for Cost Overruns.................................................................................. 66

�v Performance Audit Report on Road Works vPerformance Audit Report on Road Works

PREFACE

The Publ�c Aud�t Act No. 11 of 2008, Sect�on 28 author�zes the Controller and Aud�tor General to carry out Performance Aud�t (Value-for-Money Aud�t) for the purposes of establishing the economy, efficiency and effectiveness of any expenditure or use of resources �n the MDAs, LGAs and Publ�c Author�t�es and other Bod�es wh�ch �nvolves enquiring, examining, investigating and reporting, as deemed necessary under the c�rcumstances.

I have the honour to submit to His Excellency the President of the United Republic of Tanzania, Dr. Jakaya Mrisho Kikwete and through him to Parliament the first Performance Audit Report on MoID’s and TANROADs’ Performance in managing road construction time, Cost and Quality of Road Works in Tanzania.

The report conta�n conclus�ons and recommendat�ons that d�rectly concern the Ministry of Infrastructure Development (MoID), Tanzania National Roads Agency (TANROADS) and Financiers on ensuring that our roads are completed on time, w�th�n set budgets and also �n requ�red qual�ty and standards.

The Ministry of Infrastructure Development and TANROADS have been given the opportun�ty to scrut�n�se the factual contents and comment on the draft report. I w�sh to acknowledge that the d�scuss�ons w�th the aud�tees have been very useful and construct�ve.

My office intends to carry out a follow-up at an appropriate time regarding actions taken by the aud�tees �n relat�on to the recommendat�ons �n th�s report.

In completion of the audit, the office subjected the report to the critical review of the following experts namely, Professor Theophil Rwebangira, Dr. Damas Nyaoro from the College of Engineering and Technology of the University of Dar-es-Salaam and Eng. K�mambo from K & Assoc�ates Profess�onals Serv�ces Ltd (KAPSEL), who came up w�th useful �nputs �n �mprov�ng the output of th�s report.

This report has been prepared by George Haule, James Pilly, Wendy Massoy, Michael Malabeja and Elizabeth Augustino under the guidance of Gregory G. Teu with support from the experts of the Swedish National Audit Office, Mr. Tony Angleryd and Ms. El�sabeth Carlsund. I would l�ke to thank my staff for the�r ass�stance �n the

preparation of this report. My thanks should also be extended to the auditees for their fruitful interaction with my office.

Ludovick S. L. Utouh Controller and Aud�tor GeneralDar es Salaam, March 2010

v� Performance Audit Report on Road Works v��Performance Audit Report on Road Works

ABBREVIATIONS

ADB - Afr�can Development Bank

CAG - Controller and Aud�tor General

CRS - Crushed Stones Aggregate

FIDIC - Federation International Des Ingenious Conseils

GOT - Government of Tanzan�a

KAPSEL - K & Assoc�ates Profess�onals Serv�ces Ltd

LGAs - Local Government Author�t�es

MDAs - M�n�str�es, Departments and Agency

MoID - M�n�stry of Infrastructure and Development

MLHSD - M�n�stry of Lands and Human Settlement Development

NCC - Nat�onal Construct�ons Counc�l

PFF - Price Fluctuations / Adjustment Formula

PWD - Public Works Department

SAI - Supreme Aud�t Inst�tut�ons

TACECA - Tanzan�a Assoc�at�on of C�v�l Eng�neer�ng Contractors

TANESCO - Tanzan�a Nat�onal Electr�c�ty Company

TANROADS - Tanzania National Roads Agency

TRA - Tanzania Revenue Authority

TSh - Tanzan�an Sh�ll�ngs

TTCL - Tanzan�a Telecommun�cat�on Company L�m�ted

UWSS - Urban Water Supply and Sewerage

VOP - Var�at�on of Pr�ce

LIST OF TABLES AND FIGURES

Tables

Table 3.1 : Total number of t�me rev�s�ons �n programme of works per stage

Table 3.2 Original and actual time for the ten examined projects

Table 3.3 : D�fference between rev�sed and actual t�me for road construct�on

Table 3.4 :Request for extensions of time granted to contractors byTANROADS (days)

Table 3.5 : Factors influencing delays and their frequencies (official version)

Table 4.1 : Revised budgets during the construction stage

Table 4.2 : Revised budgets during the construction stage (Billion Tshs)

Table 4.3 : Original budget and final Costs (Billion Tshs.)

Table 4.4 : Revised budget and final costs (Billions Tshs)

Table 4.5 : Requested and granted cost increase (Billion Tshs)

Table 4.6 : Effect of each category to cost increase of the road projects

Table 5.1 :Superv�s�ng, mon�tor�ng and �nspect�on act�v�t�es among the ten examined projects

Table 5.2 : Conducted evaluat�ons of the qual�ty of stud�ed road works

Figures

Figure 2.1 : Systems Graph show�ng relat�onsh�p between d�fferent actors

Figure 2.2 : Key stages �n the process of road construct�on

Figure 2.3 : Procedure for approv�ng a cla�m for add�t�onal costs

Figure 2.4 : Procedure for Extension of Project Timeframe

v�� Performance Audit Report on Road Works ixPerformance Audit Report on Road Works

EXECUTIVE SUMMARY

Road construction uses 13% of the national budget

Road sector is an important sector in the economy of any nation due to �ts �mpact on the welfare of �ts c�t�zens and the �nvestment �nvolved. Good qual�ty of road works �s �mportant for both safety and econom�c development reasons �n any soc�ety. Th�s �mportance �s propounded by the fact that the transport sector has a major role to play in the socio-economic development of a country as it provides access to markets, production, jobs, health, educat�on and other soc�al serv�ces.

Construct�on and repa�r of roads ut�l�zes a great part of government expenditure. The estimates for roads construction amounts to almost TSh. 800 b�ll�ons, equ�valent to 13% of the nat�onal budget. The M�n�stry of Infrastructure Development (MoID) and Tanzania National Roads Agency (TANROADS) have a major influence on the road construction industry as sponsors, regulators and procurers of road projects.

Problems with delays, cost overrun and quality

The road construct�on sector �n Tanzan�a �s ev�denced from many stud�es to experience mainly three kinds of extended problems.

One problem concerns time management, i.e. road works are not completed within the agreed time and benefits of the works to the public are delayed.

Second problem concerns cost overrun, �.e. add�t�onal but avo�dable costs to the dec�ded budgets for vary�ng reasons, and

A th�rd problem concerns the weaknesses �n qual�ty control system of the road works wh�ch results �nto early wear and tear necess�tat�ng repa�r and ma�ntenance.

Purpose of the audit

The purpose of the conducted performance aud�t study �s to assess whether the Government, through the MoID and TANROADS, has an effective system of road works in the country. This includes assessing the extent the system �s work�ng to m�n�m�ze delays, cost overruns and qual�ty problems on road works.

Audit scope

The aud�t scope was �n�t�ally l�m�ted to the post-contract stage of the 12 road construction projects which were completed in the financial years 2004/2005, 2005/2006 and 2006/2007. Due to failure in obtaining sufficient data for two projects, the examination in the Performance audit study had to be confined to the ten road projects.

Major findings, Conclusions and Recommendations

Audit findings

The major findings of the audit are as follows:

Extension of time is common in most road projects It is common with time revisions for the road works project plans. These time rev�s�ons have been done as requested by the contractors when com�ng across different problems which prompted them to request for the extension of time. For example from the selected ten projects, all of them were revised during the construction phase and seven (7) or two thirds at the design phase.

Review of extension of working days is granted as requested by contractors

MoID/TANROADS has a role to play when it comes to both reviewing and recommending extensions of time. The consultant is required to review the contractor’s extension of time request and give his recommendations. Also, MoID/TANROADs are required to review consultant’s recommendations and grant their own recommendations on time extension. However, MoID/TANROADS have approved almost all requests for the extension of time as requested by contractors and approved by the consultants. Our findings indicate that MoID/TANROADS and its consultants did not carry out any �ndependent analys�s to ver�fy the adequacy of the t�me requested.

Inadequate design results into cost overrunAccording to the project files, a number of factors causing cost increase were new design and new specifications, inadequate project management and/or quant�t�es and var�at�on of pr�ce factors. A huge part of the �ncreas�ng costs were related to m�s-calculat�on of some k�nd already �n the des�gn stage.

x Performance Audit Report on Road Works xiPerformance Audit Report on Road Works

Others factors like changed conditions, values; priorities etc. have also affected the outcome.

Quality control system needs to be improvedDespite the fact that TANROADS’ officials insist that the quality control system �s work�ng very well, our aud�t has found that there �s st�ll a need for �mprovement. The qual�ty control �n the des�gn phase �s obv�ously not effect�ve. There are also several problems �n the construct�on phase. Inspect�ons and mon�tor�ng are not conducted as planned, documentat�on �s not �n order and the engaged consultants are given conflicting tasks without any proper follow up by TANROADS.

ConclusionsWe conclude that the road works system in Tanzania is not managed efficiently and timely. Road works project plans and budgets are often revised, resulting in significant delays and cost overruns. Engaged consultants are determining the�r own schedule, have mult�ple roles and are not be�ng managed well. There �s ser�ous lack of �ndependent analys�s to ver�fy the adequacy of the time extension requested by contractors. Design works is not done properly and efficiently which resulted into redesigning leading to inevitable cost overruns. All put together �nd�cates that ten roads bu�lt and aud�ted were not produced �n a way that best serves the publ�c �nterest.

Management of Consultants by the client (MoID/TANROADS) is not adequate. There �s lack of mon�tor�ng mechan�sm of these consultants who are �nvolved �n plann�ng, preparat�on and des�gn and �n controll�ng act�v�t�es of the road construct�ons l�ke superv�s�on, mon�tor�ng, �nspect�ons and evaluat�on of the works done by contractors. There are obvious conflicts of interests in the �nvolvement of the same consultant �n several steps of the process. Qual�ty assurance system does not function well. The MoID/TANROADS inspections and evaluat�ons were obv�ously not able to detect certa�n weaknesses of the road works. All ten studied road projects were approved at the final inspections though most of all the roads started to undergo repa�r and �mprovement soon after the road have been approved. Sanct�ons were not properly used for addressing and correcting the frequent and extended delays, cost overrun and also qual�ty assurance problems.

Recommendations Basing on the findings and conclusions, we recommend the following to MoID/TANROADS:

• The Ministry of Infrastructure Development and TANROADS need to improve the process of the start-up activities, such as fulfilment of loan cond�t�ons and procurement processes.

• TANROADS need to have a budget covering the whole project period and strong budgetary control throughout the project. For each project it �s �mportant that clear roles and respons�b�l�t�es among var�ous part�es are set regard�ng t�me, cost and qual�ty �ssues. Moreover, measures need to be taken to enhance TANROADS capacity in identifying and manag�ng r�sks.

• Files must be kept in better order and MoID/TANROADS should establ�sh reg�ster to record the performance of contractors and consultants for each road project.

• MoID/TANROADS should, therefore, take proactive steps to reduce t�me and cost overruns by cont�nu�ng �ts efforts to �mprove coord�nat�on with utility companies (eg. TANESCO, DAWASCO) and other parties who are �nvolved �n the road construct�on s�tes.

• MoID/TANROADS should recruit and keep their own independent strateg�c competent profess�onals who w�ll act w�th full profess�onal�sm and integrity for monitoring and inspections even if MoID/TANROADS w�ll cont�nue engag�ng spec�al�sts or consultants for the actual follow-up of �mplementat�on of var�ous k�nds of work.

• Government should ensure that MoID/TANROADS have the leadership and capacity required to manage its functions. We recommend that the Government and the M�n�str�es concerned to set up a comm�ss�on which will be responsible for finding solutions to these shortcomings as this will be cost effective to make TANROADS properly equipped w�th human resources for �ts tasks.

• MoID/TANROADS should have a discussion on how far it should go �n superv�s�ng contractors. There are r�sks w�th too much �nvolvement by TANROADS. It may undermine and confuse the contractors’ �mplementat�on respons�b�l�t�es on one hand and the overs�ght role of

xii Performance Audit Report on Road Works xiiiPerformance Audit Report on Road Works

TANROADS on the other hand.

• MoID/TANROADS should specify the responsibilities for the consultants they use. If for instance a consultancy firm is engaged for design work, it’s advisable to clarify in the contract that the firm is financially responsible for mal practice.

• The Government should rev�ew the poss�b�l�ty of mak�ng v�tal road construct�ons documents be made ava�lable to the publ�c. Des�gns and final inspections could perhaps be made available or disclosed as soon as they are approved by the part�es �nvolved.

• The Government should give TANROADS clear instructions on how to manage consultants. Th�s �nclude the sett�ng up of a comm�ss�on to review and strengthen MoID/TANROADS’ integrity and professionalism and its performance of strategic functions, and examine transparency and accountab�l�ty �ssues

• The Government and TANROADS should deliberately take steps on the pre-contract stages of projects implementation to ensure that the designs are improved to reflect the reality on the ground and avoid unnecessary alterat�ons dur�ng the �mplementat�on stage. The M�n�stry of Infrastructure Development and TANROADS need to institute a mechanism to review the designs and estimates of the project as they are prepared by the consultants before they are �mplemented.

• TANROADS should significantly improve project management and qual�ty control system �n order to avo�d delays, cost overruns, to avo�d be�ng forced to conduct repa�r works and ma�ntenance serv�ces soon roads are opened to the traffic.

1Performance Audit Report on Road Works

Chapter One

Introduction1.1 BackgroundRoad sector is an important sector in the economy of any nation due to �ts �mpact on the welfare of �ts c�t�zens and the �nvestment �nvolved. Th�s importance is propounded by the fact that transportation sector has a major role to play �n the soc�o-econom�c development of a country as �t prov�des access to markets, production, jobs, health, education and other social serv�ces.

The Tanzanian Road construction industry is also a significant contributor to the nat�onal economy account�ng for 8 per cent of Gross Domest�c Product (GDP) and employ�ng more than 1.9 m�ll�on people.

The M�n�stry of Infrastructure Development (MoID) and Tanzan�a Nat�onal Roads Agency (TANROADS) have a major influence on the road construction industry as sponsors, regulators and purchasers of road projects. These road projects are ranging in size from repair works to large road projects. Road construction industry’s turnover is mainly funded by the Government and donors.

Construction and repair of roads utilizes a great part of government expenditure in the 2007/2008 budget. The estimates for roads construction amounts to almost TSh. 800 b�ll�on, equal to 13% of the nat�onal budget.1

The country’s road network is estimated to be 85,000 km long and includes trunk, regional, district, feeder and urban roads. Urban, district and feeder roads wh�ch are est�mated to be over 56,000 km are managed by Local Government Author�t�es (LGAs) wh�le reg�onal and trunk roads (29,000 km) are managed by TANROADS. In addition to this, some road networks which are in National Parks and Game Reserve Areas are managed by the Tanzania Nat�onal Parks (TANAPA) and other �nst�tut�ons.2

Irrespective of the importance and expenditure recorded above, the road construction sector is evidenced from many studies to experience extended problems. These problems are ma�nly grouped �nto three types.3 One problem

� 2007/2008 Budget of Tanzania

� MoID

� Documentation and studies from the Annual Roads Convention 2008 “Road Financing and investment: Opportunity and Challenges”.

2 Performance Audit Report on Road Works 3Performance Audit Report on Road Works

concerns t�me management, �.e. road works are not completed w�th�n the agreed time and benefits of the works to the public are delayed. Another problem concerns cost overruns, �.e. add�t�onal but avo�dable costs to the dec�ded budgets for vary�ng reasons. A th�rd problem concerns the qual�ty of the road works, �.e. rates of deter�orat�on are h�gher than ant�c�pated wh�ch �mpl�es early repa�r and ma�ntenance.4

Tanzania’s underdeveloped transportation network remains a key structural weakness. Nearly 80% of the populat�on st�ll l�ve �n rural areas, engaged �n agr�cultural act�v�t�es. These rural areas are not adequately served by the transportation system. Moreover, the country’s transportation system also serves to handle transit traffic for Tanzania landlocked neighbours including Burundi, Malawi, Rwanda, Uganda and Zambia.5

G�ven the �mportance of the road construct�on sector and the above ment�oned problems a Performance Audit (PA) study on the management of Road Works has been conducted by the National Audit Office of Tanzania (NAOT).

1.2 Focus of the conducted studyPurpose and audit questions The purpose of the conducted performance aud�t study �s to assess whether the Government, through the MoID and TANROADS, has an effective system of road works in the country, i.e. to what extent the system is working to m�n�m�ze delays, cost over runs and qual�ty problem on road works.

In short, the aud�t quest�ons used �n th�s study were as follows:(1) To what extent are problems with delays, cost overrun and lacking

quality of road constructions common in executed road projects �n Tanzan�a?

(2) What are the possible causes of delays, cost over runs and qual�ty problems of road construct�ons?

(3) Are there work�ng systems �n place to address delays, cost overruns and qual�ty problems of road construct�on?

� From the Work Plan, p. 3-4

� National Population Policy, M�n�stry of Plann�ng, Economy and Empowerment, 2006

Assessment criteria

For answering the above mentioned audit questions, the following criteria was used:

MoID and TANROADS ought to have a documented performance measurement system regard�ng t�me delays, cost overruns and lack�ng qual�ty for d�fferent steps of road constructions. TANROADS should also have a policy on how to deal w�th these �ssues.6

MoID and TANROADS should take all necessary actions to reduce problems of t�me delays, cost over runs and lack�ng qual�ty of road construct�ons. Th�s �mpl�es the follow�ng act�v�t�es:

• the contracts should be well des�gned when �t comes to �ssues l�ke phas�ng of works, requ�rements to the contractor, t�me frame, budget and qual�ty assurance system as well as respons�b�l�t�es and sanct�ons.

• the implementation process should follow a timely manner. Where alterat�ons to the or�g�nal contract are �nev�table, act�on should be taken to prevent undue t�me delays, cost overrun and lack�ng qual�ty.

• sanct�ons should be appl�ed when appropr�ate.

1.3 Audit scope and performance The audit objectiveThe objectives of the audit has been to study whether MoID and TANROADS are �dent�fy�ng problems of delays, cost over runs and qual�ty �n the system of road works and m�n�m�ze these problems w�th�n ava�lable act�v�t�es.

The PA study is focused on development projects that are administered from the TANROADS head office and MoID. The selection of development projects is based on the fact that the investment involved per project is relatively higher than for other road projects.

� Until December 2007 MoID was responsible for two of the studied road projects.


The aud�t scope was l�m�ted to the post-contract stage7 of the development projects that was completed in the financial years 2004/2005, 2005/2006 and 2006/2007.8 This selection covered 12 roads projects. However, the examination in the Performance audit study is based on the following ten road projects:9

• Butiama – Kyabakari Roadworks (phase 2)• Morogoro – Dodoma Road maintenance works• Mutukula – Muhutwe Road upgrading project• Nzega - Tinde - Isaka Road Upgrading Project• Songwe - Tunduma Road Rehabilitation Project • Tinde – Mwanza/Shinyanga Border Upgrading project• Muhutwe – Kagoma Road Upgrading project • Mwanza Region Transport Project• Shelu� – Nzega• Kyabakar� – But�ama

Design and methodsThe aud�t work was des�gned by d�v�d�ng the above aud�t quest�ons �nto sub-quest�ons. For performance of the study, the audit team used varying methods.

The formal p�cture of management and performance of the selected cases was studied from MoID/TANROADS documents. This information was further analysed through �nformat�on prov�ded by �nterv�ews w�th aud�tees and different stakeholders. Thus, the audit office has strived to get a picture as comprehens�ve, relevant and rel�able as poss�ble of the stud�ed road construct�ons.

Many k�nds of documents were rev�ewed �n order to get the formal p�cture of the agreement between MoID/TANROADS and the contractor and the performance of each road project. The following kinds of documents were rev�ewed:

• Contracts between MoID/TANROADS and contractors for roads construction as well as for MoID/TANROADS supervision of road construct�on

� Post contract stage refers to the per�od after s�gn�ng of contract to the complet�on of works

� This selection of road projects was executed during the period 2001–2007.

� Muhutwe – Kagoma Road and Mwanza Region Transport Project were the last two road projects that were administered by MoID until December 2007 when they were eventually handed over to TAN ROADS.

• Addenda (�nstruct�ons to approve changes) to the contracts • project documents such as progress reports, quarterly and annual

progress reports and final completion reports• Minutes for Project Site meetings • Planning documents such as MoID Strategic Plan 2007/2008–

2009/2010 and Tanzania’s Construction Industry Policy book, 2003.

Reports from other Supreme Audit Institutions (SAI’s) and other documents were also used in order to get a context and references for assessment of the provided picture of Tanzanian road construction projects.10

A lot of �nterv�ews were conducted for many reasons, ma�nly to

• confirm or explain information from the documents reviewed; • g�ve clues to relevant �nformat�on �n cases where �nformat�on �n the

formal documents was lacking or missing; and• provide context and additional perspectives to the picture from MoID/

TANROADS documents.

Interv�ews and d�scuss�ons were thus carr�ed out w�th representat�ves of • executives as MoID, TANROADS (including consultants), National

Construct�on Counc�l (NCC) and contractors• experts like professional Associations11 from the road sector or

un�vers�t�es �n Tanzan�a12

• development partners representing the financiers.13

Finally site visits were conducted on five of the ten studied road projects.14 The purpose of these visits was specifically on assessing conditions of the road works and also to gather ev�dence and op�n�on on qual�ty �ssues.

�0 PA – Managing Procurement, Road Construction and Restoration Contracts, a report by the Auditor General of Malta; Roads and Traffic Authority of New South Wales- Planning for Road Maintenance by the Audit Office of New South Wales, 1999; Country Roads Division audit report by the Board of Supervi sors of the country of Santa Clara.

�� Association of consulting Engineers of Tanzania (ACET); Contractors’ Registration Board (CRB); Tanza nia Roads Association (TARA); Tanzania Association of Civil Engineering Contractors (TACECA).

�� The College of Engineering Technology (COET) of the University of Dar es salaam (UDSM); Civil Engi neering consulting firms;

�� African Development Bank (ADB); World Bank (WB); Danish International Development Agency DA NIDA); Japanese International Cooperative Agency (JICA); European Union (EU)

�� Mwanza Town Roads; Muhutwe Kagoma; Mutukula Muhutwe; Songwe Tunduma


The MoID and TANROADS directly concerned with this report have been given the opportunity by the audit team to comment on the figures and information presented in this report. They confirmed the accuracy of the figures used and information presented. Also, external experts and scientists in the field have gone through methods, evidences and findings.

1.4 Structure of the reportThe rema�n�ng part of the report covers the follow�ng:

• Chapter two g�ves the account of the aud�t area w�th the construct�on pol�cy, system set up, procedure for approving time extension and add�t�onal costs and the actors.

• Chapter three, four and five present the findings on time variations, cost overrun and qual�ty respect�vely.

• Chapter six provides conclusions and chapter seven narrates recommendat�ons wh�ch can be �mplemented �n order to �mprove the s�tuat�on.

Chapter Two

The Road Works System

2.1 Responsibility and policyThe MoID has the respons�b�l�ty for �nst�tut�ng the system for road construct�ons. The MoID �s also respons�ble for management of the system. Th�s �mpl�es overall act�v�t�es as formulat�on of pol�c�es, plans and strateg�es, as well as development of Construct�on �ndustry, transport, commun�cat�ons and meteorology serv�ces.

According to the Establishment Order GN No. 293 2000 of TANROADS under the Executive Agencies Act, 1997, the role of MoID is to concentrate on �ts pr�mary respons�b�l�t�es of pol�cy formulat�on, strateg�c plann�ng and regulat�on of roads sub-sector.

TANROADS should take over from the MoID the day to day management of the roads and ferr�es �n Ma�nland Tanzan�a and operate as a sem�-autonomous Executive Agency. TANROADS thus enters into contracts with Contractors and Consultants �n �ts own name.15 The MoID was st�ll d�rectly adm�n�ster�ng some of the road projects until December 2007 when they eventually were handed over to TANROADS.

The Construction Policy guides roads constructions. The following objectives stipulate the government’s intentions on the road construction sector:16

• To develop an efficient and self sustaining roads network that is capable of meet�ng the needs for construct�on, rehab�l�tat�on and ma�ntenance of civil works for trunk, regional, district and feeder roads network;

• To ensure efficient and cost effective performance of the construction �ndustry that w�ll guarantee value for money on constructed fac�l�t�es in line with best practices; and

• To �mprove co-ord�nat�on, collaborat�on and performance of the �nst�tut�ons support�ng the development and performance of the construct�on �ndustry.

�� The MoID was still directly administering some of the road projects until December 2007 when they eventually were handed over to TANROADS

�� Tanzania’s Construction Industry Policy, 2003


2.2 The operative systemTANROADS enters into two Performance Agreements each financial year: one with the Roads Fund Board for the provision of road maintenance and the other w�th the M�n�stry of Infrastructure Development for the prov�s�on of project management services for road projects funded by Government and Donor Agenc�es. An over v�ew�ng graph of the system set up �s shown �n figure 2.1. Figure 2.1: Systems Graph showing relationship between different actors

MoID and TANROADS are responsible to liaise with the authorities responsible for publ�c ut�l�t�es to ensure that construct�on works �s not �nterfered w�th by delayed relocation of the utilities. The sources of funding for the projects were from governments own sources, funding by development partners or joint

financing by the two sources. The Treasury is responsible for coordinating the fund�ng.

Figure 2.2: Key stages in the process of road construction The process �nvolves a number of var�ous steps as deta�led hereunder:

Projectplanning

TANROADS/MoID strategy

Consultants, interested governmentalinstitutions

• Feasibility study• Detailed engineering design• Preparation of Tender Documents

Design review by MoID/TANROADS

Procurementregulations

Packaging and development of contracts

Application for funding

Evaluation of tenders

Call for tenders

Award of tenders (lowest evaluated) meeting

Contractvariations

Quality control of works

Extension of time frame

Payments to contractors

Completionworks

Payment of retentionmoney

Compilation of Evaluationreport

Receipt of tenders

Projectimplementation

Consultants, interested governmentalinstitutions and utilities

Fundingapproved

TANROADS

Contractors

Public utilities e.g. TANESCO, Water

and Sewerage Authorities, and

TTCL

MoID

Consultants

Donors

Treasury

FIN

AN

CIN

GERB

CRB

NCC

PPRA

RE

GU

LAT

OR

Y A

UT

HO

RIT

IES

Parliament

LGAs

OTHERSACET, TARA,

UDSM


Key implementing actors within TANROADSAt TANROADS, two key directorates deal with the implementation of projects, the directorate of projects and the directorate of maintenance. This audit focused mainly on the projects that fall under the directorate of projects.

Directorate of ProjectsTh�s D�rectorate has the overall respons�b�l�ty for the del�very of road and bridges construction projects set out in the annual plans. At the national level, Project Managers are responsible to the Director of Projects for the delivery of projects assigned to them. The Project Managers are assisted by senior project engineers and project engineers. The assignments of the projects to the various Project Managers are on the basis of the sources of finance. These sources might be Government of Tanzania, mult�lateral17, b�lateral18, Pr�vate or comb�nat�ons of these sources.

At the regional level, Project Engineers in the “Projects Section” are responsible for monitoring of major projects that are not delegated from the headquarters, being outside the limits of delegation. For the purpose of the Public Procurement Act 2004, this Directorate is the “user” directorate for all major works that are directly procured at TANROADS’ headquarters.

Directorate of MaintenanceThe role of this Directorate is to implement the annual maintenance plan; �.e. that the roads of all types are be�ng ma�nta�ned �n accordance w�th the guidelines set down and; that maintenance contracts are providing value for money.

This Directorate takes care of the products of the Directorate of Projects, �.e. ma�nta�n�ng the newly bu�lt or upgraded roads �n accordance w�th the agreements on road maintenance. This is further described in chapter five.

�� IDA, AfDB, EU and Nordic Fund

�� NORAD, DANIDA, and JICA

2.3 Key players outside MoID/TANROADSBesides MoID and TANROADS, there are other important actors in the audited road construction projects.

The consultantsMoID/TANROADS hire consultants who are responsible for preparing designs and for supervising the implementation of the road works. MoID/TANROADS �s of course respons�ble for all �ts tasks, also even when they are conducted by consultants. This means that MoID/TANROADS is also responsible for superv�s�ng and mon�tor�ng the work done by the consultants.

Consultants are engaged in all phases of road projects. They are for instance engaged �n mak�ng des�gns as well as safe guard�ng the�r qual�ty. They are also engaged in supervision of construction work; serving the interest of clients (MoID/TANROADS) as general supervisors and advisors throughout the whole construction periods of road projects. In that capacity they are expected to safeguarding the correct implementation of the designs, while keep�ng the cost low. The�r superv�s�ng dut�es �nclude mon�tor�ng of the contractors act�v�t�es on s�te, perform�ng d�fferent tests to check the qual�ty of the works. They are also expected to examine and approve the contractors cla�m for hav�ng the des�gns, the plans or the budgets changed. In add�t�on, they prepare progress reports and final accounts of the projects. Moreover, consultants are also engaged in intermediate and final inspections or evaluat�ons.

The same consultant or at least the same consulting firm may in fact be involved in all functions and activities mentioned above. The consultant’s roles and tasks are regulated in a contract between TANROADS and the consultant �n accordance w�th the Publ�c Procurement Act.

The contractorsMoID/TANROADS procures contractors who are responsible for the actual construct�on of the roads. They manage people, mater�als and equ�pment �n order to be able to produce the �ntended results. Contactors enter into contracts with the client (MoID/TANROADS) who is responsible for pay�ng them. Contractors perform the�r dut�es under the superv�s�on of the consultants.


Utility Bodies These are ent�t�es respons�ble for prov�s�on of publ�c ut�l�t�es. They �nclude: Urban Water Supply and Sewerage (UWSS) which are responsible for water supply and waste water disposal; TANESCO which is responsible for generation and supply of electricity; and TTCL who deals with landline telephone serv�ces. Somet�mes, espec�ally when the road works are �n urban areas, these ut�l�t�es need to be relocated to g�ve way to the contractors to do their job. Arrangements for relocation must be done prior to contractors’ mob�l�zat�on at s�te to avo�d construct�on delays.

Ministry of Lands and Human Settlement Development (MLHSD)The MLHSD �s respons�ble for commun�cat�ng w�th land owners when there �s a need for relocat�ng them. The m�n�stry normally collaborates w�th the Local Government Author�t�es wh�ch are close to the land owners.

Regulatory Authorities Regulatory Authorities are government’s watch dogs who monitor professional conducts of the parties involved in the construction projects. They include: Contractors Registation Board (CRB), who authenticate and monitor professional conduct of the contractors; Engineers Registration Board (ERB), who certify the engineers and engineering consulting firms and keep an eye on the�r profess�onal conduct.

Local Government Authorities The Local Government Author�t�es (LGAs) come �nto play when there �s a need to relocate people and arrange for compensat�ons to g�ve way to the project.

Financiers and othersFinanciers provide funds for implementation of the project. They include the Treasury and Development Partners. The most important issue on project financing is the timeliness of approvals and disbursement of funds to the beneficiaries since delays may paralyse the project delivery.

Other stakeholders with vested interests in the road sector include Assoc�at�on of Consult�ng Eng�neers – Tanzan�a (ACET), the Assoc�at�on of Civil Engineering Contractors, Tanzania Roads Association (TARA) and the University of Dar es Salaam (UDSM). These entities share a lot of information dealing with road projects construction directly.

2.4 Additional time and costsThe contract documents spell out r�ghts and respons�b�l�t�es of var�ous part�es involved in the contracts. Responsibilities for additional costs in these projects can be summar�zed as follows:

Roles and responsibilitiesThe client, MoID/TANROADS, is generally responsible for additional costs of executing the works in a project whenever the reasons for additional costs are beyond the control of the contractor and the superv�sor.

The contractor has the respons�b�l�ty of del�ver�ng the works on t�mely and �n accordance with specifications. If the works do not meet set standards and specifications, they are supposed to be rejected until adequate remedies have been carried out at the expense of the contractor.

The consultant �s only l�able to pay compensat�on to the cl�ent ar�s�ng out of or �n connect�on w�th the agreement �f �t �s establ�shed aga�nst h�m that he d�d not exercise reasonable due care and diligence in performing his obligations. The consultant’s liability can be insured upon request by the client and the cost of such insurance is at the expense of the client.

Implementation of a road construction project is guided by the programme of work wh�ch �s prepared by the contractor and approved by the superv�sor (consultant). Depend�ng on the c�rcumstances that ar�se dur�ng the implementation of the project, the programme of work may be revised from t�me to t�me w�th or w�thout affect�ng the agreed complet�on date and the project budget (i.e. by extending the project duration).

When it comes to responsibility there are mainly four categories of extension of t�me and cost overrun:

a. One category is when there is an extension of time due to the default by the contractor though the or�g�nal agreement between the cl�ent and the contractor is still valid. This extension is a responsibility for the contractor – who has s�gned the agreement �n the contract – to pay the l�qu�dated damage.

b. Another category is when extension occurs within the origin formal contract cond�t�ons though the contractor, for good reasons, can cla�m that the real cond�t�ons have been changed �n a way that was not pred�ctable. If the contractor for good reasons can cla�m that the changed cond�t�ons are caused by the cl�ent, the cl�ent w�ll be responsible to pay for the extension.


c. A third category is when there is an extension caused by a changed procurement and contract. Th�s �s also caused by the cl�ent who w�ll be responsible to pay for the extension.

d. A fourth category �s caused by cond�t�ons that no one can be blamed for. This is force majeure.

Contractually, alterat�ons m�ght also be compared to the or�g�nal programmes or the rev�sed and approved program. Dev�at�ons from the rev�sed programmes without approval of time extension are contractually not acceptable. Non-complet�on of the works w�th�n the agreed t�me frame thus formally �s assumed to result �nto sanct�ons be�ng �mposed to the contractors and are requ�red to pay the client (MoID/TANROADS) for every additional day beyond the agreed complet�on date.

Procedures for approving a claim for time extension and additional costsThe procedure for approv�ng of add�t�onal cost covers the follow�ng steps:

1. Contractor ra�se cla�m to consultant. 2. Consultant evaluates the cla�m and makes recommendat�on to the

client (normally MoID/TANROADS) to justify the genuinity of the cla�m.

3. Employer after rev�ew�ng and assess�ng the genu�n�ty of the rev�ewed cla�m by the consultant after sat�sfy�ng themselves the approved claim is forwarded to the financier (If it is donor funded project to seek for approval) but if it is financed by GoT then, the claims will be forwarded to the TANROADS Tender Board for approval.

4. After approval, either from the Tender Board or Donor, MoID/TANROADS will prepare Addendum for variation. The addendum should be s�gned by the cl�ent, the contractor and the representat�ve of the Donor if it is donor funded project.

5. Lastly, after s�gn�ng the addendum, the document �s normally returned to the financier to be used as a basis for payment of add�t�onal cost.

Figure 2.3: Procedure for approving a claim for additional costs

MoID/TANROADSManagement requests

authorization for variation to Tender

Board

MoID/TANROADSManagement instructsSupervisor to prepare

details of variation

Applicationof newrates

Applicationof existing

rates

New rates recommendedby Supervisor

Contractorsuggests the

new rates

Supervisor checks

rates

Variation works recommendedby Supervisor

No Objection is granted by the

Financier

Donorfunded

Locallyfunded

Variation is approved

End


Figure 2.4: Procedure for Extension of Project Timeframe Chapter Three

Time variations in Road construction projects

Th�s chapter prov�des deta�ls on the t�me var�at�ons �n road construct�on projects compared to original or revised time. Roads can be finalised before set t�me, but �n most cases t�me var�at�ons means delay.

Delays may be measured in different ways. One can for instance measure delays �n relat�on to or�g�nal set t�me, regardless of whether th�s has been altered by later dec�s�on. It can also be measured �n relat�on to rev�sed t�me set; and if several revisions are made, in relation to the final revised time set.

The content �n th�s chapter �s presented �n the follow�ng order: • Time variations among the examined road projects • Causes to the t�me var�at�ons • Consequences of delays

3.1 Original, revised and actual time of road projectsIn a single road project the time for completion of a road construction is stated in the contract between MoID/TANROADS and the contractor. This time might be revised by MoID/TANROADS once or a couple of times depend�ng on d�fferent reasons.19 The t�me rev�s�ons m�ght occur at d�fferent stages of the project implementation. But most of the time revisions have been experienced at the mid of the project implementation and towards the end of the project.

S�nce th�s aud�t �s a�med at analyz�ng the system for the management of road projects, delays of road constructions are analyzed related to original as well as revised time. In projects where the time was revised more than once the measurement of delays �s related to the last rev�s�on of t�me.

�� The decision to revise the completion time is done by TANROADS upon receiving the contractor’s requested which normally reviewed by Consultants and later on passed to TANROADS for decision. See sect�on 2.4.3.

Contractor requests extension for the

completion of worksto supervisor

Supervisor analyses the reasons given

Supervisor’sstance

Does not support

extension

Supportsextension

Supervisorinforms the contractor

End MoID/TANROADStender board

approves extension

Contractor notified of terms of extension

End

Supervisorrecommends to

MoID/TANROADS onperiod of extension


Decisions of revised time might imply delays for road construction projects. The �mpact on delays can be referred to both the frequency of t�me rev�s�ons and the extent of time revisions.

Time revisions According to project and contract documents between MoID/TANROADS and the contractors, it is common with time revisions for the project work plans. These t�me rev�s�ons have been done as requested by the contractors when com�ng across d�fferent problems wh�ch prompted them to request for the extended time. This is illustrated in table 3.1 below.

Table 3.1: Total number of time revisions in programme of works per stage

Road ProjectNumber of revised plans Total Number of

revisionsDesign stage

Construction stage

Somanga – Matandu 0 1 1Kyabakar�–But�ama 0 1 1Mwanza Town 0 2 2Shelu� – Nzega 1 1 2Tinde–Shinyanga /Mwanza 1 1 2Morogoro–Dodoma 1 1 2Nzega–T�nde–Isaka 1 1 2Muhutwe–Kagoma 1 2 3Songwe–Tunduma 1 3 4Mutukula–Muhutwe 1 4 5All road projects 7 17 24

Source: Project Files and Contract documents of the ten road projects

aud�ted20

The table above shows that all projects had undergone time revisions of their work programmes. All of them were rev�sed under the construct�on phase and two th�rds dur�ng the des�gn phase.

Delays in relation to the original plan

The work programme �s a mutually approved part of the contract between MoID/TANROADS and the contractor. The work program outlines the activity plan and set date for the start and completion of the road project.

�0 Reasons for extension of time See Appendices 6 and 10

An assessment of delays �n road construct�ons can be based on four d�mens�ons of t�me per�ods.

• One dimension is the original time period for completion as stated in the contract between MoID/TANROADS and the contractor.

• Another d�mens�on �s the rev�sed t�me wh�ch �s the t�me per�od, according to MoID/TANROADS decisions on revised time.

• A th�rd d�mens�on �s the actual t�me per�od for complet�on of the road construction project.

• A fourth d�mens�on – �f that occurs – �s the add�t�onal t�me after the rev�sed t�me for complet�on.

The d�fference between or�g�nal t�me and actual t�me �s shown �n Table 3.2.

Table 3.2 Original and actual time for the ten examined projects

Road projectTime to complete the road

Difference between original and actual time

Planned months Actual months Months Percentage Kyabakar� – But�ama 16 17 1 6 Somanga – Matandu 30 32 2 7Shelu� – Nzega 31 36 5 16Morogoro – Dodoma 24 32 8 33 Mutukula – Muhutwe 34 46 12 35 Nzega – T�nde - Isaka 30 42 12 40 Tinde – Shinyanga/Mwanza 30 47 17 57 Songwe – Tunduma 24 39 15 63 Muhutwe – Kagoma 12 23 11 92 Mwanza Town 30 58 28 93 Total 261 372 111 43

Source: Data from project files and reports from MoID/TANROADS.

As seen in the Table 3.2 above, all projects have exceeded the original set time. The extension is quite significant for most projects. This was also the case for those projects (Somanga–Matandu and Shelui–Nzega) that were completed after a decision to reduce the scope and ambition for the projects. If those two projects are disregarded it means that the actual time exceeded the contracted and originally set plan by more than fifty percent (51%).21

�� The original set time for the remaining eight projects were in total 215 months. It took 110 additional months to finalise them.


Time variation in relation to the last revised planThe p�cture �s thus somewhat d�fferent when the actual t�me (calendar months to build the road) is compared to the last revised time approved by MoID/TANROADS. In table 3.3 the actual time is compared to the last revised time for each one of the studied road construction projects.

Table 3.3: Difference between revised and actual time for road construction

Contract NameApproved and actual total production time in months

Difference betweenrevised and actual time

Last revision Actual Months Percentage

Nzega – T�nde – Isaka 54 42 -12 -22 Kyabakar� – But�ama 19 17 -2 -11 Morogoro – Dodoma 32 32 0 0Shelu� – Nzega 36 36 0 0Somanga – Matandu 32 32 0 0Tinde – Shinyanga/Mwanza 47 47 0 0Mutukula – Muhutwe 43 46 3 7 Songwe – Tunduma 35 39 4 11 Muhutwe – Kagoma 17 23 6 35 Mwanza Town 40 58 18 45 Total 355 372 17 6%

Source: Data from project files and reports from MoID/TANROADS.

As seen (Table 3.1) revisions were done in all projects (sometimes two t�mes or more dur�ng the construct�on stage) dur�ng the overall process. The rev�s�ons were often done �n the m�ddle or later stages of the construct�on phase; still it’s common with deviations. In some cases the differences were quite significant.

Only in four out of ten projects the revised plan was followed. Two projects were ready ahead of t�me, and four were delayed. Th�s may be �nterpreted as an �nd�cat�on of shortcom�ngs �n plann�ng and mon�tor�ng.

Review of extension of working daysAs described (section 2.2–2.3) MoID/TANROADS has a role to play when it comes to both reviewing and recommendation of time extensions. Table 3.4 shows the extensions of time granted to contractors by MoID/TANROADS as per the�r request.

Table 3.4: Request for extensions of time granted to contractors by TANROADS (days)22

Road projectRequest for extension of

time

Reviewed and recommended time

Granted by MoID/TANROADS

Muhutwe – Kagoma 450 450 450Shelu� – Nzega 175 175 175Kyabakar� – But�ama 58 58 58Mwanza Town 180 180 180

Somanga – Matandu 45 45 45

Mutukula–Muhutwe 175 175 175

Nzega – T�nde – Isaka 720 720 720

Morogoro – Dodoma 228 228 228

Tinde – Shinyanga/Mwanza 312 312 312

Songwe – Tunduma 324 324 324

Total 2667 2267 2267 (100%)

Source: Information from the project files and contract documents23

According to the table above, MoID/TANROADS have approved almost all requests for the extension of time as requested by contractors and approved by the consultant. The figures above indicate that MoID/TANROADS and its consultants d�d not carry out any �ndependent analys�s to ver�fy the adequacy of the t�me requested.

3.2 Factors Contributing to delaysKnowledge and understand�ng about factors contr�but�ng to the delays �s of importance for possibilities of preventing and limiting delays. Of the same reason �t �s �mportant to know where and when �n the road construct�on procedures the problems occur and how they affect the procedures for the road construct�ons. Thus problems connected w�th the delays have been examined for the ten studied road construction projects.

�� There are six working days per week. However, all weeks do not consist of six full workings days and add�ng to that there are vacat�ons. In short, calendar t�me �n days or months �s not the same as work�ng t�me. 365 calendar days m�ght for �nstance mean less than 300 days of work�ng t�me. �� Reasons for extension of time See Appendices 6 and 10


Though delays related to the or�g�nal t�me were dom�nat�ng, delays related occur to both the original and the revised time for completion. The examination of factors contr�but�ng to delays has thus covered dev�at�ons from both the or�g�nal and the rev�sed complet�on t�me. Th�s �mpl�es that reasons for approval of revised completion time also have been examined.

The examination of factors contributing to delays is based on the projects files as well as interviews with MoID/TANROADS officials – including the consultants – and the contractors. In most of the projects extension of time has been approved based on a number of reasons.

Factors influencing the completion time and the responsibilities There are many factors influencing the completion time of road constructions. The responsibility, however, is always the Government’s and its authorities or the contractor’s, if problems occur. The responsibility of the Government and �ts author�t�es �mpl�es reasons caused by the Government author�t�es or other c�rcumstances that the contractor cannot be respons�ble for, l�ke force majeure, e.g. earth quake, heavy rains or flooding.

MoID/TANROADS (with consultants) is responsible for planning and preparat�on, �nclud�ng the qual�ty of the des�gn or redes�gn works, conducted before s�gn�ng of the contract. The contractor can thus take a proper conducted plann�ng and preparat�on for granted, before s�gn�ng of the contract. Delays caused by MoID/TANROADS can be affected by having to redesign part of a project or to somewhat change the scope of the quantities required. It could also be caused by shortcomings in MoID/TANROADS management, l�ke delayed �nformat�on, late dec�s�ons, poor superv�s�on and mon�tor�ng etc. Delays could occur as a result of other factors, l�ke late payment by the financiers, processing time for approval of tax exemptions or force majeure.

Lack of coord�nat�on w�th local author�t�es may also be a factor that causes delay. Some ut�l�t�es are requ�red to be relocated before the start of the construction projects (telephone lines, water piping etc.) MoID/TANROADS is not in itself responsible for this. However in relation to the contractor MoID/TANROADS have to take a responsibility for this situation by liaising with the M�n�stry of Land and Human Settlement wh�ch �s respons�ble for relocat�on.

The contractor also has respons�b�l�t�es. The contractor �s respons�ble for conduct�ng the work accord�ng to the appl�cable standards and the requirement set by the design and the contract. Insufficient skills or lack of expertise competence of staff is an example of a factor that may hamper the contractor’s performance and which the contractor is responsible for. Lack

of capac�ty �n mob�l�s�ng plants and equ�pment �s another. Poor management by the contractor is a third example, such as a poorly developed system for superv�s�ng and control.

Factors influencing the revision of plans and causing delaysIn the table below the factors explicitly referred to by MoID/TANROADS as mot�ves �n the documents for rev�s�ons of plans are presented.

Table 3.5 Factors influencing delays and their frequencies (official

version)

FACTORS INFLUENCING DELAYNUMBER OF PROJECTS CONCERNED Ma�n categor�es Sub categor�es

Redesign/new specifications 9• Change �n scope of work 4

• Weaknesses in design 3• Add�t�onal des�gns 9

Changes in scope without redesign 10• Add�t�onal quant�t�es 10

• Other changes 3

Management issues2• Inadequate projects’ supervision 1

• Inadequate Contract management 1

Contractors’ factors

1• Lack of skills of the contractors’ personnel 1

• Lack of adequate equ�pment 1• Contractor’s work program miscalculations 1

Other factors (not influential by TANROAD)

4• Force majeure (mainly heavy rains) 1• Late payments/processing time for tax

exemption. 3

Source: Information from the project files and contract documents

As seen above in nine out of ten projects TANROADS/MoID or the Government is seen as fully responsible for the delays. Only for one project the contractor �s partly blamed as a mot�ve for one of the two rev�s�ons done and the delay caused. But even in that project the causes were mainly considered of being beyond the contractor’s control (the main factors were late payments to the contractor, redes�gn and changes �n scope w�th�n the g�ven scope).

In general, the dom�nat�ng causes were changes �n scope (add�t�onal quantities of various items were required to fulfil the design) or to make some


kind of redesign, from wishes to add new objects or things to the originally approved design. As seen it’s obvious that shortcomings on behalf of the contractor are not decisive factors for MoID/TANROADS revisions. It’s also rare that MoID/TANROADS refer to shortcomings in its own management as a cause for rev�s�on.

One reason for changing design and scope is the time lag between the design stage and the construction stage. Among the examined projects, it was qu�te common that �t took 3-6 years after a des�gn had been approved unt�l the construct�on work actually started. Dur�ng those years, cond�t�ons or preferences may have changed, result�ng �n new demands etc. Another potential explanation is of course that the original design was not properly done or safe guarded.

According to MoID/TANROADS officials, the many old designs made it necessary to rev�ew the des�gn before �ts �mplementat�on. Accord�ng to the same officials, even though they know that there are going to be changes after the des�gn, they allow contractors to start the work. Th�s �s because of the often long t�me �t took to secure fund�ng.

So far it has only been the officially stated causes to the revisions that have been presented. To get a more comprehensive picture, the Audit office has also asked the various stakeholders (officials at MoID/TANROADS, superv�sors or consultants and staff among the contractors). They share most of the official version presented above, but they all claim that it does not prov�de a full p�cture of the causes.

According to the stakeholders there were frequent delays caused by MoID/TANROADS less efficient management. Unofficially, they also share the view that contractor’s lack of efficiency was a common cause to delays; and – just as for MoID/TANROADS shortcomings – more common than officially documented.

Moreover, all stakeholders stated that lack of coordination between MoID/TANROADS and local authorities was a common cause to delays.24 Impact of the causes in terms of additional work days Based on MoID/TANROADS own calculation almost all of the extra working days approved by the rev�s�ons was caused by redes�gn and changes �n scope w�thout redes�gn. A m�nor part (4%) was l�nked by late payment to the contractor, and another small part (4%) was stated to be caused by poor

�� Interv�ews w�th d�fferent stakeholders

management ´by the contractor. Heavy ra�ns was stated to have even less (2%) �mpact on the add�t�onal work�ng days requ�red as a result of the rev�sed plans.

3.3 Consequences of the DelaysDelayed completion of the road construction projects implies different kinds of immaterial and material losses and delayed benefits for the society. The soc�ety �s los�ng the opportun�ty of hav�ng new roads wh�ch would be able to reduce accidents, traffic delays as well as vehicle wear and tear. In material terms �t �s also poss�ble to calculate on the losses.

Calculated capital costs Delays involve capital costs. This means that a proportion of the final costs are caused by the longer than planned duration time. With a calculated �nterest rate of 18% that means a total cap�tal cost of around 31 b�ll�on Tshs or 13 % of the total final cost, just due to the extended time in relation to the or�g�nal plans.25 These costs are not caused by anyth�ng else than the t�me factor �tself.

Additional administrative costs for TANROADS Due to the extended processing time, TANROADS and its consultants need to spend more time than expected to conduct the work required. For these ten projects, it has been calculated that these additional costs are close to 5 b�ll�on Tshs.26

Additional costs for the society in a long term perspectiveThe calculated cap�tal and add�t�onal adm�n�strat�ve costs for only these ten projects is about 36 Billion Tshs. In a longer perspective, covering a greater number of projects, these costs will naturally be much higher. Still, the cost for the society of not having the roads built in time is likely to be significantly higher than these figures. Better roads will reduce transport costs and st�mulate the economy. It w�ll ensure safe l�fe and reduce acc�dents. It has not been within the scope of the audit to calculate on these “savings or cost-benefits”. But in most countries which conduct such calculations it is obvious that delays or poor t�me management are costly, espec�ally for the soc�ety as a whole �n a long term perspect�ve.

�� In total the projects exceeded the original plan by 111 months and the revised plan by 17 months (see table 3.2 and table 3.3). With a calculated interest rate of 18% that means a total capital cost of around 31 Billion Tshs or 13 % of the total final cost, just due to the extended time in relation to the original plans. In relation to the rev�sed plans the cap�tal cost �s marg�nal or 0.4 B�ll�on Tshs or 2 % of the total costs m�nus the last rev�sed budg-ets.

�� See appendix 10 for more detailed information.


Chapter Four

Cost Deviation and Cost Overrun

4.1 Introduction Cost overrun is defined as exceeding of the Contract sum, i.e. the agreed budget sum between the contractor and the employer, MoID/TANROADS. The contract sum is specified and based on a number of concerned items �nclud�ng the rate for each �tem and the total amount of requ�red money for the project. Linked to the contract sum is also a formula for updating the rates, i.e. prices per unit. The updating of rates is decided by MoID/TANROADS based on adv�ce from �ts superv�sors (superv�s�ng consultants).

The rev�sed budget �s reached when the or�g�nal budget �s added by other cost elements wh�ch were not �ncluded when prepar�ng the or�g�nal budget. The rev�sed budget m�ght occur for many reasons and at d�fferent stages of the project implementation. But frequent revisions have been experienced at the mid of the project implementation and towards the end of project completion. In a single road project, budget can be revised more than once depending on the nature and reasons for the rev�s�on of the budget.

Accord�ng to the contract documents, whenever there �s an �ncrease of the quantities/volume of materials at site (when the project is in construction stage), contractor �s supposed to �nform the cl�ent through the consultant who is supervising the construction of the project on behalf of MoID/TANROADS. Then the consultant �s supposed to rev�ew the request and re-measure the quantities on question and inform the client on the matter. Then MoID/TANROADS can review the calculations made by the consultant and then, if they are �n good order, they can accept the quant�ty �ncrease.

4.2 Original and revised budgets and actual costs M�nor changes can be approved w�thout budget rev�s�ons, but �f the requests are huge or the total changes done or planned are many, �t �s requ�red to adjust the budget. In short, the number of revised budgets is an indication of how often major changes with cost consequences have occurred in the projects.

Almost all projects had their budgets revised during the construction stage, as seen �n the table below.

Table 4.1: Revised budgets during the construction stageRoad Project Budget revisions Shelu� – Nzega 0

Somanga – Matandu road 1Muhutwe – Kagoma 1Kyabakar� – But�ama 1Mwanza Town 1

Morogoro – Dodoma 1Mutukula – Muhutwe 2Tinde – Shinyanga /Mwanza 3Nzega – T�nde – Isaka 4Songwe – Tunduma 4

Source: Project Files and Contract documents

As shown above, four out of ten projects were revised two times or more. Only one project did not have its budget revised (even though that project got its time plan revised by five months).

The total amount of added fund�ng through the rev�sed budgets was qu�te significant, as seen in the table below.


Table 4.2: Revised budgets during the construction stage (Billion

Tshs)

Road ProjectOriginal budget

Last revised budget

Change (%)

Shelu� – Nzega 20.7 20.7 0Somanga – Matandu 12.3 12.4 1Songwe – Tunduma 10.2 11.2 10Kyabakar� – But�ama 1.7 2.0 11Mwanza Town. 16.4 19.0 18Mutukula – Muhutwe 13.8 17.6 28 Muhutwe – Kagoma 4.4 6.2 41Morogoro – Dodoma 25.3 41.0 62Tinde – Shinyanga/Mwanza 28.3 53.2 88Nzega – T�nde – Isaka 20.6 41.6 102 TOTAL 153.7 223.9 46


As seen above, the calculated cost for the ten projects had increased by close to 50% from the original budgets. For three projects, the changes were huge �n both relat�ve and absolute terms.

Original budgets and actual costs Cost var�at�on can be measured �n var�ous ways, and below �t �s measured by compar�ng actual costs w�th the or�g�nal contract sum.

Table 4.3: Original budget and Final Costs (Billion Tshs)

Road ProjectOriginal budget Final Cost

Deviation(%)

Shelu� – Nzega 20.7 19.5 -6Somanga – Matandu 12.3 12.0 -2Muhutwe – Kagoma 4.4 4.7 9

Mwanza Town 16.4 18.2 11

Kyabakar� – But�ama 1.7 1.9 12Mutukula–Muhutwe 13.8 17.6 28Songwe – Tunduma 10.2 14.1 38Morogoro – Dodoma 25.3 43.9 74Nzega – T�nde – Isaka 20.6 44.2 115Tinde – Shinyanga/Mwanza 28.3 65.2 130TOTAL 153.7 241.3 57


As shown, most of the projects had cost overrun, and in several projects to a high degree. Two projects used less money than budgeted, since these projects had been limited in scope (see under table 4.3). The largest cost overruns �n both relat�ve and absolute terms were most common among the big projects.

4.3 Revised budget and actual costs Cost var�at�on can also be measured as d�fference between the last rev�sed budget and the final cost of each project. This is shown in the table below.

Table 4.4: Revised budget and final costs (Billion Tshs)

Revised budget

Final cost Deviation

(%)Muhutwe – Kagoma 5.2 4.7 -11Shelu� – Nzega 20.7 19.5 -6

Kyabakar� – But�ama 2.0 1.9 -5

Mwanza Town 19.0 18.2 -4

Somanga – Matandu 12.4 12.0 -3

Mutukula – Muhutwe 17.6 17.6 0

Nzega – T�nde – Isaka 41.6 44.2 6Morogoro – Dodoma 41.0 43.9 7Tinde – Shinyanga/Mwanza 53.2 65.2 18Songwe –Tunduma 11.2 14.1 21

TOTAL 223.9 241.3 15


As seen above, four projects were not even able to keep their cost in line with the last revised budget. Notable is that those three projects that had got their budgets revised several times were also among those who had difficulties to even cope w�th the last rev�sed budget.

Two projects (Shelui–Nzega and Somanga–Matandu) had spent less money than the original budget, since some of the tasks were not executed. According to the contract document, payment �s done as per work done, and �f there �s any change of scope (e.g. om�ss�on) then contractor �s not pa�d for that.

Finally, it’s worth noting that the term final costs means final cost both in that sense that it covers the total and final cost and also equals the money being paid by MoID/TANROADS. In other words, the contractor got paid not only for the approved last rev�sed budget, but also for the upcom�ng costs thereafter,


after hav�ng gone through the accounts.27 To sum up, th�s means that the contractors got bas�cally all the money they requested throughout the whole process in all these projects – and no contractor had to pay the stipulated fee for be�ng delayed (for more �nformat�on, see below and also chapter 5.)

4.4 Requested and granted request for additional costs The management and supervision of road projects is done by MoID/TANROADS for all roads which are under them. To execute this task MoID/TANROADS as a client has employed consultants to supervise the works on �ts behalf. Accord�ng to the contract documents, �f there �s any problem wh�ch can affect the cost of the road project, the contractor is required to notify the consultant. After �ssuance of that not�ce, the contractor �s requ�red to prepare a request and subm�t �t to the consultant.

The consultant evaluates the claim and gives recommendations. MoID/TANROADS will then decide to accept or reject the claim. The most important things to check are the quantities of work to be executed and their accompany�ng costs. Depend�ng on those two factors, evaluat�on of that request can result �nto dropp�ng of some works, chang�ng the quant�t�es or negot�at�ng to reduce the rates appl�ed etc.

The table 4.5 below shows the amount requested by contractors, what have been approved by consultant and final amount approved by MoID/TANROADS. It’s worth noting that these requests presented below are not by necessity linked to revisions of the budgets. Requests may occur at various t�mes, but put together w�th other cost �ncreas�ng �ssues they can create �ncent�ve for rev�s�ng the budget.

�� TANROADS did not disagree with any final accounts (see chapter 5)

Table 4.5: Request for claim and granted cost increase (Billion Tshs)

Road Project

Requested for cla�m by contractor

Reviewed and Recommended by consultant

Approval by MoID/TANROADS

Nzega – T�nde – Isaka 23.1 23.1 23.1Kyabakar� – But�ama 0.34 0.32 0.32Muhutwe – Kagoma 0.8 0.8 0.8Songwe–Tunduma 1.0 1.0 1.0Shelu� – Nzega 1.9 1.9 1.9Mwanza Town 2.6 2.6 2.6Mutukula – Muhutwe 2.8 2.8 2.8Somanga – Matandu 12.4 12.4 12.4Morogoro–Dodoma 15.7 15.7 15.7

Tinde – Shinyanga/Mwanza 24.9 24.9 24.9

TOTAL 85.54 85.52 85.52 (100%)

Source: Project Files and Contract documentsAccording to the table above, MoID/TANROADS and its consultants have in pr�nc�ple approved all the money as requested by contractors.

4.5 Factors contributing to cost overrunAs shown above, when the final costs were related to original budget all projects that fulfilled their undertakings had cost overruns. Information on the causes to cost overrun is thus of interest in order to find possibilities of �mprovements.

According to the project files, a number of factors causing cost increase were identified. The various causes can roughly be divided into the two ma�n categor�es: (1) �ncreased costs as a result of a new des�gn and new specifications, and (2) increased costs due to quantities and variation of pr�ce factors. In the table below the �mpact to cost �ncrease of each category is presented. The information has been obtained from the project files as documented by MoID/TANROADS and consultants.


Table 4.6: Effect of each category to cost increase of the road projects

Reasons for cost increaseAdditional amount

B�ll Tsh s %New specification of works (new design) 20.0 23

Add�t�onal �nsurance costs 2.1 2

Interest on delayed payment (0.5) andfinancial compensation to land owner (0.5)

1.0 1

Increased volume and pr�ces - Increased quant�t�es - Project cost increase

(VOP)

64.6 74 (33.5) (38) (31.1) (36)

TOTAL 87.7 100


As seen above volume related factors had great influence on the increasing cost. First, it was common with new specifications, which have been shown earl�er (chapter 3 and 4). Such changes often meant h�gher volume (not only additional objects). Second, adjustments of volumes occurred quite frequent dur�ng the �mplementat�on stage and the costs for that were qu�te h�gh, as seen above. Less remarkable to some extent is the cost increase, since these projects had a long duration time and were executed in an environment where rap�d pr�ce �ncreases are rather common.

Design and starting time of the project

As earl�er seen, a huge part of the �ncreas�ng costs are related to m�ss calculat�on of some k�nd already �n the des�gn stage. Th�s �n turn could for instance be linked to insufficient preparation (ground work) when the design was done or by less effective quality control. Other factors like changed cond�t�ons, values, pr�or�t�es etc. have of course also affected the outcome.

One finding is however less expected: among these road projects there were not any obv�ous correlat�on between short and long delay �n commencement of the projects. The expectation was that projects that started with a design conducted several years ago ought to have greater d�fference between the contract sum and the final costs than other projects. Still it’s obvious that those older designs got more expensive than originally planned, due to the long process�ng t�me from hav�ng the des�gn ready and start�ng the construct�on work.

Cost overrun according to MoID/TANROADS, consultants and

contractorsAll costs have been approved and found reasonable by MoID/TANROADS. According to files and documents and officials at MoID/TANROADS, the ma�n causes to the �ncreas�ng cost and the need to rev�se the budgets, are changes in specification or unforeseen increased amount of work that have to be carr�ed out.

Accord�ng to consultants and Assoc�at�on of Consult�ng Eng�neers, there are several reasons why road projects often have high cost increase. The reasons are �nadequate plann�ng, due to fa�lure to come up w�th the good cost est�mates of each element. Most of the t�me, the rates wh�ch are used are the ones taken from what has been used by contractors in other projects and then modified a bit. But there is no thorough study carried out to establish the actual cost of each work �tem and used them as a bas�s for contract�ng with contractors. The way the procurement is executed is another aspect. It may turn out that the lowest b�d may not be the most econom�cal solut�on �n a long term perspect�ve.

Moreover, �nadequate des�gn wh�ch resulted �nto change of scope of work dur�ng the construct�on stage �s a common cause to cost overrun, accord�ng to both consultants and contractors. There are also problems w�th �nadequate project management. As examples they refer to the frequent failures to pay the contractors on t�me, result�ng �n �nterest payment, fa�lure to process contractor’s claims, or inspect and approve the completed work of the contractor.

Most of these remarks are shared by the contractors and Contractors Registration Board of Tanzania. Final quantities are almost always quite different from the original ones, according to their experience. And the site cond�t�ons do often d�ffer from des�gn and plann�ng documents (th�s could include everything from soil profile, borrow pit and water sources, to price mater�als).


Chapter Five

Quality Control of Road Works

Good qual�ty of road works �s �mportant for both safety and econom�c reasons in any society. That’s why government’s set quality standards that need to be met and requ�re government author�t�es to establ�sh systems of qual�ty control. In order to be effect�ve these control systems need to cover the whole process of plann�ng, conduct�ng and ma�ntenance serv�ces.

The Audit Office has found frequent problems among the ten examined road projects linked to planning and supervising. This can be seen as an indication of a qual�ty control system problem.

The chapter focuses on the road construct�on stage.

5.1 General standards for planning and conducting road worksQual�ty control of road works �n Tanzan�a �s gu�ded by the nat�onal standards and gu�del�nes spec�ally developed for the local env�ronment of the road sector. The gu�del�nes prov�de gu�dance on acceptable qual�ty standards set as well as procedures for test�ng the compl�ance w�th these standards �n the stages of the road project. The guidance for establishing of standards is stated �n the follow�ng documents:

• Pavements and Materials Design Manual (PMDM 1999);• Standard Specifications for Road Works (SSRW 2000);• Laboratory Testing Manual (2000); and • Field Testing Manual

The general standards and gu�del�nes are supplemented by the standard�zed tender and contract documents, prov�ded by var�ous local and �nternat�onal �nst�tut�ons for works of c�v�l eng�neer�ng construct�on.28 These documents prov�de the rules and procedures for manag�ng the construct�on process �n order to ach�eve the des�red results and �nclude r�ghts and respons�b�l�t�es of various parties during the implantation of the different project stages.29

�� The institutions providing the documents include Fédération Internationale Des Ingénieristes Conseils (FIDIC) and Public Procurement Regulatory Authority (PPRA).

�� For an overview of the road works procedures see chapter 2.

Generally, these documents are similar except for minor differences concern�ng the procurement procedures and some cond�t�ons, e.g. for approval to release varying finances. Thus, for the single cases the actual choice of guiding standard documents depends on who is the financier. In addition TANROADS sets a minimum standard for the road to be constructed.

According to the standard contract document between the client (TANROADS) and the contractor a qual�ty control system shall be establ�shed by the cl�ent and stated �n the contract.30 MoID/TANROADS is responsible for the road works, �nclud�ng the qual�ty control.

5.2 The system of quality control The system of qual�ty control covers several act�v�t�es. The ma�n steps �n the process of bu�ld�ng roads are the des�gn phase and the construct�on phase.

5.2.1 The design phase Planning, preparation and review The des�gn �s a plan or set of draw�ngs and deta�ls produced to show the look and function of the road before it is built. Designing is expected to be done after thorough �nvest�gat�on of the s�tes. The �nvest�gat�ons should �nclude, but are not l�m�ted to, so�l �nvest�gat�ons, geotechn�cal �nvest�gat�ons, hydrolog�cal stud�es, topograph�cal surveys and �nterv�ews w�th stakeholders, �nclud�ng local people within the vicinity of the project area. This could be done by use of in-house engineers or outsourcing to private consulting firms. At this stage, specifications need to be set, and bills of quantities, cost estimates and tender documents have to be prepared. The des�gn has to be rev�ewed �n order to safe guard �ts qual�ty.

5.2.2 The construction phase IntroductionFor the construction stage, contractors are expected to be engaged.31 Based on the conducted design with the specifications of quality standards, the contractors provide bids which have to be scrutinized and evaluated by MoID/TANROADS who proves the contractors’ technical and financial capability of performing road projects.

�0 Contract for consultancy services for the supervision of Roadwork’s

�� The consultants and the contractors are engaged according to the Public Procurement Regulation, 2005 – government Not�ce No. 98 of 15th Apr�l, 2005.


Accord�ng to the contract documents, some of the most �mportant �tems which determine the quality of the roads and need to be reviewed by MoID/TANROADS periodically are: Identification of defects; tests of materials; correction of defects; presence of qualified contractor’s and consultant’s staff; and early warning.

TANROADS/MoID’ quality control of construction work is conducted by superv�s�ng, mon�tor�ng, �nspect�ons and evaluat�ons. Superv�s�ng �s a cont�nuously ongo�ng act�v�ty, wh�ch �s supposed to be carr�ed out both by the responsible project manager at MoID/TANROADS and – to a large extent – by hired consultants. Monitoring is also an ongoing activity, but more periodically, in order to follow how the project is developing in relation to the act�v�ty plan etc. Inspect�ons are carr�ed out as monthly �nspect�ons and also in the form of final inspections with the aim to detect problems to be addressed and adjusted. Evaluations are to be conducted during critical steps �n the process when more comprehens�ve and perhaps �ndependent assessments are needed.

Supervising and MonitoringMoID/TANROADS is responsible for executing supervising and monitoring funct�ons. Laboratory tests and tests done at s�te have to be performed to ascertain compliance with specifications. Defective works should be re-worked or �mproved pr�or to approval by the superv�sor. Mater�als to be used for the works must also be subjected to tests, where necessary, prior to their use. MoID/TANROADS should also monitor the projects through its own staff or through the engaged consultants �n part�c�pat�on w�th the contractors at s�te meet�ngs.

InspectionsInspect�ons are requ�red to be conducted monthly as substant�al complet�on and as final inspections of the construction. Both kinds of inspections are expected to be conducted jointly by MoID/TANROADS, the consultant (�f engaged) and the contractor. The monthly �nspect�ons should be documented �n progress reports. In the per�od �n between the monthly and the final inspections, the contractor has to rectify identified snags. When all adjustments are done, the contractor is relieved from obligations to MoID/TANROADS. If the work is delayed the contractor is required to pay a fee

per each day of delay (the da�ly fee that has to be pa�d �s 0.01% - 0.1% of the contract sum or a fixed figure of UDS 20,000 for some projects32).33 Evaluation The evaluat�on on qual�ty of the work �s part and parcel of qual�ty assurance of the roadwork. TANROADS is supposed to conduct periodic evaluations of the performance of the engaged consultant and contractor �n order to sat�sfy �tself that the work meets the set standards and qual�ty des�red.

Monthly meetings TANROADS is, through its consultants, expected to continuously check the qual�ty of the construct�on work at s�te. The purpose �s to approve all materials and to ensure compliance with required technical specifications and qualifications of the staff in accordance with the contracts. The duties imply different specified tests, evaluation of existing systems and checking that the present staff – both the contractor’s and the consultant’s staff – have required qualifications. The results of all these activities are dealt with in monthly meetings which should be well documented. The meetings are expected to be conducted jointly by TANROADS’ or its consultants and the contractor. Monthly progress reports, ma�nly as a result of the monthly �nspect�ons, have to be prepared w�th the result of the meet�ngs and recommendat�ons.

5.3 Quality assurance in practice Reviewing quality of designs The design work is in most cases conducted by private consulting firms. Once the designs are completed, the consultants prepare a design report which is submitted to TANROADS, where it is supposed to be reviewed by an �n-house eng�neer to ascerta�n �ts adequacy. Th�s �s the way qual�ty �s expected to be safeguarded. In practice, consultants are often engaged in this work to assist TANROADS in reviewing the quality of the designs.

Design problems were rather common among the examined projects, but they were far from often discovered by the reviews. In the ten examined projects it was for instance common with underestimations of the quantities of mater�als, due poor so�l �nvest�gat�ons, geotechn�cal �nvest�gat�ons, hydrological studies and topographical surveys. There were several projects

�� If there �s a sect�onal handover the l�qu�dated damage �s charged on the unrema�ned work

�� The fee for delays could be rather costly for the contractors. Therefore, it’s within their interest to have the plan rev�sed �f they run the r�sk of be�ng delayed. Moreover, cost overrun, �ncreased budgets or minor delays are in general easier for the contractors to cope with than significant delays.


w�th �ncomplete des�gns. S�nce these problems were not detected �n the rev�ew, costs consequences and delays appeared dur�ng the construct�on phase. According to TANROADS’ officials and other stakeholders, this is a common phenomenon in road projects.

Similarly, according to TANROADS officials, reviews of earlier approved des�gns were not done though �t took between 2 to 5 years after �ts complet�on of the des�gn before the commencement of construct�on started. Dur�ng that t�me the road was st�ll �n use and by the t�me construct�on work starts the des�gn deemed �nval�d and supposed to be rev�ewed.

Quality assurance during the construction phase

In the ten examined projects almost all conducted activities of supervising, mon�tor�ng and superv�s�on were carr�ed out by the engaged consultants who also prepared the monthly reports. TANROADS thus to a high degree rel�es on the engaged consultants to carry out the qual�ty assurance work. In other words, TANROADS is fully dependent on their consultants who have genu�ne �ns�ghts. The effect�veness of the qual�ty assurance �s to a large extent determined by how well the consultant has fulfilled his or her duties.

It has not been within the scope of this audit to examine the quality of the work conducted by the TANROADS and (mainly) its consultants. However, �t has been poss�ble to get an est�mat�on of how often d�fferent k�nds of superv�s�ng, mon�tor�ng and �nspect�on act�v�t�es have been carr�ed out dur�ng the construct�on phase. Such est�mat�on – based on documentat�on files and interviews with consultants and TANROADS’ officials – are shown �n the table below.

Table 5.1 Supervising, monitoring and inspection activities among the ten examined projects

Parameters to be addressed Often Monthly Seldom Never

Identification of Defects V

Tests• Tests on so�ls and gravel • Tests on aggregates and concrete • Tests on Asphalt and B�tum�nous

V

Correct�on of Defects VPresence of qualified contractor’s and consultant’s staff as identified during the bidding

V

Early warn�ng �n case of poor work of the contractor, delays or cost escalat�on

V

Source: File documents; interviews with consultants and TANROADS’ officials

As seen above the quality assurance was not executed as expected. The only monthly check�ng was done on the tests and early warn�ng �n case of poor work of the contractor’s delays or cost escalation. The other parameters were seldom or never checked, accord�ng to the est�mat�ons. Not even evaluations were conducted as expected. This is shown in the table below. The table shows the number of conducted evaluat�ons on road qual�ty and the reasons for the evaluat�ons, as a rout�ne or someth�ng else.


Table 5.2 Conducted evaluations of the quality of studied road works

Road ProjectsNumber of conducted eva-luations on road quality

Reasons for the eva-luations

Tinde – Shinyanga/Mwanza 1Routine after completion of the project.

Songwe– Tunduma 1Routine after completion of the project.

Somanga - Matandu 1Routine after completion of the project.

Shelu� – Nzega 1Routine after completion of the project.

Morogoro – Dodoma 1Routine after completion of the project.

Makuyun� - Ngorongoro SeveralRoutine before and after completion of the project.

Chal�nze - Melela SeveralRoutine before and after completion of the project.

Mutukula – Muhutwe 1Routine after completion of the project.

Kyabakar� -But�ama 1Routine after completion of the project.

Source: Files and documents at TANROADS

According to the table above just two of the conducted evaluations were performed before and after the completion of the road project. This implies that TANROADS’ evaluations don’t cover the design stage, where severe qual�ty problems seem to start w�th the way the qual�ty standards are set. Further on the evaluations just to a limited extent cover the construction stage where many problems appear w�th the poorly set qual�ty standards and the poorly conducted mon�tor�ng and superv�s�on.

The complet�on of the construct�on stage �s thus started by an evaluat�on, also called final inspection. The purpose is to approve the quality of the conducted road work and – �f th�s �s the case – to transfer the respons�b�l�ty of the road work from the contractor to TANROADS. Also this inspection is, however, conducted jointly by TANROADS, its consultant – the supervisor – and the contractor. Weaknesses noted in quality assurance system imply that all ten studied road projects had experienced quality problems resulting �n delays and cost overrun.

As seen �n chapter 3, �t was common w�th delays. But most of the delays were reduced (from 111 to 17 months) by revised plans. This resulted in that

no fees for delays were paid regarding the ten examined projects.

To be fa�r cla�ms from the contractors for add�t�onal costs due to delays caused by long processing time of the tax exemptions for donor funds at the Tanzania Revenue Authority (TRA) was not approved by TANROADS, since it was considered not to be a problem caused by TANROADS. According to the contractors they got add�t�onal cost of several b�ll�on Tsh as a result of the complicated and long procedures at TRA.

5.4 TANROADS and its engaged consultants According to standards and good practice it’s important to engage experts that are competent and �ndependent. Even though �t may have advantages, it’s vital to secure that the same consultant or consultancy firm is not engaged in conflicting roles.34 This has however not been secured in the ten examined projects. In fact, the same consultancy firm (and often exactly the same consultants) were used in every stage of the process and for many conflicting tasks. The same consultants could be engaged �n des�gn work, mon�tor�ng and superv�s�ng act�v�t�es. They prov�ded techn�cal and other adv�ces �n var�ous areas to both contractors and TANROADS. They were also mainly the only ones from TANROADS who conducted monitoring and supervision of the actual construct�on work35.

In addition, the consultants examined and approved request for revised plans or add�t�onal costs. They also approve the whole construct�on stage when the final inspections are conducted.

Another important issue is to what extent the set up system for quality assurance is transparent. In other words, does the system with the consultants’ duties and activities provide TANROADS and other concerned interests – as financiers and other stakeholders – with a proper overview of whether the qual�ty standards are met w�th. Th�s �s depend�ng on the prov�ded and documented information from the consultants and on TANROADS’ conducted evaluat�ons of the system.

�� The consultants need to be engaged according to the Public Procurement Regulation, 2005 – govern ment Not�ce No. 98 of 15th Apr�l, 2005.

�� The supervision contract between TANROADS and the consultant covers monitoring, compliance and good performance of the works d�scharged by the consultants.


However, beyond the documentat�on �n the progress reports, prepared by the consultants, there �s hardly any more regular documentat�on of conducted quality control. Moreover, there is no written report showing how TANROADS have assessed the work of the consultants �n order to sat�sfy �tself w�th the qual�ty of the conducted road works. Th�s �nd�cates that there �s no systemat�c monitoring of the satisfaction of the consultants’ work. The reason given by TANROADS officials is that it is very difficult to go into details with a lot of projects for the responsible engineers. TANROADS’ monitoring of its consultants �s done through monthly s�te management meet�ngs. Accord�ng to TANROADS’ officials they had no problem with the performance of any consultant in the ten studied projects.

5.5 Consequences Despite the fact that TANROADS’ officials state that its quality control system �s work�ng well, th�s aud�t has found that there �s st�ll need for �mprovement. The qual�ty control �n the des�gn phase �s obv�ously not effect�ve. There are also several problems �n the construct�on phase. Inspect�ons and mon�tor�ng are not conducted as expected, documentation is not in order and the engaged consultants are given conflicting tasks without any proper follow up by TANROADS. It might also be worth mentioning in this context even though it’s not within the scope of the audit to examine this, soon after the finalising �nspect�on – where all stud�ed ten road construct�ons were approved – most roads bu�lt started to undergo repa�rs (not only regular ma�ntenance).36

This situation can exist largely due to the fact that it isn’t possible for the public to get insights into the running of things. Even for the Audit Office it has been difficult to get all documents and information needed, due to lack of transparency and of disorder of document files. As a consequence roads built in Tanzania end up to be more expensive than needed and with many qual�ty problems.

�� According to documents and files an interviews with TANROADS officials and various stakeholders.

Chapter Six

Conclusions

The road works system in Tanzania is not managed efficiently and timely. Plans and budgets are often revised, resulting in significant delays and cost overruns. Consultants are the ones who determ�ne the�r own schedule, have mult�ple roles and are not managed well. All put together �nd�cates that ten roads bu�lt and aud�ted were not produced �n a way that best serves the publ�c �nterest.

Despite of the weaknesses mentioned above, MoID/TANROADS has shown that there �s room for �mprovements s�nce �t has already started to take some act�ons to address the above ment�oned problems.

Possible causes of delays, cost over runs and quality problems of road

constructionsAccording to the project documents; inadequately prepared designs is the main cause of problems in the construction phase. The Audit Office shares the v�ew that the des�gn works need to be rev�ewed. S�m�larly, the Aud�t Office has also found several other influencing causes to address, as shown below.

6.1 Organization of tasks and roles problematic MoID/TANROADS procures contractors for the constructions stage and consultants for act�v�t�es carr�ed out dur�ng the des�gn and construct�on stages. There are good reasons for using experts. But the way MoID/TANROADS has organ�zed �ts use of consultants and contractors prov�des some problems for the road work system.

Consultants are engaged �n var�ous steps �n the process. They are �nvolved in planning, preparation and design. They fulfill important tasks in the construction phase; serving the interest of employers (TANROADS and MoID) and adv�ses them on the conduct of contractors. The same consultant may be engaged �n controll�ng act�v�t�es l�ke superv�s�on, mon�tor�ng, �nspect�ons and evaluat�on of the works on behalf of the cl�ent. Consultants are also often engaged to conduct daily, monthly and final inspections of road construction projects. The inspection protocol forms the basis for MoID/TANROADS’ final approval dec�s�on, for wh�ch they fully respons�ble.


When signing the contract agreement, the contractor can take a proper design of the road project for granted. If this is not the case, which is more or less always, the contractor �s not respons�ble for be�ng prepared to meet the situation. This might influence the contractor to put blame on all the problems ar�s�ng dur�ng the construct�on on the earl�er des�gn wh�ch �s also the common argument when problems occur. Thus, an �mportant task for the consultants should be to meet those arguments, �n protect�ng the cl�ent by promot�ng an efficient use of public resources.

Consequently, �t appears that procurement of d�fferent consultancy firms makes it difficult for MoID/TANROADS to properly make use of the experiences from conducted road works in order to improve the activities. In fact, the same k�nd of problems appears repeatedly �n a more or less s�m�lar way from case to case.

Thus, if mixed roles and responsibilities of consultants are not managed properly they may endanger the economy, efficiency and effectiveness of the whole road work system. This becomes even more obvious as MoID/TANROADS hires the same consultancy firm for all stages and tasks in each project.

In short, MoID/TANROADS is largely dependent on consultancy firms to fulfill its tasks and has to act with integrity when dealing with consultants and contractors. The way the work �s organ�zed and conducted, accord�ng to the Audit Office raises questions of TANROADS’/MoID’s efficiency and accountab�l�ty tak�ng �nto account of several delays �n complet�ng road works, cost overruns, poor qual�ty of road works and management of the work of consultants.

6.2 Management time, costs and quality is weak MoID/TANROADS has difficulties in managing costs and time. The costs of the road projects are less calculated and controlled. This makes it difficult to manage the process; from assessing designs and contractors’ bids to managing contractors’ requests for additional funding or extended time.

During the construction stage, MoID/TANROADS deals with the repeated problems by rev�s�ng the or�g�nally set t�me tables and budgets, often more than once and probably �n many cases more than what �s really needed, �f th�ngs had been better planned and managed. Also, contractors are systematically being paid even for costs that exceed the last revised budgets. The contractors therefore do not have dr�v�ng force to keep the costs low and

to be t�mely. Also, �t seems that contractors were systemat�cally gett�ng the�r requests approved. The contractors seem to systemat�cally be able to get the�r requests approved.

The quality of the final inspection can also be discussed. All ten studied road projects were approved at the final inspections though most of all the roads started to undergo repairs soon after this approval. MoID/TANROADS �nspect�ons and evaluat�ons were obv�ously not able to detect certa�n weaknesses of the works. Moreover, sanct�ons were not properly used for tackling and correction of the frequent and extended delays, cost overruns and also qual�ty assurance problems.

6.3 Conditions for transparency not fulfilled The road works system represents a great part of the publ�c sector. A good transparency and �mprovements of the act�v�t�es and the proper use of money will increase the trust of an efficient use and an effective exchange of public resources. In sp�te of th�s, the records show ser�ous weaknesses on t�me and cost management of road works.

Last but not least, construct�on and repa�r of roads represents a great deal of the government expenditure and ranged to almost TSh 800 billion, equal to 13% of the Tanzanian budget 2007/2008. This money is intended for important �ssues of the country as a whole as well as for the �nd�v�dual c�t�zens. The comb�nat�on of deal�ng w�th huge amounts of publ�c money and the severely lack�ng of transparency on the use of th�s money �s a problem �n �tself. Th�s �mpl�es there are weaknesses �n publ�c adm�n�strat�on of publ�c resources. Proper documentat�on made ava�lable to the publ�c �s lack�ng.

6.4 Unsolved systematic issues cause delays, cost overrun and quality problems of road construction

Problems in the road work system and for the societyNot properly examined and corrected problems related with delays and cost overruns �mpl�es problems for the road work system as well as for the soc�ety as a whole.


Beyond the above described problems, the audit office has seen many problems to tackle �n the road work system w�th the follow�ng ma�n examples:

• Weaknesses in conducted planning; preparation and design with underest�mat�ons of quant�t�es have caused qual�ty problems dur�ng the road construct�ons and are followed by delays, cost overruns and poor qual�ty roads.

• Experienced quality problems from the design are not detected and corrected before dec�s�on and del�very of the des�gn report.

• Lack�ng calculat�on of the actual costs for the road works �mpl�es inefficiency for MoID/TANROADS’ assessment of bids during the tender�ng and the procurement of contractors.

• Lack�ng coord�nat�on w�th local author�t�es �mpl�es that relocat�ng of e.g. �ssues belong�ng to water p�p�ng system and electr�cal system hamperes the road construct�ons.

• The contractors’ performance are not measured and not used for correct�ons or future �mprovements of h�red contractors.

• Unsolved disputes with the contractors concerning reimbursed taxes.

The ma�n problem for the soc�ety �s that the requ�red roads are not completed �n t�me wh�ch means �ncreased both soc�al and econom�c d�sadvantages. Calculations based on the ten examined projects indicate the following increased expenses for the public sector as well as for the society generally:

• With an interest rate of 18 % the delays involve increased capital costs, just caused by the time factor to around 31 billion Tshs.

• MoID/TANROADS and its consultants have to spend more time and money than expected for prolonged time which is ranging to close to 5 b�ll�on Tshs.

In a longer perspective and with a greater number of projects these costs w�ll be even h�gher, w�thout compensat�on for �ncreased qual�ty and w�thout hav�ng the roads �n t�me when they are needed.

Chapter Seven

Recommendations

MoID/TANROADS has problems with efficiency in managing its road projects. This means that MoID/TANROADS – perhaps due to lack of competence in certain areas – has difficulties in managing its role towards financiers, contractors and consultants. MoID/TANROADS is expected to professionally lead funct�ons l�ke plann�ng, des�gn�ng, manag�ng and qual�ty control w�th�n �ts mandate, but that �s not the case today. Th�s �n turn has ser�ous consequences for the soc�ety. Even though the s�tuat�on �s understandable and may prove difficult to change, it needs to be addressed by MoID/TANROADS as well as the Government, s�nce the Government has the overall respons�b�l�ty for the cond�t�ons concern�ng nat�onal road works �n Tanzan�a.

This chapter contains recommendations to the Government and TANROADS. The Audit Office believes that these recommendations need to be considered �f the nat�onal road works �n Tanzan�a are to be better planned and managed ensuring that the 3E’s of Economy, Efficiency and Effectiveness is achieved �n the use of publ�c resources.

7.1 Institutional improvements It’s important that MoID/TANROADS has the strength, competence and capacity to manage all kinds of national road works. This means that MoID/TANROADS must be able to recruit and keep strategic competencies, even if MoID/TANROADS will always have to engage specialists or consultants for various kinds of work. Moreover, it’s vital that MoID/TANROADS acts with full professionalism and integrity, regardless of financier, designer, consultant and contractor. So, if for instance donors don’t show sufficient interest in economy and efficiency aspects, MoID/TANROADS still has to do so, if MoID/TANROADS are expected to earn the citizens trust.

The Government must ensure that MoID/TANROADS has the leadership and capacity required to manage its functions. The Audit Office recommends the Government and the M�n�str�es concerned to set up a comm�ss�on to find solutions to these shortcomings. The Audit Office believes that it is cost effective to make TANROADS properly equipped for its tasks as regards human resources.


Moreover, MoID/TANROADS needs to discuss how far it should go in superv�s�ng contractors. There are r�sks that too much �nvolvement may undermine the contractors’ responsibilities. The Audit Office realizes that it is not easy to find the right balance here, but the aim must be to make contractors (regardless of whether �t concerns des�gn or construct�on works) more respons�ble for the�r undertak�ngs. Consultants and contractors should not expect that MoID/TANROADS and financiers will compensate for their shortcom�ngs.

MoID/TANROADS needs to specify the responsibilities for the consultants they use. If for instance a consultancy firm is engaged for design work, it is advisable to set it clear in the contract that the firm is financially responsible for malpractice. This could later be used by MoID/TANROADS as a basis for complaint against the design work done by the firm, if it is likely to believe that problems �n the construct�on phase are caused by poor des�gn work. The same idea is applicable to firms engaged for final inspections. If it turns out that an engaged firm has not detected faults that it ought to have seen, if the inspection would have been carried out professionally, MoID/TANROADS should put charge on the firm for neglect or malpractice.

The same kind of thinking applies to MoID/TANROADS when it is fully respons�ble for the des�gn work. If th�s work �s proved poorly done, the contractors are entitled to request additional funding when needed to fulfill the contract agreement. However, if it turns out – as for the ten examined projects – that projects are systematically affected by poor design work conducted or approved by MoID/TANROADS, the long term solution is not to cont�nue prov�d�ng add�t�onal fund�ng but to �mprove the qual�ty of the des�gn works and the rev�ews. Finally, the Audit Office has found that the way the work is carried out and filed does not meet reasonable standards of order or transparency. The Audit Office recommends to the Government to review the possibility of making vital documents better available to the public. Designs and final inspections could perhaps be made ava�lable or d�sclosed as soon as they have been approved to the part�es wh�ch are supposed to have an access to them.

To sum up, the Audit Office recommends to the Government to:• Set up a commission to review the possibility of strengthening MoID/

TANROADS’ integrity and professionalism and its performance of strategic functions, and in doing so also examine transparency and accountab�l�ty �ssues

• Give TANROADS clear instructions on how to manage consultants

7.2 Project planning and design The planning of the projects and the design processes are strategic phases in road projects, and it is obvious that TANROADS and its consultants are unable to conduct these activities efficiently. Preparation work is not done as expected, calculations are not accurately made, the quality control seems to be superficial, coordination work has shortcomings etc. This can be seen as a result of insufficient planning and design. It may also be linked to the fact that consultancy firms are engaged in services that stands in conflict with each other. They may be engaged �n des�gn work or �n rev�ew�ng des�gns, as well as �n superv�s�ng act�v�t�es dur�ng the construct�on phase. As seen �n chapter 5 the engaged consultants involved in the examined road projects approved almost all requests for add�t�onal money from the contractors, and TANROADS accepted this without questioning the merits of the consultants for their previous design work. This means that the financier – through TANROADS’ behaviour – systematically had to bear the full financial respons�b�l�ty for poorly done rev�ews or des�gn works. In add�t�on, no one seems to have done anyth�ng to change the s�tuat�on.

The Government and TANROADS are recommended to deliberately exert efforts to pre-contract stages of projects implementation to ensure that the designs are improved to reflect the reality on the ground and avo�d unnecessary alterat�ons dur�ng the �mplementat�on. The M�n�stry of Infrastructure Development and TANROADS need to institute a mechanism to review the designs and estimates of the project as are prepared by the consultants before they are �mplemented.

To sum up, the Audit Office recommends to the Government to:• On a non regular basis conduct evaluations of the efficiency of

TANROADS’ design work and how TANROADS procures, instructs and manages �ts des�gn consultants

• Give the earlier recommended commission the instruction to examine how to best address the above ment�oned respons�b�l�ty �ssues �n des�gn works

• Based on the work of the recommended commission, give TANROADS clear �nstruct�ons on how to �mprove the des�gn work and the rev�ews of the des�gn work.


7.3 Project management and quality controlAs shown in this audit, TANROADS need to significantly improve project management and qual�ty control �n order to avo�d delays, cost overruns, and to be forced to conduct repa�r works and ma�ntenance serv�ces soon after opening the roads to be used by traffic. The following text contains a number of suggest�ons and statements that may serve as a bas�s on how to move forward.

In short, the Audit Office recommends to TANROADS and the Ministries concerned to cons�der the follow�ng suggest�ons and pr�nc�ples:

1. Project management The Ministry of Infrastructure Development and TANROADS need to improve start-up activities such as fulfilment of loan conditions and procurement processes. S�nce the loan cond�t�ons are set and agreed upon dur�ng negot�at�ons (between the government and development partners), the government should ensure that loan cond�t�ons that are set can be ach�eved w�th�n the ant�c�pated t�meframe.

TANROADS need to have a budget covering the whole of the project and strongly affects budgetary control throughout the project. For each project it �s �mportant that clear roles and respons�b�l�t�es among var�ous part�es are set, one of whom should dec�de on t�me, cost and qual�ty �ssues. Moreover, measures need to be taken for the capac�ty of �dent�fy�ng and manag�ng r�sks. This is crucial for contractors to complete projects within the specified time, w�th�n the cost agreed upon and end up w�th roads of acceptable qual�ty.

Files must be kept in order. MoID/TANROADS should establish a register to record the performance of contractors and consultants for each road project. This will help in monitoring and assessing their performance and d�st�ngu�sh performers from non-performers for cons�derat�on dur�ng award�ng of contracts. Also, it is important for the TANROADS to take measures to improve its procedures for documentation. A lot of the files seem to be in disorder, and it has for instance not been easy for the Audit Office to get all �nformat�on needed for th�s aud�t.

Procurement of contractors should be based on calculations of the final costs of completed roads. And the requ�rements of the road qual�ty �n the contracts should state a standard that clearly excludes the general need for

early repa�r after complet�on. In add�t�on, the contracts should �nclude clear sanct�on clauses for contractors that do not st�ck to contract cond�t�ons of time, budgets and quality of the roads. Also, it is important that TANROADS states clear conditions in the contracts for reimbursement of taxes to the contractors.

Since utility companies (Water Authorities, TANESCO and TTCL) often lack accurate records about the prec�se locat�ons of the�r underground ut�l�ty l�nes, contractors frequently encounter ut�l�ty l�nes that need to be moved before construct�on can proceed. Th�s s�tuat�on result �n delays and cost overruns. TANROADS (and the Ministry) should, therefore, take proactive step to reduce t�me and cost overruns by cont�nu�ng �ts efforts to �mprove coord�nat�on w�th ut�l�ty compan�es and other part�es who are �nvolved �n the road construct�on s�tes.

2. Quality control and learning The controll�ng act�v�t�es superv�s�on, mon�tor�ng, �nspect�on and evaluat�on should be put �n use for detect�on of delays, cost overruns and qual�ty problems. In add�t�on, adequate act�v�t�es should be used for correct�on and prevent�on of dev�at�ons from the set program and contractual cond�t�ons. TANROADS should reduce the time for applying Price Fluctuation Formula. This might be done through breaking the road projects into packages with shorter deadl�nes.

The purpose with the final inspections – when the road project is approved and handed over to TANROADS – has to be improved in order to exclude early repa�r of the roads. The system w�th sanct�ons – stated �n the contracts – has to be appl�ed �n accordance w�th the cond�t�ons for consultants and contractors. In add�t�on, evaluat�ons should be used to measure and analyse the achieved results. Experiences gained should be used for better planning and for learning and improvements. In addition, TANROADS should take act�on to �mprove �ts stat�st�cs and performance report�ng – and make �t ava�lable to the publ�c.

Finally, a register or road inventory ought be kept and be monitored over the l�fe t�me of the roads to fac�l�tate determ�nat�on of ma�ntenance needs and record�ng of the ma�ntenance act�v�t�es performed.


REFERENCES

1. Conditions of Contracts for Works of Civil Engineering Construction, part I, by FIDIC, 4th ed, 1992;

2. Nat�onal Populat�on Pol�cy, M�n�stry of Plann�ng, Economy and Empowerment, 2006;

3. Pavement and Materials Design Manual – by Ministry of Works of the United Republic of Tanzania, 1999;

4. Performance Aud�t Handbook

5. Performance Audit Report: Managing Procurement – Road Construction and Restoration Contracts, A Report by the Auditor General, Malta, 2004;

6. Standard Specifications for Roadworks by Ministry of Works of the United Republic of Tanzania, 2000;

7. Tanzania’s Construction Industry Policy, 2003;

8. Success Factors for Road Management Systems, World Bank, 2005

APPENDICES


Appendix 1: Genaral Information of the Audited Projects

SN Contract NameLength (Km)

Contractor Consultant Financier Client

1Mwanza Region Transport Project

55.741Astald� S. p. A Tanzan�a Branch

C. Lott� & Assoc�at� Consult�ng Eng�neers S. p. A

European Development Fund

MoW

2Upgrading of Muhutwe - Kagoma Road

24.014China Road & Br�dge Corporat�on

Norconsult Internat�onal A S

Opec Fund for Internat�onal Development

MoW

3Upgrading of Somanga - Matandu Road

33.04China GEO Eng�neer�ng Corporat�on

Parkman Ltd �n Assoc�at�on w�th M-Konsult Ltd

GoT MoW

4Tinde - Mwanza/Sh�nyanga Border

96.7Gr�naker - LTA Ltd

Lou�s Berger S.AEuropean Development Fund

TANROADS

5Mutukula - Muhutwe Road upgrading project

113

Ch�na Henan Internat�onal cooperat�on Group Co. Ltd

BCEOM ADB/GoT TANROADS

6Shelu� - Nzega Road Upgrading Project

112China GEO Eng�neer�ng Corporat�on


GoT, ADB TANROADS

7

Songwe - Tunduma Road Rehabilitation Project

70China Road & Br�dge Corporat�on


NORAD TANROADS

8Nzega - T�nde - Isaka Road Upgrading Project

73Gr�naker - LTA Ltd

Hydroarch SRL consulting Eng�neers


TANROADS

9Morogoro - Dodoma

256NCC Internat�onal Denmark AS

Carl Bro (Denmark)


TANROADS

10But�ama – Kyabakar�

12 CHICO Amb�con GoT TANROADS

Appendix 2: Organization Structure of the MoID

MINISTER

PERMANENT SECRETARY

POLICY AND PLANNING DIVISION

DIRECT0R

PROCUREMENT MANAGEMENT UNIT

PRINCIPAL SUPPLIES OFFICER

ADMINISTRATION & HUMAN RESOURCES

MANAGEMENT DIVISION

INFORMATION, EDUCATION AND COMMUNICATION UNIT

PRINCIPAL INFORMATION UNIT

SUPPLIES AND SERVICES

INTENAL AUDIT UNIT

CHIEF INTERNAL AUDITOR EXECUTIVE AGENCIES:-• TAA• TGFA• TMA• TANROADS• TBA• TEMESA

SAFETY AND ENVIROMENT UNIT

DIRECTOR

TRANSPORT DIVISION

DIRECTOR

COMMUNICATIONDIVISION

DIRECTOR

ROAD DIVISION

DIRECTOR

SURFACE TRANSPORT MANAGEMENT SECTION

MARITIME TRANSPORT MANAGEMENT SECTION

AIR TRASPORTMANAGEMENT &METEOROLOGY

INFORMATIONTECHNOLOGIES

SECTION

COMMUNICATIONSERVICE SECTION

REGIONALROADS SECTION

TRUNK ROADS SECTION

Proposed or already an Executive Agency


Appendix 3: Organization Structure of TANROADS Appendix 4: Time Variations

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iam

a-

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437

560

560

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30

28


Appendix 5: Reasons for the Delays

S/N Road projectAdditional

monthReasons for extensionof time

1. Somanga- Matandu

2Increase �n volume of work due to m�scalculat�ons �n the or�g�nal des�gn

2. Shelu�- Nzega175 days

(5 months)

• Out of date design and survey data: 58 days1

• Late payment of interim certificates: 30 days2

• Reduced production due to heavy ra�ns: 423 (with no financial compensat�on)

• Ordered additional works: 45 days4 (w�thout add�t�onal compensat�on)

3.Kyabakar�- But�ama

2Increase �n work volume due to om�ss�on of �mportant act�v�t�es �n the or�g�nal des�gn5 586 days



4.Morogoro – Dodoma

8Add�t�onal work volume due to changes �n s�te cond�t�ons result�ng from delay �n �mplement�ng the des�gns 7

5.Mutukula - Muhutwe Road

13

•69 days for late del�very of survey data (need for re-survey due to late �mplementat�on of the des�gn by 8 years)

•30 days for w�den�ng of road surfac�ng•30 days for additional “borrow case 2”

(add�t�onal quant�t�es of borrow mater�als)•159 days for “omitted works”

6.Nzega – T�nde - Isaka Road

24 Add�t�onal works8

7.Songwe – Tunduma

14

•Change �n des�gn due to delay �n �mplement�ng the des�gn (5 years)

•Increased quant�t�es•New works

8.

T�nde – Mwanza/ Sh�nyanga Border

17

First extension9

• Additional items (rockfill)10

• Increase in quantities some existing bill �tems11

7 It took 4 years between complet�on of the des�gns and the start of construct�on.

8 The �ncrease �n work volume due to changes �n the des�gns resulted �nto a cost �ncrease from 20.6 billion to 41.5 billion TSh (over 100%). The road had deteriorated to the extent that the rehabilitation as provided for in the contract would not suffice (Administrative Order No. 1 -AO1). Other reasons were poor estimates in AO1, introduction of rockfill to paddy fields and inadequate hydrological studies that led to too small drainage channels (AO2).

9 The first extension approved 252 additional working days which is approximately 15 calendar months (calendar months �nclude both work�ng and non-work�ng days).

10 No item was scheduled for rockfill. New items were introduced for rockfill, i.e. materials from the cut and mater�als from the crusher s�tes amount�ng to 221,825 m3, �n add�t�on to th�s, an �tem for overhaul was introduced for the rockfill with a quantity of 1,584,000 m3.km.

11 There was an underest�mat�on of some b�ll �tems. The or�g�nal b�ll of unsu�table mater�al was 380,000 m3. Dur�ng construct�on the amount of unsu�table mater�al �ncreased to 925,612 m3 (�.e. an �ncrease of 144%).

1 Due to long per�od from the des�gn to the commencement of the works, some of the survey po�nts �nclud�ng temporary bench marks were e�ther d�splaced or destroyed and they had to be re-establ�shed before works could commence. The works were supposed to start on 14th august 2002. However, the contractor at this point was not sufficiently mobilised to start works until 1st September 2002 (�.e. delayed for 19 days). The survey data were �ssued to the contractor on 28th October 2002. This implies a delay of 58 days from the day the contractor was ready for work and 77 days from the contract start date.

2 During the period between November 2003 and July 2004 the ADB who were funding 89.7% of the project costs, suspended the payments due to expiry of the loan closing date. This forced the contractor to slow down the production due to financial difficulties. A total of four IPCs (Nos 6, 7, 8 and 9) amounting to US$ 1.02 million were delayed for payment.

3 The extension of time for 88 days (i.e. 58 days due to displaced survey points and 30 days due to delayed IPCs) fell into the rainy season at the project site. This resulted into a further extension of 42 days to compensate the contractor for reduced rate of product�on result�ng from ra�ny weather. Th�s made a total extension of 130 days.

4 TANROADS instructed the contractor to carry out additional works including road reserve marker posts and add�t�onal kerbstones for protect�on of the edges on bu�lt up areas, curves and on br�dge approaches. This made a total extension of 175 days.

5 Bus bays, access roads, catch water drains, ditch lining and T-junctions details at the start of the road were not cons�dered �n the or�g�nal des�gn. During construction, the original design was found to be deficient of the following aspects:

• It d�d not take �nto account earthwork quant�t�es �nvolved �n road w�den�ng at sharp curves• A number of culverts were found to be shorter than the width of the road and required to be extended to

cover the full w�dth of the road.• Further, on commencing construction the original design was found to be inadequate in that the road

al�gnment passed through soft and water logged areas. Moreover, the des�gn not �ncorporate spec�al des�gn measures for the sect�ons �n soft and water logged areas.

The assoc�ated �ncrease �n work volume amounted to TSh 316.5 m�ll�on.

6 The request for approval of extension of time as submitted to the TANROADS Tender Board by the Director of Development indicates an extension from 19th June to 31st August 2005 as be�ng 58 days instead of 73 days. In addition, according to the Final completion Report, the revised completion date was 19th August 2005 and not 31st August 2005.




9.Muhutwe - Kagoma Road

5

•Add�t�onal work volume due to changes �n s�te cond�t�ons result�ng from delay �n implementing the designs (7 years)

•Commencement delay (took long t�me to fulfil loan conditions)

10.

Mwanza town roads Transport Project

27• Add�t�onal work (6 month)12

• Contractor’s problems not authorized by MoID (21 months)

Appendix 6: Reasons behind revision of programme of works for each road project

Road Project Reasons behind revision of programme of works

Muhutwe–Kagoma

Add�t�onal quant�t�es to works

Shelu�–NzegaDelay �n effect�ng payment to the consultant, �ncorrect sett�ng out data and add�t�onal quant�t�es to works quant�t�es

Kyabakar�–But�ama

-

Mwanza Town Proj.

- Modification of overlay sections in different sections of the road project

- Retrospective extension of time due of two months, due to delayed payments

Somanga – Matandu road

Increased overhaul quant�t�es

Mutukula–Muhutwe

Inadequate des�gn, delay �n mob�l�zat�on by the contractor, �ncorrect survey data and change of scope of work, var�at�on order and cla�ms from contractor

Morogoro–Dodoma

Change of scope due to late start of rehab�l�tat�on works after complet�on of des�gn

T�nde – Sh�nyanga/Mwanza Border

Design: El N�ño ra�nfall affected the or�g�nal des�gn Construction: Change of scope of work to overcome unforeseen black cotton so�l

Songwe–Tunduma

Design: change of scope due to late start of rehab�l�tat�on works after complet�on of des�gnConstruction:

- �ncreased scope of works due to delay �n commencement- due to ra�n season - add�t�onal works (construct�on of we�ghbr�dge, construct�on of

no man’s land and construction of parking areas)

Source: Project Files and Contract documents of 10 road projects audited

12 The extension of time was attributed to omissions of important items, change in specifications (i.e. widening of 4 existing bridges and modification of pavement layers thickness) due to excessive deter�orat�on of the because �t took a long t�me to �mplement the des�gn.


Appendix 7: Reasons behind cost increase for each road project audited

Road Project Reasons behind cost increase for each road project

Muhutwe–Kagomaa) - Add�t�onal quant�t�es to worksb) - Var�at�on of pr�ce of �nputsc) - Changes �n des�gn due to �nadequate des�gn

Shelu�–Nzega d) Add�t�onal work quant�t�es

Kyabakar�–But�ama -

Mwanza Town Proj.- Modification of the overlay sections in Mwanza roads project- Changes �n des�gn due to �nadequate des�gn

Somanga – Matandu

e) - Increased overhaul quant�t�es

Mutukula–Muhutwe

- Add�t�onal works wh�ch were om�tted dur�ng des�gn- Var�at�on order - Cla�ms- Var�at�on of pr�ce of �nputs

Morogoro–Dodoma- Increased scope of works- Changes �n des�gn due to �nadequate des�gn

T�nde – Sh�nyanga/Mwanza Border

- Increased scope of works due to �nadequate des�gn,- �ncreased cost of works, - prov�s�onal sums for var�at�on of pr�ce and cla�ms

Songwe–Tunduma

- Increased scope of works due to delay �n commencement- construction of weighbridge, no man’s land and two parking

areas- Interest on delayed payments to contractor- Var�at�on of pr�ce of �nputs

Source: Project Files and Contract documents of 10 road projects audited

Appendix 8: Partial Deductions of Liquidated Damages

Case 1: Mwanza road worksThe contractor was supposed to be charged l�qu�dated damages at a rate of TSh 17,710 million per day from 19th February 2004 (i.e. monthly certificate for February 2004). The maximum amount of liquidated damages was TSh 2,657 million (i.e. 15% of contract price excluding provisional sums and day-works).

Ev�dence of deduct�ons �nd�cates that the amount that was actually deducted was TSh 1,264 million out of TSh 2,657 million leaving un-deducted amount

of TSh 1,392 m�ll�on.

Deductions of TSh 17,710 million per day to a maximum of TSh 2,657 million imply that it would take 150 days to reach this limit. Reaching this limit would lead to term�nat�on of the contract. If the rules were followed th�s l�m�t would have been reached on 17th July 2004.

Payment records show that MoID delayed �n start�ng to apply the clause for liquidated damages. The deductions started in October 2004 instead of February 2004.

Summary of the monthly amounts deductible for liquidated damages in TSh

S/N MonthNumber of days in delays

Rate per day delays (TSh.)

Monthly amounts (TSh)

1 Feb 2004 11 17,710,309.56 194,813,405.162 March 2004 31 17,710,309.56 549,019,596.363 Apr�l, 2004 30 17,710,309.56 531,309,286.804 May, 2004 31 17,710,309.56 549,019,596.365 June, 2004 30 17,710,309.56 531,309,286.806 July 2004 17 17,710,309.56 301,075,262.52Total l�qu�dated damages 2,656,546,434.00Deducted amounts (see table below) 1,264,200,110.79 Undeducted amount of liquidated damages 1,392,346,323.21

Summary of the monthly amounts deducted for liquidated damages in TSh

S/N Month IPC No Amount Certified

Amount Deducted

Amount Paid to Contractor

1 Oct 2004 46 223,446,786.57

223,446,786.57 -

2 Nov 2004 47 240,035,964.89 240,035,964.89 -

3 Dec 2004 48 197,046,626.82 197,046,626.82 -

4 Jan 2005 49 204,103,881.23 204,103,881.23 -

5 Feb 2005 50 235,595,506.30 235,595,506.30 -

6 Mar 2005 51 45,409,060.06 45,409,060.06 -

Apr 2005 52 36,276,988.66 36,276,988.66 -

May 2005 53 82,285,296.26 82,285,296.26 -

1,264,200,110.79 1,264,200,110.79 -


Case 2: Songwe-Tunduma road

The project completion was delayed by 102 days beyond the revised completion date. Full amount of Liquidated Damages that should have been deducted from the mon�es due to the Contractor was TSh 1,529 m�ll�on. However, through an am�cable agreement, only 26% of th�s amount, wh�ch amounts to TSh 394 m�ll�on, was deducted from the mon�es due to the Contractor leav�ng the un-deducted amount of 1,135 m�ll�on. The bas�s for calculat�on was the percentage of the outstand�ng works �nstead of the contractual rate of US$ 20,000 for every additional day. In addition, it was stated that the delays had partially been caused by the resident engineer’s d�srupt�ve act�ons through arb�trary dec�s�ons s�nce some of the dec�s�ons were not always based on the specifications. The resident engineer, however, was not held respons�ble for the sa�d d�srupt�ve act�ons.

There �s no ev�dence as to how the superv�sor has compensated the cl�ent for caus�ng the delay and subsequent fa�lure to get the contractually agreed financial remedy.

Instead, the delay has lead to cost escalat�on of the superv�s�on contract from NOK 11.6 millon to NOK 18.1 million (i. e. an increase of NOK 6.5 million or 56%). The beneficiary of this increase was the supervisor. The fact that TANROADS did not claim for any compensation from the supervisor �mpl�es that the cond�t�ons �n the contract are more �ncl�ned to favour the superv�sor.

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SN Road ProjectAdditional

Costs (TSh. Million)

Reasons for Cost Overruns

4

Morogoro – Dodoma14

15,707

First revision (15,707,612,741)Add�t�onal15 works that led to modification and up dating BOQ including new rates for additional works, e.g. the quantity of CRS in reconstruction sections �ncreased from or�g�nal 21,400m3 to 148,000m3; The quant�ty of levell�ng course requ�red has �ncreased 3,900 tones to 43,283 tones; the quantities of asphalt

�ncreased from 80,900 to 89,600m3; etc.

5Mutukula – Muhutwe

3,52416

m�ll�ons

First Revision (TSh 1,311,008,369) Modifications in the road design; elements affected �nclude: earthworks, surfac�ng and dra�nage structures.Second Revision (TSh 154,257,732)Design modification and relocation of Ngono Bridge wh�ch was des�gned as too short and construct�on of a bridge (instead of arch-pipe culvert) at Akimbiri River.Total: TSh 1,465,266,101No further revisions were presented for verification. However, the Project Completion Report presented by TANROADS in February 2006 gave the following explanations:• Increase �n quant�t�es due to �ncorrect des�gn,

adverse ground cond�t�ons, underest�mat�ons of quant�t�es: TSh 1,394,068,112;

• Add�t�onal quant�t�es that were not prov�ded for �n or�g�nal BoQ: TSh 762,212,910;

• Pr�ce escalat�on that was prov�ded for �n the cond�t�ons of contract but not prov�ded for contract pr�ce: TSh 1,367,764,782

• Total 3,524,045,804

14 It has been reported by TANROADS that there is an additional cost of TSh 8779.34 Million which involved Claims and Disputes. This amount needs evidence from TANROADS. Also it has been indicated that there are two revisions in this project, but we have seen only one revision.

15 The design of the road was completed in 2000, but it took 4 years to implement the project, and as a result deter�orated further than ant�c�pated �n the des�gn.

16 This figure has been computed based on TANROADS report where the final cost has been reported as TSh 17,359,832,309. According to the consultant’s report, however, the final cost was TSh 17,581,602,207.30 resulting into an additional cost of TSh 3,746 million.

Appendix 10: Reasons for Cost Overruns




1Somanga – Matandu

2 Shelu� – Nzega

Had Cost Sav�ngs, however there were elements of �ncrease �n costs as follows:

• Price adjustment: 3,110,431,123• Financial compensation: 476,881,47• Loss of �nterest: 38,546,102

3But�ama – Kyabakar�

316

(But Tanroads record shows 337)

Revision 316,449,600Inadequac�es �n the or�g�nal des�gn13 led to add�t�onal works such as �ntroduct�on of Access roads, bus bays, culvert extension catchwater and mitre drains which �ncreased costs as follows: •Road Bases (5,277,316) for Bus bays and access

roads•Bituminous & Surfacing (3,124,578) for Bus bays

and access roads•Earthworks (197,417,606) for common excavation,

rock excavation, embankment fill, and construction of 3 access roads and 2 bus bays

•Extra drainage requirement (57,675,800) for provision of extra length of concrete culverts headwall and aprons at selected areas

• Incidentals (52,954,300) for prov�s�on of concrete

and rubble paved water ways

The length of all culverts was the same w�thout tak�ng note of earthworks above the culverts and the sharp corners which require widening; Control points by the designer were verified to be wrong without correct levels and coordinates (These were corrected jointly by the contractor and TANROADS. Some of the control points were completely changed); The geotechnical study report had inadequate information to identify all rock outcrops and areas with weak sub grade; Access roads and bus bays were not considered in the original design; and Minor drainage works like catch water/mitre drains, ditch lining and scour checks were not fully addressed �n the or�g�nal des�gn.

13





7Songwe – Tunduma

3,942

3,942,127,933First revision (TSh 43,594,758)Workplace interventions on HIV/AIDS/STIsSecond revision (TSh 712,624,243)Add�t�onal work: construct�on of Mpemba we�ghbr�dge stat�on.Third revision (TSh)Not presented for the aud�t Fourth revision (TSh 68,954,328)Additional parking area and surface drainage at the ‘’No man’s land’’ between Tanzania and ZambiaFifth revision (TSh 181,499,982)Add�t�onal quant�t�es based on Addendum No 1 for consultancy serv�ces.

8

T�nde - Mwanza/Sh�nyanga Border

First revision (10,201,182,201)• Additional items (rockfill)• Increase in quantities some existing bill itemsSecond revision (13,338,961,171)• Add�t�onal works• Prov�s�onal sum for var�at�on of pr�ceThird revision (1,445,609,355)• Haulage of water: TSh 288,000,000 • Additional cost of insurance: TSh 247,903,923 • Standby costs for crush�ng and surfac�ng equ�pment

: TSh 857,263,560• Additional performance bonds: TSh 52,440,447Other

• Interest on late payments TSh 510,214,639 • Var�at�on of pr�ce: TSh 9,151,335,989• Fuel, VAT, duty and levy: TSh 7,630,780,293

9Muhutwe – Kagoma

793

First revision (793,136,616)• Increased costs �n fuel dur�ng the 5 month t�me

extension• Add�t�onal works17 (Addendum No.1 not presented

for aud�t)

10

Mwanza Region Transport Project

2,632

First revision (2,631,628,581)Reasons•Additional works due to change in specifications and

modification of overlays, widening of existing bridges and add�t�onal s�de dra�ns

17 Change of al�gnment to m�n�m�ze �nfr�ngement �nto propert�es and water sources for the v�llagers. Th�s increased the quantities of earthworks and bases significantly.




6Nzega - T�nde – Isaka

23,144

But �n the report �s 23,551

First revision (i.e. Administrative Order No.: 7,742,785,756)Updating of BOQ including new rates for additional works as a result of changes �n the des�gn to accommodate further deterioration of the existing road (original design was not adequate).Second revision (i.e. Administrative Order No.: 2: 12,383,947,590)Updating BOQ to reflect increased cost of works and prov�s�on sum of pr�ces due to further changes �n the des�gn that led to add�t�onal cut, change of dra�nage channel cross-sect�on from tr�angular to trapezo�dal, and introduction of rockfill to areas of black cotton soil.Third revision (i.e. Administrative Order No. 3, Contractor’s Claim: 809,888,810)Updating BOQ to reflect approved claims resulting from: haulage of water; additional insurance costs; additional costs for performance bond; and standby costs for crush�ng and surfac�ng equ�pment.Fourth revision (i.e. Administrative Order No. 3, Contractor’s Claim: 2,207,496,886)

• Contractor’s proven costs for extension of time, • Escalation related to extension of time claim• Claim for costs related to delay of bridge 17

des�gn• Claim related to effect of forex and • Cla�m for the �nterest on the re�mbursement of

VAT, Dut�es and Lev�es, late paymentsOther Revisions

• Dest�nat�on �nspect�on scheme (DIS): TSh 37,062,355

• VOP: TSh 150,000,000• Emergence repa�r works: TSh 220,000,000


72 Performance Audit Report on Road Works

PERFORMANCE AUDIT REPORT ON ROAD WORKS

The Ministry of Infrastructure Development and TANROADS’ Performancein Controlling Road Construction Time, Cost and Quality

A REPORT OF THE CONTROLLER AND AUDITOR GENERAL OF THE UNITED REPUBLIC OF TANZANIA

March, 2010

Controller & Auditor GeneralNational Audit Office

Samora Avenue/Ohio StreetP.O. Box 9080,Dar es Salaam

TanzaniaTelephone: +255 22 2115157/8

Fax: +255 22 2117527E-mail: [email protected]

Website: http://www.nao.go.tz