Delays

By: Francis Allan L. Angelo

This is a rejoinder on the report of Gerome Dalipe in our Nov 22, 2019 issue headlined “Capitol contractors told to complete road projects on time.”

The farm-to-market road projects being referred to in the story, which was culled from the Commission on Audit’s (COA) annual audit report on the Iloilo provincial government in 2018, were funded through the Philippine Rural Development Project.

These projects have indeed been completed, especially the one in Passi City. But the gist of the story is the tolerance of negative slippages or delays during the construction phase.

Aside from our procurement laws which set limits to negative slippages and provide bases for the rescission or termination of the contract no matter the reasons are for the delay, the PRDP Operations Manual provides a “Three Strike” rule for unsatisfactory performance of the contractor.

This how the COA report described the rule:

“The first warning should be given by the Provincial Project Management Implementing Unit (PPMIU) when there is a 5% negative slippage, and this should require the submission of a catch up plan (there should be only one catch up plan, unless there are mitigating circumstances) to ensure completion of the subproject on time.

Subsequent warnings will be issued if the contractor fails to comply with the catch up plan. If a 10% slippage occurs, the PPMIU will be reminded that PRDP funding support will be withdrawn if slippage exceeds 15%.

If three warnings have been issued (regardless of percentage between 5 and 15) and 15% slippage occurs, the PPMIU will be advised that the process of withdrawal of PRDP funding for the subproject has been triggered.”

The table in the COA report shows the slippage rate of the projects during the construction phase:

Table 13. Summary of PRDP I-BUILD Subprojects’ Slippages

As state auditors noticed, the table indicates that “there were four instances that the Contractors exceeded the 15% negative slippage but the contract was not terminated.”

The PRDP manual included Time Control to ensure that subprojects are timely implemented and provided remedy in case there is a material slippage.

“Section 3.6.5 of the same Manual states that during the implementation within the contract period, a negative slippage beyond 15% is a ground for contract termination x x x x x,” the COA report added.

Of course, the contractors offered various reasons for the delay such as lack of aggregates, shortage in cement, and late processing of payments.

In cases of delays in public sector projects, it is normal to impose the so-called liquidated damage which is a fine of sorts on the contractor.

But COA is adamant in saying that delays should not be tolerated in government projects, no matter the reason.

“Time control in the implementation of subproject is not only for the determination of liquidated damages (LDs) but also to ensure its timely completion. Although, contractors are amenable with the application of LDs, delays should not be tolerated. The penalties charged could not offset the lost benefits and gains of the beneficiaries had the subprojects been timely completed,” the COA report added.

The audit agency added that the Provincial Engineer’s Office (PEO) “may not have direct control over the contractors’ pacing, but their experience of a contractor’s performance should be taken into consideration before awarding similar projects in the future. Otherwise, similar delays will be experienced.”

In short, COA admonished the PEO and the provincial government, in general, to carefully select contractors who can carry out projects within the contract period and to fairly implement the rules, especially penalties on delays.

But it appears the admonition fell on deaf ears as the Iloilo provincial government even tolerated massive delays in the rather pricey landscaping of the Capitol grounds. I believe the delay has stretched to more or less a year beyond the original contract period but there was no punitive action against the contractor.

I don’t know why government entities, especially local government units are so afraid of disciplining erring contractors. Pila gid ang rason haw?