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Rich source of campaign funds.

The Inquirer recently ran a news report on the construction of a P2.28-billion national highway in Isabela, which would pass through the Sierra Madre mountains (Construction of P2.28-B road thru Sierra Madre starts amid protests, Across the Nation, 11/25/15). One issue being raised against it is its environmental impact on the Northern Sierra Madre mountain range. This is a valid concern that must be addressed because of the government's poor record in environmental management.

The other issue is its total project cost-P2.28 billion for an 82-kilometer road; is it really worth spending for the project? The National Economic and Development Authority is supposed to do cost-benefit analyses to determine if public funds to be spent for proposed infrastructure are justifiable.

Government infrastructure projects that involve the amount of P500 million or above require the approval of the Neda board, which is chaired no less by the president of the Philippines. Thus, it can be presumed that this P2.28-billion road project in Isabela has President Aquino's approval. And Public Works Secretary Rogelio Singson's as well.

At the usual cost of P12.5 million per km by standard estimates of the Department of Public Works and Highways, the 82-km highway will cost P1 billion only. But since it is a greenfield project and located far from the source of construction materials, 20 percent or P200 million of the standard project cost may be added, bringing the project cost to P1.2 billion.

Assuming a total of 1,000 linear meters of bridges would have to be built with the project, add another P500 million to the project cost-for a total cost of P1.7 billion. At the combined length of 1 km in an 82-km road project, it's like building every 7 km a new bridge with an average span of 70 linear meters. That would be around 11 bridges.

So if the project's total allocation is P2.28 billion and its actual construction cost is only P1.7 billion (which already includes a P700-million provision for additional expenses), then the project must be overpriced by at least P580 million. A 25-percent overprice (P580 million divided by P2.2 billion) in DPWH projects are common. This could be a rich source of campaign funds for the ruling Liberal Party come the 2016 elections. Other projects are overpriced by 30 percent or above.

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Publication:Philippines Daily Inquirer (Makati City, Philippines)
Date:Dec 4, 2015
Words:396
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