Auditing operation No. 03/26
Railway corridor construction and operation
The auditing operation was included in the Annual Audit Plan of the Supreme Audit Office (hereinafter referred to as „SAO“) for the year 2003 under No. 03/26. The auditing operation was managed and audit conclusion drawn up by Mr. Jiří Adámek, the Member of the SAO.
The aim of the audit was to examine the management with the funds earmarked for the preparation, the construction and the operation of the railway corridors.
The audited period covered the years from 2002 to the end of the audit, as well as previous periods in case of relevant connections.
The audited bodies were the Ministry of Transport (hereinafter referred to as „MT“), the State Fund for Transport Infrastructure, the Railway Infrastructure Administration, state organisation, and Czech Railways, joint-stock company.
In the planning phase of corridor III and IV modernisation projects the MT did not create the required conditions to guarantee that the most efficient solution is selected for execution, in particular
- The MT did not provide a uniform approach for the calculation of the socio-economic analyses of the modernisation projects and the method of social effect indicators evaluation,
- The MT did not verify the accuracy of calculations in the feasibility studies, the calculations contained errors,
- Results of solution analyses were overrated by applying benchmarks of varying extent,
- Solutions recommended by the MT and subsequently approved showed inferior socio-economic calculation results than some other solutions outlined in the feasibility studies,
- Proposed financing models were unrealistic. This has led to the postponement of implementation deadlines beyond the envisaged 2010 prospect.
Implementation of corridor I and II modernisation programmes did not proceed in accordance with the updated terms approved by the Government in 1999, in particular
- The investment requirements quoted by the MT in the updated financing models for corridors I and II did not include the costs to be covered by investor’s own resources and investment requirements for both corridors are therefore in fact 7 milliard CZK higher,
- The corridor I completion deadline was extended by 2 years until 2004 and the modernized section remained short of 7.9 km,
- On the corridor II the track speed of 160 km/hr for tilting trains will be achieved on just 62 % of the envisaged length.
Economic and efficient use of resources earmarked for the corridor modernisation programme implementation was negatively affected in particular by
- Limiting the scope of corridor I and II construction works during execution, with the execution of some sections and works cancelled or transferred to corridor III modernisation programme,
- Deficiencies in construction planning leading to changes in the scope of works during execution,
- Public procurement for design works and construction contractors in the conditions of limited competition, which did not create effective pressure that, would optimise the offered prices,
- Not evaluating the bidders’ prices against optimum criteria,
- Payments for works exceeding the limits set by the corridor modernisation principles, works on sections outside the construction site or works on property owned by a different entity, and other breaches of the principle of economy, estimated to amount to 270 million CZK for the basic set of construction works.
Comparison analysis of selected actions on corridor I and II confirmed that the prices for work were not optimised and showed opportunities for savings in the range of 13 to 30 %.
There will not be achieved envisaged benefits of corridor I and II modernisation in terms of reduced travel times. The design track speeds can in practice be reached by conventional trains on 59 % of the track length of corridor I and 40 % of corridor II. A wider operation at those speeds is prevented by
- A number of sections with lower speed limits,
- Some persisting construction and technical defects,
- Deficiencies in repairing of the identified defects.
Availability of vehicles to be operated on corridor I and II is not provided satisfactorily:
- Purchasing only seven instead of ten tilting trains that can reach higher speeds on longer sections than the conventional trains means that the envisaged service range will not be covered, what is more, the trains will be supplied for the original price of ten,
- The calculation of benefits that would demonstrate the efficiency of operating the tilting trains under different conditions has not been done,
- Delivery deadlines for tilting trains were postponed,
- Due to the failure to arrange for financial resources, the lack of engines and carriages to be operated on the corridors is scheduled to be addressed as late as in 2006 to 2008.
There is a risk that deficiencies identified by previous SAO audits will occur again during the implementation of corridor III and IV programmes
- Similar problems with financing as in corridors I and II arose also in case of corridor III and IV modernisation,
- Deficiencies in construction planning, in adherence to timeframes and in price optimisation were not removed satisfactorily,
- To a certain extent, payments for works exceeding the limits set for the construction of the corridors persist.