Audit operation No. 10/30 scrutinized funds earmarked for construction of the National Technical Library in Prague 6 – Dejvice
Press Release – March 2, 2011
The National Technical Library demanded a new building as the rented area in the National Library in Klementinum was not sufficient. The Ministry of Education, Youth and Sports did not find the necessary amounts of financial resources in the state budget, so in 2004 the Ministry came with an idea to realize the construction works in participation with a strategic partner, who would co-fund the project by means of a supplier credit. The Ministry reasoned that the project could be finished by June 2006 thanks to a strategic partner. Thus the estimated cost of the construction (CZK 1,592 million) increased by CZK 217.4 million to the total estimated cost CZK 1,809.4 million. The credit was to be paid off by the end of 2010 and the annual repayment would make CZK 300 million. The Ministry failed to perform the cost-effectiveness analyze of the chosen means of realization and funding of the construction, which is necessary with PPP projects (Public Private Partnership).
The conclusion of the auditing operation proves that the Ministry chose an inappropriate way of the project’s funding.
The selection of the contractor was finished in 2006. By then it was clear that the essential condition of the chosen funding system (e. g. pushing the construction forward) could not be complied with. During the realization phase, the costs increased by CZK 785.634 million to CZK 2,377.634 million and the construction was not finished until 2008. The credit will not be paid back until the end of 2013. The Ministry informed the Government about the cost increases and schedule delays as late as in November 2007, i. e. 15 months after the changes to the schedule had been made.
The cost increase was caused by the rise of VAT rate of May 2004 and incidental higher prices for construction works. Among other things that influenced the final cost were the construction of rentable spaces (the library of Prague 6, subterranean parking area for 291 cars, shops, and the cafeteria) and communication technologies. The chosen way of managing the project (at the hand of suppliers) also influenced the cost as well as the fact that the interior decor included some expensive designer products (for example reading desks for 6–24 persons that were charged from CZK 31,956 to CZK 449,288). The cost height was negatively influenced by the fact that the State Technical Library (the legal predecessor of the National Technical Library) did not check whether the charges for component construction works and supplies were justifiable as the strategic partner was not placed under obligation to account for actual works and supplies.
The cost for building volume reached CZK 13,803/m3 and was some 38 % higher than the Ministry had originally proclaimed in the programme’s documentation.
Communication Department
Supreme Audit Office