The SAO audited funds earmarked for the construction of the ring road around the capital city of Prague

Press Release – May 14, 2012

The audit aimed at funds earmarked for preparation and construction of the ring road. According to the documents submitted by the Ministry of Transport in 2001, the construction should have been finished in 2008 with the length of 83 km and the total cost amounting to CZK 48,229 million. Until the audit operation only 41 km (sections Satalice–Běchovice and D1–Ruzyně) had been finished, with the cost amounting to CZK 34,818 million. Completion terms are not fixed, but the Road and Motorway Directorate expect the ring road to be completed in 2020 with the total costs reaching over CZK 106 milliard.

The audit operation followed Audit Operation No. 04/26 – The construction of the road circular around the capital city of Prague, which was performed in 2004 and scrutinized the preparation phase of the planned construction. In September 2005, the government instructed the Ministry of Transport to implement measures, which would remedy and eliminate the shortcomings mentioned in the audit conclusion. The SAO states that the implemented measures had only minor or none impact and several shortcomings have remained. For example:

  • Coordination between state and local authorities was unsatisfactory.
  • Realization terms were postponed and cost increased because of requirements and appeals of participants in planning procedures. 
  • The route variants in north-west part of the ring road were poorly assessed.

In following areas, auditors also revealed negative impacts on the effectiveness of the funds spent on preparation and realization phases of the construction:

  • land purchases in the area of the ring road and motorway intersection,
  • too many modifications during the realization phase,
  • assignment proceedings in connection with the additional works.

The audit conclusion lists several examples of cost increases caused by realizations of additional buildings and works, which had subsequently been required by local authorities and interest groups. Their requirements went far beyond conditions set in environmental impact assessments. In some cases, the requirements were included into zone permit terms. The Road and Motorway Directorate paid for construction works, which evaluated assets belonging to other bodies. In one example, the additional works cost amounted to CZK 1.2 milliard.

The audit conclusion lists examples documenting the unsatisfactory preparation: For example, additional works accomplished by the supplier cost more than CZK 4 milliard, which made 90 % of the pre-negotiated price. Changes and pricing alternations were usually authorized by the Road and Motorway Directorate after their implementation. The audit operation revealed that the Road and Motorway Directorate had paid CZK 659 million more than laid down in the agreement in spite the changes were not entered in a contractual appendix.

Another case described in the audit conclusion is the intersection crossing of the ring road and the D1 motorway. At first, the Road and Motorway Directorate opted for a solution without evaluating other possibilities and later decided for changes to the original plan. As a result, the petrol station placed at the intersection area was demolished. The Road and Motorway Directorate paid CZK 300 million for the dispossessed lands of 9 719 square meters (i. e. CZK 30,867 per one square meter).

The audit also revealed nine cases of violation of Act No. 137/2006 Sb., on public procurements, in which the procurements had been placed by the Road and Motorway Directorate. These cases can be also qualified as violations of Act No. 218/2000 Sb., on budgetary rules. That is why the SAO noticed the financial authority that the Road and Motorway Directorate misused funds provided by the State Fund of Transport Infrastructure in the amount of CZK 5.7 milliard within years 2005–2011.

The SAO also noticed the District Prosecutor’s Office in Prague 4 that the Criminal Code had been violated.

The audit conclusion lists several shortcomings and assures that in case these shortcomings are dealt with, the effectiveness of the funds spent on the construction will increase rapidly. The most alarming shortcomings include:

  • lengthy zone and building planning (sometimes taking over 10 years),
  • approvals of buildings and works, which are not directly related to the ring road construction, without the claimant’s participation in the payments,
  • non-functioning system of value control, non-existing instruments for its implementing,
  • little motivation of the Road and Motorway Directorate to do something about the expensiveness of the construction.

The auditing operation was performed from June 2011 to January 2012. The audited period extended from January 2006 to September 2011; where relevant, the preceding period and the period until the auditing operation’s completion were also scrutinized. The audited bodies were the Ministry of Transport, the State Fund of Transport Infrastructure, and the Road and Motorway Directorate. The auditing period was included into 2011 Audit Plan of the SAO under No. 11/16. Jiří Adámek, Member of the SAO Board, managed the operation and prepared the audit conclusion as well.

Communication Department
Supreme Audit Office

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