The SAO: Czech motorways could be cheaper by 20 %; so far, construction of 1 kilometre cost CZK 416 million
Press Release – August 5, 2013
The Supreme Audit Office (SAO) performed an audit of preparation processes and construction works of roads and motorways within the period from 2008 to September 2012. Auditors scrutinized 74 construction works worth CZK 215,000 million and focused in detail on 29 individual works worth CZK 83,000 million. Among the audited bodies were the Ministry of Transport, the State Fund of Transport Infrastructure, and the Road and Motorway Directorate of the Czech Republic.
The average cost of 1 kilometre of motorway construction amounted to CZK 416 million, with road constructions, the average cost of 1 kilometre made CZK 378 million. The SAO insisted it was possible to cut the costs by 12-20 %, which could save up to CZK 43,000 million with the 74 audited constructions. The SAO based this estimate on a comparison of road building and construction expenses in the Czech Republic and Germany. While in our country, the average costs of 1 kilometre of roads is CZK 355 million, it is CZK 260 million (e. g. 27 % less) in Germany.
Auditors calculated that the originally planned costs had mostly increased during the local planning proceedings - by CZK 21,900 million (68 %) - and during building permit proceedings - by CZK 5,900 million (37 %). Cost increases were caused by several factors. For example, local planning and planning permission proceedings took longer than usually, participants of the proceedings requested additional constructions (including water/sewer connections, gas fixtures, and crossings), and alternations to the original and already approved plans were demanded.
The constructions considerably fell behind the schedules. It usually takes 12 years to implement the investment plan and finish up the construction. Delays were mainly caused by longer planning and building permission processes. There were also problems with demarcation of the planned roads. For example, the Road and Motorway Directorate (RMD) planned an optimal route of R35 section from Křelov to Slavonín in 1993 with the expected costs in the amount of CZK 683 million. In 2001, the construction was divided into two parts - one of which continued, while the other one got suspended because of protests posed by the affected municipality. In spite the R35 section has not been finished yet, construction costs will soon exceed CZK 2,100 million.
During the local planning and planning permission proceedings, procedural errors enabled the participants to make repetitive protests, which led to even longer delays of constructions. Substantial schedule delays were caused by settlements of property rights with land and property owners, which usually took 2-3 years, but might have taken up to 10 years in some extreme cases.
Cost increases related to roads and motorways constructions did not occur only during the local planning and planning permission proceedings, there were cost increases during the construction works as well. The audit report states that during the construction of 13 works 920 alternations were adopted, which further increased the costs by CZK 2,000 million. Unforeseeable additional works only made small parts of the amounts.
Auditors scrutinized 38 individual public procurements worth CZK 6,400 million in total. In 21 cases, violations of Public Procurement Act were found, which amounted to CZK 4,300 million. For example, with 11 operations the RMD ordered additional works, which increased the original costs by 5-29 % and were ordered without tenders or sometimes without written agreements. In case of counselling agreement worth CZK 100 million, the RMD violated the Act on Public Procurement twice: the works were ordered without tendering (in spite the conditions stipulated by Public Procurement Act for awarding public contract without tender were not met) and tender conditions were set by the RMD in a way, which allowed only one specific supplier to perform the public contracts.
According to conceptual materials compiled in 1990´s at the Ministry of Transport, the network of roads and motorways should have been finished by now. However, with the current pace of implementation, the network will be finished in 32 years and the costs will reach CZK 520,000 million, which is 64 % more than the total costs presumed in 1999.
The Ministry of Transport also failed to arrange for controlling and conceptual activities. Since 2007, no binding mid- or long-term conceptual document has been approved, which would define priorities and the urgency of individual building projects depending on financial resources. Under the current funding system, the RMD usually starts the preparatory processes and building phases without having secured sufficient funds to finish the projects. Cost increases make the problems even worse.
For further details about auditing operation No. 12/18 (in Czech only), see the following link: http://www.nku.cz/assets/media/informace-12-18.pdf (pdf 340 kB).
Supreme Audit Office