Two buildings housing government departments on Virgin Gorda will soon undergo repairs, following the damage to the structures by category five hurricanes more than two years.
The buildings – the Flax and the North Sound Administration facilities – are now open for tender for rehabilitative and reconstruction works, a government-commissioned release has said.
Flax building
The release said proposed works on the Flax Administration building will see the structure’s concrete frame rehabilitated, block walls strengthened and a new truss timber roof with metal sheeting built.
The carpentry, interior finishes, plumbing fires and fittings, electrical systems and some mechanical works will also be replaced, the release added.
Vanterpool building
In the meantime, Procurement Coordinator Ishma Rhymer said the Vanterpool building will receive reinforced block walls and a concrete frame.
Timbre rafter roofs with metal sheets, a replacement of the exterior stairwells and a new roof will also be done, she further said.
“Other works on the building include the rehabilitation and partial replacement of carpentry, improvements to all finished floors, walls and ceilings; rehabilitation of some plumbing fixtures, electrical lights and components and some mechanical systems, in addition to the construction of a water cistern,” the release noted.
Requirements to bid
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The International Monetary Fund (IMF) has highlighted gaps in Guyana’s governance structure which it contends could lead to corruption.
According to the Staff Report from its 2019 Article IV Mission, weakness in several key areas such as fiscal governance, regulatory framework, rule of law, and AML/CFT could give rise to corruption vulnerabilities.
The staff noted that authorities have taken steps to strengthen governance in the areas highlighted, but capacity weaknesses continue to impact decisive implementation of policy actions.
Specifically key governance institutions such as the Financial Intelligence Unit, National Procurement and Tender Administration Board, Public Procurement Commission and the Integrity Commission face significant capacity weaknesses with severe staff shortages, particularly legal and accounting expertise, the report highlighted.
“This severely impacts the ability of the institutions to ensure compliance with existing regulations, conduct investigations including for politically exposed persons (PEPs) and implement additional actions to further strengthen governance systems to address corruption vulnerabilities,” it stressed.
Efforts by the authorities to strengthen governance, in the areas of anti-corruption and transparency in the extractive industry, and procurement were noted and commended.
These commendations were premised on the submission of the Extractive Industries Transparency Initiative (EITI) Report in 2019 and the commencement of implementation of its recommendations to further enhance transparency in the extractive industry as well as the recent reestablishment of the Integrity Commission.
According to the IMF this reestablishment has reinvigorated compliance with the asset declaration regime.
The report noted that staff have encouraged authorities to make the asset declarations public and develop the methodology for their verification.
In public procurement, the staff welcomed the steps to enhance the transparency of the bidding process and awarding of contracts, but also encouraged the authorities to ensure timely compliance with existing regulations and take further actions to fortify the transparency of the procurement system.
Repeated mention was made of the “welcome step” embodied in the Natural Resources Fund (NRF) legislation but the report has recommended the legislation be expeditiously complemented with a fiscal responsibility framework to ensure that fiscal deficits are avoided.
“The NRF framework commendably aims to save part of the natural resource income as net wealth for future generations. To ensure this and to keep public debt from rising, a zero-overall balance rule which constrains the annual non-oil deficit to not exceed the expected transfer from the NRF is needed. This rule could be phased in over the next three years to allow a smooth widening of the non-oil deficit (in relation to non-oil GDP),” they advise.
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The caretaker APNU+AFC administration on Friday released to the media a list of approved road contracts worth $714.51m for regions 4, 6 and 10.
Since it has effectively been a caretaker government from December 21 last year the contracts approved by the National Procurement and Tender Administration Board and noted by Cabinet will raise eyebrows.
Many of these roads are also located within what are perceived to be strongholds of the governing APNU+AFC coalition.
The road works include $69m for Front Road, West Ruimveldt awarded to H Nauth and Sons; $48.6m for the Agricola Main Access (Brutus Street) to GuyAmerica Inc; $37m for Essequibo Street, Lamaha Springs awarded to Chung’s Global Enterprise; $41.4m for Primary School Street, Manchester, Corentyne awarded to Kason Engineering and $74m for Sansculotte Street, (Bun Bush Dam), East Canje, Berbice to Surrey Paving and Ideal.
The list of roads follows:
Region 4, Ministry of Public Infrastructure
- Road network, (South entrance) South Ruimveldt, Georgetown For the sum of $25,963,270.00. Contract awarded to K.P Thomas & Sons contracting.
- Front Road, West Ruimveldt, Georgetown For the sum of $69,083,400.00 Contract awarded to H. Nauth & Sons.
- Agricola Main Access (Brutus Street) Georgetown For the sum of g$48,696,570.00 Contract awarded to Guyamerica Inc.
- Essequibo Street, Lamaha Springs, Georgetown For the sum of $37,057,800.00 Contract awarded to Chung’s Global Enterprise.
- Tukeit Drive, South Ruimveldt, Georgetown. For the sum of $21,881,380.00 Contract awarded to K.P Thomas & Sons Contracting.
- Rehabilitation of William Street, Kitty, Georgetown For the sum of 17,030,940.00Contract awarded to Y. Bhola construction
- Rehabilitation of Critchlow Avenue, South Ruimveldt Park, Georgetown. For the sum of million $18,013,720.00 Contract awarded to Eron Lall Civil Engineering.
- Rehabilitation of Aubrey Barker Road, Georgetown. For the sum of million $19,237,700.00 Contract awarded to Y. Bhola construction
- Rehabilitation of Eleazar Street, D’Urban Back- lands, Georgetown. For the sum of million $18,312,650.00 Contract awarded to K.P Jagdeo General Contractor.
- Rehabilitation of Titus Street, Agricola For the sum of million $11,924,530.00 Contract awarded to Chung’s Global Enterprise
- Rehabilitation of Marabunta Street, Meadow Brook Gardens. For the sum of million g$22,321,110.00 Contract awarded to Chung’s Global Enterprise
- Rehabilitation of Meadowbank Access Road, Georgetown. For the sum of million $14,725,400.00 Contract awarded to Puran Brothers Inc.
Total for Region Four roads is $309,523,071
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Representatives from the cruise lines and the engineering firm that are involved in the Verdant Isle group, which was selected by government to build the cruise berthing facility if it goes ahead, will be meeting with government and other stakeholders here in Cayman this week. In a press release the group said that these would be the first in a series of meetings over the coming months, which will include an open town hall. However, no date has been set for a face to face with the public.
The representatives include Michael Bayley, President and CEO of Royal Caribbean; David Candib, Vice President Development and Operations of Carnival Corporation; Barry Loudermilk, Director, Business Development of Orian Marine Group; and Richard Noel, General Manager of McAlpine Limited in the Cayman Islands.
CNS understands that the group was due to meet at the George Town Yacht Club on Monday evening with tour operators, though it was said to be an invitation only event. The representatives are due to meet other stakeholders on Tuesday and the media on Wednesday. They will also meet with the Cruise Port Referendum campaigners, the National Trust for the Cayman Islands, and the young local climate activists from Protect Our Future.
In the press release about the arrival of the consortium representatives from local marketing company Tower, Michael Bayley said the meetings were to share information about the project and to listen to stakeholder needs and concerns.
“We are committed to being a proactive, approachable and positive community partner, emphasizing stakeholder relationships based on transparency and authenticity,” Bayley said.
It is now more than one year since government held the last public meeting regarding the controversial project. This was during the tendering process but well before the bidders were selected. However, Candib from Carnival and Miguel Reyna from Royal Caribbean were in attendance and sat with the tourism minister and civil servants from the procurement office overseeing the process.
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Having reached down to the project level, this Part will conclude the Infrastructure Insight series and will do so by examining how a contractor conceptually prices a project.
Let us consider the real case of “Budday,”* who, following an invitation to bid for construction of a hinterland bridge by a regional administration, decided to submit a bid on behalf of his business, Budday’s Construction Enterprise, which has been successful at completing a number of projects. In pricing the tender document, Budday included a sizeable premium in his final price, due to the fact that his business is new to the hinterland location and he wanted to cover for uncertainties. At the bid opening Budday’s price was the lowest and he was awarded the contract for the works.
Judging from the prices of other tenderers, Budday’s price was too low to complete the bridge. However he could not withdraw from the process, and instead hoped that his added premium was enough to carry the project through, and perhaps leave a degree of profit. Budday’s dilemma was that he still did not know if, and how, to proceed as he could make a substantial profit or a heavy loss, and he had no way of assessing his true position. Budday’s bid pricing method was largely determined by the nature and content of the tender document at hand. It is useful to examine the likely methods of pricing.
Bottom-up pricing
Perhaps the most important feature of the classification of contractor pricing is the starting point of the pricing. The traditional ‘bottom up’ approach begins with evaluating the cost factors for each item in a bill of quantities, a contractual document widely used in Commonwealth countries as part and parcel of the received common law of England. To allow certainty in pricing, the work in the bill of quantities is measured off of design drawings and itemised into elementary work packages. Each item specifies both the quality and quantity of the respective work package and must itself conform to an independent, standardised method of measurement. A common misconception is that the bills of quantities are merely passive lists of materials.
The price of a complex structure can then be attained by pricing each elementary work package and building an overall price when all prices are summed up. An amount for desired contractor profit is included, and the total so evaluated is then adjusted for the risk the bidder associates with the project. The usual market risks of which a bidder should be aware are cost inflation and availability of both materials and labour, and the likely bid-prices of others. The importance to the bidder of winning the bid is also important. There are also project risks, which include the competence of design/supervision personnel and the quality of the tender documents. This final adjustment is commonly based on the ‘informed intuition’ of the bidder. However, it may be likened to actuarial calculations made by insurers when pricing risks: for this is the view of John Murdoch et al in their work ‘Con-struction Contracts’ (Taylor & Francis, 2009). Hence bottom up pricing is always subject to a final adjustment upon review, however, diligently each item has been priced, and this is its main drawback.
Top-down pricing
In contrast, ‘top down’ pricing starts with the total bid price the bidder wishes to submit, including for profit and risks as before. This total is then proportioned against anticipated construction activity duration, rather than work packages, set out in the tender document. An apparent drawback is that the price of each activity is simply an allocated element of the total price, without measureable particulars. Nevertheless top down pricing is applicable where bills of quantities are not provided, either because the works are minor and such value does not warrant the time and expense of bills of quantities preparation, (for example, a modest dwelling house) or a mega-project is at hand where bills of quantities cannot be prepared within a feasible time due to the extensive structure.
Pricing the tender document before work starts may be contrasted with ‘cost-reimbursement pricing,’ where the price is only ascertainable after the project ends, and only if successfully so. At the same time, the strength of top down pricing is realisable when the top down approach (without measureable details) is combined with the cost-reimbursement pricing and used to establish a “target price”.
Target pricing
David Trench, in his work ‘On Target’ (Thomas Telford, 1991), pointed out that an independent UK survey showed that project time overruns was the largest single cause of cost increase for both construction owners and contractors; with large projects being highly susceptible to uncontrollable costs. He introduced target pricing as a new type of procurement and accounting to mitigate this. First: a proposed project is bid on a ‘top down’ price basis with the successful price being used as a target price. Next: arrangements are made to pay the contractor under a parallel cost-reimbursement account. Finally: where the reimbursed cost is less than the target price, the saving is shared between owner and contractor; where such cost exceeds the target price, the excess cost is also shared. The object is to establish a joint interest in time- and cost-control between the owner and contractor. Trench saw his system pioneered in the construction of the landmark London Millennium Dome, which was successful technically, but dubbed a financial failure (based on the visitor ticket sales) until sold off to a private owner. Over time, target pricing has been extended in use, even to when bills of quantities are provided.
Target pricing presently is limited to use on mega-projects, and to particular countries, but it is mentioned here as there is a nascent international dimension to Guyana’s construction market, and this pricing may emerge. Its drawback is that it demands multiple teams of quantity surveyors and other specialists – for contract documentation, settling of owner/contractor shares, and accounting.
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