There were lots of talks recently on the increasing number of delayed government projects in all regions of the Kingdom. This is a dangerous phenomenon that leaves its negative impact on national development. A number of committees have been set up in the past to find out the reasons for the delay of projects.
A royal decree was issued recently to set up a high-level committee to find solutions for the problem within six months. The panel includes representatives from seven government departments to follow up development and service projects. It should complete works on each project within a month and present its report to the concerned authorities.
The committee members represent the Ministries of Finance, Economy and Planning, General Auditing Bureau, Experts Committee, Control and Investigation Board, the National Anti-Corruption Commission and the Cabinet’s General Secretariat.
I thought I should also contribute to the government’s efforts to solve this complicated problem. First of all, I would like to point out that the new committee is comprised of officials under Grade 15 giving the impression that they would follow employees in Grade Six and Grade Seven. Moreover, most committee members are from monitoring agencies that have failed to follow project works. How can we reach the truth if the committee comprises parties whom the contractors blame for the delay.
I propose that the committee should be comprised of 1) Government representatives (excluding Finance and Project Management) 2) Representatives from the private sector including contractors committees at chambers as well as Saudi Aramco. 3) It should also include international companies specialized in project management, like Bechtel (which managed Jubail Industrial City, or Parsons that managed Yanbu Industrial City and other companies that Saudi Aramco can propose in the light of its experience.
This committee will be able to present a practical and objective report to higher authorities within six months.
Let us try to find out the crux of the problem and ask five questions to the committee:
First question: Why we don’t hear about any delayed Aramco projects?
Second Question: Why we don’t hear about any delayed project of the Royal Commission for Jubail and Yanbu?
Third question: Why we don’t hear any delayed military projects under the Ministry of Defense?
Fourth question: Why we don’t hear any delayed projects related to Jeddah floods supervised by Prince Khaled Al-Faisal and Saudi Aramco and implemented by Saudi companies?
Fifth question: Why we don’t hear about any delayed projects in the private sector that carries out more projects than the public sector?
Most of these projects, mentioned in the five questions except that of the private sector, are financed by the government. While answering these questions, the committee would find that the main reason for the delay is government agencies. Contractors also play their role. The majority of these contractors are non-Saudis like Chinese (in schools and housing) and subcontractors (most of them are non Saudis either licensed by SAGIA or firms covered-up by Saudis).
The committee should focus on the drawbacks of government agencies, their systems and methods of awarding contracts.
Let us now discuss the problems facing projects from contractors. The main reason for the success of the five groups mentioned above is their good selection of contractors. They also insisted they would not pay any money to the main contactor until it pays the dues of subcontractors.
Our government allocates money for projects and the Ministry of Finance pays the money at suitable times. But nobody knows how the does contactor spend the money or whether it is transferred to some other accounts either to purchase land or new shares or to complete other delayed projects. In the case of major projects worth billions of riyals, we have to check whether the money is transferred to foreign accounts or their local accounts.
The phenomenon of unpaid debts to subcontractors, banks and importers worth billions of riyals is another major issue. It is like a dangerous economic bomb having dangerous consequences on the economy. So we have to find a quick solution for this problem.
One possible solution is that contractors should be asked to open an account in a Saudi bank for every project for which contracts have been signed and the contractor should be given the money in installment. The amount’s disbursement should not be allowed except after the signatures of three parties: The contractor, consultant and auditor of the project and the checks should be given to those who are directly linked with the project. At the end of the project, the full amount would be given to the contractor.
In the past we had faced a similar problem in the real estate sector. Some developers ran away after collecting money from people without fulfilling their promises. At that time, I made a proposal to open an extra account for any real estate project under construction where all the amounts received from investors would be deposited and the amount would be spent only on that particular project. A ministerial decision was issued later urging implementation of the proposal, which helped in saving the real estate market from foul players.
We need a practical solution like this for the delayed government projects. Naturally there are many problems related to government procedures and bad selection of contractors and the new committee should deal with all these issues with courage.
Finally, if the committee did not put the condition of setting up a special account for each project, I can tell you the problem would continue forever. Most subcontractors are foreigners and if they are not given money by the main contractor they would run away to other countries, especially the projects are given to them after deducting 30 percent of the project value with the knowledge of the government. Consultants expect these subcontractors would follow the necessary specifications and quality conditions.
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Courtesy of Al-Eqtisadiah newspaper