COA flags MCWD for unfinished, overdue projects

Water district says there are reasons for delays that are beyond their control

CEBU CITY, Philippines—The Commission on Audit (COA) has flagged the Metropolitan Cebu Water District (MCWD) for seven unfinished and overdue infrastructure projects with a total contract cost of P235.880 million.

In its December 2022 annual audit report published on its official website, COA said these projects are either due for termination, not yet started, suspended, ongoing, or completed but incurring significant delays ranging from 45 days to eight years.

“Thus, government funds were either tied up on the unimplemented, uncompleted, and delayed projects and deprived the concessionaires of the benefits that could have been derived from the immediate use therefrom,” the state auditor said.

MCWD projects

These projects, COA, stated were started as early as 2013 and awarded to different contractors.

Three projects with a total contract cost of P63,012,002.03 were for termination due to various issues. Some of these projects are also still in the planning stages, with delays of three to eight years.

The state auditor said these projects include the Mactan Water System Improvement Program Package 3 with a project cost of P52.6 million. Aside from lacking required permits from the Department of Public Works and Highways (DPWH), this project was stopped due to various modifications which, COA said, resulted in significant variation orders that may go beyond the limit set by the law on procurement.

COA said the water district already made payments amounting to P18,957,680.20 on the advance payment or mobilization fee and progress billing of these projects, P8,571,814.65 of which covers the mobilization fee.

“The advance payments/mobilization fee totaling P8,571,814.65 were not recovered by MCWD…The failure to recover the mobilization fee granted for the above-mentioned cancelled/terminated projects deprived the agency of the use of the said funds,” COA report reads.

Other delayed projects

Moreover, COA noted four other projects that were not completed within their contract period. These projects have a total contract cost of P172.868 million.

Of the four infrastructure projects, two were completed but with delays ranging from 45 to 964 calendar days.

The state auditor said contractors of these projects have been subjected to liquidated damages, except for projects contracted by JFAP Construction/Optimus Engineering and Construction Joint Venture and Petrina Construction and General Merchandising, which incurred delays of 48 days and 444 days, respectively.

COA recommended that MCWD intensify its regular monitoring and supervision to ensure its timely completion and to demand immediate refund of mobilization fees released to contractors.

The state auditor also urged the water district to ensure collection of the liquidated damages for delayed projects.

MCWD’s response

MCWD, in its comments, said they have been regularly monitoring and supervising their projects. 

However, there are reasons for delays that are beyond their control.

These include the delay in the issuance of excavation permit, refusal or protests of nearby residents to projects, like the pipe laying project.

MCWD also said that some variation orders happen because of the intervention of the local government units (LGUs), with some LGU requiring the whole width of the lane of the road affected to be restored even if only a small portion has been affected by their project.

The water district also said that its Contract Termination Committee is currently handling the processing pf termination of contracts for projects recommended for termination.

“We will continue to impose liquidated damages to our contractors who will be delayed without valid reasons,” MCWD said.

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