Extraordinarily high Nu 167.20 mn estimate for 2.5 km road widening project in Lhuentse raises doubts

The cost is higher than that for constructing an entirely new road

An anonymous letter addressed to the Anti Corruption Commission (ACC) with copies to the Royal Audit Authority (RAA) and The Bhutanese raises some serious concerns on the abnormally high estimate of Nu 167.20 mn for a 2.5 km road widening and permanent works in Phaling Thromde under Lhuentse Dzongkhag.

The letter not only questions the very high estimate prepared by the Lhuentse Dzongkhag but also certain tender provisions which it alleges have been put in to favour a bidder.

The tender was published on 9th March 2019 on the government’s e-procurement website and it is in the process of evaluation.

If broken down, the cost estimate comes down to Nu 66.88 mn per km for the road widening and permanent works making it an unusually expensive road widening project.

Given that it is a Dzongkhag road, the high cost is even more curious.

The letter questions this high cost saying that there are no special items in the Bill of Quantities (BOQ) and it does not have the Dense Bituminous Macadam (DBM) blacktop.

The letter alleges possible collusion between the one who has estimated the abnormally high road widening project and the eventual lowest bidder.

It questions why the tender criteria is giving zero marks for hired equipment and also mandating a high level of technical manpower for a 2.5 km road project.

It alleges this is to favour the eventual winner of the bid.

More expensive than East-West highway

The Bhutanese found that, by comparison, the biggest road widening project in the form of the National East-West Highway comes to an average of Nu 25 mn per km. This cost involves permanent works like drain, culverts and road protection walls.

Therefore, Lhuentse project of 66.88 mn per km is Nu 41.88 mn more per km than the east-west highway itself.

For a comparative analysis The Bhutanese talked to both the project staff of the east-west highway to get specification of the east-west highway and also the Dzongkhag Engineer of Lhuentse, Kelzang Lhendup and engineer Karma Wangdi to get the measurement and specifications of the Lhuentse road.

While the Lhuentse road design was done by the design division under the Department of Roads the cost estimation and item of works was decided by the engineering section of the Lhuentse Dzongkhag.

The level of road works required in the east-west national highway project is more as the total breath of the highway is 10.5 meters with 7.5 meters of blacktopped road and another 2 meters for drains and additional space. The east-west highway also used the more expensive and thicker DBM which is blacktop of around 60 cm thickness. It then used the thinner Asphalt Concrete of 25 mm over it.

By comparison the Lhuentse road widening project will take the total breadth of the highway to only 9.1 meters with black top at 7 meters, a 1.1-meter foot path and 1 meter for drain. Importantly, the Lhuentse road is not using the more expensive DBM like the east-west highway but only the cheaper and thinner concrete asphalt.

Much more expensive than even Thimphu Thromde’s estimates

When asked why the Dzongkhag road widening was so much more expensive the Dzongkhag Engineer said that the works also included a one-meter walking footpath, storm water drain, man hole cover and electric lights on one side of the 2.5 km road.

In response to another question, engineer Karma Wangdi said that the storm water drain would be only for around 500 meters in the town area. The street lights would cover the 2.5 km stretch while the walking pavement of around 1-meter breadth would be made of concrete but have tiles on the top and it would cover the entire 2.5 km stretch.

With these additional urban works The Bhutanese now did a cost comparison between the Lhuentse Dzongkhag’s pavement, drain and lights for Phaling Thromde with that of Thimphu Thromde.

Here a Thimphu Thromde official said that steet lights in urban roads are usually put at a gap of every 30 meters and the calculation done is Nu 40,000 to Nu 50,000 per pole inclusive of all works, equipment, construction and labour costs. With around 100 poles going in a 1 km stretch the estimate cost is around Nu 4 mn to 5 mn per km.

The Thimphu Thromde also recently constructed a 2-meter breadth pavement complete with storm drain and service ducts along the expressway. This pavement size is double that of in Lhuentse.

It must also be remembered that in Lhuentse the storm water drain is only for around 500 meters.

As per Thimphu Thromdes own construction cost this 2-meter pavement breadth with a storm water drain and service duct under it comes to Nu 5,365 per meter which if extrapolated is around Nu 5.36 mn per km.

So if one is very generous one can take the 25 mn per km figure for a much bigger east-west highway widening work with more expensive DBM. One can also take the Nu 5 mn per km figure of Thimphu Thromde for electric lights.

Then if one takes Thimphu Thromde’s pavement (double the size of Lhuentse with storm water drain and service ducts complete) it comes to another Nu 5.36 mn per km.

Apart from the above The Bhutanese did not find any other major works that would require huge costs.

This very generous grand total should be Nu 35.36 mn per km which is still far below the Nu 66.88 mn per km project estimated and tendered by Lhuentse Dzongkhag.

Even by this most generous estimate of The Bhutanese of Nu 35.36 mn per km the Lhuentse works should come to around Nu 88.04 mn in total for the entire 2.5 km stretch and the budget even then would be enough to build a bigger national highway quality road with DBM, Thimphu Thromde standard electric lights and a pavement double the size of the current one complete with storm water drains and service ducts throughout.

More expensive than a new and bigger road

It gets worse, as the 2.5 km road-widening cost of Lhuentse Dzongkhag is even more than the cost of an absolutely new road under construction near Phuentsholing Thromde.

The Department of Roads is currently executing an ADB road construction project which will be a 3.36 km entirely new road from Phuentsholing Thromde to Chamkuna.

Here, the cost according to DoR officials for this entirely new road including embankment, drains, pavement and blacktop but minus the cost of bridges comes to around Nu 33.33 mn per km. The new road is 10.5 meters in breadth with 7.5-meter blacktop.

This means that the Lhuentse road widening project of 66.88 mn per km is double that of an entirely new and much bigger road.

It gets more curious 

The Dzongkhag engineer said that while the engineering section had prepared the estimates it was approved by the Dzongkhag level tender committee. He said that the same committee would also award the winning bid.

The dzongkhag engineer claimed that the Dzongkhag had included all the works together for the road widening and permanent works in one package which is why it expensive.

The letter questions why the tender scoring system gives zero marks for hired equipment and stresses on more manpower. It alleges this is to favour a bidder.

This scoring is interesting given that most contractors in Bhutan use hired equipment of some sort or the other.

Here the dzongkhag engineer claimed that in the past they had problems with contractors with hired equipment unable to start work on time and so the Dzongkhag tender committee had brought in a new provision in the tender document of giving zero marks to hired equipment.

The letter also asks why such a high level of technical manpower is required by the tender document for a 2.5 km road. The project requires the contractor to provide a project manager, a project engineer, a materials engineer and a site engineer.

Here the dzongkhag engineer said that to his mind it is important to have three engineers in a project given its short duration of two years.

The project gets even more curious because while the tender document was uploaded on the e-procurement website the advertisement for it was given as an extract for broadcast on BBS for only one day according to engineer Karma.

The advertisement for such a large project was not given in any of the print media where normally contractors can look at the tender in more detail.

Kelzang Lhendup said that everything has been done as per the rules and norms and everything had received approval at the Dzongkhag tender committee level. He denied any allegations of over estimation of the works or any allegation of potential collusion.

A technical expert in the field of engineering and construction pointed out that flaw with the current system is that while the drawings are done by the MoWHS the estimates for major works are done at the Dzongkhag level and then heavy tender documents are placed in e-procurement sites.

He said that by comparison, in India, estimates are done at the center and only the implementation is done at the ground level.

He said that Lhuentse is not the only Dzongkhag and there are many other Dzongkhags where similar questionable practices are going on and it is not looked into much as it is far away from Thimphu.

This case comes in back drop of a much higher level of decentralization in the 12th plan. Of the 116 bn capital budget around half will go to local governments for implementation.

This also goes hand in glove with e-procurement where several tenders are floated only on e-procurement site with either no or minimal notification in the media as this is supposed to save some cost.