Tuesday, October 09, 2018

Be careful about design specification of infrastructure projects

I have held this view.

A major source of high infrastructure spending is design specification.

If the specification is excessive, it will certainly lead to high cost, even with a competitive tender system.

Some consultants recommend design specification to favor certain parties.

This is also the experience found by the new finance minister of Malaysia.

It's smarter spending not austerity, argues Malaysian finance minister

The Malaysian government is not in austerity mode and will spend where necessary, said finance minister Lim Guan Eng. “We are also more selective in making public investments,” he added.

Mr Lim revealed that the government has cut back on the LRT3 (third Light Rail Transit) project by reducing the cost by 47 per cent (RM31.65 billion to RM16.63 billion) by changing the design specifications and shaved off RM5.22 (S$1.74 billion) off the MRT2 (Mass Rapid Transit line two) cost by rationalising the above ground portion of the project.

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