Tuesday, December 25, 2012


Civic body rides roughshod over rules with cost escalations in road works
‘BMC Often Ignored Technical Guidelines, Didn’t Recover Security Deposits From Contractors’
The Brihanmumbai Municipal Corporation has come under stinging criticism from the Comptroller and Auditor General for undertaking slipshod development and repairs of Mumbai’s roads. The auditor’s latest report highlights several infractions, including variations in tender costs, disregard of technical guidelines, nonrecovery of security deposits from contractors, direct losses of over Rs 25 crore besides indirect losses of many crores.

Tabled in the winter session of the assembly, the report on local bodies covers audit of records from 2007-08 to 2010-11. In the report, the CAG rips apart the BMC and its roads department, which has faced intense public scrutiny for permitting poor road repair and maintenance works. Every year, a cartel of contractors grab tenders, provide poor work, quote low costs and thereby ensure that big firms stay away from the process.

The CAG report underscores the rot in the system. Hinting at losses to the municipal exchequer, it notes that the roads department made ‘idle’ investment in pothole filling machines and did not put in place a Road Management and Maintenance System as per the recommendation of the Standard Technical Advisory Committee (STAC). It also says the department did not recover additional security deposit of Rs 21 crore from a civil works contractor and lost out on Rs 1.38 crore in interest on the amount. In another case, the report adds, a loss of Rs 1.5 crore was incurred on account of non-recovery of “rebate” from a contractor.

The severest stricture in the report is on award of contracts without invitation of tenders, which later enables major variations in costs. Between December 2009 and October 2011, the CAG reveals, 147 works of concreting (CC) and asphalting were awarded to the same contractors without calling tenders. Of these, 59 works recorded cost variations of Rs 750 crore. The cost of CC works surpassed the original estimate by 62% and of asphalting works by 57%.

The BMC justified the variations by passing the buck to elected representatives. MPs and MLAs, the BMC argued, insisted on completing work on priority basis. This resulted in hasty preparation of estimates; besides, the election code of conduct meant no tenders were floated for a while.

Dismissing the BMC’s explanation, the CAG says: “The department should have planned for inclusion of all work after reviewing the demand of corporators, MLAs and MPs. Before inviting tenders, it should have ensured there was no variation. This move was in violation of the MMC Act and deprived BMC benefits of competitive rates.”

According to the CAG, many of the STAC’s 90 recommendations are not followed by the BMC, including on quality control provisions in tender specifications and a system to maintain records. Also, in violation of the MMC Act, many “works of sizeable value were awarded by variations as additional works without inviting tenders”.

The objective of the report was to study if repairs were properly planned, if the tendering process was up to the mark, if work was undertaken ‘effectively and economically’ and if syst e m s o f monitoring and evaluation were put in place.

The latest CAG report indicts the BMC on several counts:

In June 2008, an order was placed with Speco Infrastructure for three pothole-repairing machines costing 2.34 crore. The machines could not be used on minor roads less than 9-meter wide. Out of the 7.14 lakh sq m of filling executed during the monsoons of 2010 and 2011, only 141.75 sq m was done with the machines

For the development of the Road Management and Maintenance System, the BMC released 1.76 crore as payment to consultants. But the consultants’ report was not up to the mark and incomplete. No action, however, could be taken against them, resulting in blockage of funds

In a civic works tender, additional security deposit of 21 crore was not recovered. Due to this, the BMC lost out on interest of 1.4 crore

The work of concreting side strips was awarded to M/s Rupesh and M/s Supreme at a tender cost of 12.68 crore, with a rebate of 12.8%. The tender was however invited before the finalization of the design of the widening of the Mulund-Goregaon Link Road, depriving the corporation rebate of 1.4 crore

Cost variations were allowed in 30 of the 46 concreting works and 29 of the 42 asphalting works. Because of this, additional contract costs of 470 crore and 234 crore were incurred

The municipal estate department incurred a loss of about 46 crore for failing to recover capitalised value and interests on a redevelopment scheme. In 1996, the standing committee approved redevelopment of civic BIT cottage at Matunga. M/s Vaishnavi Builders was required to pay BMC levy computed on surplus area of 46,533 sq ft. In all, 46 crore was to be recovered. While the developer paid some of the amount over the years, interest at 15% was not levied. And yet, a commencement certificate was issued

In 2007, the BMC standing committee cleared a scheme to supply flavoured milk to schoolchildren. While the scheme was suspended in December, the contractor was informed later. As a result, 30 lakh packs were supplied and later expired. Since schools were closed for holidays, the packs were given away or dumped. This resulted in wasteful expenditure of 2.8 crore

Many major projects awarded in excess of approved costs or with variations. Middle Vaitarna Water Supply Project was awarded at an increased cost of 678 crore or nearly 51% variation from the original 1,329 crore. The Mumbai Sewage Disposal Project (stage two) recorded a variation of 73 crore — 20%
over the original 365 crore.
Sharad Vyas | TNN

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