MINISTRY OF PUBLIC UTILITIES
8.1 Grand Bay Sewerage Project
8.1.1 Treatment Plant -Rs 250 million
Summary
This Design and Build contract comprised the construction of a treatment plant and its
‘Operation and Maintenance’ (O&M). The plant capacity was 3,500 cubic metres per day with
provision for treatment and re-use of treated effluent for irrigation. Alternatively, the effluent
will be disposed of as aquifer injection when no irrigation is required. Contract value was revised
as shown in Table 40.
Table 40 Contract Details
Date
Description
Amount
(Rs million)
30.07.01
Original Contract value
218
07.07.03
Approved contract value
237
30.06.04
Revised contract value
250
30.06.04
Total amount paid
234
The original completion date for the construction of the plant was 10 February 2003. This was
revised to 25 April 2003. The original O& M contract completion date was 10 February 2006 but
was revised to 25 April 2006
The Works were substantially completed on 25 April 2003 and the Taking Over Certificate was
issued accordingly. The O&M stage has started since 25 April 2003.
Key Findings
 The original contract was awarded for an amount of Rs 218 million but the revised estimated
cost was increased to Rs 250 million. This is an increase of some Rs 32 million. The cost
increase was mainly due to delay in the implementation of the project and to additional
works.
 The system will not be operational until such time that the housing connection works will be
completed in July 2005. This asset worth Rs 250 million is expected to remain idle for two
years.
 In the absence of effluent, Government is paying Rs 315,000 per month for operation and
maintenance excluding consumables and price escalation. The ‘Mechanical & Electrical’
(M&E) equipment is being operated for a number of hours every month. These are
preventive measures to minimise risk of impairment due to idleness. As at 30 June 2004, Rs
3,998,784 had been paid to the Contractor. During the two years, more than Rs 7 million will
be paid to the Contractor without any benefit to Government.
 Government paid some Rs 3.9 million (excluding VAT) for extension of time with cost. The
additional cost paid was due to the delay in providing water on site for testing.
 The Contractor was paid Rs 1.8 million for both process testing and commissioning, although
the commissioning part of the contract was not yet done.
Recommendations
 Management of project should be improved through better planning and timely decision
making. Appropriate action should be taken to ensure that the implementation of the house
connection project is not delayed.
 The Waste Management Authority (WMA) and the Consultant must ensure the correctness
and accuracy of the Contractor’s claims before recommending payments to the Ministry.
 The portion of the process commissioning has to be quantified out of the lump sum of Rs 1.8
million.
Background
This Design and Build contract comprised the construction of a treatment plant. The plant
capacity was 3,500 cubic metres per day with provision for tertiary treatment and re-use of
treated effluent for irrigation. Alternatively, the treated effluent will be disposed of as aquifer
injection when no irrigation is required. In 2001, the original contract value was agreed at Rs
218,092,362 and details are shown in Table 41.
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Table 41 Amount Payable
Component
Rs
Amount payable in local
currency (Rs)
139,561,935
Amount payable in foreign
currency (FF 19,982,297)
78,530,427
Total
218,092,362
The WMA is responsible to manage all wastewater projects.
Current Project Status
The works were substantially completed on 25 April 2003 and the Taking Over Certificate was
issued accordingly. The project is in the Operation & Maintenance (O & M) stage and the
revised estimated project cost is shown in Table 42.
Table 42 Project Cost
Description
Amount (Rs)
Approved contract sum by the Central Tender Board
237,000,000
Associated costs for Extension of Time
3,935,369
Costs for Additional works
4,610,236
Other claim due to Public Holidays
168,559
Contingencies (Variation of price for O&M, interests and
Additional works)
Projected contract price
4,200,000
249,914,165
Say 250,000,000
Payment at June 2004
Rs 234,000,000
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Operation and Maintenance.
In 2002, the WMA informed the Contractor that it would not be possible to carry out the process
commissioning of the plant due to unavailability of effluent. Effluent would be available during
the financial year 2005- 2006 because the house connection programme had just started. As per
the contract, in the event of zero flow condition (i.e. no effluent), Rs 315,000 per month would
be payable to the Contractor. In order to minimise such costs, the WMA requested the Contractor
to defer the O & M period of the plant by one year. The Contractor did not accept this proposal.
Observations.
 In the absence of effluent, the Contractor is presently operating the equipment for a number
of hours every month as preventive measures to minimise risk of impairment due to idleness.
Every two months, the Contractor issues a report on the general activities of the plant.
Government is paying Rs 315,000 per month (excluding price variation) to the Contractor.
This sum is payable until 2005-2006 when service users will be connected to the network. As
at June 2004, Rs 3,998,784 (including price variation) were paid for the operation and
maintenance.
 Although construction of the plant was completed since April 2003, the Consultant had not
issued a Performance Certificate. The reason was that no performance test could be carried
out.
 The plant constructed at a cost of some Rs 250 million had been taken over without any
performance test carried out due to the unavailability of effluent. This test will only be
possible in 2005-2006. Meanwhile, during the two years, some Rs 7 million will be paid to
the Contractor to prevent impairment of idle M&E equipment, valued at
Rs 133 million.
Recommendation
Management of project should be improved through better planning and timely decision making.
Appropriate action should be taken to ensure that the implementation of the house connection
project is not delayed.
Extension of Time with associated costs for water testing purposes (Rs 3,935,369 excl VAT).
As per the terms and conditions of the contract, the WMA had to provide an adequate source of
clean water to fill and test the concrete structures. However, there was delay in the provision of
water on site. Water had to be carried by private water tankers at a cost of some Rs 273,000.
Following discussion between the Consultant and the Contractor an extension of time of two
months was granted to the latter to carry out the testing during the period 28 February 2003 to 25
April 2003. In December 2003, the Tender Committee was requested to approve the payment of
Rs 3.9 million. The total amount was paid in several payment certificates up to December 2003.
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Process Commissioning (Testing & Commissioning- Rs 1,845,329)
Included in the Contract is a lump sum of Rs 1,845,329 for testing and commissioning. Rs
330,000 were for Civil portion and Rs 1,515,329 for Mechanical & Electrical portion. The whole
portion (Rs 1,845,329) of the cost of commissioning had been paid despite no process
commissioning had been carried out.
Observation
Payment had already been made for the process commissioning which could not be carried out.
The Contractor had issued a notification for additional claim for commissioning. The amount
was not yet determined.
Recommendation
The portion of the process commissioning has to be quantified out of the lump sum of
Rs 1,845,329 so that any potential liability can be offset against this advance payment.
Generator Set (Rs 3,312,446)
The Contractor quoted a sum of Rs 3,312,446 for the Generator set. This included electrical
auxiliaries, batteries, lubricator, cooling and exhaust systems, oil and fuel tanks and vent fans. In
the Particular Technical Specifications it was mentioned that “The fuel tank shall be of the
buried, double wall type with leak detection, the tank shall be solidly fastened to the slab. The
Contractor shall provide an electrical transfer pump and a manual pump.”
Visits were carried out on 2 June 2004. The Contractor’s representative and the Technical
Adviser to the WMA in connection with the Generator set were also present.
Observations
 Some Rs 183,000 had been paid to the Contractor for 15,860 litres of diesel during the period
April 2003 to June 2003. However, the volume of diesel in the tank could not be verified as
the measuring instrument had not been calibrated properly.
 The Generator set was not equipped with an ‘hour run meter’. Examination of the records
kept by the Contractor did not provide accurate information on the hours run by the
generator.
 The two-month report did not contain details on the hours run by the generator and the diesel
consumption.
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 Some Rs 12.4 million had been paid for the Scada and Automation system in April 2003. At
June 2004, the operation of the generator had not been integrated into the system.
 Instead of being a buried and double wall type, the tank was fixed above ground level and
appeared to be a single wall type. The deviation from the tender specification was not
recorded in the contract files. The Contractor was requested to confirm whether the tank was
double wall on 2 June 2004. At September 2004, no reply has yet been received.
 It was not possible to ascertain whether the amount of diesel consumed was fair and
reasonable.
Recommendations
 It is recommended that the Contractor records should contain accurate information on the
Generator set.
 The potential cost savings in constructing the tank different from that specified in the tender
be investigated and offset against future payment to the Contractor.
8.1.2 Contract for the Network & Pumping Stations (revised contract value Rs 577 million)
Summary
Under the Grand Baie Sewerage Project wastewater collected from domestic and commercial
users in that area through a system of piping network would be conveyed to a treatment plant.
Treated water would be used for irrigation, thus preventing pollution in this tourist area, which is
of high economic importance.
The Contract comprises the construction of pipeline, rising mains, pumping stations and
Operation and Maintenance (O&M) of the network. These would be connected to the treatment
plant already constructed in March 2003 at a cost of Rs 250 million. The original contract value
amounted to Rs 361.8 million in March 1999 but was revised to Rs 577 million in August 2004.
The implementation dates are shown in Table 43.
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Table 43 Implementation Dates-Network and Pumping Stations
Description
Date
Award of contract
13 July 2001
Original construction completion Date
17 August 2003
Revised construction completion date
07 March 2004
Revised Operation and Maintenance start date
08 March 2004
Revised Operation and Maintenance completion date
07 March 2007
The WMA was responsible for the project management.
Key Findings
 The contract value has increased significantly from Rs 361.8 million in March 1999 to Rs
577 million in August 2004, that is, an increase of Rs 215 million. The exact amount has not
yet been determined. This was mainly due to delay in award of contract, additional works
and extension of time with cost being granted.
 At June 2004 the project was still non-operational despite some Rs 513 million have been
disbursed. This amount excludes the treatment plant cost of Rs 250 million. The project has
suffered a delay of more than two years.
 The O& M contract which started since March 2004, will end in March 2007 and had been
approved for an amount of Rs 28,355,769. In the absence of effluent, Government is paying
some Rs one million per month for O&M. As at 30 June 2004, amount paid was
Rs 2,630,669.
 The Contractor claimed some Rs 83 million from Government for extension of time with cost
due to additional works and delays in the contract. The WMA assessed the amount payable at
Rs 8.4 million. The Consultant recommended an amount of Rs 51 million.
 In June 2004, Government appointed a team to negotiate with the Contractor to come to an
amicable agreement. In September 2004, the agreed amount was finalised at
Rs 48 million. This amount had already been paid.
 As at 31 December 2003, some Rs 9.8 million were paid to the Contractor for loss of
productivity without prior approval by the WMA and the CTB. It was only in August 2004,
that the CTB gave its approval for a provision of Rs 5 million.
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Implications
 Revenue will only be generated after completion of house connections to the sewerage
system. As the sewerage system is not yet operational, revenue foregone could be substantial.
 The Consultant certified claims of some Rs 9.8 million in respect of loss in productivity
without prior approval from the WMA and the CTB. Payments not provided under the
contract price were made without proper authority.
 The construction of some 2,000 property connections concurrent with the contract would
have minimised the inconveniences to the residents and other economic operators of Grand
Baie. Numerous complaints were received from the inhabitants.
 The project has not yet achieved its objective, that is, to prevent the pollution of the lagoon
by the existing onsite disposal system.
 The WMA foresees serious operational problems and clogging of the mains when the
network will be operational.
Recommendations
 Project management must be improved to minimise claims for extension of time with cost.
 Proper planning and monitoring must be done to avoid delays. Decisions should be taken
within reasonable time.
 These valuable assets must be put to use without delay. House connections must not be
delayed.
 The WMA must ensure that claims submitted for payments include authorised items.
Background.
This contract comprised the construction of pipeline, rising mains, pumping stations and the
Operation and Maintenance (O&M) of the network. These would be connected to the Treatment
Plant already constructed in March 2003 at a cost of Rs 250 million. The WMA was responsible
for the management of this contract. The revised estimated project cost exclusive of VAT is
shown in Table 44.
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Table 44 Contract Details-Network and Pumping Stations
Amount (Rs)
Approved Tendered Price in March 1999
361,782,680
Approved contract sum by the Central
Tender Board (July 2001)
Claim for extension of time with cost
411,984,892
50,951,151
Additional quantities
40,912,971
Mini pumping stations
11,500,000
Revised Contract sum at 30 October 2003
Additional works (including Price
Variation)
Claims for loss of productivity
Other Claims
say 515,500,000
53,400,000
5,000,000
2,730,000
Revised contract sum at 8 August 2004
Total payment at 30 June 2004
say 577,000,000
512,977,097
The tender for the project was submitted in March 1999 but it was only in July 2001 that the
contract was awarded. This delay in award led to a price increase of Rs 50.2 million.
Current Status of Contract
The original completion date was 17 August 2003 but was revised to 7 March 2004 due to
additional work and delays. Hence the contract price has increased by Rs 215 million. The entire
piping network has been completed except for the construction of a pumping station, which had
been postponed. The contract for operation & maintenance has started in March 2004 and will
end in March 2007 for an approved contract sum of Rs 28,355,769 (included in the above
contract price). The network is not being used to carry effluent to the treatment plant as house
connections programme has been delayed by more than one year. Some Rs 10 million are
expected to be paid up to July 2005 for maintaining the idle network. For the period April-May
2004, Rs 2,630,699 have already been paid as operation and maintenance cost.
Claim of Rs 50,951,151.
The claim relates to the extension of time of 150 days with associated cost, granted on the
following ground:
 Increase in house connections from 1,547 to 2,002.
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 Increase in manholes on the network from 578 to 1,005.
 Additional reinstatement on additional house connections.
 Delay in clearing the contractor’s equipment from the customs.
In May 2002, the Contractor had assessed the cost to be Rs 85 million whereas the Consultant
had determined the amount payable to be Rs 50,951,151.The WMA had assessed the amount
payable to be only Rs 8,417,715.
As from September 2002, the Consultant had started to include the sum of Rs 50,951,151
(spread over 22 months) in the monthly interim payment certificates (IPC). Under the contract
clauses, WMA had the obligation to pay to the Contractor all sums certified by the Consultant on
the IPC. Furthermore, the Contractor threatened to stop all works under contract clauses if the
amount of Rs 50,951,151 determined by the Consultant was not paid in the monthly IPC.
Following legal advice, the WMA agreed to pay the disputed sum under protest up to IPC 22
(paid in February 2004) , which included the sum of Rs 43,744,495 as extension with cost.
Meanwhile, steps were being taken to resolve the dispute. A negotiation team was appointed to
hold discussions in view of an amicable settlement in July 2004. Agreement was reached on Rs
48 million and the outstanding amount was paid in September 2004.
Temporary Admission of Equipment – Amount paid Rs 704,108.
Rs 704,108 were paid to the Contractor against the claim that vehicles had to be hired from
December 2001 to February 2002, and demurrage charges had been paid because of delay for
clearances at Customs & Excise Department regarding temporary admission of equipment.
Observations
 According to the terms of the Contract, the Employer had the responsibility to provide
assistance in clearing the Contractor’s plant, equipment and vehicle from custom and;
 The delay in temporary admission was reported to be due to a confusion at the Ministry of
Finance’s level.
The Consultant stated that the delay was due to the inability of the WMA to make a timely
processing of the relevant documents and inadequate follow-up of this issue.
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Implication
Inadequate follow-up by the WMA has led to the payment of Rs 704,108.
Additional Works – Rs 53.4 million
Included in the figure of Rs 53.4 million in the revised contract price were Rs 23,434,414 paid at
30 June 2004. This amount included a mark up of Rs 4,520,440, which represented 23.9 per cent
mark up of the cost of the additional works. This calculation was based on the principle that the
overhead was an average percentage of the Contractor’s turnover. Both the WMA and the
Consultant had agreed to an overhead charge to be 23.9 per cent of the turnover. The figure of
23.9 per cent was claimed to be the average of the ratios of overheads to turnovers based on the
audited financial statements of the past four years (1998-2001) of the Contractor.
Observations
 Examination of the documents used to calculate the figure of 23.9 per cent revealed that the
computation was not been based on audited financial statements. Instead, it has been based
on figures contained on four sheets of paper submitted by the Contractor, summarising
income and expenditure of each of the four years;
 Despite several requests, the audited financial statements had not been submitted to my
Office, hence it was not possible to ascertain the accuracy of this percentage.
Implication
Payment of Rs 4,520,440 has been effected without proper verification of documents to ensure
that this amount was fair and reasonable.
Recommendation
The 23.9 per cent of overhead paid to the Contractor must be checked against full set of audited
financial statements and any overpayment recouped.
Claim of Rs 5 million for loss of productivity.
In July 2004, a provision of Rs 5 million has been included in the approved contract price for a
claim payable to the Contractor for loss of productivity during construction work due to existing
services on site.
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Observations
 The Contractor had submitted claims that additional costs were being incurred because
existing services for water, telephone and electricity had affected productivity on site. As per
the Contractor, the existing services on site did not correspond to the plan included in the
Tender Documents. The Contractor argued that it was misled by contract clause and asked
for reimbursements for the consequent loss due to working around these services. The
Consultant informed the Contractor and WMA that no payment would be effected for loss of
productivity.
 However, the Contractor was paid Rs 327 per metre for loss of productivity in the interim
payment certificates (IPC). This cost was not provided in the Bill of Quantity. Breakdown
for the figure of Rs 327 was not available to substantiate the claim.
 The Consultant had certified payments to the Contractor for an item he was not agreeable
with and there was no evidence that he has informed the WMA about this additional cost.
The approval of the Tender Committee was not sought for a total payment of Rs 9,831,117
effected at 31 December 2003.
 In February 2004, the Contractor submitted a claim of Rs 16,935,755 for loss of productivity
due to existing services. The WMA was informed of this issue in March 2004 when the
construction contract ended. It was then that the Consultant agreed on the admissibility of the
claim and expressed the need to assess to what extent productivity was affected and eventual
determination of the amount payable.
 In April 2004 the WMA sought legal advice on the admissibility of the claim and Tender
Committee’s approval when some Rs 10 million had already been paid. The amount paid had
been adjusted in the final accounts and a provision of Rs 5 million was made.
 The Tender Committee agreed to make a provision of Rs 5 million in July 2004. The CTB
gave its approval for this estimated cost on 2 August 2004.
Implication
Payment was made without proper substantiation, approval of Tender Committee and legal
advice. This was prejudicial to the interest of the Government.
Recommendation
The WMA must ensure that claims submitted for payment include only authorised items.
Risk of damage if the network is not operational.
As the network is not yet operational, the following problems exist
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 Grand Baie being a flood prone area, the manholes are flooded after heavy rainfall.
 Domestic waste and stones were found dumped in the manholes. If the system is not put into
use soon, the network may be clogged with these debris.
The WMA suggested that the maintenance work must be undertaken on the network on a regular
basis to remove these debris.
8.1.3 Project For The Extension Of St Martin Sewerage Treatment Plant Construction,
Operation And Maintenance Of A New Treatment Plant (Contract Value – Rs 1,034
Million)
Summary
The project is for the extension of the existing St. Martin Sewerage Treatment Plant to treat
sewerage up to year 2010 for an estimated population of 288,000 from the Plaines Wilhems
region. The plant will treat sewerage up to tertiary level and the treated effluent will be used for
sugar cane irrigation in the Western region of the island, where there is an acute shortage of
water for this purpose. The contract was awarded in December 2000.
Details of the contract are as follows:
Original Date
Commencement Date
Revised Date
15 January 2001
Completion Date
Section 1(construction, testing& commissioning)
14 January 2004
14 January 2005
Section 2(Operation and maintenance )
14 January 2007
14 January 2008
The Ministry of Public Utilities is funding the project under its capital vote. The WMA is
responsible for the management of the project and charges a fee of 2 per cent of the project
value. Total amount paid to the WMA as management fee for financial year 2003-04 was Rs 14
million.
Key Findings
 In December 2000, the original contract price amounted to Rs 819 million. In June 2004 it
was revised to Rs 1,034 million. That is an increase of some 215 million or 26 per cent. The
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increase was mainly due to additional works and price escalation. The exact amount is not
yet determined as further claims may be payable by the end of the contract in January 2005.
 Due to delay in taking a decision on the type of pipes to be used, the Contractor claimed
some Rs 93.4 million for extension of time with cost. In June 2004, Government reached an
amicable settlement with the Contractor and paid some Rs 26.4 million.
 Test checks made on Interim Payment Certificates showed that payments made for materials
on site were not supported with proper documents.
 Some Rs 4.6 million were paid for materials which turned out to be obsolete due to change in
specifications. No legal advice was sought to determine whether it was a contractual
obligation to pay for these materials. No approval was seen for this payment. One item
valued at Rs 429,628 was not included in the Bill of Quantities.
 Although the project will be completed in January 2005, the issue regarding the use of the
treated effluent for irrigation purposes was not yet settled.
Implications
 The cost of the project has increased substantially by Rs 215 million
 Delay in taking decision has resulted in the payment of some Rs 26.4 million on account of
extension of time with cost.
 Payments were made without proper supporting documents, authority and verification.
Recommendations
 Timely decisions must be taken in order to avoid disruption or any further delay in the
project which could turn out to be very costly for Government. The WMA must identify the
critical stages of the project and ensure that appropriate actions are taken at those stages so
that the project is not delayed.
 Close monitoring and follow up must be made to ensure that deviations are identified early
and necessary corrective actions are taken.
 Proper documentation must be provided before any claims are paid.
 The issue of sale of treated effluent must be finalised without delay to avoid future increase
in cost or claims and revenue is not foregone.
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Background
The project is for the extension of the existing St. Martin Sewerage Treatment Plant to treat
sewerage up to year 2010 for an estimated population of 288,000 in the Plaines Wilhems region.
The plant will treat sewerage up to tertiary level and the treated effluent will be used for sugar
cane irrigation in the Western region of the island where there is an acute shortage of water. The
contract was awarded in December 2000.
Contract Details
In December 2000, the Ministry of Public Utilities entered into a contract for this project. Details
are shown in Table 45.
Table 45 Implementation Dates –St Martin Sewerage Treatment Plant
Original Date
Commencement Date
Revised Date
15 January 2001
Completion Date
- Section 1(construction)
14 January 2004
14 January 2005
- Section 2(Operation and maintenance period)
14 January 2007
14 January 2008
Contract Sum
The revised contract sum exclusive of VAT is shown in Table 46.
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Table 46 Contract Details-St Martin Sewerage Treatment Plant
Amount
Rs
Amount
Rs
Section 1 (Construction , Testing& Commissioning)
Tendered Price at December 2000 (Approved by CTB)
693,138,646
Additional works (Approved by CTB in May 2001)
56,197,624
Digester Foundations (Approved by CTB in July 2001)
840,000
Revised contract price at 30 July 2001
750,176,270
Additional components approved by CTB in April 2004
Approved Variations
7,180,315
Increased in cost of civil works
61,000,000
Price escalation
45,000,000
Contingencies
30,000,000
Revised contract price at 30 June 2004
143,180,315
893,356,585
Section 2 (Operation & Maintenance)
Tendered Price at December 2000 (Approved by CTB)
126,143,396
Additional works (Approved by CTB in May 2001)
14,152,000
Revised contract price at 30 July 2001 for Section 2
140,295,396
CTB approved contract price for Section 1 & 2 at
December 2000
CTB approved contract price for Section 1 & 2 at 30 June
2004
Amount paid at 30 June 2004
819,282,042
1,033,651,981
787,275,022
There was a price increase of Rs 215 million (an increase of 26 per cent) due to additional work
and price escalation. This did not include the amount paid in September for extension of time
with cost which amounts to Rs 26.4 million.
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Project Status.
Section 1 of the project, scheduled to be completed by 14 January 2004, had suffered one-year
delay with additional cost and was still on going as at 30 June 2004. The Contractor has been
paid a sum of Rs 26.4 million in September 2004, in connection with two claims due to
extension of time with cost. The plant is expected to treat effluent as from January 2005;
however, the sale agreement for the disposal of treated effluent has not yet been finalized.
Claim with associated cost of Rs 93.4 million.
In April and November 2002, the Contractor submitted two claims totalling some Rs 93.4
million for extension of time with cost due to delay on the contract. In September 2004, after an
amicable settlement, an amount of Rs 26.4 million was paid to the Contractor. This amount was
approved by the CTB in August 2004 and therefore was not included in the approved contract
sum at 30 June 2004.
Observations
 In June 2000, in the tender evaluation report the proposal of the Contractor to use Glass
Reinforced pipes (GRP) was rejected. The plant was designed to use Ductile Iron (DI) pipes
and GRP was not considered suitable for the project.
 In December 2000, at time of award of the contract, the WMA instructed the Contractor to
examine the GRP proposal instead of DI pipes as this could lead to potential savings of Rs 17
million.
 The construction work started on 15 January 2001. Agreement could not be reached on the
suitability and the type of GRP. The GRP option was abandoned in May 2001 when it was
realized that instead of savings of Rs 17 million, extra cost of Rs 6.5 million would have to
be incurred. Consequently, the order of pipes and fittings was delayed and major disruption
occurred in the construction programme.
 The Contractor submitted two claims of a total sum of Rs 93.4 million for extension of time
with associated cost. The reasons were due to delay in delivery of pipes and fittings, late
approval of documents, disruption and additional procurement cost.
 In September 2003, the WMA and the Consultant recommended to the WMA Board that the
Contractor be allowed an extension of time for a period of eight months: four months without
cost and four months with cost of Rs 24.4 million. The WMA Board did not approve the
recommendation and did not agree to the extension with cost.
 As a result the Contractor declared dispute. In June 2004, an amicable settlement was
reached with the Contractor. The Contractor was awarded a sum of Rs 24 million (equivalent
to MUR 16,040,200 and Euros 315, 427) and an extension of time of 12 months with
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completion date 14 January 2005. Payment was effected in September 2004 and amounted to
Rs 26.4 million. The increase of Rs 2.4 million was due to foreign exchange differences.
Implication
Delay in taking decision on the GRP issue has increased the contract price by Rs 26.4 million.
Recommendation
 It is important that timely decision is taken on issues which can disrupt construction schedule
and lead to costly disputes. The WMA must identify the critical stages of the project and
ensure that appropriate actions are taken at those stages so that the project is not delayed
unnecessarily.
Price Escalation
No provision was made in the original contract price for any price escalation. In April 2004, the
CTB approved a sum of Rs 45 million on account of price escalation.
Implication
Revision of the completion date from January 2004 to January 2005 has led to an increase in the
price escalation.
Payment for materials- on- site
As per the contract agreement, payments amounting to 80 per cent of the cost of the materialson-site may be made to the Contractor. However, such payments must be supported by
appropriate invoices/documents to determine the value of the materials -on-site.
Observations
 Test checks carried out on Interim Payment Certificate (IPC) No 23 revealed that documents
provided did not match the payment of Rs 45,239,464 made for materials -on-site relating to
civil works.
 Test checks carried out on IPC 31 revealed that payment of Rs 6,103,528 for ‘Ductile Iron
Pipe Fittings and Bends’ has been made on Bill on Quantity (BOQ) rate instead of cost. The
BOQ rate was higher than the cost as it contained the material cost, installation cost,
overheads and the profit element.
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Implication
Payments were being made to the Contractor without proper supporting documents as stipulated
in the contract. There is a risk that the Contractor has been paid an amount higher than what he
was entitled to.
Recommendation
Following Audit comments, the Consultant had agreed in March 2004 that all future payments
for materials-on-site would be supported by appropriate invoices.
Payment for obsolete materials
As per the contract, no partial payment shall be made for excess materials or materials not in
accordance with the specifications in the contract. In June 2001, during construction works, there
had been changes in design and disputes have been ongoing regarding responsibility for design.
In IPC No 31 (works certified up to 30 September 2003), Rs 4,621,014 have been paid for
obsolete materials as a result of change in drawings specifications.
Observations
 No documents were seen to support the valuation of these items.
 No legal advice was sought regarding the validity of this claim. It was only in November
2003 that legal advice was sought to determine responsibility on design.
 No Tender Committee or WMA’s Board approval was seen for the payment of this amount.
 Included in this amount was item name ‘socketed tee’ valued at Rs 429,628 each (total Rs
1,289,035) which is not mentioned and priced in the BOQ.
 Necessary adjustments were made in June 2004 after observations made by my Office.
Implication
An amount of Rs 4,621,014 was paid without proper authority and this was against
Government’s interest.
Sale of treated effluent for irrigation
One of the three main conditions for the financing agreement of the treatment plant was the sale
of treated effluent to the Irrigation Authority. Proceeds of this sale would ensure the financial
viability of the project. Any delay in finalising an agreement with the Irrigation Authority will
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lead to a situation where effluent which is costly to treat and meant for sugar cane irrigation,
would be disposed in the sea.
Observations
 The plant is expected to be operational by January 2005. Discussion on the technical and
legal arrangements concerning sale agreement started in 2001. At 30 September 2004 no
sale agreement has yet been finalised with the Irrigation Authority.
 One of the concerns of the WMA is about the performance of the plant in relation to
industries discharging their effluent in the sewer line. As at 30 June 2004, legislation
requiring industries to pre-treat their effluent before being discharged in sewer line was not
yet enacted. In July 2004, the Consultant has expressed concerns about the fact that
legislation would most likely not be in force when the plant would be commissioned in
January 2005. This would adversely affect the commissioning of the plant as the influent
would contain a higher pollutant content.
Implications
 Government has foregone revenue on the sale of treated effluent over a one year period due
to the delay in the construction schedule. Delay in finalising the sale agreement with the
Irrigation Authority may extend the period over which no revenue is received for treated
effluent.
 The absence of appropriate legislation for pre-treatment of industrial discharge will entail
delay in the commissioning of the plant and thus resulting in additional claims from the
Contractor.
Recommendation
It is crucial that close monitoring and follow up be carried out on the finalization of the sale
agreement and legislation requiring pre-treatment of industrial discharge.
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