Over the past 10 years, the Supreme Audit Office (NKÚ) carried out 11 audits focusing on the construction or upgrading of terrestrial communications, i.e. motorways and first class roads, rail corridors and the Elbe waterway, where, all in all, dozens of billions of crowns flow in annually. The auditors focused on prices and everything that influenced them. The result? It’s not just the costs that are flexible, but also the completion dates — naturally in an upwards direction.
The NKÚ published a summary of each control in the Price of Contracts from the office’s Perspective, which was made available to Czech Position. What, specifically, did inspectors criticize about infrastructure construction?
“After approving an investment plan, there are significant changes to the economic parameters in the subsequent phases of implementation,” states the NKÚ material. As a result, costs increase by as much as tens of percent points, compared to the approved plan.
A prime example is the control that focused on programs for constructing and renewing A-roads and motorways (02/13). The auditors checked the period from 2000 to 2003. “For example, all 28 actions relating to motorways and high-speed communications, which should have started or been completed after 1999, had their deadlines extended by up to seven years and investment costs rose by a total of Kč 35 billion, about 68 percent,” the auditors state in the report.
The NKÚ also points out that selection procedures were manipulated in violation of the Law on Public Procurement. A frequently used method is, for example, setting the terms of reference to allow subjective evaluations. This narrows down the number of applicants.
As a model example, the NKÚ gave the material from a control in 2006, in which the auditors verified whether the conditions had been created for effectively and efficiently spending money in two sections of the D8 motorway, the section Lovosice–Řehlovice and from Trmice to the Czech-German border (06/03). The NKÚ is convinced that the Road and Motorway Directorate (ŘSD) allowed subjective evaluations in the competition for building a bridge connecting the D8 motorway to the A17 in Germany. One of the tender’s criteria was professional competence, but the scales were not mentioned at all in the competition’s conditions. One of the candidates assailed the tender, as did the Office for the Protection of Competition (ÚOHS). The administrative procedure took the entire summer of 2004. This significantly shortened the time for construction. “Shortening the time for constructing the bridge led to technical and other measures that resulted in increasing the bridge’s price by nearly Kč 206 million,” the NKÚ report states.
Another weakness of constructing transport infrastructure is a poor quality preparatory phase for orders, leading to sliding deadlines and a rise in costs.
453 projects for building and renewing terrestrial communications were subjected to NKÚ audits (07/04). From 2005 to July 2007, the auditors monitored how the time and economic parameters were met. The estimated costs of the 453 projects increased from Kč 346.5 billion to Kč 422.7 billion. This represents an increase of over a fifth. The results of the audits show that the constructions had substantial delays, mainly in the preparation phase. The auditors found one case in which the delay was up to twelve years. It concerned the stretch of the D3 motorway between Prague and the municipality Mezno.
Although the state investor chooses from several variants, they are assessed on the basis of architectural and landscape aspects. The costs play a subordinate role.
An example of this is the construction of the Prague ring road (04/26). The ŘSD chose from seven options on how to bridge the Lochkovské Valley. The winning bridge was a box-girder steel construction. According to the auditors, the institution decided on the basis of architectural and landscape aspects, the ŘSD did not even request an economic evaluation be processed. An expert opinion, ordered by the NKÚ, stated that the price difference between the chosen solution and a cheaper variant made of pre-stressed concrete would be fifteen per cent, i.e. about Kč 130 million. The ŘSD similarly assessed the bridge for spanning the Vltava in the Suchdol – Březiněve construction. In this case, too, the winning twin-deck bridge lacked an economic assessment.
The auditors also point out the large amount of extra work.
According to the NKÚ the tools to secure optimum prices for the structures are also lacking.
In short, the NKÚ amassed plenty of evidence that the State, respectively the ŘSD, SŽDC or the Directorate of Waterways and the Ministry of Transport, did not behave as a good manager when building infrastructure.
The Ministry of Transport says that over the years control mechanisms and measures have been introduced to prevent the constructions becoming more expensive and the deadlines shifting. According to press spokesman Martin Novák, an audit was carried out in subordinate institutions such as the ŘSD or SŽDC. The selection procedure was checked as was the management of financial resources. “Also you cannot ignore personnel changes in high positions,” Novák points out. In addition, further rules will be set up that will lead to greater transparency in the system. What specifically, he did not say. ‘Due to systemic corruption disrupting the quality of public administration, the Czech Republic’s international rating is at the level of certain African countries.’
For public contracts the Ministry intends to introduce the duty to publish the contract and information about the final total amount for the work, involve non-governmental organizations in monitoring of public contracts, establish central purchases, not to start construction if they are not financially covered, or to split contracts up so that smaller local companies could get a part of them. “The introduction of an electronic construction journal will also improve quality,” adds Novák. Great plans, but how many times have we heard the same from the Ministry of Transport?
Phlegmatism and unwillingness
Let’s return to the NKÚ's criticism, which stemmed from 11 audits. The reason the state fails to behave as a proper manager when building and upgrading communications is not a lack of laws, rather the phlegmatic approach and the unwillingness of those responsible to change something.
But there is another level, which was pointed out by the NKÚ Vice President Miloslav Kala, the relationship between the level of corruption and wastefulness. “According to various sources, the estimated losses due to corruption in the Czech Republic are Kč 30 billion to Kč 60 billion, some even put it at the entire public budget deficit,” Kala said. “Due to systemic corruption disrupting the quality of public administration, the Czech Republic’s international rating is at the level of certain African countries.”