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on the

PERFORMANCE AUDIT REPORT of the

AUDITOR GENERAL

CONSTRUCTION OF ACHIMOTA-OFANKOR ROAD PROJECT

Performance audit report of the Auditor-General on construction of Achimota-Ofankor Road Project

TABLE OF CONTENTS

List of Acronyms ……………………………………………………………………….

Transmittal letter …………………………………………………………………. i

Executive summary ………………………………………………………………. iii

CHAPTER ONE ………………………………………………………………….. 1

Introduction ……………………………………………………………………… 1

1.1 Motivation ………………………………………………………………… 1

1.2 Purpose, Scope, Audit Questions and Criteria …………………………….. 2

1.3 Method and implementation ……………………………………………….. 3

CHAPTER TWO ………………………………………………………………….. 4

Description of the audit area ………………………………………………………. 4

2.1 Background of the project ………………………………………………….. 4

2.2 Objectives of the Achimota-Ofankor Road Project ………………………… 4

2.3 Rules and Regulation ………………………………………………………... 5

2.4 Funding for the Achimota Ofankor Road Project ………………………….. 6

2.5 Key players and their responsibilities………………………………………... 6

2.6 Systems Description ………………………………………………………… 9

2.7 Current Development ……………………………………………………….. 13

CHAPTER THREE

Findings, Conclusions and Recommendations …………………………………….. 14

3.1 Introduction …………………………………………………………………. 14

3.2.0 GHA put the Achimota-Ofankor Road project on tender without developing

the feasibility study drawings into detailed engineering drawings …………. 14

3.2.1 GHA did not obtain all the requisite data needed to prepare detailed

drawings and a more accurate BOQ ……………………………………….. 15

3.2.2 GHA tendered the Achimota-Ofankor Road project with insufficient

details …………………………………………………………………… 17


3.3 Contractor selection did not meet the full requirements of the Public

Procurement Act …………………………………………………………. 19

3.4 GHA increased the scope of works by 217% over the original contract

sum before seeking approval …………………………………………….. 22

3.5 GHA delayed in providing information for setting out and drawings …… 25

3.6.1 GHA ensured the road project was executed in accordance with the

Specifications …………………………………………………………….. 27

3.7.1 Delays in paying Interim Payment Certificates (IPCs) cost GoG

GH¢4.40 million in interest charges ……………………………………… 29

3.8 Overall conclusion ………………………………………………………… 34

APPENDICES

A Methods and implementation ……………………………………………… 36

B Schematic drawing of Dual Carriage Highway …………………………… 39

C Examples of concerns raised by Tenderers ………………………………. 40

D Instances of delays by contractor in following Resident Engineer’s

Instructions ………………………………………………………………… 42

E Details of total interest paid ……………………………………………….. 44


LIST OF ACRONYMS

AfDB African Development Bank

BOQ Bill of Quantities

CEO Chief Executive Officer

CESSM Civil Engineering Standard Method of Measurement

CH Chainage

CRWGC China Railway Wuju Group Corporation

CTRB Central Tender Review Board

DBM Dense Bituminous Macadam

FAA Financial Administration Act

FAR Financial Administration Regulation

FIDIC International Federation of Consulting Engineers

GHA Ghana Highways Authority

GOG Government of Ghana

IPC Interim Payment Certificate

KfW Kreditanstalt Für Wiederaufbau

LHS Left Hand Side

MoFEP Ministry of Finance and Economic Planning

MRH Ministry of Roads and Highways

PPA Public Procurement Act

RCC Regional Coordinating Council

RHS Right Hand Side

RSDP Road Sector Development Programme

Performance audit report of the Auditor-General on construction of Achimota-Ofankor Road Project i

TRANSMITTAL LETTER

AG.01/109/Vol.2/65

Office of the Auditor-General

Ministries Block “O”

P. O. Box MB 96

Accra

Tel. (021) 662493

Fax (021) 662493

15 March 2013

Dear Mr. Speaker,

PERFORMANCE AUDIT REPORT OF THE AUDITOR-GENERAL

ON CONSTRUCTION OF ACHIMOTA-OFANKOR ROAD PROJECT

I have the honour to submit to you a performance audit report on the construction of

the Achimota-Ofankor road project in accordance with my mandate under Section

187(2) of the 1992 Constitution of Ghana and Section 13(e) of the Audit Service Act

which requires me to carry out performance audits.

2. The purpose of the audit was to determine whether or not Ghana Highway

Authority (GHA) ensured that the Achimota-Ofankor road project was designed and

implemented to meet specifications, delivered on time and in accordance with the

cost. The audit covered the period 2006 to 2012.

3. The audit found that the road project was constructed according to the

technical specifications. However, GHA did not plan adequately for the road project

and thus increased the scope of works by 217% before seeking approval. Payments

made to the Contractor delayed leading to extra cost in interest charges. GHA also

made expenditures that were unrelated to the project.

ii Performance audit report of the Auditor-General on construction of Achimota-Ofankor Road Project

4. In this report I have made recommendations to guide GHA in subsequent

projects that they will undertake.

5. I trust that this report will meet the approval of Parliament.

Yours faithfully,

AUDITOR-GENERAL

THE RIGHT HON. SPEAKER

OFFICE OF PARLIAMENT

PARLIAMENT HOUSE

ACCRA

Performance audit report of the Auditor-General on construction of Achimota-Ofankor Road Project iii

PERFORMANCE AUDIT OF THE AUDITOR-GENERAL ON

CONSTRUCTION OF ACHIMOTA-OFANKOR ROAD PROJECT

EXECUTIVE SUMMARY

The road from Achimota to Ofankor forms part of the Accra-Kumasi trunk road and

was a single-lane road prior to November 2006. It could not contain the increased

volume of traffic of about 15,000 vehicles per day. As a result, commuters spent about

three hours in traffic to cover the 5.7 kilometer route. To ease the traffic congestion

and improve transport services for commuters on the road, the Government of Ghana

(GoG), acting through the Ministry of Roads and Highways (MRH) and the Ghana

Highway Authority (GHA), in 2006 undertook a project to upgrade the road from a

single lane to a dual carriageway at an estimated cost of GH¢40.4 million. The project

was expected to be completed in November 2009.

2. As at December 2011, the Achimota-Ofankor road project had exceeded the

expected completion date by 25 months and progress was about 88%. The estimated

cost had shot up to GH¢ 128 million, an increase of about 217%. Commercial drivers

and commuters on the road complained about the extremely long hours spent

commuting between Achimota and Ofankor due to prolonged construction activities

and the diversion of roads.

3. The audit was to determine whether Ghana Highway Authority (GHA)

ensured the Achimota to Ofankor road project was designed and implemented to meet

specifications, delivered on time and in accordance with the cost, with focus on two

lines of enquiry:

developing the road project (planning phase i.e. from feasibility study to

contract award); and

the implementation of the road contract with respect to scope, quality and

cost controls.

iv Performance audit report of the Auditor-General on construction of Achimota-Ofankor Road Project

Developing the road project

GHA put the Achimota to Ofankor road project on tender without developing

feasibility study into detailed engineering drawings

4. We found that GHA put the Achimota to Ofankor road project on tender

without detailed engineering drawings and a very accurate Bill of Quantities. This

resulted in a lot of changes to the major components of the project and claims by the

Contractor during implementation.

Recommendation

GHA should ensure that all the right things necessary to ensure that details

needed are obtained for preparing good tender documents before proceeding to

tender. Where time is of essence and GHA cannot go through all the needed

steps to undergo the traditional form of procuring a Contractor, other methods

for procuring a Contractor that do not require detailed tender documents should

be pursued.

Contractor selection did not meet requirements of the Public Procurement Act

5. The selection of the Contractor did not meet the requirements of the Public

Procurement Act. There were a lot of inconsistencies in the tender information

provided by GHA and technical deficiencies in the tendering process which were not

properly addressed by GHA. GHA did not allow tenderers sufficient time to meet the

criteria set for both the prequalification and actual tendering. This led to only one

Contractor being evaluated, thereby reducing the competitiveness of the tender

process.

Recommendation

GHA should allow tenderers sufficient time to prepare and submit tenders to

enhance competition in tendering and also ensure that detailed information are

included in the tender documents.

Implementation of the road project

Performance audit report of the Auditor-General on construction of Achimota-Ofankor Road Project v

GHA increased the scope of works 217% over the original contact sum before

seeking approval

6. We found that GHA increased the scope of works by 217%, over the original

contract sum, before seeking approval from the MRH and the Central Tender Review

Board (CTRB). Due to the increased scope of works without approval, the Ministry of

Finance and Economic Planning (MOFEP) did not know the full extent of the

financial obligation under the contract and was, therefore, unable to pay on time,

which resulted in extra cost from interest payments.

Recommendation

GHA should seek approval from MRH and CTRB before implementing major

changes in design which will result in more than 15% increase in contract sum.

GHA delayed in providing information for setting-out and drawings to the

contractor

7. GHA delayed in providing information for setting-out and drawings to the

Contractor. As a result, the Contractor was inactive on the project for 10 months

which reflected in the extension of the completion time of the project.

Recommendation

GHA should act promptly to request for information to ensure that the Contractor

works diligently on the project. MOFEP should surcharge GHA officers who cause

delays to contract duration with the cost involved in such delays.

GHA ensured the road project was executed in accordance with the

specifications

8. Test reports for concrete at 7 and 28 days exceeded the minimum strength

required by the contract. The test results for the asphalt were mostly satisfactory as

stated by the resident Engineer. GHA ensured that works that did not meet the

specifications were reconstructed to meet specifications.

Recommendation

vi Performance audit report of the Auditor-General on construction of Achimota-Ofankor Road Project

GHA should be vigilant and ensure that only works that meet the specifications are

accepted for payment.

Delays in paying Interim Payment Certificates (IPCs) cost GoG GH¢4.40 million

9. Delays in paying Interim Payment Certificates (IPCs) cost GH¢4.40 million.

The interest on delayed payment from 2007 to 2011 amounted to GH¢3.33 million

and US$1.16 million which have increased the cost of implementing the project.

Recommendations

Government should explore alternative means of funding, for example Public,

Private Partnership (PPP) to spread the burden of project financing;

GHA, MRH, RCC and MOFEP should analyse the tasks involved in the payment

procedure and allot maximum number of days IPCs should spend in each office.

The total period should not exceed the contractual payment period. Officers who

cause the delays should be surcharged with the proportion he/she contributed to the

accruing interest; and

GHA, MRH and MOFEP should review the period for payment inserted in the

contract to what is convenient to forestall the delays and the attendant interest

payments.

GH¢374,000 was spent on items unrelated to the Achimota-Ofankor road project

10. We further found that GHA spent GH¢ 374,000 on items not related to the

Achimota to Ofankor road project. The expenditure was made on items which should

have been paid for from the Administration and Investment vote of GHA.

Recommendation

GHA should desist from including expenditure not related to the project in the

IPCs; and

MRH should check IPCs thoroughly to ensure GHA expenditures that are not

related to road projects are expunged from IPCs before they are forwarded to

MOFEP for payment.


LIST OF ACRONYMS

AfDB African Development Bank

BOQ Bill of Quantities

CEO Chief Executive Officer

CESSM Civil Engineering Standard Method of Measurement

CH Chainage

CRWGC China Railway Wuju Group Corporation

CTRB Central Tender Review Board

DBM Dense Bituminous Macadam

FAA Financial Administration Act

FAR Financial Administration Regulation

FIDIC International Federation of Consulting Engineers

GHA Ghana Highways Authority

GOG Government of Ghana

IPC Interim Payment Certificate

KfW Kreditanstalt Für Wiederaufbau

LHS Left Hand Side

MoFEP Ministry of Finance and Economic Planning

MRH Ministry of Roads and Highways

PPA Public Procurement Act

RCC Regional Coordinating Council

RHS Right Hand Side

RSDP Road Sector Development Programme

Performance audit report of the Auditor-General on construction of Achimota-Ofankor Road Project 1

CHAPTER ONE

INTRODUCTION

1.1 Motivation

The road from Achimota to Ofankor forms part of the Accra-Kumasi trunk road and

was a single-lane road prior to November 2006. It could not contain the increased

volume of traffic of about 15,000 vehicles per day1. As a result, commuters spent

about three hours in traffic to cover the 5.7 kilometre route. To ease the traffic

congestion and improve transport services for commuters on the road, the Government

of Ghana (GoG), acting through the Ministry of Roads and Highways (MRH) and the

Ghana Highway Authority (GHA), in 2006 undertook a project to upgrade the road

from a single lane to a dual carriageway at an estimated cost of GH¢40.4 million. The

project was expected to be completed in November 2009.

2. As at December 2011, the Achimota to Ofankor road project had exceeded

the expected completion date by 25 months and progress was about 88%. The

estimated cost had shot up to GH¢128 million, an increase of about 217%.

Commercial drivers and commuters on the road complained about the extremely long

hours spent commuting between Achimota and Ofankor due to prolonged construction

activities and due to the diversion of roads2.

3. The Auditor-General therefore commissioned a performance audit into the

construction of the Achimota-Ofankor road project to examine the planning and

implementation of the project.

1 Traffic Studies conducted by TABCON LTD in 2002

2 Daily Graphic of 17 September 2010

2 Performance audit report of the Auditor-General on construction of Achimota-Ofankor Road Project

1.2 Purpose, Scope, Audit Questions and Criteria

Purpose and scope

4. The purpose of the audit was to determine whether Ghana Highway Authority

(GHA) ensured the Achimota to Ofankor road project was designed and implemented

to meet specifications, delivered on time and at the estimated cost.

5. The audit focused on two lines of enquiry:

developing the road project (planning phase i.e. from feasibility study to

contract award); and

implementing the road contract with respect to scope, quality and cost

controls.

6. The audit period was from May 2004 to December 2011 and was carried out

from June to October 2012.

Limitations

7. The audit was limited to the Achimota to Ofankor road and all observations

are specific to the Achimota to Ofankor road project. However, as the road project

was nearly completed at the time of our audit in 2012, the recommendations included

in this report are for GHA to follow when embarking on future projects.

8. An assessment of the cost of the redesigned road project was beyond the

scope and capabilities of the audit team.

Audit questions and criteria

9. The audit team formulated four main audit questions to determine whether the

Ghana Highway Authority (GHA) ensured that the Achimota to Ofankor road project

was designed and implemented to meet specifications, delivered on time and at the

estimated cost.


Audit question Criteria

1) Were road designs adequately developed prior to

going on tender?

Designs for all major components should be completed prior to

tender.(GHA internal good practice)

2) Did GHA have justification for the differences in the

implemented project and the planned project resulting

in a 217% cost increase?

Project should be executed according to the contract.

(FIDIC)

Major changes should receive approval before being

incorporated into the project (FIDIC)

3) To what extent did GHA ensure the road project was

executed to the agreed quality?

Works should be delivered in accordance with the technical

specifications under Section 6 of the contract.

Approval by the Resident Engineer of each stage of the

works before continuation. (FIDIC)

4) To what extent did GHA avoid unnecessary cost to the

project?

Monies should be used in a manner that secures optimum value

for money. (Regulation 39 (1) of Financial Regulations 2004)

1.3 Method and implementation

10. We reviewed project files kept by GHA, interviewed key staff of GHA, the

Ministry of Roads and Highways (MRH) and the Ministry of Finance and Economic

Planning (MOFEP) on the Achimota to Ofankor road project and visited the project

site for the data required for the audit (Please refer to Appendix A for full details of

method).


CHAPTER TWO

DESCRIPTION OF THE AUDIT AREA

2.1 Background of the project

11. The Achimota to Ofankor road project forms part of the major development

works component of the Road Sector Development Programme (RSDP)3. It is wholly

funded by the Government of Ghana acting through the Ministry of Roads and

Highways (MRH) and implemented by the Ghana Highway Authority (GHA).

12. The proposed road was a four-lane dual carriageway planned as a two-lane

north and south bound fast access route. These are flanked by two-lane north bound

and south bound service roads for use by local traffic. Traffic management structures

on the road consisted of:

five foot bridges;

four interchanges (two flyovers and two bridges); and

two roundabouts.

13. The schematic drawing of the proposed Achimota to Ofankor dual carriage

road is attached as Appendix B.

14. The contract was awarded to Messrs China Railway Wuju (Group)

Corporation at an initial contract sum of GH¢ 40.4 million. The works started on 15

November 2006 and was to be completed on 14 November 2009, a period of 36

months.

2.2 Objectives of the Achimota to Ofankor road project

15. The objective of the Achimota to Ofankor road project was to reconstruct and

expand the existing single carriageway into a dual carriageway at a cost of GH¢ 40.4

million and to complete it in a period of 36 months.

3 A project aimed at achieving sustainable improvements in the supply and performance of roads and

transport services in Ghana – http://www.worldbank.org/projects/P050623/road-sector-development-project?lang=en – accessed on 3 December 2012

http://www.worldbank.org/projects/P050623/road-sector-development-project?lang=en

http://www.worldbank.org/projects/P050623/road-sector-development-project?lang=en


2.3 Rules and regulations

Ghana Highway Authority Act, 1997 (Act 540)

16. The Ghana Highway Act, 1997 (Act 540) assigns the responsibility of trunk

roads to GHA. GHA classified the Achimota to Ofankor road as a trunk road (a major

highway connecting two or more places) and therefore the Act gives GHA the

mandate to carry out work on it.

Financial Administration Act, 2003 (Act 654) and Financial Administration

Regulation of 2004

17. The Financial Administration Act, 654 regulates the financial management of

public funds, prescribes the responsibilities of persons entrusted with financial

management in government and ensures the effective and efficient management of

state revenue, expenditure, assets, liabilities and resources of government. As the

Achimota to Ofankor road project is wholly financed by the Ghana Government, the

Act places an obligation on all government entities involved, to use public resources

with due regard to economy, efficiency and effectiveness.

Public Procurement Act, 2003 (Act 663)

18. Procuring a competent contractor is important in ensuring the success of the

road project. The Public Procurement Act which has been in force since 2003 sets out

provisions for tendering for contracts.

International Federation of Consulting Engineers’ (FIDIC) Conditions of

Contract for Works of Civil Engineering Construction, 4th

Edition

19. The Achimota to Ofankor road contract was governed by the FIDIC

Conditions of Contract between China Railway Wuju (Group) and the Ministry of

Roads and Highways, on behalf of the Government of Ghana. The FIDIC sets out the

responsibilities of each party to the contract and deals with cost, time and quality

control of the contract.


2.4 Funding for the Achimota to Ofankor road project

20. The Achimota to Ofankor road project was financed from the Consolidated

Fund. Table 1 shows annual budgetary allocations and expenditures made from

November 2006 to December 2011. Although there was a budget in 2007, no

payments were made in respect of the project for three Interim Payment Certificates

(IPCs) amounting to GH¢5,873,392.49 that were submitted in May, October and

November 2007 for payment. The yearly budget allocations for the project were less

than the yearly invoiced IPCs.

Table 1: Budget and expenditure on the project from 2006 to 2011

Source: MRHMTEF Budget Estimates for 2006 to 2011 and Achimota-Ofankor Project

Progress report No. 33

***No budget was provided in 2009

2.5 Key players and their responsibilities

21. The key players for the Achimota to Ofankor road project are the MRH,

MOFEP, GHA and China Railway (Wuju) Group Corporation (CRWGC). See figure

1 for a system graph showing the relationship between the key players.

Ministry of Roads and Highways (MRH)

22. The MRH is responsible for formulating policies for the road transport sector.

It is the Employer or the Project Owner and acts for and on behalf of the Government

of Ghana. MRH receives monthly progress report from GHA on the Achimota to

Ofankor road project and reports to Cabinet. The Ministry also approves IPCs before

Year Budget amount

(GH¢)

Actual expenditure

(GH¢)

2006 159,600.00 7,187,917

2007 2,805,024 nil

2008 4,055,908 13,133,220

2009 ***- 11,557,368

2010 10,448,011 21,840,735

2011 521,241 34,812,089

Total 17,989,784 88,531,329


they are submitted to MOFEP for payment. It also reviews major changes made by

GHA before it is forwarded to MOFEP for approval.

Figure 1: Relationship between key players

Ministry of Finance and Economic Planning (MOFEP)

23. MOFEP provided the budget for the project. It disbursed funds to settle

Interim Payment Certificates (IPCs) submitted by GHA on behalf of the Contractor

for the Achimota to Ofankor road project.

Ghana Highway Authority

24. The Ghana Highway Authority is under the Ministry of Roads and Highways

and is responsible for planning, developing and administering the Achimota to

Ofankor road project.

GHA

Pay

men

ts for w

ork

don

e

CEO MOFEP

Planning

Division

Resident

Engineer

Survey &

Design

Division

Contracts

Division

Road

Contract CRWGC

MRH

Issue further

drawings and details

Con

trac

ts A

dm

inis

trat

ion

Seek Clarification

Ap

pro

vals

Pro

gress

Eng

ineer’s in

structio

ns

Submit valuation of

Work done

GHA- Ghana Highway Authority

CEO – GHA Chief Executive

MRH - Ministry of Roads and Highways

MOFEP – Ministry of Finance and Economic

Planning

CRWGC- China Railway (Wuju) Group Corporation

Pla

nn

ing

, desig

n a

nd

selection

of co

ntra

ctor

Imp

lemen

tatio

n


i) The Chief Executive (CEO)

25. The CEO is the head of GHA who appoints the Resident Engineer and

approves changes suggested by the Resident Engineer. He issues variation orders and

IPCs. He also reports on the status of the Achimota to Ofankor road project to MRH.

ii) The Development Department of GHA

26. The Deputy Chief Executive heads this department comprising: Planning,

Contracts, Materials, Quantity Surveying, Bridges and Survey and Design Divisions.

The Planning Division conducts feasibility studies, identifies right of way and

buildings for demolition to make way for the road as well as assessing properties for

payment of compensation.

27. The Contracts Division prepares tender documents. The Division also handles

tendering and tender evaluation, construction planning (including relocation of

utilities and compensation of affected properties) and the reviewing of IPCs.

28. The Materials Division is responsible for engineering studies and material

investigations. The Division also prospects for materials for construction.

29. The Quantity Surveying Division is involved in the preparation of preliminary

cost estimates for projects. The Division is responsible for the preparation of the Bills

of Quantities (BOQ) (a component of contract documents) and the verification of

quantities on IPCs.

30. The Bridges Division is responsible for identifying locations, designing and

detailing bridges to be constructed.

31. The Survey and Design Division is responsible for gathering site information

through various surveys, designing the road to be constructed and preparing

engineering drawings for construction.


iii) The Resident Engineer

32. The Resident Engineer receives Contractors’ queries, issues instructions to

Contractors, ensures that Contractors follow good practices and approves work done

by Contractors. The Resident Engineer also monitors the progress of works and gives

the CEO regular reports on projects through monthly progress reports. He chairs

monthly site meetings to discuss progress of work.

The Contractor - China Railway (WUJU) Group Corporation (CRWGC)

33. CRWGC is the contractor for the construction of the Achimota to Ofankor

road project. CRWGC is to execute the contract according to the drawings and

specifications. They maintain the project site, receive instructions from the Resident

Engineer and carry them out. They apply for payment of work done from MOFEP

through GHA. CRWGC conducts tests on materials and components, and forwards

test results to the Resident Engineer for approval.

2.6 Systems description

The planning process

34. The planning process for a trunk road project starts after a decision of

Government to undertake the project. GHA conducts a feasibility study as the basis to

develop a scheme for the project. GHA then carries out detailed engineering studies

on the road project in order to come up with a suitable design for the route chosen.

35. After the detailed engineering studies, GHA prepares detailed engineering

drawings, Bills of Quantities and other tender documents that can be used for

tendering for the project. The detailed design and drawings are reviewed by an

independent consultant. After the review, GHA procures a contractor to undertake the

construction of the road project.


Figure 2: Flowchart for planning and implementation of the road project

Tendering

END

Is project

feasible? START

Conduct

feasibility

studies

Prepare detailed

Engineering

Studies, Design &

Drawings

Prepare

detailed Bill

of Quantities

No

Yes

Implementation

Planning

Yes

Select

Contractor

Is Contractor

acceptable?

Sign Contract

Construct road and components

Issue Variations

Clarify drawings/other issues

Approve materials and road components

Approve payments to contractor

Monitor progress of work

No

Prepare

Tender

Documents


Implementing road projects

36. The implementation phase of road projects deals with constructing the road

according to the contract drawings and specifications. GHA monitors the progress of

the works to ensure timely completion and ensures that cost is within acceptable

limits. The works are carried out according to the agreed schedule in the programme

of works so that the Resident Engineer can monitor the works and make changes as

and when they occur. The Resident Engineer also clarifies any questions/queries the

Contractor may have about the drawings for the project.

37. Where a variation is necessitated, variation orders are issued by GHA to cover

changes to the original design or scope of the project. The Engineer (CEO of GHA)

requires approval from MRH before issuing variation orders above 15% of the

contract sum. Where the value of the change in scope is beyond the approval limit of

MRH, approval will have to be sought from the Central Tender Review Board before

proceeding with the variation.

38. The materials and components for the road project must meet quality

standards set out in the specifications. The Resident Engineer reviews test results of

materials and the road components provided by the Contractor to ascertain whether

they are satisfactory or not.

39. The Contractor submits statements of value of work done on a monthly basis

to the Resident Engineer. The Resident Engineer vets the IPCs and forwards them to

the CEO of GHA for further scrutiny to ensure that only works properly executed are

included in the certificate for payment. The IPCs are then forwarded to MOFEP for

payment.

40. The Resident Engineer monitors the project and provides progress reports to

stakeholders. When the Contractor completes the project, the final valuation is done

for final payment. Final payment implies that the Contractor has discharged all his

duties under the contract.


Process for Payment of Interim Payment Certificates

41. The process of certifying Interim Payment Certificates before paying the

Contractor for work carried out is shown in Figure 3.

Figure 3: Process for paying Interim Payment Certificates

2. Deputy

Chief Executive (Dev’t)

receives IPC and

forwards to Directors for

Contracts and Quantity

Survey

1. Chief

Director receives

IPC from GHA and

checks and validates

the IPC

Project Site

Greater Accra Regional

Coordinating Council

Ghana Highway

Authority Head Office

Ministry of Roads and

Highways

Ministry of Finance &

Economic Planning

1) Resident

Engineer

prepares the IPC

on site with input

from the

contractor

2) Regional

Highways

Director checks

and validates IPC

3) Regional

Economic

Planning Officer

checks and

validates IPC

4) Regional

Minister checks

and validates IPC

and forwards to

GHA

6) Director Contracts

checks IPC for errors and

contractual issues and

forwards to Quantity

Survey

7) Director Quantity

Survey checks for

accuracy of measurements

for payment requested and

forwards to Dir. Contracts

8) Accounts Department

receives IPC from

Contracts Division,

checks for accuracy of

amount to be paid and

process request for

payment of IPC.

5) Deputy Chief

Executive (Dev’t) receives

IPC and forwards to

Directors for Contracts and

Quantity Survey

10) Chief Director

receives IPC from

GHA and checks

and validates the

IPC

11) Minister of MRH

checks and validates

IPC Forwards IPC to

MOFEP for payment

12. Minister MOFEP

receives IPC from

MRH and forwards to

Budget Division

14) Controller &

Accountant General

pays contractor on

receipt of warrant

from MOFEP

Contractor receives

cheque from Controller

and Accountant General

when IPC is paid

9) Chief Executive

reviews IPC and forwards

to MRH for validation

13) Budget Officer

prepares warrant

Controller to

Accountant General

based on availability

of funds in MRH

account


2.7 Current development

42. As at 29 February 2012, all outstanding IPCs due to the Contractor had been

settled, reducing the delay by the Contractor. The project has been substantially

completed and the defects liability period began on 20 September 2012 and will end

on 20 September 2013.


CHAPTER THREE

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

3.1 Introduction

43. We present our findings of the audit on the developing the road project in the

areas of the development of the scheme, detailed design and the selection of the

Contractor. With the implementation of the road project the audit team made

observations on the revision in scope, payment of IPCs and the use of monies

allocated for A900 in the contract.

Developing the road project

3.2.0 GHA put the Achimota to Ofankor road project on tender without

developing the feasibility study drawings into detailed engineering drawings

44. GHA’s normal practice for tendering for road projects is to develop

preliminary drawings into detailed engineering drawings and prepare Bills of

Quantities (BOQ) out of the detailed drawings. These documents then form the basis

for interested tenderers to compete on a common understanding of the requirements of

the project.

45. The audit team expected GHA to complete the design and drawings for the

major components of the road project comprising the roadway, flyovers, underpass

and pedestrian footbridges and streetlights before going on to tender.

46. Our review of the tender documents and the tender process showed that the

BOQ used for tendering were prepared using preliminary designs and drawings

prepared by TABCON Limited (a consultant commissioned by MRH to conduct the

feasibility study) in 2004. GHA reviewed TABCON’s feasibility study designs and

drawings and passed them to be used for the tender documents and subsequent

tendering.

47. Our review of tender documents and correspondences between GHA and the

tenderers showed that no drawings were available for the retaining walls, interchanges


and pedestrian bridges. When tenderers questioned GHA during the pre-tender

meeting about outstanding drawings, GHA responded that the detailed drawings were

in progress and that tenderers were to price their tenders according to the provisions

made in the BOQ. We examined the contract document and found that the part for

drawings used for tendering were the preliminary designs submitted by TABCON

Limited.

48. We also found that the BOQ that GHA had prepared made references to

drawings of concrete kerbs, retaining walls, reflective road signs, galvanised steel

beam guard rails and pedestrian hand rails which were not provided with the tender

documents.

49. Our examination of project documentation and interviews on why GHA could

not provide detailed drawings before going on tender showed that:

i. GHA did not obtain the requisite data needed to prepare detailed drawings

and a more accurate BOQ; and

ii. MRH rushed GHA to take the Achimota to Ofankor road project to tender

with little details.

3.2.1 GHA did not obtain all the requisite data needed to prepare detailed

drawings and a more accurate BOQ

50. According to the Director of Survey and Design Division of GHA, detailed

road drawings should be based on detailed engineering studies. Detailed engineering

studies provide information on soil and subsurface conditions, location of sites for

gravel and sand for the project, utility lines, right of way and properties to be affected

by the road construction. This information informs the design of the road and also

allows for a more accurate costing of the project.

51. We found through interviews and review of project correspondences that, the

soil and sub-surface condition report needed for the detailed road and bridge designs


were not ready at the time of tender. As indicated in paragraph 44, there were no

drawings for the bridges and retaining walls. GHA needed these details to prepare a

comprehensive BOQ and a more accurate cost of the project. The tenderers needed

this information to determine the actual roadway, location of existing buildings and

utility lines, and an appreciation of the actual scope of work.

52. We found that there were no drawings on items such as retaining walls,

girders, concrete u-drains and kerbs which were mentioned in the BOQ. These

drawings were to accompany the BOQ to help tenderers prepare their tenders. Our

review of project correspondences indicated that tenderers complained that some of

the drawings GHA submitted to them after the pre-tender meeting were not readable

and also lacked cross-sectional details.

53. A priced BOQ based on inadequate information in a contract renders the

contract susceptible to a lot of changes and claims by the Contractor during

implementation.

Conclusion

54. The CESMM54as well as the FIDIC indicates that quantities in the BOQ are

estimates. Value for money is achieved when the variance between completed cost of

the project and the contract sum is minimal. Therefore, the BOQ which is the basis for

the costing of the tender should be prepared based on detailed information. Since there

were no drawings for bridges, retaining walls, kerbs, etc., the quantities provided in

the BOQ were unreliable and led to huge changes in the project during

implementation. For example, the whole of the concrete works for the two flyovers

were redesigned during the implementation, increasing the scope of concrete works by

about 375%.

55. GHA did not have enough time to gather the requisite data to prepare detailed

drawings and a more accurate BOQ.

4 This is the fifth edition of the standard method of measurement used to measure civil engineering works.


Recommendation

56. GHA should obtain all necessary data needed to develop detailed drawings

and accurate BOQ for road projects.

GHA’s response

57. GHA responded that time constraints accounted for the delay observed by the

Auditor-General. However, the information provided was reasonably sufficient to go

for tender.

3.2.2 GHA tendered the Achimota to Ofankor road project with insufficient

details

58. It is the practice of GHA to use about four years to conduct feasibility studies,

develop road schemes, detailed engineering studies, preliminary designs, design

reviews and preparation of detailed drawings and estimates, sourcing of funds,

preparation of tender documents and tendering.

59. The Ministry of Finance and Economic Planning (MOFEP) initially sought

funding for the project from KfW and AfDB in 2005. The process of sourcing funds

put the estimated start date of the project at 2008 which was not favourable to the

Government. MOFEP curtailed the process with KfW and AfDB on 15 May 2006

because Government decided to finance the project from the Consolidated Fund.

MRH gave GHA a three-month non-negotiable period from 19 May 2006 to 21 July

2006 to prepare the project for tendering and award of contract.

60. At the time of the directive, only the feasibility study report and cost estimate

prepared by TABCON in 2004 were available. The feasibility study report included

initial surveys and investigations and preliminary road designs. GHA needed to

conduct the engineering studies, review designs, prepare detailed drawings and Bill of

Quantities and other documents for tendering.


61. A set of tender documents comprised the following:

Tender and Appendix to Tender;

Conditions of Contract, Part II;

Conditions of Contract, Part I;

The special and general technical specifications;

Blank BOQ; and

Drawings.

62. The first four components listed above are standard documents which GHA

need not spend time to customise for the project. The BOQ is prepared from the

drawings. GHA was not able to carry out the detailed engineering studies and detailed

drawings for the preparation of the BOQ so GHA used the preliminary drawings to

prepare the BOQ used for tendering.

63. The tenderers sought a lot of clarifications from GHA during tendering

because the information in the tender documents was not clear. As a result, two of the

tenderers lost interest in the project and pulled out. The whole project was completely

redesigned when the details that GHA should have obtained and used in preparing

detailed drawings before going on tender became available after award of the contract.

Conclusion

64. The preliminary drawings issued for tendering were not detailed. The

drawings did not include the details on flyovers, retaining walls and pedestrian

bridges. GHA did not carry out proper design review, detailed engineering studies and

detailed drawings on the road within the three-month period. The tender documents

were, therefore, deficient in important information to allow tenderers submit

competitive tenders.

Recommendation

65. We recommend that GHA should ensure that all the right things necessary to

ensure that details needed are obtained to prepare good tender documents before


proceeding to tender. Where time is of essence and GHA cannot go through all the

needed steps to undergo the traditional form of procuring a Contractor, other methods

for procuring a Contractor that do not require detailed tender documents should be

pursued.

GHA’s response

66. Recommendation accepted.

3.3 Contractor selection did not meet the full requirements of the Public

Procurement Act

67. Section 45 of the Public Procurement Act, 2003 (Act 663) governs effective

international competitive tendering. It deals with pre-qualification and tendering.

Section 45 (2c) of the Act specifies that tenderers should be allowed at least six weeks

for the submission of their tenders (either pre-qualification or the actual tender). This

is to allow sufficient time for the invitation to reach the tenderers and for them to

prepare their tenders based on information that is clear and understandable.

68. Our review of the tender process (through documents and interviews) showed

that GHA conducted the tender by first inviting interested tenderers for pre-

qualification. Subsequently tenderers who passed the pre-qualification were invited to

the actual tender. GHA advertised the sale of pre-qualification dossiers for the

construction of the Achimota to Ofankor road project in the two national dailies

(Ghanaian Times on 22 April 2006 and Daily Graphic on 26 April 2006). Eleven

international firms purchased the pre-qualification dossiers, but seven submitted their

applications to GHA on 5 May 2006. Out of the seven, three were pre-qualified to

submit tenders. GHA’s reasons for not pre-qualifying the other four loosing tenderers

were:

key technical staff of tenderer did not meet the pre-qualification criteria; and

tenderer did not submit equipment holding, financial statements and curriculum

vitae of all personnel in line with the format in the pre-qualification dossier.


69. M/s Daewoo E&C Company Limited, China Railway Wuju Group

Corporation and Bilfinger Berger were the three tenderers invited to submit tenders on

16 July 2006. The tender documents were forwarded to the three tenderers without all

the drawings. The quantities in the BOQ were based on preliminary drawings. The

tenderers together sent 57 queries about the tender documents for GHA to clarify.

Some of the queries for which the tenderers wanted answers included:

i. inconsistencies between the drawings and BOQ ;

ii. request for outstanding drawings;

iii. title of project stated 3-lane and 3 interchanges whereas drawings

showed 2-lane and 4 interchanges;

iv. some of the available drawings were not readable;

v. errors in drawings;

vi. inconsistencies in BOQ, unclear description of items; and

vii. request for soil report.

70. To answer the queries, GHA organised a pre-tender meeting on 30 June 2006

(two weeks to the submission date) where they discussed the queries and also issued

an Addendum to the tender documents. According to the tenderers, the addendum bill

created considerable increases in the original quantities in the BOQ and also

introduced a lot of new items.

71. The minutes of the pre-tender meeting got to the tenderers on 18 July 2006.

Based on this, GHA extended the tender submission date by 12 days from 16 July to

28 July 2006. China Railway Wuju Group Corporation was the only pre-qualified firm

which submitted its tender by 28 July 2006.

72. Our analysis of the tender process showed that GHA allowed two weeks for

the pre-qualification (from 22 April to 5 May 2006) and initially gave the pre-

qualified tenderers five weeks to submit their tenders (9June to 16 July 2006). GHA

upon request from tenderers extended the period by two weeks. These times were not

sufficient to allow tenderers to meet the criteria set in the Instructions to Tenderers for

both the pre-qualification and actual tendering. In the case of the pre-qualification,


four interested tenderers could not submit tenders. Out of the seven who submitted,

four namely: Taysec Limited, P. W. Civils, Sonitra Limited and Parsons Brinkerhoff

could not provide detailed pre-qualification documents although they are known to be

competent contractors in civil engineering works. Two of the tenderers (Taysec

Limited and Sonitra Limited) were working for the Government of Ghana at the time

of the pre-qualification.

Conclusion

73. An effective competitive tendering thrives on the basis that all tenderers are

provided sufficient, clear and understandable information to tender. The audit team

was of the opinion that the time given for the pre-qualification and tendering were

short (two weeks for pre-qualification and, seven weeks for tendering) and that not all

the information needed to enable competitive tendering was provided by GHA. The

tender documents were not clear and specific to allow qualified contractors to prepare

accurate cost estimates.

74. As there were a lot of inconsistencies in the tender information provided by

GHA and queries were not fully answered at the pre-tender meeting, tenderers did not

have the same understanding to deliver competitive tenders. The two week extension

was not sufficient for two of the tenderers to submit tenders and their request for

extension of time was turned down. Only one tenderer was evaluated and declared the

winner of the tender for the Achimota to Ofankor road project.

75. The technical deficiencies in the tendering process were not addressed to

make the tender information clearer. Competition thrives on more contestants

participating in the tender so that in order to win, a contestant has to provide the best

price under the circumstances. The conditions that existed allowed only one contractor

to be evaluated, thereby reducing the competitiveness of the tender process.


Recommendation

76. We recommend that GHA should allow tenderers sufficient time to prepare

and submit tenders to enhance competition in tendering and also ensure that detailed

drawings are included in the tender documents.

GHA’s response

77. GHA responded that the requisite time would be allotted for the procurement

process.

The implementation of the road project

3.4 GHA increased the scope of works by 217% over the original contract

sum before seeking approval

78. The original scope of works for the contract for the Achimota to Ofankor road

project was the construction of a three-lane dual carriageway from Achimota to

Ofankor spanning a length of 5.7 kilometers with three interchanges and service roads.

The interchanges were to be two 80 metre four-span bridges (flyovers) at Mile 7 and

Ofankor and an underpass at Tantra Hill. In addition to these were four cable-stayed

pedestrian footbridges at various locations between Neoplan Junction and Ofankor.

79. Clause 51.1 of the Conditions of Contract Part I gives the Engineer the power

to vary the scope of the project. Sub-Clause 2.1 (d) and (e) of the Conditions of

Contract Part II stipulate that the Engineer shall obtain specific approval of the

Employer before issuing a variation under Clause 51, except where the variation

would increase the contract price by less than the amount stated in the Appendix to

Tender or less than 15 % of the contract price. In the Appendix to Tender, the

Engineer’s authority to issue variations is 15% of the contract price. This means that

any change in scope of work which will lead to an increase in cost of 15% or more of

the contract sum cannot be issued by the Engineer unless he obtains approval from

MRH. Schedule 3 of the threshold for Procurement Entities in the Procurement Act

requires that procurement of works above GH¢15 million is to be approved by the


Central Tender Review Board. In this case, the revision in scope can only be effected

after approval has been given by the Board.

80. The audit team found that the Achimota to Ofankor road project went on

tender with drawings from preliminary designs. We found through review of

correspondence that drawings for the project submitted to the Contractor could not be

implemented and a new set of drawings were submitted by the Resident Engineer to

the Contractor in August 2007 which changed the original concept. The revised design

concept was for four lanes for the highway, with two breakdown lanes and two service

lanes from Neoplan to Ofankor. Other major changes were:

a. Mile 7 and Ofankor bridges were redesigned from 4-span to 19-span;

b. the Tantra Hill bridge was changed from 3-span bridge of

1,495m3reinforced concrete to 2,674m

3 reinforced concrete box

underpass;

c. retaining walls were also increased from a length of 750m to 12,000m;

and

d. the footbridges were changed from cable-stayed bridge to simply

supported reinforced concrete deck slab on cylindrical columns.

81. We expected GHA to have costed the new designs and determined whether or

not they needed to seek approval from the Central Tender Review Board (CTRB) but

instead they went ahead and implemented the new designs. GHA only sought

approval from CTRB for the changes on 26 November 2009. The CTRB

appropriately queried GHA for not seeking prior approval before implementing the

new designs and asked GHA to provide justification for the redesign. The CTRB gave

approval of the revision in the scope of the project on 6 April 2010 when the project

was estimated at GH¢128 million. Table 2 shows a comparison of the cost of

components of original scope and revised scope of works.


Table 2: Cost comparison of the original scope and revised scope of works.

No. Major components

Original cost

as per BOQ

(GH¢

Component)

Original cost as

per BOQ (US$

Component)

Original cost as per

BOQ (GH¢ Equivalent)

Revised cost

per Re-design

(GH¢)

%

increase

1 General Items 3,552,090 1,919,979.22 5,319,977.68 15,027,738.04 183

2 Roads and Pavings 2,913,031 16,221,562.46 17,849,602.63 19,007,654.31 8

3 Mile 7 Flyover

731,580 3,735,938.07 4,171,575.33

14,491,953.19

4 Ofankor Flyover 17,223,224.24 735

5 Tantra Hill Underpass 3,128,751.17

6 6 No. Foot Bridges 527,836 2,654,668.56 2,972,215.42 4,617,016.62 55

7 Drainage 619,851 2,776,950.73 3,176,825.92 7,298,378.28 230

8 Retaining wall 281,840.91 281,840.91 16,840,392.62 5875

Subtotal (A) 8,344,388 27,309,099.04 33,490,196.98 85,604,608.17

Specified provisional sums

included in bill items (B) 3,402,803 1,599,300.00 4,875,414.34

Subtotal of bills less

provisional sums (A)-(B) =

(C)

4,941,585 25,709,799 28,614,782.60

Add physical contingency

(D) 494,159 2,570,979.90 2,861,478.26 10% of Sub-Total (C)

Add physical contingency

4,280,230.41

5 % of (A)

Add price contingency (E ) 1,482,476 2,570,979.90 3,849,795.33

Add price contingency

(10%) of (A) 8,560,460.82

Total Dayworks (F) 48,732 95,735.42 136,884.21

Net Bid price

(A)+(B)+(E)+(F) 10,369,755 32,546,794 40,338,354.54

Total Cost of variation 98,445,299.39

Bill of omissions -10,622,889.50

Net Variation 87,822,409.89

Revised Cost 128,160,764.43

Source: GAS Analysis of GHA “Revised scope and estimated cost to complete” document dated 30 October 2009

Note: Exchange rate is US$1=GH¢0.92

82. Due to the increased scope of works without approval, the Ministry of

Finance and Economic Planning did not know the full extent of the financial

obligation under the contract. Therefore, Ghana Government was saddled with

unplanned cost and was unable to pay on time, which resulted in extra cost from

interest payments.


Conclusion

83. It is important for clients to be informed of major cost implications on

projects for the client to plan and find additional resources to meet the added burden.

The contract required GHA to follow good practice of seeking approval prior to

implementing major changes exceeding 15% of the contract sum. GHA failed in this

regard although they had the capacity to assess the cost implication of the redesign.

Though the CTRB was unhappy about the actions of GHA, they had no option than to

grant approval.

Recommendation

84. The MRH should engage an independent cost consultant to assess the cost of

the completed project to determine the reasonableness of the total cost of the project.

85. GHA should seek approval from MRH and Central Tender Review Board

before implementing major changes in design which will result in more than 15%

increase in the contract sum.

GHA’s Response

86. GHA responded that they needed time to have the reviewed scope fully

identified. Also the desire not to have the Contractor idling while the re-scoping was

on-going brought about the delay in seeking the appropriate approvals. On completion

of the re-scoping, GHA sought the necessary approval of MRH and notified the CTRB

as required under the Public Procurement Act 663.

3.5 GHA delayed in providing information for setting-out and drawings

87. As in all contracts, information needed for the smooth start of a project should

be ready prior to the commencement of a project. This is to enable the Contractor to

commence work and complete within the agreed period or any extended time properly

given by the Engineer under the contract.

88. We found through a review of correspondence between GHA and the

Contractor and interviews with the Resident Engineer that GHA delayed in providing


setting- out information to the Contractor which delayed the start of the works by six

months. Within this six months period, the Contractor set up his campsite and was

ready to work but could not proceed. He was idle due to the non-availability of

information to proceed. GHA was to have provided the setting-out information to the

Contractor in November 2006 to enable him to start work.

89. GHA contracted HAG Consult (a civil engineering consultancy firm) to

conduct a new survey to collect the setting- out information required for the works to

start. CRWGC began setting out for the project after they received the information

from GHA in May 2007.

90. GHA also delayed in issuing drawings for the major components of the

project. They issued the drawings to CRWGC in September 2007 instead of

November 2006. Within the period that drawings for the new designs for major works

such as the four pedestrian footbridges, retaining walls, drainage, the main

carriageway and flyovers were not ready, the Engineer instructed the Contractor to

carry out minor works.

91. The setting -out information and drawings were delayed because GHA did not

conduct the detailed engineering study to collect the setting-out information and

prepare detailed drawings. The information and drawings issued initially were those

from preliminary designs which the Contractor could not work with.

92. As a result, the actual start of the project was delayed by 10 months due to the

absence of setting- out information and detailed drawings. The Contractor made a

claim for unproductive labour time and equipment on site for the 10 month period but

GHA did not pay any compensation because the Contractor did not formally inform

GHA that it had begun to count the days that labour and equipment were idle.

Conclusion

93. The delay in providing the Contractor information needed to set out the

project caused a delay of 10 months that reflected in the extension of time granted the

Contractor.


Recommendation

94. We recommend that GHA should act promptly to request for information to

ensure that the Contractor works diligently on the project. MOFEP should surcharge

GHA officers who cause delays to contract duration with the cost involved in such

delays.

GHA’s response

95. GHA responded that given the complexity of the project, the 10 months it

took in providing the setting out data was considered reasonable, in view of the

processes involved. The 10 months were used not only for detailed designs but also to

resolve issues regarding relocation of services, demolishing of structures, payment of

compensation to property affected persons, road diversions, etc.

Ensuring the road works meet quality specifications of the contract

3.6.1 GHA ensured the road project was executed in accordance with the

specifications

96. According to the General Conditions of Contract Sub-clause 36.1(a) all

materials, plant and workmanship shall be of the respective kinds described in the

contract and in accordance with the Engineer’s instructions.

97. Under the General Conditions of Contract Part I, Sub-clause 37.2 (Inspection

and testing), the materials used for construction should be inspected and tested by the

Engineer to ensure they meet quality specifications. The General Conditions of

Contract Sub-clause 38.1 (Examination of work before Covering up) and Sub-clause

39.1 (Removal of improper work, materials or plant) no part of the works shall be

covered up or put out of view without the approval of the Engineer and the Engineer

shall have the authority to remove from site any materials or plant which are not in

accordance with the contract.

98. Interviews with the Resident Engineer indicated that GHA had 12 Engineers

and other staff who help him do daily supervision of the works on site. The team was


made up of a Materials Engineer, a Quantity Surveyor, a Surveyor, five Works

Inspectors, two Survey Assistants and two Laboratory Technicians. We also noted that

there was a materials laboratory on site to test the quality of materials and

components.

99. There were cube test results for all major concrete works done on site. These

were: concrete test results for retaining walls, bridge foundations and piers, suspended

concrete and kerb foundations. There were test reports for 7 and 28 days old concrete.

These results were reviewed by the Resident Engineer who gave his consent to the

results achieved. We reviewed a sample of 20 concrete test reports for concrete at 7

and 28 days and found that they all exceeded the minimum strength for what they

were to be used for as stated in the Specifications.

100. We reviewed test results on compaction tests for gravel base and found they

were consistently done and also exceeded the minimum of 96% density allowable in

the Specifications.

101. We took measurement of the thickness of the asphalt bitumen laid on the road

surface for verification and noted that it conformed to the thickness of 60 mm for

service road and 80 mm for main carriageway as stated in the drawings. The test

results for the asphalt were mostly satisfactory as stated by the resident Engineer.

Where the test result was not satisfactory, we found that the Resident Engineer

instructed the Contractor to remove 1.77 kilometre of asphalt which had been laid

without quality control reports. Again the Resident Engineer instructed the Contractor

to remove asphalt on Mile 7 Overpass which did not meet the specifications when

tested.

102. We found through review of documents and interviews with the Resident

Engineer that he made sure the Contractor demolished substandard concrete works

and reconstructed them to meet specifications.


Conclusion

103. GHA ensured works delivered were of the required specifications in the

contract. GHA’s site supervisors reported breaches of the quality control measures to

the Resident Engineer for rectification. Consequently, works below specification

brought to the attention of the RE were rejected and reconstructed according to

specification.

Recommendation

104. We recommend that GHA should be vigilant and ensure that only work that

meets the specifications are accepted for payment.

GHA’s response

105. GHA responded that they would continue to be vigilant on all projects, as

they have done on the Achimota to Ofankor road project, to ensure work is done to

specification.

Managing the cost of the road project

3.7.1 Delays in paying Interim Payment Certificates (IPCs) cost GoG GH¢4.40

million in interest charges

106. According to Sub-clause 60.8 of the Conditions of Particular Application of

the contract, IPCs are to be paid within 56 days after certification by the Engineer.

The Contractor is entitled to interest on the unpaid debt at the rate of the Bank of

Ghana prime rate plus 2% and a London Inter-Bank on-lending rate plus 1% for cedi

and dollar components respectively each day the debt remains unpaid.

107. The IPC is prepared on site by the Resident Engineer with input from the

Contractor. The process for preparing and paying IPCs to the Contractor under the

Achimota to Ofankor road project is shown in Figure 3 (page 15).This procedure has

14 steps before the IPC is finally paid.


108. We examined all IPCs issued and the dates IPCs were paid by MOFEP. As at

31 December 2011, 36 IPCs had been issued and certified by the Engineer and 35 had

been paid during the time of our audit in 2012. The audit team found that apart from

IPC No.1 (mobilization) which was exempt from interest payment, the remaining 35

IPCs were paid beyond the 56 days payment period. The average delay period was

224 days for Ghana cedi component and 231 days for US dollar component. See

Appendix 5 for details of all 35 IPCs issued as at 31 December 2011, the periods of

delay for each certificate and the corresponding interest accruing from the delay.

109. We examined the trail of 23 IPCs (IPC No 12 to 36)5 from the project site to

the point where MOFEP instructs the Controller and Accountant General to pay the

Contractor. Averagely, the IPC spends 35 days at the Greater Accra Regional

Coordinating Council, 39 days at GHA, 28 days at MRH, 89 days at MOFEP and 33

days at the Controller and Accountant-Generals Department. The total days exceeds

the 56 days period within which the Contractor should be paid.

110. The interest on delayed payment from 2007 to 2011 amounted to GH¢3.33

million and US$ 1.16 million (GH¢4.4 million equivalent). This amount has also

increased the cost of implementing the project.

111. The Contractor used the delay in paying IPCs as an excuse to delay the rate of

progress of work. As a consequence of this, the Contractor did not follow his

programme of work and always fell short of his monthly planned progress throughout

the period covered by the audit.

5 Information on IPC No 2 to 11 was not provided by GHA


Table 4: Payment Trail for IPCs 12 to 36

Number of Days at

G.A.R.C.C. G.H.A. MRH MOFEP IPC No. Regional

highway

director

Regional

economic

planning

officer

Chief

director

gar

Regional

minister

gar

Dir.

Quantity

surveying

Dir.

Contracts

Dy. Chief

executive

dev't

Chief

executive

officer

Chief

director

Minister

MRH

MOFEP Controller

and

accountant

general

12 5 7 0 2 9 3 1 7 30 4 1 n/a

13 8 5 0 14 23 4 n/a 8 8 25 3 n/a

14 12 3 0 5 17 4 n/a 7 9 25 2 n/a

15 15 6 0 14 17 1 3 8 8 5 1 n/a

16 13 5 2 n/a 20 1 0 6 n/a 21 6 n/a

17 20 4 1 20 23 6 1 6 n/a 22 0 36

18 n/a 11 0 24 46 2 0 5 n/a 11 3 52

19 10 11 0 10 46 2 0 5 n/a 9 2 77

20 19 8 0 16 32 2 0 7 11 7 2 107

21 6 10 0 n/a 50 3 1 6 11 4 1 163

29 7 7 1 28 12 1 0 18 14 9 1 221

30 8 25 1 31 17 2 1 7 n/a 32 3 179

31 12 9 1 13 20 5 1 3 27 8 3 152

32 31 7 1 8 18 37 0 7 16 2 3 84

33 11 3 0 10 14 5 1 7 13 2 4 28

33A 11 3 0 0 32 41 1 12 50 0 99

34 13 2 0 14 n/a 4 0 4 9 12 1 44

35 9 7 0 9 20 1 3 17 12 14 1 21

36A n/a 16 0 20 20 1 1 13 8 5 2 19

36 10 6 0 20 13 1 0 8 21 5 2 19

Average 12.2 7.8 0.4 14.3 23.6 6.3 0.8 8.1 14.1 13.6 2.1 86.7

34.7 38.8 27.7 88.8

n/a – not enough information to compute

Source: GAS analysis of IPCs

Conclusion

112. It is an obligation on both parties to a contract to abide by the terms of the

contract. China Railway Wuju Group Corporation was to execute the works in

accordance with the conditions of the contract. Ghana government’s obligation was to

pay the Contractor amounts legitimately due him and at the times specified in the

contract. The many steps and long periods officers take to process the IPCs before

payment led to the Government incurring additional cost of GH¢4.40 million that

could have been avoided.


Recommendation

113. We recommend that:

i. Government should explore alternative means of funding, for example

Public, Private Partnership (PPP) to spread the burden of project

financing;

ii. GHA, MRH, RCC and MOFEP should analyse the tasks involved in the

payment procedure and allot maximum number of days the IPC should

spend at each office. The total period should not exceed the contractual

payment period. Officers who cause delays should be surcharged with the

proportion he/she contributed to the accruing interest;

iii. GHA, MRH and MOFEP should review the period for payment inserted

in the contract to what is convenient to forestall the delays and the

attendant interest payments. Such periods may preferably be discussed

with the prospective tenderers.

GHA’s response

114. GHA accepted the recommendation. GHA and other stakeholders will work

together towards timely processing and payment of IPCs.

3.7.2 GH¢374,000 was spent on items unrelated to the Achimota to Ofankor

road project

115. Regulation 39 (1) of the Financial Administration Regulations, 2004

stipulates that monies should be utilized in a manner that secures both optimum value

for money and the intention of Parliament. BOQ Item A900 is a provisional sum

(GH¢957,457.20 and US$ 450,000.00) included in the BOQ to settle payments for

incidental consultancy services regarding designs, reviews and supervision that

become necessary under the project. It is also for paying expenditures incurred by the

GHA supervisory staff in their day to day supervisory work.


116. We sampled 240 expenditures that GHA had made and categorised under

Item A900 of the BOQ. We selected expenditure samples of GH¢ 2,000.00 and above.

Table 6 shows expenditures that in our opinion were not related to the project.

Table 6: Expenditures made not related to the Achimota to Ofankor road project

Item Date Details Amount

A 09/12/08 Head office backstopping GH¢ 50,000

B 01/12/2010 Participation fees in favour of four (4) GHA

officers who participated in a short course in Urban

Transportation Systems Planning organised by the

Department of Civil Engineering KNUST.

GH¢ 2400.00

C 25/01/2011 Purchase of saloon car (BMW 740Li – 2010

MODEL)

One year comprehensive insurance

$ 160,305.76

$ 6,672.71

(GH¢242118.78

)equivalent

D 08/04/2011 Training of four GHA staff at GIMPA GH¢11,264.00

E 20/04/2011 Posting allowance for 13 GHA staff transferred to

the head office

GH¢34,764.73

F 01/06/2011 Conversion of GHA’s Archive Basement into

offices and renovation of the office of Deputy Chief

Executive (Dev.)

GH¢33,225.62

G Total GH¢374,000.00

Source: GAS review of General Correspondence file

117. Each year, GHA is allocated funds in their budget to fund their operations

under Investments and Administration. Our analysis of the expenditures in Table 6

shows that two of the expenditures, items B and D, were for training which falls under

Administration. The training for which the expenditures were made was not related to

the Achimota to Ofankor road project.

118. The procurement of assets, items C and F in Table 6, i.e. the purchase of a

BMW saloon car and the conversion of the basement of GHA head office into

archives, fall under Investment. Although GHA had used funds under Item A900 to

purchase and maintain vehicles, those vehicles were directly used by the GHA

Engineers to conduct supervision.


119. According to the CEO, funds allocated to GHA for its operations are

inadequate to support its internal operations so the practice has been to use funds from

GoG funded projects to support internal activities. Payment for expenditure items not

related to the Achimota to Ofankor road project increased the contract sum by

GH¢374,000 as at 31 December 2011.

Conclusion

120. The amount of GH¢374,000.00 was misapplied by incorporating expenditures

that were not directly related to the road project under audit. Such practices have the

effect of increasing project cost unnecessarily. It also has the tendency of distorting

cost information on the project. The real cost of the project cannot be correctly

determined and unit cost comparison will make Government construction look very

expensive.

Recommendation

121. GHA should desist from including expenditure not related to the project in

IPCs. MRH should check IPCs thoroughly to ensure GHA expenditures that are not

related to road projects are expunged from IPCs before they are forwarded to MOFEP

for payment.

GHA’s response

122. Inadequate budgetary allocation for training of staff partly accounted for this

situation. Contract administration goes beyond those technical staff at the site. It

involves key staff from Contracts, Survey and Design, Materials, Bridges, Safety and

Environment Divisions providing Head Office technical backstopping to the resident

project supervision teams. GHA makes provision on all its projects for Head Office

backstopping and continuing educational programmes, etc., for deserving staff.

3.8 Overall conclusion

123. The Achimota to Ofankor road project was completely redesigned after the

contract had been awarded because according to GHA the preliminary design used for

tendering was not implementable. GHA did not conduct detailed engineering studies


to develop a detailed design, drawings and an accurate BOQ. GHA increased the

scope of the project without prior approval from Government and this caused

Government to delay in paying the Contractor. This slowed the pace of construction

and cost an avoidable GH¢4.40 million extra. GHA delivered the project to the

required specification in 72 months instead of the 36 months initially envisaged. The

redesign has cost Government GH¢88 million more than initially estimated as at 31

December 2011.


APPENDICES

Appendix A

Methods and implementation

i) List of Documents reviewed

Document Information required

Contract document

Specifications and project description on road works.

General and specific conditions.

Enabling Act Legally mandated role of GHA on the project

Progress report

(monthly)

Activities carried out on the project from inception/commencement

to date

Trends, date, and cost of the project

Quality review, quality assurance and quality checks conducted by

GHA on the project

Information on the site visits

Reports of progress of actual works

Inception

report/documents

Background of the project, project activities, justification of project.

Phases of project, project outputs, project partners and their roles.

Road map of project with time frame

Feasibility study

report

Economic analysis, source of funding for the project, project

schedule with lay milestone, objectives of the project.

Project budget

Risk evaluation

Interim Payment

certificates

Payments that have been made to the contractor over the period

Project

correspondence

Project issues discussed between partners on the project, letters,

resolutions, negotiations, authorisations

Programme of works Details of activities to be done, time lines, proposed budgets,

milestones

Minutes of project

meetings

Issues discussed during meetings between the partners on the project

Approval, requests and actions

Operational reports

Project scope The extent of the project requested by the client and agreed to by the

contractor

Project variations Changes that were made to the project, who requested for the

changes, authorisations, costs of the changes approved

Project initial

estimates

Initial costs of components of the project

Organisational

structure

Accountability relationship at GHA

Project expenditure All amounts spent on the project (expenses made so far on the

project)


ii) List of Officials interviewed and subjects for interviews

Interviewee Subject

CEO and

Deputy Chief

Executive

Officer

(Development)

i) Roles and responsibilities,

ii) Coordination of the divisions under Development

department.

iii) Feasibility studies

iv) Planning for the Achimota-Ofankor Road Project.

v) Preliminary estimate

vi) Selection of contractor

vii) Human resource for the project.

viii) Challenges and the way forward

Director

Planning


ii) Role in the planning and implementation of the

Achimota-Ofankor Road Project,

iii) Planning for Achimota-Ofankor Road Project.

iv) Identification of properties and payment of

compensation.

v) Challenges and the way forward

Director Survey

and Design


ii) Role in the planning and implementation of the

Achimota-Ofankor Road Project.

iii) Initial road profile

iv) Design of components of the project

v) Change in design.

vi) Challenges and the way forward

Director Bridges i) Roles and responsibilities,

ii) Design of the footbridges and flyovers.

iii) Change in design of the flyovers and footbridges

iv) Challenges and the way forward

Director

Quantity

Surveying


ii) Cost Planning.

iii) Tender documentation

iv) IPCs

v) Challenges and the way forward

Director i) Roles and responsibilities,


Interviewee Subject

Contracts ii) Tendering

iii) Selection of contractor

iv) Contract Administration

v) IPCs


Director

materials


ii) Quality control

iii) Quality assurance


Resident

Engineer

i) Role in the implementation of the Achimota-Ofankor

Road Project.

ii) IPCs

iii) Quality assurance

iv) Monitoring of the project.

v) Progress of work on the project


Project Manager

(CRWG)

i) Interim Payment Certificates.

ii) Progress of work on the project.

iii) Quality of works


Chief Executive i) Roles and responsibility in planning and

implementation of the project

ii) Approval processes

iii) Relationship with MRH and MOFEP

iv) Role of MRH on the project

v) Relationship with Resident Engineer

vi) Tendering

vii) IPCs

viii) Challenges and the way forward

Budget Officer –

MOFEP

i) Roles and responsibility in planning and

implementation of the project

ii) Approval processes

iii) Relationship with MRH and GHA

iv) Role of MOFEP on the project

v) Payment of IPCs


Appendix B

Schematic Drawing of Dual Carriage Highway


Appendix C

Examples of concerns raised by Tenderers

The audit team gathered from review of project files that tender documents were

forwarded without drawings, and quantities were based on conceptual sketches.

(Correspondence between CEO-GHA and Minister of Transport dated 22 May 2006).

Tenderers also complained of incomplete tender documents and errors in tender

documents and sought for clarifications. Examples are:

i. On the 19th

of June 2006, P. W. Civils requested for tender drawings, Bills

of Quantities and rates.

ii. On the 22nd

of June 2006 Bilfinger Berger and Daewoo E & C Co. Ltd

requested for clarification of tender document.

iii. On 26th

June 2006 Daewoo E & C Co. Ltd requested for drawings since

they were not included in the tender documents. Bilfinger Berger requested

for clarification on drawings showing 2-lane carriageway with four

interchanges instead of 3-lane carriageway with three interchanges as per

the project name.

iv. On 28th

June 2006 CRWG requested for clarification on nine errors detected

in tender documents, one of the errors being incomplete design drawing.

v. On 29th

June 2006 Bilfinger Berger sought clarification on the bill of

quantities. Also, tender documents did not have contract identification

numbers.

vi. On 30th

June 2006 Bilfinger Berger requested for outstanding drawings in

order to formulate responsive bid since the drawings were not included in

the tender documents. Also the BOQ referred to drawings which were not

provided within the tender documents such as concrete kerb details,

reflective road sign details, retaining wall details, galvanised steel beam

guardrail details, and pedestrian handrail details.

vii. On the 4th

of July 2006, Bilfinger Berger drew the attention of GHA to the

errors in drawings and sought clarification.


viii. 14th

July, Bilfinger Berger queried GHA for not furnishing them with the

minutes of the Pre-Bid meeting of 30th

June 2006.

Request for extension of deadline to submit tenders

i. On the 12th

of July 2006 Bilfinger Berger requested for extension of

deadline because they had not received the revised contract documentation

as of 7th

July 2006. The estimation process was suspended as a result.

ii. Daewoo wrote for extension of submission date from 28th

July 2006 to 25th

August 2006 due to changes in quantities in the Bill of Quantities received

from GHA on 18th

July 2006.

Request for extension of time denied

On 21st July 2006, GHA wrote to deny Daewoo E & C Co. Ltd the request for

extension of time.

Withdrawal of Bid

On 28th

July 2006 Daewoo informed GHA of their decision to withdraw their bid due

to lack of bid preparation time.


Appendix D

Instances of delays by contractor in following Resident Engineer’s instructions

i. On 9th

April 2009, the Resident Engineer instructed the Contractor to

construct Tapering End Post for the New Jersey barriers but as at 13th

May2011, the Contractor had not constructed the Tapering End Posts

ii. Laying of Asphalt Wearing Course in the RHS main carriageway without

first submitting the quality control reports for the DBM and binder courses

laid for the section between ch.2 + 290 ~ 4 + 060 without seeking approval

to proceed as required. (sub-clause 38.1 “Examination of work before

covering)

iii. Dumping of 19mm chippings in swamp to stabilise sub-grade contrary to

the RE’s instruction for sub-grade stabilisation prior to casting of the

required concrete binding for the base of 1.5m x 1.5m box culvert.

iv. The RE instructed the contracted on the 28/04/2009 to reverse slopes in the

kerb inlets and to change the pre-cast moulds to ensure regular slopes for

drainage from the road to the side drains. The works was not done

according to specification. All the kerb inlets had to be removed and

replaced.

v. Poor concrete finish for New Jersey Barrier within Ch 4 +816 ~ 4 + 828, Ch

4 +865 ~ 4 + 877.

a. According to the RE, the expatriate supervisor was never present during

concrete pour except for the operatives and although the RE drew his

attention to it, no action was taken.

b. (sub clause 15.1 Contractor’s superintendence at site at all times)

vi. Random jointing and corrugations on DBM placed within Ch. 3 +370 ~ 4 +

050 LHS main carriageway resulting in bumpy riding surface contrary to

specification to place asphalt layer within specified surface tolerances to

ensure smooth riding quality.


vii. Irregular sizes of pre-cast u-drain cover slabs placed on u-drains at several

locations along the main carriageways and service roads, and poor finish of

the in-situ concrete deck slabs contrary to specifications.

viii. Defective work for wearing course on Mile 7 overpass Ch. 2 + 116 ~ 2 +

133 LHS

a. The wearing course was manually finished instead of paver finish and

covered in a coat of bitumen to conceal the resultant undulations contrary

to specifications.

ix. Laying of either deformed or broken kerb stones along Ch.1 + 460 ~3 +060

LHS service road.


Appendix E

Details of total interest paid as at 31 December 2012

PC No. Amount Total days of delay in

payment Interest paid

% increase over IPC

amount

GH¢ component

US$ component GH¢ part US$ part

GH¢ part US$ part GH¢ part US$ part

1 7,187,917.00

0 0 0 0 0 0

2 489,589.98 1,117,010.63 241 245 48,961.00 54,395.00 10.00% 4.87%

3 522,305.91 1,452,690.80 307 279 69,014.00 76,182.83 13.21% 5.24%

4 1,569,485.61 1,005,520.79 144 150 92,210.97 27,690.85 5.88% 2.75%

5 1,228,444.28 1,053,793.79 211 219 115,959.11 41,582.62 9.44% 3.95%

6 924,500.71 1,642,855.47 146 154 61,231.39 45,557.18 6.62% 2.77%

7 627,079.44 2,165,292.02 187 188 57,936.00 73,606.24 9.24% 3.40%

8 1,141,990.26 2,895,863.13 187 265 91,049.42 100,934.21 7.97% 3.49%

9 2,551,401.49 2,791,886.27 269 291 375,519.14 87,341.42 14.72% 3.13%

10 617,896.06 1,562,262.41 377 323 138,058.02 40,188.24 22.34% 2.57%

11 181,616.44 422,206.24 347 347 36,664.89 10,799.61 20.19% 2.56%

12 976,449.85 1,021,790.98 379 384 183,459.42 27,133.72 18.79% 2.66%

13 554,971.74 87,828.78 249 254 89,874.21 1,608.31 16.19% 1.83%

14 797,666.93 1,620,846.56 241 246 109,318.16 24,577.53 13.70% 1.52%

15 1,041,173.82 534,870.95 226 231 133,896.42 7,545.13 12.86% 1.41%

16 2,072,303.44 3,203,329.16 104 109 122,565.02 19,559.04 5.91% 0.61%

17 935,419.27 1,974,619.32 121 136 48,632.76 14,087.13 5.20% 0.71%

18 762,321.72 1,804,898.06 116 118 67,183.78 20,790.51 8.81% 1.15%

19 640,033.83 1,342,776.27 133 136 57,452.12 12,970.65 8.98% 0.97%

20 1,261,515.65 912,304.68 175 175 111,029.99 9,229.40 8.80% 1.01%

21 382,493.39 881,021.98 233 252 41,492.90 11,863.43 10.85% 1.35%

22 313,429.44 1,047,650.36 320 327 46,238.82 17,790.68 14.75% 1.70%

23 1,753,172.41 1,080,304.32 293 300 234,427.03 16,774.01 13.37% 1.55%

24 754,317.83 2,001,347.83 261 268 89,067.43 27,414.43 11.81% 1.37%

25 766,710.80 1,847,766.18 397 421 89,252.39 34,236.97 11.64% 1.85%

26 2,421,399.94 12,404,880.05 378 402 390,624.62 232,488.33 16.13% 1.87%

27 470,497.61 1,346,618.48 183 190 35,978.34 11,922.07 7.65% 0.89%

28 612,824.05 1,277,474.12 135 142 34,229.65 8,456.18 5.59% 0.66%

29 692,255.54 1,785,410.78 320 327 92,447.39 27,272.46 13.35% 1.53%

30 553,078.83 1,551,642.48 281 288 64,120.27 20,856.76 11.59% 1.34%

31 656,080.43 1,668,263.10 231 238 62,566.03 18,515.44 9.54% 1.11%

32 488,276.63 1,493,934.79 137 144 38,429.81 9,930.26 7.87% 0.66%

33 504,780.54 813,371.69 83 90 15,687.21 4,521.59 3.11% 0.56%

34 752,340.24 1,985,151.26 113 127 32,266.64 12,897.34 4.29% 0.65%

35 1,584,204.43 1,460,032.48 88 87 50,130.64 8,500.64 3.16% 0.58%

Total 31,602,028.54 61,257,516.21 3,326,974.99 1,159,220.21

Total GH¢

Equivalent 88,439,814.96

4,394,367.57

Average 223.9 231.0

Source: GAS analysis of IPCs. Note: IPC No1 was mobilization payment and did not attract interest payment

Mission

Statement

The Ghana Audit Service exists

To promote

good governance in the areas of transparency,

accountability and probity in the public financial

management system of Ghana

By auditing

to recognized international auditing standards the

management of public resources

And

reporting to Parliament

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