KUCHING: Lebuhraya Borneo Utara (LBU), the Project Delivery Partner (PDP) for Pan Borneo Highway Sarawak (PBHS), is confident of saving RM2 billion in construction cost as a result of efficient design, cost and change control management.
LBU said in a statement yesterday that, the total construction cost is currently projected at around RM15.13 billion, reduced from the original target cost ceiling of RM16.488 billion.
It said the total savings arising from design management and optimisation alone will be around RM553 million.
“It is important to note that these savings are made in compliance with the design brief and with no compromise on standards or quality of highway, including design speed.
“When other savings are included (mainly due to re-measured quantities based on actual site conditions), the total savings achieved to date is around RM1.5 billion,” the statement added.
However, since the owners (the federal and state governments) have instructed additional works to be carried out, especially with regard to strengthening the pavement structure, the current net savings stand at around RM1 billion.
A further RM1 billion of saving is expected from allocated contingency not likely to be expended in view of the cost and change control measures undertaken for the project.
“Keeping a lid on construction costs is important for the PDP, whose performance is measured against meeting two Key Performance Indicators (KPIs).
“As the PDP, we are required to deliver the project within the agreed target cost (KPI 1) and by the agreed completion date (KPI 2).
“While these KPIs sound simple, yet the task is very challenging,” LBU said.
PBHS Phase 1 has a road alignment that spans 786km, via 11 works packages comprising 25 road sections, across the length of Sarawak.
The project is to be completed within a timeline until 2021-end, with a target cost of RM16.12 billion.
With the PDP model, LBU is given incentives to keep within the target cost. Cost overruns will lead to expensive penalties in the form of fee reduction.
In recent days, much has been said about the PDP model used for implementation of Pan Borneo Highway mega project, with concerns about keeping costs within the agreed target costing. – BY NICK FLETCHER
