MRT Co speeding up the award of contracts

Sunday, 05 February 2012 10:09

The  Klang Valley My Rapid Transit (KVMRT), the country’s largest infrastructure project, is already gaining traction with the recent award of the two big packages worth RM1.74bil. This is the start of slew of other packages to be awarded this year to develop the multi-billion project. MRT Co chief executive officer Datuk Azhar Abdul Hamid shares with StarBizWeek a glimpse of what to expect on the KVMRT.

SBW: Can you shed some light on the evaluation process for the bidders?

Azhar: Well, the bidders are divided in two categories namely the open and bumiputra categories which the participants have been already pre-qualified earlier. Then, they will be invited to put in their bids and proposals for the specific jobs.

Their proposals are first evaluated by a working committed chaired by both MRT Co and Project Delivery Partner to gauge their technical and financial capabilities. They then go to the one-stop technical committee chaired by me.

Finally, we will present the outcome of these evaluations to the one-stop procurement committee to be chaired by three different persons depending on the contract value.

What are the coming big packages to be awarded soon?

The rest of the eight elevated track packages will be awarded in stages until middle of this year and there are six packages more to go (two have already been awarded to IJM Corp Bhd and Ahamd Zaki Resources Bhd). Also, the tunnelling package, that is the single largest package of the project that makes up 30% to 40% out of the total cost, is expected to be awarded in April.

We also will award the contract for development of the stations where each package will consist the contract to build three stations.

Generally, most of the large packages will be awarded this year.

Why does MRT Co need to rush in awarding most of the big contracts by middle of this year?

We are already about six months behind schedule and want to make sure we can deliver the project ahead of the expected completion time in July 2017.

There is nothing wrong to speed things up as we do not rely on one company to do the work. The most important thing is coordination and supervision.

We also do not want any delay and cost overrun.

Additionally, for the tunnelling job, we need a longer lead time as the construction of a specific tunnel-boring machine for a job usually takes 12 months. But, we are targeting to shorten the lead time to only nine months.

Do we have the enough capacity in terms of the number of local construction companies to undertake such a massive project?

If we are short on local capacity, the local companies can partner a foreign party.

Take the tunnelling package for example. The only local participant in the bid is the MMC Corp Bhd and Gamuda Bhd joint-venture. Gadang Holding Bhd is partnering with Hyundai and the remaining three bids come from two Chinese companies and a Japanese company.

The big boys in the construction industry are already there and they can farm the work out to smaller players as well.

What this project will do is to bring the smaller and medium-sized contractors to a higher level. That is also important as we do not build MRTs everyday.

There will be a lot of spin-offs from this project and it will touch a lot of people.

What are the likely areas in the project that will have to depend on foreign expertise?

Rolling stock and the systems. The rest we are good on our own.

Can you estimate the margins the contractors involved will receive?

From our perspective, it has to depend on the type of job but frankly we really don’t know what their margins are like. Nevertheless, I would be very worried if a contractor bids much lower than our estimates.

Why did the Government opt for a Swiss Challenge method for the tunnelling packages? Is it because there is a preference to award it to locals?

For the Swiss Challenge method, MMC and Gamuda, were the first to come up with the MRT proposal and they presented it to the Government, and they have indicated to be involved in the tunnelling portion.

But, the Government couldn’t give the green light just like that as they must do its own due diligence. Thus, via Swiss Challenge method, it is fair to everybody as well as MMC and Gamuda where they are only given the first right of refusal (if their bid is not the lowest).

We have a strong preference for local companies in general (not only for tunnelling) unless we cannot find the expertise here.

Has MRT Co calculated the total cost of the project and the financing?

We already have a figure but we still need to finalise it and get it approved first. The Government will finance the entire line 1 (Sungai Buloh-Kajang) via bond issuances. That will be done very soon.

What is the latest development in areas with issues such as Chinatown, Bukit Bintang and Jalan Inai?

I have lost count on how many times I have repeated this. First of all, we are all for heritage. We do not want to take any piece of land in Chinatown except the one that we need for the station and we are not going to demolish any building in Chinatown.

We just need time for them to vacate the area with compensation for six months for us to do the tunnelling works underground.

The actual tunnelling works is only about three weeks, but we need some time before and after tunnelling to check on the buildings there.

We also want to endorse on the land title that there is a tunnel underground thus the owner has to consult us first for any future development there. But that shouldn’t be a problem as the area is a heritage area anyway.

But, some people just refuse to understand.

Like in Jalan Inai and Bukit Bintang, we may be signing the points of agreements with owners soon.

What about Taman Tun Dr Ismail residents?

They are working with us. You see, we are doing this from a humanitarian approach. We actually already have the rights to begin construction there, but we are still trying to find a creative way to minimise the noise.

From The Star