Works Ministry explains Pan Borneo Sabah delays driven by contractor issues, costs rise

Highlights

The Works Ministry stressed that Pan Borneo Sabah delays are due to contractor performance, not issues with government payments to contractors.
Phase 1A recorded physical progress of 89.54% versus the scheduled 96.23%, while Phase 1B reached 25.53% versus the scheduled 24.76% to date.
The switch to a conventional contractor implementation model caused project costs to rise to RM24.89 billion from RM12.86 billion after 2019.

This article was translated from the original. Read the original version by our correspondent here.

Ministry's explanation of project progress

As reported by The Edge Malaysia, the Works Ministry rejected claims that project delays stemmed from the government's failure to make timely payments to contractors. Deputy Works Minister Datuk Seri Ahmad Maslan told the Dewan Rakyat that there were no financial issues; rather, some contractors were indeed facing implementation problems.

He was responding to a question from Kota Marudu MP Datuk Wetrom Bahanda on whether the project delays were caused by late government payments. Ahmad stressed that payments were not an issue, citing progress and payment figures for work packages under Phase 1A and Phase 1B.

For Phase 1A, which comprises 15 work packages, scheduled physical progress stands at 96.23%, while actual progress to date is 89.54%. Progress payments stand at 88.78%. For Phase 1B, involving 19 work packages, scheduled progress is 24.76% while actual physical progress has reached 25.53%; payments were scheduled at 20.73%, but the government has paid 22.11%.

Factors behind the delays and impact on project costs

In addition to contractor issues, the ministry said weather conditions, land acquisition challenges, utility relocation and the impact of the Covid-19 pandemic had also affected project implementation. These factors have added pressure to the 706-kilometre alignment as construction work continues.

Another major cause of the delays was the change in the project implementation model to a conventional contractor model from the project delivery partner model used at the initial stage. The original model was terminated in 2019, and the transition required a reassessment of the remaining works and project scope, thereby contributing to the ongoing delays.

The change also had a major impact on costs, with the project value rising to RM24.89 billion from RM12.86 billion previously. Borneo Highway PDP Sdn Bhd, a joint venture between UEM Group Bhd and MMC Corp Bhd, was the original project delivery partner before its appointment was terminated in the national interest.

In our previous coverage of the launch of Menarabena, we discussed Menara Asia Sdn Bhd's efforts to accelerate the digitalisation of the construction sector through a B2B platform that connects contractors with building material suppliers, complete with certificate information, documentation and compliance details. We also highlighted how this approach is intended to help the industry manage costs, meet material specifications and streamline supply chains so that project completion can be driven more efficiently without replacing existing certification requirements.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.