Sabah Pan Borneo Highway Phase 1 records cost increase after missing 10-year deadline
The implementation of the first phase of the Sabah Pan Borneo Highway faced a RM1.05 billion cost increase after the project failed to be completed within the stipulated 10-year period. The increase is equivalent to 6% of the project cost and raises the government's funding requirement beyond the original amount.
Highlights
- The cost of Phase 1a of the Sabah Pan Borneo Highway rose to RM11.323 billion, up RM987 million or 9.5% from the original estimate of RM10.336 billion.
- Cost increases and delays meant the project could not be completed within its original scope, forcing the government to provide funding beyond the initial allocation.
- Delays to this 706-kilometre project involving 35 work packages add pressure to public development spending and postpone benefits for Sabah's rural communities.
This article was translated from the original. Read the original version by our correspondent here.
Cost increase and project scope in Sabah
As reported by The Edge Malaysia, citing the Auditor General's Report, the main factor behind the cost overrun came from Phase 1a, which rose to RM11.323 billion, or RM987 million and 9.5% higher than the project's original cost of RM10.336 billion.The report stated that the cost increase meant the project could not be fully completed within the scope of the original allocation, forcing the government to provide additional funding beyond the initial allocation.
The Sabah Pan Borneo Highway initiative was introduced as a government effort to improve the road infrastructure network in the state, with the implementation concept outlined by the works minister on 23 Oct 2015.
Impact on rural connectivity and public spending
The project comprises 35 work packages with a total road alignment of 706 kilometres. The main objective of the Sabah Pan Borneo Highway project is to improve connectivity and access, particularly for rural communities in Sabah.Delays and cost increases of this scale add pressure to public development spending while postponing the intended infrastructure benefits for road users and inland areas of the state.
In our previous article on two high-profile audit lawsuits, we examined how cases involving Serba Dinamik and the Sabah government's claim against an audit firm revived questions about the true limits of unmodified audit opinions when financial figures depend on highly sensitive estimates. We also explained how Key Audit Matter (KAM) disclosures can exist without material qualifications while still leaving an investor “expectations gap”, and discussed reform proposals to improve transparency and market confidence.
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