2012-07-31
Prices for Construction works going up as a result of savings at the expense of professionalism
National Audit Office conducted a Survey of Public Procurement of Construction Works within the audits performed in 2006–2011. “We have analysed violations established during financial (regularity) audits that might have impact on construction works prices and provided recommendations that would allow to increase efficiency of construction works and decrease risks of growth of construction works prices”, said Deputy Auditor General Arūnas Keraminas when presenting the aims of the Survey.
Financial (regularity) audits revealed that public institutions lack the necessary competence in administering construction projects whereas the right granted by the Law on Construction to engage project and construction works managers is rarely exercised. Improper management of the main areas of technical construction activity results in a need to purchase additional construction works therefore their prices go up. Problems also occur when technical works supervisor is hired after public procurement procedures for construction works have been implemented.
Analysis of financial (regularity) audit reports showed that the lowest price criterion is used most often by public institutions in awarding their contracts when performing public procurement and selecting construction designers as well as construction works contractors.
During the mentioned period only 4 per cent out of all public procurement cases in the field of construction used economic benefit as the main assessment criterion.
The lowest price criterion is the clearest and best understandable criterion however upon selection of this criterion contracting authorities might face a risk of necessity to purchase additional works in the period of construction.
A tendency was observed that in order to win the tender contractors do not include part of works into their bids. In such cases a risk occurs that the additional works purchased at a later stage might cost more than at the time of initial purchase.
Procurement of construction works (except low price purchases) in the public sector in 2006-2011 totalled to LTL 25.9 billion, procurement of additional works totalled to LTL 398 million.
Survey summary:
Public Procurement of Construction Works
Full text of Survey “Public Procurement of Construction Works” is available in Lithuanian on the website of the National Audit Office.