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Unpaid cost of blocking public projects

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Apart from the unforgivable bureaucracy in this country, there have been problems in recent years in the execution of public tenders for infrastructure and other state projects.

Each government tries to promote infrastructure projects that help the wider economy and various communities or districts improve access, increasing their development prospects for the benefit of the residents of an area targeted by a specific project.

The tenders are opened by the state or relevant authority deciding who will be the successful bidder.

As usual, the one who did not win the tender files an objection with the court, freezing the award until the case is heard, taking at least 2-3 years.

An example is the case of the traffic cameras (with ten years delay) and, more recently, the Paphos-Polis Road, a deadly road, where the new one is expected to reduce accidents, casualties, lengthy traffic delays and is key for the development of the Paphos and Polis areas.

Quite rightly, the communities expected to benefit from public projects are protesting against the objection of a non-runner-up bidder, and only God knows when these projects will proceed to execution.

In the meantime, and until the court decides, the construction cost is going up, as expected, and the additional demands of the winning contractor are clearly in losses of millions, both to local tourism and the development of the area.

In one case, it was submitted by the affected communities that the project be assigned to the winning contractor and if the complainant wins in court, any compensation due to be paid to them by the state.

But does anyone who objects bear no costs other than, perhaps, a few thousand euros in legal costs and nothing else? What do they have to lose?

Suppose the objecting contractor does not succeed in court. In that case, they should pay the cost of the delay, which may amount to several million euros, as compensation to the state for its unjustified objection.

Therefore, anyone with an objection must submit a bank guarantee for compensation to the state (depending on the project).

The problem arises in infrastructure projects and other more important ones, such as the airports and the Limassol port that were granted to third parties.

Imagine if a new baggage conveyor belt was needed at airports and this went through tenders; we could wait 1-2 years when the technology and capacity would be outdated.

Similarly, in the case of Limassol Port.

Fortunately, both projects were given to private companies, thus avoiding public disputes, and as a result, contracts and purchases are procured much faster.

A similar concern occurs in architectural competitions, where while an ‘x’ amount is presented as a cost budget (based on which the tender is won), this amount is far exceeded at the end or even at the beginning of the bids.

Is the architect who won the competition not responsible, and why should they be awarded the work if it exceeds the budgeted costs?

Qatar plot

This reminds me of our proposal for the valuation of the “Qatar fillet,” the prime government property opposite the former Hilton, where the cost for the estimation was €15,000 and we submitted our proposal for €5,000.

Even here, objections were filed (but not judicial), so the assessment proceeded.

Regardless of the outcome of the Qatar plot, imagine if the Qataris were to wait  1-2 years until the decision was issued.

At the time, a colleague insisted in parliament that the €70 mln valuation of the plot was not enough.

He added that the value was extremely low, and buyers were ready to offer €140 mln.   So, we asked him if we cancelled Qatar’s offer, and he did not present the buyer at twice as much, who would pay for the loss—dead silence, of course.

By extension, we also have the various groups that submit objections on environmental and other issues that remain unexecuted (as is the new road from Paphos airport to Paphos town, which has been half completed for the last six years).

Unless they are fully justified, these objections should also be budgeted, and the objectors should be responsible for compensating the state.

Should any government office or the Environment Department employees bear personal responsibility?

Also, consider the objections to the widening of Strovolos-Tseri avenues that were purposely delayed in helping the interests of certain shopkeepers.

Who will be responsible for the delay or non-implementation of the project, especially when the EU funds have been lost for this project?

We must all be responsible and not be quick to criticise without repercussions those who file objections that will cost the economy millions more.

 

Antonis Loizou F.R.I.C.S. – Antonis Loizou & Associates EPE – Property Appraisers, Property Sellers & Development Project Managers