Budgeting for Infrastructure Projects

Mr Christopher de Souza asked the Minister for Transport whether the Ministry will consider coming to an internal, objective and confidential calculation of infrastructure project costs before calling for tenders to ensure that projects will be sufficiently funded and awarded appropriately to companies without pressuring sub-contractors' fees.

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Sir, for infrastructure projects, such as a new road or rail line, LTA works through the project cost estimates and seeks budget approval to ensure sufficient funding before a tender is called. These cost estimates are based on cost norms as well as prevailing market rates, and are kept confidential to avoid influencing the tender process.

For each project, competitive tenders are called, in line with the key Government procurement principles of transparency, open and fair competition, and value for money. The tenders are first assessed for overall quality before prices are then considered during shortlisting. LTA's internal cost estimates of the project and clarifications with the tenderers also serve as checks during tender assessment. Throughout the tender process, the Ministry and LTA do not exert pressure or influence on sub-contractors' fees.

I thank the Parliamentary Secretary for the response. My question has to do with the sub-contractors. Therefore, if there is an internal calculation which LTA comes to, for any given infrastructure project for transport, would the LTA then not award to a person who has tendered much lower than that figure? Because, realistically, the project could not be done within that lower figure and, therefore, we avoid squeezing the sub-contractors further down the road.

Sir, if I understand the Member correctly, I would like to reassure the Member that when we call for a tender, or even before we call for tender, we make sure to assess the project accurately and we go stages by stages. Wherever possible, we meet the tenderers to discuss on the cost estimates per se. We do not necessarily look at the lowest tenderer; we also look at quality and how realistically the project can be implemented and completed. In fact, prior to looking at all the cost estimates, we work very closely with the market, the industry, to ensure that our cost estimates are accurately provided.

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