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Cashed Out: Construction of B450mn Provincial Hall stalls, ‘financial mismanagement’ blamed

PHUKET: Construction of Phuket’s long-awaited and much-touted B450 million Provincial Hall has fallen flat, with the main contractor running out of funds to complete its part of the project.

constructioneconomics
By Shela Riva

Saturday 6 January 2018, 09:00AM


The shell of the building looms large on the south side of Phuket Town, casting a large shadow near Suan Luang, also known as Rama IX Park.

The contractor, Chun Eaw Co Ltd, has already had two stays of execution. First, the original nine-month deadline of May 29 last year was extended by a further six months as the company had run into trouble with a “lack of workers”.

It was then granted another extension to Nov 26. When that deadline passed with zero progress made, the company was given until next month – date unspecified – to complete its construction.

Then, finally, Chun Eaw Co Ltd will be held accountable for a B449,000 per day fine for late completion, promises Thawee Homhuan of the Phuket Provincial Office of Public Works and Town & Country Planning, which is tasked with overseeing the project.

Incredibly, Mr Thawee called the construction “very slow”, while admitting that construction of the new Provincial Hall is still only at 70%, the same percentage reported back in June last year.

However, he confessed, “At this rate it will certainly not be completed by the current deadline in February.”

“After February 2018, they will be fined B450,000 (sic) per day. They will be fined and then the contract will possibly be terminated.

“There will not be another extension issued for this company. I will send a request to Phuket Governor Norraphat Plodthong to consider cancelling this contract and finding a new construction company,” Mr Thawee explained.

“But we need the Governor’s approval to terminate the contract,” he added.

Just how Chun Eaw Co Ltd ran out of money remains a mystery, especially for a government contract, which by law successful bidders are given the government funds first in order to complete the work its has agreed by contract to deliver.

“The construction company, Chun Eaw Co Ltd is very slow. They are having problems with financial management,” Mr Thawee said.

“The budget that has already been spent is at about B280mn… Although there is B170mn remaining of the government-approved budget, the construction company cannot withdraw this budget until the project is complete. So their investment money (sic) is not enough,” Mr Thawee said vaguely.

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“There is still about B170mn remaining, which will be picked up by the new contractor, if there will be one, to finish off the project,” he added.

“In Phase 2, which includes the parking areas, meeting rooms and furniture, we have a separate budget of B300mn from the Ministry of Interior,” Mr Thawee continued.

“Works for Phase 2 will begin this month, in January. In the meantime we are urging Chun Eaw Co Ltd to hurry up,” he added.

However, Mr Thawee did not confirm exactly how much of the B280mn budget already spent had been given to Chun Eaw Co Ltd to complete the construction.

Land Architect Co Ltd has been entrusted to complete Phase 2 of the project, he noted, but did not clarify whether Phase 2 can proceed without Chun Eaw completing its part of the project – and if so, why that work had not started already.

Chun Eaw project manager Karist Rabjaeng said the main problem was that the company is “lacking in financial management”.

“At the end of the month, we don’t have enough money to buy materials or pay more than a certain number of workers,” Mr Karist said.

“We are looking for more investment money to resolve this problem,” he added, without elaborating on why an investor would plough funds into completing a government contract that leaves no room for profitability on completion.

“In addition, many of our workers left during the change in labour laws in late June this year, which also slowed down the construction,” Mr Karist noted, possibly hinting at the true downfall of company’s ability to complete the project.

The only change in labour laws in late June last year The Phuket News can note is the crackdown on illegal migrant labour and the push for employers to legalise and register their foreign workforce to uphold minimum standards of labour law.

Under the new rules harsher penalties were introduced. “For example, deceiving that one can bring a foreigner to work without a work permit can incur a fine from B600,000 up to B1 million and from three to 10 years in prison, or both, for each foreign worker deceived,” Phuket Employment Office Chief Pitool Dumsakorn told The Phuket News on June 27. (See story here.)

 

 

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francoislaurier | 06 January 2018 - 15:19:29

What a poor 'news' story, loaded with ambiguities and personal opinions of the 'reporter'. Thawee "admitted", "confessed", said "incredibly", said "vaguely". The source "did not confirm", "did not clarify", "did not elaborate". Well, did you ASK him? If the reporter insists on keeping himSELF in the story, then p...

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