Roads Works in Tanzania

PERFORMANCE AUDIT REPORT ON ROAD WORKS
The Ministry of Infrastructure Development and TANROADS Performance

in Controlling Road Construction Time, Cost and Quality
A REPORT OF THE CONTROLLER AND AUDITOR GENERAL OF THE UNITED REPUBLIC OF TANZANIA
March, 2010
Performance Audit Report on Road Works

TABLE OF CONTENTS Chapter Five..................................................................................................................... 34
PREFACE...................................................................................................................................................iii Quality Control of Road Works. ...................................................................................................... 34

5.1 General standards for planning and conducting road works. ................................... 34
ABBREVIATIONS.................................................................................................................................. v
5.2 The system of quality control. ........................................................................................... 35
LIST OF TABLES AND FIGURES................................................................................................. vi 5.2.1 The design phase............................................................................................................... 35
5.2.2 The construction phase. .................................................................................................. 35
EXECUTIVE SUMMARY.................................................................................................................vii 5.3 Quality assurance in practice. ............................................................................................ 37
5.4 TANROADS and its engaged consultants. .................................................................... 41
Chapter One....................................................................................................................... 1 5.5 Consequences. ........................................................................................................................ 42
Chapter Six....................................................................................................................... 43
Introduction................................................................................................................................................ 1
1.1 Background. .............................................................................................................................. 1 Conclusions. .............................................................................................................................................. 43
1.2 Focus of the conducted study............................................................................................... 2 6.1 Organization of the work..................................................................................................... 43
1.3 Audit scope and performance. ............................................................................................. 3 6.2 Management and quality control. ..................................................................................... 44
1.4 Structure of the report. ........................................................................................................... 6 6.3 Conditions for transparency and self improvements. ................................................. 45
Chapter Two....................................................................................................................... 7 6.4 Working systems to address delays, cost overrun and quality problems of road
construction. ............................................................................................................................. 45
The Road Works System. ...................................................................................................................... 7
Chapter Seven.................................................................................................................. 47
2.1 Responsibility and policy...................................................................................................... 7
2.2 The operative system.............................................................................................................. 8 Recommendations.................................................................................................................................. 47
2.3 Key players outside MoID/TANROADS....................................................................... 11 7.1 Institutional improvements................................................................................................. 47
2.4 Additional time and costs.................................................................................................... 13 7.2 Project planning and design. .............................................................................................. 49
Chapter Three.................................................................................................................. 17 7.3 Project management and quality control........................................................................ 50
REFERENCES.............................................................................................................................................. 52
Time variations in Road construction projects.......................................................................... 17
3.1 Original, revised and actual time of road projects....................................................... 17 APPENDICES. ........................................................................................................................................ 53
3.2 Factors Contributing to delays........................................................................................... 21 Appendix 1: Genaral Information of the Audited Projects. ................................................ 54
3.3 Consequences of the Delays............................................................................................... 25 Appendix 2: Organization Structure of the MoID. ............................................................... 55
Chapter Four.................................................................................................................... 26 Appendix 3: Organization Structure of TANROADS. ........................................................... 56
Appendix 4: Time Variations........................................................................................................ 57
Cost Deviation and Cost Overrun. .................................................................................................. 26 Appendix 5: Reasons for the Delays.......................................................................................... 58
4.1 Introduction............................................................................................................................. 26 Appendix 6: Reasons behind revision of programme of works for each road project 61
4.2 Original and revised budgets and actual costs.............................................................. 26 Appendix 7: Reasons behind cost increase for each road project audited.................... 62
4.3 Revised budget and actual costs........................................................................................ 29 Appendix 8: Partial Deductions of Liquidated Damages.................................................... 62
4.4 Requested and granted request for additional costs.................................................... 30 Appendix 9: Cost Variations......................................................................................................... 65
4.5 Factors contributing to cost overrun................................................................................ 31 Appendix 10: Reasons for Cost Overruns. ................................................................................. 66
Performance Audit Report on Road Works Performance Audit Report on Road Works iii
ii
PREFACE preparation of this report. My thanks should also be extended to the auditees
for their fruitful interaction with my office.
The Public Audit Act No. 11 of 2008, Section 28 authorizes the Controller and Auditor
General to carry out Performance Audit (Value-for-Money Audit) for the purposes of
establishing the economy, efficiency and effectiveness of any expenditure or use of
resources in the MDAs, LGAs and Public Authorities and other Bodies which involves Ludovick S. L. Utouh
enquiring, examining, investigating and reporting, as deemed necessary under the Controller and Auditor General
circumstances. Dar es Salaam,
March 2010
I have the honour to submit to His Excellency the President of the United Republic
of Tanzania, Dr. Jakaya Mrisho Kikwete and through him to Parliament the first
Performance Audit Report on MoIDs and TANROADs Performance in managing
road construction time, Cost and Quality of Road Works in Tanzania.
The report contain conclusions and recommendations that directly concern the
Ministry of Infrastructure Development (MoID), Tanzania National Roads Agency
(TANROADS) and Financiers on ensuring that our roads are completed on time,
within set budgets and also in required quality and standards.
The Ministry of Infrastructure Development and TANROADS have been given the
opportunity to scrutinise the factual contents and comment on the draft report. I wish
to acknowledge that the discussions with the auditees have been very useful and
constructive.
My office intends to carry out a follow-up at an appropriate time regarding actions

taken by the auditees in relation to the recommendations in this report.
In completion of the audit, the office subjected the report to the critical review of
the following experts namely, Professor Theophil Rwebangira, Dr. Damas Nyaoro
from the College of Engineering and Technology of the University of Dar-es-Salaam
and Eng. Kimambo from K & Associates Professionals Services Ltd (KAPSEL), who
came up with useful inputs in improving the output of this report.
This report has been prepared by George Haule, James Pilly, Wendy Massoy,
Michael Malabeja and Elizabeth Augustino under the guidance of Gregory G. Teu
with support from the experts of the Swedish National Audit Office, Mr. Tony Angleryd
and Ms. Elisabeth Carlsund. I would like to thank my staff for their assistance in the
Performance Audit Report on Road Works Performance Audit Report on Road Works
iv
LIST OF TABLES AND FIGURES
ABBREVIATIONS
Tables
ADB - African Development Bank
Table 3.1 : Total number of time revisions in programme of works per stage
CAG - Controller and Auditor General
Table 3.2 Original and actual time for the ten examined projects
CRS - Crushed Stones Aggregate
Table 3.3 : Difference between revised and actual time for road construction
FIDIC - Federation International Des Ingenious Conseils
Request for extensions of time granted to contractors by
Table 3.4 :
GOT - Government of Tanzania TANROADS (days)
KAPSEL - K & Associates Professionals Services Ltd Table 3.5 : Factors influencing delays and their frequencies (official version)
LGAs - Local Government Authorities Table 4.1 : Revised budgets during the construction stage
MDAs - Ministries, Departments and Agency Table 4.2 : Revised budgets during the construction stage (Billion Tshs)
MoID - Ministry of Infrastructure and Development
Table 4.3 : Original budget and final Costs (Billion Tshs.)
MLHSD - Ministry of Lands and Human Settlement Development
Table 4.4 : Revised budget and final costs (Billions Tshs)
NCC - National Constructions Council
Table 4.5 : Requested and granted cost increase (Billion Tshs)
PFF - Price Fluctuations / Adjustment Formula
PWD - Public Works Department Table 4.6 : Effect of each category to cost increase of the road projects
Supervising, monitoring and inspection activities among the ten
SAI - Supreme Audit Institutions Table 5.1 :
examined projects
TACECA - Tanzania Association of Civil Engineering Contractors Table 5.2 : Conducted evaluations of the quality of studied road works
TANESCO - Tanzania National Electricity Company
TANROADS - Tanzania National Roads Agency
Figures
TRA - Tanzania Revenue Authority
TSh - Tanzanian Shillings Figure 2.1 : Systems Graph showing relationship between different actors
TTCL - Tanzania Telecommunication Company Limited
Figure 2.2 : Key stages in the process of road construction
UWSS - Urban Water Supply and Sewerage
Figure 2.3 : Procedure for approving a claim for additional costs
VOP - Variation of Price
Figure 2.4 : Procedure for Extension of Project Timeframe
Performance Audit Report on Road Works Performance Audit Report on Road Works vii
vi
EXECUTIVE SUMMARY
Audit scope
Road construction uses 13% of the national budget
The audit scope was initially limited to the post-contract stage of the 12 road
Road sector is an important sector in the economy of any nation due to construction projects which were completed in the financial years 2004/2005,
its impact on the welfare of its citizens and the investment involved. Good 2005/2006 and 2006/2007. Due to failure in obtaining sufficient data for two
quality of road works is important for both safety and economic development projects, the examination in the Performance audit study had to be confined
reasons in any society. This importance is propounded by the fact that the to the ten road projects.
transport sector has a major role to play in the socio-economic development
of a country as it provides access to markets, production, jobs, health,
education and other social services. Major findings, Conclusions and Recommendations
Construction and repair of roads utilizes a great part of government Audit findings
expenditure. The estimates for roads construction amounts to almost
TSh. 800 billions, equivalent to 13% of the national budget. The Ministry The major findings of the audit are as follows:
of Infrastructure Development (MoID) and Tanzania National Roads Agency
(TANROADS) have a major influence on the road construction industry as
sponsors, regulators and procurers of road projects.
Extension of time is common in most road projects
It is common with time revisions for the road works project plans. These time
revisions have been done as requested by the contractors when coming
Problems with delays, cost overrun and quality
across different problems which prompted them to request for the extension
of time. For example from the selected ten projects, all of them were revised
The road construction sector in Tanzania is evidenced from many studies to
during the construction phase and seven (7) or two thirds at the design
experience mainly three kinds of extended problems.
phase.
One problem concerns time management, i.e. road works are not completed
Review of extension of working days is granted as requested by
within the agreed time and benefits of the works to the public are delayed.
contractors
Second problem concerns cost overrun, i.e. additional but avoidable costs to
MoID/TANROADS has a role to play when it comes to both reviewing and
the decided budgets for varying reasons, and
recommending extensions of time. The consultant is required to review the
contractors extension of time request and give his recommendations. Also,
A third problem concerns the weaknesses in quality control system of the
MoID/TANROADs are required to review consultants recommendations
road works which results into early wear and tear necessitating repair and
and grant their own recommendations on time extension. However, MoID/
maintenance.
TANROADS have approved almost all requests for the extension of time
as requested by contractors and approved by the consultants. Our findings
Purpose of the audit
indicate that MoID/TANROADS and its consultants did not carry out any
independent analysis to verify the adequacy of the time requested.
The purpose of the conducted performance audit study is to assess whether
the Government, through the MoID and TANROADS, has an effective system
Inadequate design results into cost overrun
of road works in the country. This includes assessing the extent the system
According to the project files, a number of factors causing cost increase were
is working to minimize delays, cost overruns and quality problems on road
new design and new specifications, inadequate project management and/or
works.
quantities and variation of price factors. A huge part of the increasing costs
were related to mis-calculation of some kind already in the design stage.
Performance Audit Report on Road Works Performance Audit Report on Road Works ix
viii
Others factors like changed conditions, values; priorities etc. have also Recommendations
affected the outcome. Basing on the findings and conclusions, we recommend the following to
MoID/TANROADS:
Quality control system needs to be improved
Despite the fact that TANROADS officials insist that the quality control The Ministry of Infrastructure Development and TANROADS need to
system is working very well, our audit has found that there is still a need for improve the process of the start-up activities, such as fulfilment of
improvement. The quality control in the design phase is obviously not effective. loan conditions and procurement processes.
There are also several problems in the construction phase. Inspections and
monitoring are not conducted as planned, documentation is not in order and TANROADS need to have a budget covering the whole project period
the engaged consultants are given conflicting tasks without any proper follow and strong budgetary control throughout the project. For each project it
up by TANROADS. is important that clear roles and responsibilities among various parties
are set regarding time, cost and quality issues. Moreover, measures
need to be taken to enhance TANROADS capacity in identifying and
Conclusions managing risks.
We conclude that the road works system in Tanzania is not managed efficiently
and timely. Road works project plans and budgets are often revised, resulting
in significant delays and cost overruns. Engaged consultants are determining Files must be kept in better order and MoID/TANROADS should
their own schedule, have multiple roles and are not being managed well. establish register to record the performance of contractors and
There is serious lack of independent analysis to verify the adequacy of the consultants for each road project.
time extension requested by contractors. Design works is not done properly
and efficiently which resulted into redesigning leading to inevitable cost MoID/TANROADS should, therefore, take proactive steps to reduce
overruns. All put together indicates that ten roads built and audited were not time and cost overruns by continuing its efforts to improve coordination
produced in a way that best serves the public interest. with utility companies (eg. TANESCO, DAWASCO) and other parties
who are involved in the road construction sites.
Management of Consultants by the client (MoID/TANROADS) is not adequate.
There is lack of monitoring mechanism of these consultants who are involved MoID/TANROADS should recruit and keep their own independent
in planning, preparation and design and in controlling activities of the road strategic competent professionals who will act with full professionalism
constructions like supervision, monitoring, inspections and evaluation of the and integrity for monitoring and inspections even if MoID/TANROADS
works done by contractors. There are obvious conflicts of interests in the will continue engaging specialists or consultants for the actual follow-
involvement of the same consultant in several steps of the process. Quality up of implementation of various kinds of work.
assurance system does not function well. The MoID/TANROADS inspections
and evaluations were obviously not able to detect certain weaknesses of the Government should ensure that MoID/TANROADS have the leadership
road works. All ten studied road projects were approved at the final inspections and capacity required to manage its functions. We recommend that
though most of all the roads started to undergo repair and improvement soon the Government and the Ministries concerned to set up a commission
after the road have been approved. Sanctions were not properly used for which will be responsible for finding solutions to these shortcomings
addressing and correcting the frequent and extended delays, cost overrun as this will be cost effective to make TANROADS properly equipped
and also quality assurance problems. with human resources for its tasks.
MoID/TANROADS should have a discussion on how far it should go

in supervising contractors. There are risks with too much involvement
by TANROADS. It may undermine and confuse the contractors
implementation responsibilities on one hand and the oversight role of
Performance Audit Report on Road Works Performance Audit Report on Road Works xi

TANROADS on the other hand.
MoID/TANROADS should specify the responsibilities for the

consultants they use. If for instance a consultancy firm is engaged
for design work, its advisable to clarify in the contract that the firm is
financially responsible for mal practice.
The Government should review the possibility of making vital road

constructions documents be made available to the public. Designs
and final inspections could perhaps be made available or disclosed as
soon as they are approved by the parties involved.
The Government should give TANROADS clear instructions on how

to manage consultants. This include the setting up of a commission to
review and strengthen MoID/TANROADS integrity and professionalism
and its performance of strategic functions, and examine transparency
and accountability issues
The Government and TANROADS should deliberately take steps on

the pre-contract stages of projects implementation to ensure that the
designs are improved to reflect the reality on the ground and avoid
unnecessary alterations during the implementation stage. The Ministry
of Infrastructure Development and TANROADS need to institute a
mechanism to review the designs and estimates of the project as they
are prepared by the consultants before they are implemented.
TANROADS should significantly improve project management and

quality control system in order to avoid delays, cost overruns, to avoid
being forced to conduct repair works and maintenance services soon
roads are opened to the traffic.
Performance Audit Report on Road Works Performance Audit Report on Road Works xiii
xii
Chapter One
Introduction
1.1 Background
Road sector is an important sector in the economy of any nation due to
its impact on the welfare of its citizens and the investment involved. This
importance is propounded by the fact that transportation sector has a major
role to play in the socio-economic development of a country as it provides
access to markets, production, jobs, health, education and other social
services.
The Tanzanian Road construction industry is also a significant contributor to

the national economy accounting for 8 per cent of Gross Domestic Product
(GDP) and employing more than 1.9 million people.
The Ministry of Infrastructure Development (MoID) and Tanzania National

Roads Agency (TANROADS) have a major influence on the road construction
industry as sponsors, regulators and purchasers of road projects. These road
projects are ranging in size from repair works to large road projects. Road
construction industrys turnover is mainly funded by the Government and
donors.
Construction and repair of roads utilizes a great part of government expenditure

in the 2007/2008 budget. The estimates for roads construction amounts to
almost TSh. 800 billion, equal to 13% of the national budget.
The countrys road network is estimated to be 85,000 km long and includes

trunk, regional, district, feeder and urban roads. Urban, district and feeder
roads which are estimated to be over 56,000 km are managed by Local
Government Authorities (LGAs) while regional and trunk roads (29,000 km)
are managed by TANROADS. In addition to this, some road networks which
are in National Parks and Game Reserve Areas are managed by the Tanzania
National Parks (TANAPA) and other institutions.
Irrespective of the importance and expenditure recorded above, the road

construction sector is evidenced from many studies to experience extended
problems. These problems are mainly grouped into three types. One problem
2007/2008 Budget of Tanzania

MoID
Documentation and studies from the Annual Roads Convention 2008 Road Financing and investment:
Opportunity and Challenges.

concerns time management, i.e. road works are not completed within the Assessment criteria
agreed time and benefits of the works to the public are delayed. Another
problem concerns cost overruns, i.e. additional but avoidable costs to the For answering the above mentioned audit questions, the following criteria
decided budgets for varying reasons. A third problem concerns the quality of was used:
the road works, i.e. rates of deterioration are higher than anticipated which
implies early repair and maintenance. MoID and TANROADS ought to have a documented performance measurement
system regarding time delays, cost overruns and lacking quality for different
Tanzanias underdeveloped transportation network remains a key structural steps of road constructions. TANROADS should also have a policy on how
weakness. Nearly 80% of the population still live in rural areas, engaged in to deal with these issues.
agricultural activities. These rural areas are not adequately served by the
transportation system. Moreover, the countrys transportation system also MoID and TANROADS should take all necessary actions to reduce problems
serves to handle transit traffic for Tanzania landlocked neighbours including of time delays, cost over runs and lacking quality of road constructions. This
Burundi, Malawi, Rwanda, Uganda and Zambia. implies the following activities:
Given the importance of the road construction sector and the above mentioned the contracts should be well designed when it comes to issues
problems a Performance Audit (PA) study on the management of Road Works like phasing of works, requirements to the contractor, time frame,
has been conducted by the National Audit Office of Tanzania (NAOT). budget and quality assurance system as well as responsibilities and
sanctions.
the implementation process should follow a timely manner. Where
alterations to the original contract are inevitable, action should be
taken to prevent undue time delays, cost overrun and lacking quality.
1.2 Focus of the conducted study sanctions should be applied when appropriate.
Purpose and audit questions
The purpose of the conducted performance audit study is to assess whether 1.3 Audit scope and performance
the Government, through the MoID and TANROADS, has an effective system The audit objective
of road works in the country, i.e. to what extent the system is working to The objectives of the audit has been to study whether MoID and TANROADS
minimize delays, cost over runs and quality problem on road works. are identifying problems of delays, cost over runs and quality in the system of
road works and minimize these problems within available activities.
In short, the audit questions used in this study were as follows:
(1) To what extent are problems with delays, cost overrun and lacking The PA study is focused on development projects that are administered from
quality of road constructions common in executed road projects the TANROADS head office and MoID. The selection of development projects
in Tanzania? is based on the fact that the investment involved per project is relatively
(2) What are the possible causes of delays, cost over runs and higher than for other road projects.
quality problems of road constructions?
(3) Are there working systems in place to address delays, cost
overruns and quality problems of road construction?
From the Work Plan, p. 3-4

National Population Policy, Ministry of Planning, Economy and Empowerment, 2006 Until December 2007 MoID was responsible for two of the studied road projects.

The audit scope was limited to the post-contract stage of the development Addenda (instructions to approve changes) to the contracts
projects that was completed in the financial years 2004/2005, 2005/2006 project documents such as progress reports, quarterly and annual
and 2006/2007. This selection covered 12 roads projects. However, the progress reports and final completion reports
examination in the Performance audit study is based on the following ten Minutes for Project Site meetings
road projects: Planning documents such as MoID Strategic Plan 2007/2008
2009/2010 and Tanzanias Construction Industry Policy book, 2003.
Butiama Kyabakari Roadworks (phase 2)
Morogoro Dodoma Road maintenance works Reports from other Supreme Audit Institutions (SAIs) and other documents
Mutukula Muhutwe Road upgrading project were also used in order to get a context and references for assessment of
Nzega - Tinde - Isaka Road Upgrading Project the provided picture of Tanzanian road construction projects.10
Songwe - Tunduma Road Rehabilitation Project
Tinde Mwanza/Shinyanga Border Upgrading project A lot of interviews were conducted for many reasons, mainly to
Muhutwe Kagoma Road Upgrading project confirm or explain information from the documents reviewed;
Mwanza Region Transport Project give clues to relevant information in cases where information in the
Shelui Nzega formal documents was lacking or missing; and
Kyabakari Butiama provide context and additional perspectives to the picture from MoID/
TANROADS documents.
Design and methods

The audit work was designed by dividing the above audit questions into Interviews and discussions were thus carried out with representatives of
sub-questions. For performance of the study, the audit team used varying executives as MoID, TANROADS (including consultants), National
methods. Construction Council (NCC) and contractors
experts like professional Associations11 from the road sector or
The formal picture of management and performance of the selected cases universities in Tanzania12
was studied from MoID/TANROADS documents. This information was development partners representing the financiers.13
further analysed through information provided by interviews with auditees
and different stakeholders. Thus, the audit office has strived to get a picture Finally site visits were conducted on five of the ten studied road projects.14
as comprehensive, relevant and reliable as possible of the studied road The purpose of these visits was specifically on assessing conditions of the
constructions. road works and also to gather evidence and opinion on quality issues.
Many kinds of documents were reviewed in order to get the formal picture
of the agreement between MoID/TANROADS and the contractor and the
performance of each road project. The following kinds of documents were
10 PA Managing Procurement, Road Construction and Restoration Contracts, a report by the Auditor
reviewed: General of Malta; Roads and Traffic Authority of New South Wales- Planning for Road Maintenance by
Contracts between MoID/TANROADS and contractors for roads the Audit Office of New South Wales, 1999; Country Roads Division audit report by the Board of Supervi
sors of the country of Santa Clara.
construction as well as for MoID/TANROADS supervision of road
11 Association of consulting Engineers of Tanzania (ACET); Contractors Registration Board (CRB); Tanza
construction nia Roads Association (TARA); Tanzania Association of Civil Engineering Contractors (TACECA).
Post contract stage refers to the period after signing of contract to the completion of works 12 The College of Engineering Technology (COET) of the University of Dar es salaam (UDSM); Civil Engi

neering consulting firms;
This selection of road projects was executed during the period 20012007.
13

African Development Bank (ADB); World Bank (WB); Danish International Development Agency DA
Muhutwe Kagoma Road and Mwanza Region Transport Project were the last two road projects that
NIDA); Japanese International Cooperative Agency (JICA); European Union (EU)
were administered by MoID until December 2007 when they were eventually handed over to TAN
ROADS. 14 Mwanza Town Roads; Muhutwe Kagoma; Mutukula Muhutwe; Songwe Tunduma

The MoID and TANROADS directly concerned with this report have been given Chapter Two
the opportunity by the audit team to comment on the figures and information
presented in this report. They confirmed the accuracy of the figures used and The Road Works System
information presented. Also, external experts and scientists in the field have
gone through methods, evidences and findings.
2.1 Responsibility and policy
The MoID has the responsibility for instituting the system for road constructions.
1.4 Structure of the report
The MoID is also responsible for management of the system. This implies
The remaining part of the report covers the following: overall activities as formulation of policies, plans and strategies, as well
Chapter two gives the account of the audit area with the construction as development of Construction industry, transport, communications and
policy, system set up, procedure for approving time extension and meteorology services.
additional costs and the actors.
Chapter three, four and five present the findings on time variations, According to the Establishment Order GN No. 293 2000 of TANROADS
cost overrun and quality respectively. under the Executive Agencies Act, 1997, the role of MoID is to concentrate
Chapter six provides conclusions and chapter seven narrates on its primary responsibilities of policy formulation, strategic planning and
recommendations which can be implemented in order to improve the regulation of roads sub-sector.
situation.
TANROADS should take over from the MoID the day to day management of
the roads and ferries in Mainland Tanzania and operate as a semi-autonomous
Executive Agency. TANROADS thus enters into contracts with Contractors
and Consultants in its own name.15 The MoID was still directly administering
some of the road projects until December 2007 when they eventually were
handed over to TANROADS.
The Construction Policy guides roads constructions. The following objectives

stipulate the governments intentions on the road construction sector:16
To develop an efficient and self sustaining roads network that is capable
of meeting the needs for construction, rehabilitation and maintenance
of civil works for trunk, regional, district and feeder roads network;
To ensure efficient and cost effective performance of the construction
industry that will guarantee value for money on constructed facilities
in line with best practices; and
To improve co-ordination, collaboration and performance of the
institutions supporting the development and performance of the
construction industry.
15 The MoID was still directly administering some of the road projects until December 2007 when
they eventually were handed over to TANROADS
16 Tanzanias Construction Industry Policy, 2003

2.2 The operative system financing by the two sources. The Treasury is responsible for coordinating
the funding.
TANROADS enters into two Performance Agreements each financial year:
one with the Roads Fund Board for the provision of road maintenance and
Figure 2.2: Key stages in the process of road construction
the other with the Ministry of Infrastructure Development for the provision of
The process involves a number of various steps as detailed hereunder:
project management services for road projects funded by Government and
Donor Agencies. An over viewing graph of the system set up is shown in TANROADS/ Project Consultants, interested
MoID strategy planning governmental
figure 2.1. institutions
Figure 2.1: Systems Graph showing relationship between different Feasibility study
Detailed engineering design
actors Preparation of Tender Documents
Parliament Procurement Packaging and Application for

regulations development of funding
contracts
Funding
approved
MoID
Design review by
FINANCING
Donors MoID/
LGAs TANROADS
Call for tenders

OTHERS
ACET, TARA, Treasury
Receipt of
UDSM tenders
Public utilities e.g.
TANESCO, Water
TANROADS and Sewerage
Authorities, and Compilation of Evaluation of
ERB
REGULATORY AUTHORITIES
TTCL Evaluation tenders

report
Contract
variations
CRB Award of tenders

(lowest evaluated)
meeting
Consultants Quality control
of works
NCC Consultants, interested Project
governmental implementation
institutions and utilities
Extension of
time frame
PPRA
Completion
Contractors works
Payments to
contractors
Payment of
MoID and TANROADS are responsible to liaise with the authorities responsible retention
for public utilities to ensure that construction works is not interfered with by money
delayed relocation of the utilities. The sources of funding for the projects were
from governments own sources, funding by development partners or joint

Key implementing actors within TANROADS 2.3 Key players outside MoID/TANROADS
At TANROADS, two key directorates deal with the implementation of projects, Besides MoID and TANROADS, there are other important actors in the
the directorate of projects and the directorate of maintenance. This audit audited road construction projects.
focused mainly on the projects that fall under the directorate of projects.
The consultants
Directorate of Projects MoID/TANROADS hire consultants who are responsible for preparing designs
This Directorate has the overall responsibility for the delivery of road and and for supervising the implementation of the road works. MoID/TANROADS
bridges construction projects set out in the annual plans. is of course responsible for all its tasks, also even when they are conducted
by consultants. This means that MoID/TANROADS is also responsible for
At the national level, Project Managers are responsible to the Director of supervising and monitoring the work done by the consultants.
Projects for the delivery of projects assigned to them. The Project Managers
are assisted by senior project engineers and project engineers. The Consultants are engaged in all phases of road projects. They are for instance
assignments of the projects to the various Project Managers are on the basis engaged in making designs as well as safe guarding their quality. They are
of the sources of finance. These sources might be Government of Tanzania, also engaged in supervision of construction work; serving the interest of
multilateral17, bilateral18, Private or combinations of these sources. clients (MoID/TANROADS) as general supervisors and advisors throughout
the whole construction periods of road projects. In that capacity they are
At the regional level, Project Engineers in the Projects Section are expected to safeguarding the correct implementation of the designs, while
responsible for monitoring of major projects that are not delegated from the keeping the cost low. Their supervising duties include monitoring of the
headquarters, being outside the limits of delegation. For the purpose of the contractors activities on site, performing different tests to check the quality of
Public Procurement Act 2004, this Directorate is the user directorate for all the works. They are also expected to examine and approve the contractors
major works that are directly procured at TANROADS headquarters. claim for having the designs, the plans or the budgets changed. In addition,
they prepare progress reports and final accounts of the projects. Moreover,
Directorate of Maintenance consultants are also engaged in intermediate and final inspections or
The role of this Directorate is to implement the annual maintenance plan; evaluations.
i.e. that the roads of all types are being maintained in accordance with the
guidelines set down and; that maintenance contracts are providing value for The same consultant or at least the same consulting firm may in fact be
money. involved in all functions and activities mentioned above. The consultants
roles and tasks are regulated in a contract between TANROADS and the
This Directorate takes care of the products of the Directorate of Projects, consultant in accordance with the Public Procurement Act.
i.e. maintaining the newly built or upgraded roads in accordance with the
agreements on road maintenance. This is further described in chapter five. The contractors
MoID/TANROADS procures contractors who are responsible for the actual
construction of the roads. They manage people, materials and equipment
in order to be able to produce the intended results. Contactors enter
into contracts with the client (MoID/TANROADS) who is responsible for
paying them. Contractors perform their duties under the supervision of the
consultants.
17 IDA, AfDB, EU and Nordic Fund

18 NORAD, DANIDA, and JICA
Performance Audit Report on Road Works Performance Audit Report on Road Works 11
10
Utility Bodies 2.4 Additional time and costs
These are entities responsible for provision of public utilities. They include:
The contract documents spell out rights and responsibilities of various parties
Urban Water Supply and Sewerage (UWSS) which are responsible for
involved in the contracts. Responsibilities for additional costs in these projects
water supply and waste water disposal; TANESCO which is responsible
can be summarized as follows:
for generation and supply of electricity; and TTCL who deals with landline
telephone services. Sometimes, especially when the road works are in urban
Roles and responsibilities
areas, these utilities need to be relocated to give way to the contractors to
The client, MoID/TANROADS, is generally responsible for additional costs
do their job. Arrangements for relocation must be done prior to contractors
of executing the works in a project whenever the reasons for additional costs
mobilization at site to avoid construction delays.
are beyond the control of the contractor and the supervisor.
Ministry of Lands and Human Settlement Development (MLHSD)
The contractor has the responsibility of delivering the works on timely and in
The MLHSD is responsible for communicating with land owners when there
accordance with specifications. If the works do not meet set standards and
is a need for relocating them. The ministry normally collaborates with the
specifications, they are supposed to be rejected until adequate remedies
Local Government Authorities which are close to the land owners.
have been carried out at the expense of the contractor.
Regulatory Authorities
The consultant is only liable to pay compensation to the client arising out of
Regulatory Authorities are governments watch dogs who monitor professional
or in connection with the agreement if it is established against him that he did
conducts of the parties involved in the construction projects. They include:
not exercise reasonable due care and diligence in performing his obligations.
Contractors Registation Board (CRB), who authenticate and monitor
The consultants liability can be insured upon request by the client and the
professional conduct of the contractors; Engineers Registration Board (ERB),
cost of such insurance is at the expense of the client.
who certify the engineers and engineering consulting firms and keep an eye
on their professional conduct.
Implementation of a road construction project is guided by the programme
of work which is prepared by the contractor and approved by the supervisor
Local Government Authorities
(consultant). Depending on the circumstances that arise during the
The Local Government Authorities (LGAs) come into play when there is a
implementation of the project, the programme of work may be revised from
need to relocate people and arrange for compensations to give way to the
time to time with or without affecting the agreed completion date and the
project.
project budget (i.e. by extending the project duration).
Financiers and others
Financiers provide funds for implementation of the project. They include the
When it comes to responsibility there are mainly four categories of extension
Treasury and Development Partners. The most important issue on project
of time and cost overrun:
financing is the timeliness of approvals and disbursement of funds to the
a. One category is when there is an extension of time due to the default
beneficiaries since delays may paralyse the project delivery.
by the contractor though the original agreement between the client
and the contractor is still valid. This extension is a responsibility for the
Other stakeholders with vested interests in the road sector include
contractor who has signed the agreement in the contract to pay
Association of Consulting Engineers Tanzania (ACET), the Association of
the liquidated damage.
Civil Engineering Contractors, Tanzania Roads Association (TARA) and the
b. Another category is when extension occurs within the origin formal
University of Dar es Salaam (UDSM). These entities share a lot of information
contract conditions though the contractor, for good reasons, can
dealing with road projects construction directly.
claim that the real conditions have been changed in a way that was
not predictable. If the contractor for good reasons can claim that
the changed conditions are caused by the client, the client will be
responsible to pay for the extension.
12
c. A third category is when there is an extension caused by a changed Figure 2.3: Procedure for approving a claim for additional costs
procurement and contract. This is also caused by the client who will
be responsible to pay for the extension.
MoID/TANROADS
d. A fourth category is caused by conditions that no one can be blamed Management instructs
Supervisor to prepare
for. This is force majeure. details of variation
Contractually, alterations might also be compared to the original programmes

Application
or the revised and approved program. Deviations from the revised programmes Application of new
of existing
without approval of time extension are contractually not acceptable. Non- rates
rates
completion of the works within the agreed time frame thus formally is assumed Contractor
to result into sanctions being imposed to the contractors and are required suggests the
new rates
to pay the client (MoID/TANROADS) for every additional day beyond the
agreed completion date.
Supervis
Procedures for approving a claim for time extension and additional or checks
costs rates
The procedure for approving of additional cost covers the following steps: Variation works
recommended
by Supervisor New rates
1. Contractor raise claim to consultant. recommended
by Supervisor
2. Consultant evaluates the claim and makes recommendation to the
client (normally MoID/TANROADS) to justify the genuinity of the
claim.
3. Employer after reviewing and assessing the genuinity of the
Donor Locally
reviewed claim by the consultant after satisfying themselves the funded funded
approved claim is forwarded to the financier (If it is donor funded
project to seek for approval) but if it is financed by GoT then, the
claims will be forwarded to the TANROADS Tender Board for
No Objection is MoID/TANROADS
approval. granted by the Management requests
authorization for
4. After approval, either from the Tender Board or Donor, MoID/ Financier variation to Tender
Board
TANROADS will prepare Addendum for variation. The addendum
should be signed by the client, the contractor and the representative
of the Donor if it is donor funded project.
5. Lastly, after signing the addendum, the document is normally
returned to the financier to be used as a basis for payment of
additional cost. Variation is
approved
End
14
Figure 2.4: Procedure for Extension of Project Timeframe Chapter Three
Contractor requests
extension for the
completion of works Time variations in Road construction projects
to supervisor
This chapter provides details on the time variations in road construction

Supervisor analyses
projects compared to original or revised time. Roads can be finalised before
the reasons given set time, but in most cases time variations means delay.
Delays may be measured in different ways. One can for instance measure
Does not Supervisors Supports delays in relation to original set time, regardless of whether this has been
support stance extension altered by later decision. It can also be measured in relation to revised time
extension
set; and if several revisions are made, in relation to the final revised time
set.
Supervisor
Supervisor
recommends to
informs the
contractor
MoID/TANROADS on The content in this chapter is presented in the following order:
period of extension
Time variations among the examined road projects
Causes to the time variations
Consequences of delays
End MoID/TANROADS
tender board
approves extension
3.1 Original, revised and actual time of road projects
In a single road project the time for completion of a road construction is
stated in the contract between MoID/TANROADS and the contractor. This
Contractor notified of
terms of extension time might be revised by MoID/TANROADS once or a couple of times
depending on different reasons.19 The time revisions might occur at different
stages of the project implementation. But most of the time revisions have
been experienced at the mid of the project implementation and towards the
End
end of the project.
Since this audit is aimed at analyzing the system for the management of road
projects, delays of road constructions are analyzed related to original as well
as revised time. In projects where the time was revised more than once the
measurement of delays is related to the last revision of time.
19 The decision to revise the completion time is done by TANROADS upon receiving the contractors
requested which normally reviewed by Consultants and later on passed to TANROADS for decision. See
section 2.4.3.
16
Decisions of revised time might imply delays for road construction projects. An assessment of delays in road constructions can be based on four
The impact on delays can be referred to both the frequency of time revisions dimensions of time periods.
and the extent of time revisions. One dimension is the original time period for completion as stated in
the contract between MoID/TANROADS and the contractor.
Time revisions Another dimension is the revised time which is the time period,
According to project and contract documents between MoID/TANROADS according to MoID/TANROADS decisions on revised time.
and the contractors, it is common with time revisions for the project work A third dimension is the actual time period for completion of the road
plans. These time revisions have been done as requested by the contractors construction project.
when coming across different problems which prompted them to request for A fourth dimension if that occurs is the additional time after the
the extended time. This is illustrated in table 3.1 below. revised time for completion.
Table 3.1: Total number of time revisions in programme of works per The difference between original time and actual time is shown in Table 3.2.
stage
Number of revised plans Table 3.2 Original and actual time for the ten examined
Total Number of projects
Road Project Design
Construction stage revisions
stage
Somanga Matandu 0 1 1 Difference between
Time to complete the road
Road project original and actual time
KyabakariButiama 0 1 1
Planned months Actual months Months Percentage
Mwanza Town 0 2 2
Kyabakari Butiama 16 17 1 6
Shelui Nzega 1 1 2
Somanga Matandu 30 32 2 7
TindeShinyanga /Mwanza 1 1 2
Shelui Nzega 31 36 5 16
MorogoroDodoma 1 1 2
Morogoro Dodoma 24 32 8 33
NzegaTindeIsaka 1 1 2
Mutukula Muhutwe 34 46 12 35
MuhutweKagoma 1 2 3 Nzega Tinde - Isaka 30 42 12 40
SongweTunduma 1 3 4 Tinde Shinyanga/Mwanza 30 47 17 57
MutukulaMuhutwe 1 4 5 Songwe Tunduma 24 39 15 63
All road projects 7 17 24 Muhutwe Kagoma 12 23 11 92
Source: Project Files and Contract documents of the ten road projects Mwanza Town 30 58 28 93
audited20 Total 261 372 111 43
Source: Data from project files and reports from MoID/TANROADS.
The table above shows that all projects had undergone time revisions of their
work programmes. All of them were revised under the construction phase
and two thirds during the design phase. As seen in the Table 3.2 above, all projects have exceeded the original set
time. The extension is quite significant for most projects. This was also the
Delays in relation to the original plan case for those projects (SomangaMatandu and SheluiNzega) that were
completed after a decision to reduce the scope and ambition for the projects.
The work programme is a mutually approved part of the contract between If those two projects are disregarded it means that the actual time exceeded
MoID/TANROADS and the contractor. The work program outlines the activity the contracted and originally set plan by more than fifty percent (51%).21
plan and set date for the start and completion of the road project.
21 The original set time for the remaining eight projects were in total 215 months. It took 110 additional
20 Reasons for extension of time See Appendices 6 and 10 months to finalise them.
18
Time variation in relation to the last revised plan Table 3.4: Request for extensions of time granted to contractors by
The picture is thus somewhat different when the actual time (calendar months TANROADS (days)22
to build the road) is compared to the last revised time approved by MoID/
TANROADS. In table 3.3 the actual time is compared to the last revised time Request for
Reviewed and Granted by MoID/
for each one of the studied road construction projects. Road project extension of
recommended time TANROADS
time
Muhutwe Kagoma 450 450 450
Table 3.3: Difference between revised and actual time for road
Shelui Nzega 175 175 175
construction
Kyabakari Butiama 58 58 58
Approved and actual total Difference between
revised and actual time Mwanza Town 180 180 180
Contract Name production time in months
Somanga Matandu 45 45 45
Last revision Actual Months Percentage MutukulaMuhutwe 175 175 175
Nzega Tinde Isaka 54 42 -12 -22 Nzega Tinde Isaka 720 720 720
Kyabakari Butiama 19 17 -2 -11
Morogoro Dodoma 228 228 228
Morogoro Dodoma 32 32 0 0
0 Tinde Shinyanga/Mwanza 312 312 312
Shelui Nzega 36 36 0
0 Songwe Tunduma 324 324 324
Somanga Matandu 32 32 0
Tinde Shinyanga/Mwanza 47 47 0 0 Total 2667 2267 2267 (100%)
Mutukula Muhutwe 43 46 3 7 Source: Information from the project files and contract documents23
Songwe Tunduma 35 39 4 11
Muhutwe Kagoma 17 23 6 35 According to the table above, MoID/TANROADS have approved almost all
Mwanza Town 40 58 18 45 requests for the extension of time as requested by contractors and approved
Total 355 372 17 6% by the consultant. The figures above indicate that MoID/TANROADS and its
Source: Data from project files and reports from MoID/TANROADS. consultants did not carry out any independent analysis to verify the adequacy
of the time requested.
As seen (Table 3.1) revisions were done in all projects (sometimes two
times or more during the construction stage) during the overall process. The 3.2 Factors Contributing to delays
revisions were often done in the middle or later stages of the construction Knowledge and understanding about factors contributing to the delays is of
phase; still its common with deviations. In some cases the differences were importance for possibilities of preventing and limiting delays. Of the same
quite significant. reason it is important to know where and when in the road construction
procedures the problems occur and how they affect the procedures for the
Only in four out of ten projects the revised plan was followed. Two projects road constructions. Thus problems connected with the delays have been
were ready ahead of time, and four were delayed. This may be interpreted as examined for the ten studied road construction projects.
an indication of shortcomings in planning and monitoring.
Review of extension of working days

As described (section 2.22.3) MoID/TANROADS has a role to play when it
comes to both reviewing and recommendation of time extensions. Table 3.4
shows the extensions of time granted to contractors by MoID/TANROADS as
per their request.
22 There are six working days per week. However, all weeks do not consist of six full workings days and
adding to that there are vacations. In short, calendar time in days or months is not the same as working
time. 365 calendar days might for instance mean
less than 300 days of working time.
23 Reasons for extension of time See Appendices 6 and 10
20
Though delays related to the original time were dominating, delays related of capacity in mobilising plants and equipment is another. Poor management
occur to both the original and the revised time for completion. The examination by the contractor is a third example, such as a poorly developed system for
of factors contributing to delays has thus covered deviations from both supervising and control.
the original and the revised completion time. This implies that reasons for
approval of revised completion time also have been examined.
Factors influencing the revision of plans and causing delays
In the table below the factors explicitly referred to by MoID/TANROADS as
The examination of factors contributing to delays is based on the projects
motives in the documents for revisions of plans are presented.
files as well as interviews with MoID/TANROADS officials including the
consultants and the contractors. In most of the projects extension of time
has been approved based on a number of reasons. Table 3.5 Factors influencing delays and their frequencies (official
version)
Factors influencing the completion time and the responsibilities FACTORS INFLUENCING DELAY
NUMBER OF PROJECTS CONCERNED
There are many factors influencing the completion time of road constructions. Main categories Sub categories
The responsibility, however, is always the Governments and its authorities Redesign/new specifications 9
Change in scope of work 4
or the contractors, if problems occur. The responsibility of the Government Weaknesses in design 3
and its authorities implies reasons caused by the Government authorities or Additional designs 9
other circumstances that the contractor cannot be responsible for, like force Changes in scope without redesign
majeure, e.g. earth quake, heavy rains or flooding. Additional quantities 10 10
Other changes 3
MoID/TANROADS (with consultants) is responsible for planning and Management issues
preparation, including the quality of the design or redesign works, conducted Inadequate projects supervision 2 1
before signing of the contract. The contractor can thus take a proper conducted Inadequate Contract management 1
planning and preparation for granted, before signing of the contract. Delays Contractors factors
caused by MoID/TANROADS can be affected by having to redesign part Lack of skills of the contractors personnel
1
1
of a project or to somewhat change the scope of the quantities required. It Lack of adequate equipment 1
could also be caused by shortcomings in MoID/TANROADS management, Contractors work program miscalculations 1
like delayed information, late decisions, poor supervision and monitoring etc. Other factors (not influential by TANROAD)
Delays could occur as a result of other factors, like late payment by the Force majeure (mainly heavy rains) 4 1
Late payments/processing time for tax
financiers, processing time for approval of tax exemptions or force majeure. exemption.
3
Lack of coordination with local authorities may also be a factor that causes Source: Information from the project files and contract documents
delay. Some utilities are required to be relocated before the start of the
construction projects (telephone lines, water piping etc.) MoID/TANROADS
As seen above in nine out of ten projects TANROADS/MoID or the Government
is not in itself responsible for this. However in relation to the contractor MoID/
is seen as fully responsible for the delays. Only for one project the contractor
TANROADS have to take a responsibility for this situation by liaising with the
is partly blamed as a motive for one of the two revisions done and the delay
Ministry of Land and Human Settlement which is responsible for relocation.
caused. But even in that project the causes were mainly considered of being
beyond the contractors control (the main factors were late payments to the
The contractor also has responsibilities. The contractor is responsible
contractor, redesign and changes in scope within the given scope).
for conducting the work according to the applicable standards and the
requirement set by the design and the contract. Insufficient skills or lack of
expertise competence of staff is an example of a factor that may hamper the In general, the dominating causes were changes in scope (additional
contractors performance and which the contractor is responsible for. Lack quantities of various items were required to fulfil the design) or to make some
22
kind of redesign, from wishes to add new objects or things to the originally management by the contractor. Heavy rains was stated to have even less
approved design. As seen its obvious that shortcomings on behalf of the (2%) impact on the additional working days required as a result of the revised
contractor are not decisive factors for MoID/TANROADS revisions. Its also plans.
rare that MoID/TANROADS refer to shortcomings in its own management as
a cause for revision.
3.3 Consequences of the Delays
One reason for changing design and scope is the time lag between the Delayed completion of the road construction projects implies different kinds
design stage and the construction stage. Among the examined projects, it of immaterial and material losses and delayed benefits for the society. The
was quite common that it took 3-6 years after a design had been approved society is losing the opportunity of having new roads which would be able to
until the construction work actually started. During those years, conditions reduce accidents, traffic delays as well as vehicle wear and tear. In material
or preferences may have changed, resulting in new demands etc. Another terms it is also possible to calculate on the losses.
potential explanation is of course that the original design was not properly
done or safe guarded. Calculated capital costs
Delays involve capital costs. This means that a proportion of the final costs
According to MoID/TANROADS officials, the many old designs made it are caused by the longer than planned duration time. With a calculated
necessary to review the design before its implementation. According to the interest rate of 18% that means a total capital cost of around 31 billion Tshs
same officials, even though they know that there are going to be changes or 13 % of the total final cost, just due to the extended time in relation to the
after the design, they allow contractors to start the work. This is because of original plans.25 These costs are not caused by anything else than the time
the often long time it took to secure funding. factor itself.
So far it has only been the officially stated causes to the revisions that have
been presented. To get a more comprehensive picture, the Audit office Additional administrative costs for TANROADS
has also asked the various stakeholders (officials at MoID/TANROADS, Due to the extended processing time, TANROADS and its consultants need
supervisors or consultants and staff among the contractors). They share to spend more time than expected to conduct the work required. For these
most of the official version presented above, but they all claim that it does ten projects, it has been calculated that these additional costs are close to 5
not provide a full picture of the causes. billion Tshs.26
Additional costs for the society in a long term perspective
According to the stakeholders there were frequent delays caused by MoID/ The calculated capital and additional administrative costs for only these ten
TANROADS less efficient management. Unofficially, they also share the projects is about 36 Billion Tshs. In a longer perspective, covering a greater
view that contractors lack of efficiency was a common cause to delays; and number of projects, these costs will naturally be much higher. Still, the cost
just as for MoID/TANROADS shortcomings more common than officially for the society of not having the roads built in time is likely to be significantly
documented. higher than these figures. Better roads will reduce transport costs and
stimulate the economy. It will ensure safe life and reduce accidents. It has
not been within the scope of the audit to calculate on these savings or cost-
Moreover, all stakeholders stated that lack of coordination between MoID/ benefits. But in most countries which conduct such calculations it is obvious
TANROADS and local authorities was a common cause to delays.24 that delays or poor time management are costly, especially for the society as
Impact of the causes in terms of additional work days a whole in a long term perspective.
Based on MoID/TANROADS own calculation almost all of the extra working
days approved by the revisions was caused by redesign and changes in 25 In total the projects exceeded the original plan by 111 months and the revised plan by 17 months (see
scope without redesign. A minor part (4%) was linked by late payment to the table 3.2 and table 3.3). With a calculated interest rate of 18% that means a total capital cost of around 31 Billion
Tshs or 13 % of the total final cost, just due to the extended time in relation to the original plans. In relation to the
contractor, and another small part (4%) was stated to be caused by poor revised plans the capital cost is marginal or 0.4 Billion Tshs or 2 % of the total costs minus the last revised budg-
ets.
24 Interviews with different stakeholders 26 See appendix 10 for more detailed information.
24
Chapter Four
Almost all projects had their budgets revised during the construction stage,
as seen in the table below.
Cost Deviation and Cost Overrun
4.1 Introduction Table 4.1: Revised budgets during the construction stage
Cost overrun is defined as exceeding of the Contract sum, i.e. the agreed Road Project Budget revisions
budget sum between the contractor and the employer, MoID/TANROADS. Shelui Nzega 0
The contract sum is specified and based on a number of concerned items Somanga Matandu road 1
including the rate for each item and the total amount of required money for
Muhutwe Kagoma 1
the project. Linked to the contract sum is also a formula for updating the rates,
i.e. prices per unit. The updating of rates is decided by MoID/TANROADS Kyabakari Butiama 1
based on advice from its supervisors (supervising consultants). Mwanza Town 1
Morogoro Dodoma 1
The revised budget is reached when the original budget is added by other cost Mutukula Muhutwe 2
elements which were not included when preparing the original budget. The Tinde Shinyanga /Mwanza 3
revised budget might occur for many reasons and at different stages of the Nzega Tinde Isaka 4
project implementation. But frequent revisions have been experienced at the Songwe Tunduma 4
mid of the project implementation and towards the end of project completion.
In a single road project, budget can be revised more than once depending on Source: Project Files and Contract documents
the nature and reasons for the revision of the budget.
As shown above, four out of ten projects were revised two times or more.
According to the contract documents, whenever there is an increase of the Only one project did not have its budget revised (even though that project got
quantities/volume of materials at site (when the project is in construction its time plan revised by five months).
stage), contractor is supposed to inform the client through the consultant who
is supervising the construction of the project on behalf of MoID/TANROADS. The total amount of added funding through the revised budgets was quite
Then the consultant is supposed to review the request and re-measure significant, as seen in the table below.
the quantities on question and inform the client on the matter. Then MoID/
TANROADS can review the calculations made by the consultant and then, if
they are in good order, they can accept the quantity increase.
4.2 Original and revised budgets and actual costs

Minor changes can be approved without budget revisions, but if the requests
are huge or the total changes done or planned are many, it is required to
adjust the budget. In short, the number of revised budgets is an indication
of how often major changes with cost consequences have occurred in the
projects.
26
Table 4.2: Revised budgets during the construction stage (Billion As shown, most of the projects had cost overrun, and in several projects to
Tshs) a high degree. Two projects used less money than budgeted, since these
projects had been limited in scope (see under table 4.3). The largest cost
Original overruns in both relative and absolute terms were most common among the
Last revised Change big projects.
Road Project budget
budget (%)
Shelui Nzega 20.7 20.7 0
Somanga Matandu 12.3 12.4 1
4.3 Revised budget and actual costs
Songwe Tunduma 10.2 11.2 10 Cost variation can also be measured as difference between the last revised
Kyabakari Butiama 1.7 2.0 11 budget and the final cost of each project. This is shown in the table below.
Mwanza Town. 16.4 19.0 18
Mutukula Muhutwe 13.8 17.6 28 Table 4.4: Revised budget and final costs (Billion Tshs)
Muhutwe Kagoma 4.4 6.2 41
Morogoro Dodoma 25.3 41.0 62 Revised Deviation
Tinde Shinyanga/Mwanza 28.3 53.2 88 Final cost
budget (%)
Nzega Tinde Isaka 20.6 41.6 102 Muhutwe Kagoma 5.2 4.7 -11
TOTAL 153.7 223.9 46 Shelui Nzega 20.7 19.5 -6
Source: Project Files and Contract documents Kyabakari Butiama 2.0 1.9 -5
Mwanza Town 19.0 18.2 -4
Somanga Matandu 12.4 12.0 -3
As seen above, the calculated cost for the ten projects had increased by
Mutukula Muhutwe 17.6 17.6 0
close to 50% from the original budgets. For three projects, the changes were
Nzega Tinde Isaka 41.6 44.2 6
huge in both relative and absolute terms.
Morogoro Dodoma 41.0 43.9 7
Tinde Shinyanga/Mwanza 53.2 65.2 18
Original budgets and actual costs Songwe Tunduma 11.2 14.1 21
Cost variation can be measured in various ways, and below it is measured TOTAL 223.9 241.3 15
by comparing actual costs with the original contract sum.
Source: Project Files and Contract documents
Table 4.3: Original budget and Final Costs (Billion Tshs)
As seen above, four projects were not even able to keep their cost in line with
Original
Deviation the last revised budget. Notable is that those three projects that had got their
Road Project budget Final Cost
(%) budgets revised several times were also among those who had difficulties to
Shelui Nzega 20.7 19.5 -6 even cope with the last revised budget.
Somanga Matandu 12.3 12.0 -2
Muhutwe Kagoma 4.4 4.7 9 Two projects (SheluiNzega and SomangaMatandu) had spent less money
Mwanza Town 16.4 18.2 11 than the original budget, since some of the tasks were not executed. According
Kyabakari Butiama 1.7 1.9 12 to the contract document, payment is done as per work done, and if there is
MutukulaMuhutwe 13.8 17.6 28 any change of scope (e.g. omission) then contractor is not paid for that.
Songwe Tunduma 10.2 14.1 38
Morogoro Dodoma 25.3 43.9 74
Nzega Tinde Isaka 20.6 44.2 115 Finally, its worth noting that the term final costs means final cost both in that
Tinde Shinyanga/Mwanza 28.3 65.2 130 sense that it covers the total and final cost and also equals the money being
TOTAL 153.7 241.3 57 paid by MoID/TANROADS. In other words, the contractor got paid not only for
the approved last revised budget, but also for the upcoming costs thereafter,
Source: Project Files and Contract documents
28
after having gone through the accounts.27 To sum up, this means that the Table 4.5: Request for claim and granted cost increase (Billion Tshs)
contractors got basically all the money they requested throughout the whole
process in all these projects and no contractor had to pay the stipulated fee Requested Reviewed and
Approval by MoID/
for being delayed (for more information, see below and also chapter 5.) for claim by Recommended
Road Project TANROADS
contractor by consultant
4.4 Requested and granted request for additional costs Nzega Tinde Isaka 23.1 23.1 23.1
Kyabakari Butiama 0.34 0.32 0.32
The management and supervision of road projects is done by MoID/
TANROADS for all roads which are under them. To execute this task MoID/ Muhutwe Kagoma 0.8 0.8 0.8
TANROADS as a client has employed consultants to supervise the works on SongweTunduma 1.0 1.0 1.0
its behalf. According to the contract documents, if there is any problem which Shelui Nzega 1.9 1.9 1.9
can affect the cost of the road project, the contractor is required to notify the Mwanza Town 2.6 2.6 2.6
consultant. After issuance of that notice, the contractor is required to prepare Mutukula Muhutwe 2.8 2.8 2.8
a request and submit it to the consultant. Somanga Matandu 12.4 12.4 12.4
MorogoroDodoma 15.7 15.7 15.7
The consultant evaluates the claim and gives recommendations. MoID/ Tinde Shinyanga/Mwanza 24.9 24.9 24.9
TANROADS will then decide to accept or reject the claim. The most TOTAL 85.54 85.52 85.52 (100%)
important things to check are the quantities of work to be executed and their
accompanying costs. Depending on those two factors, evaluation of that Source: Project Files and Contract documents
request can result into dropping of some works, changing the quantities or According to the table above, MoID/TANROADS and its consultants have in
negotiating to reduce the rates applied etc. principle approved all the money as requested by contractors.
The table 4.5 below shows the amount requested by contractors, what
have been approved by consultant and final amount approved by MoID/ 4.5 Factors contributing to cost overrun
TANROADS. Its worth noting that these requests presented below are not by As shown above, when the final costs were related to original budget all
necessity linked to revisions of the budgets. Requests may occur at various projects that fulfilled their undertakings had cost overruns. Information on
times, but put together with other cost increasing issues they can create the causes to cost overrun is thus of interest in order to find possibilities of
incentive for revising the budget. improvements.
According to the project files, a number of factors causing cost increase

were identified. The various causes can roughly be divided into the two
main categories: (1) increased costs as a result of a new design and new
specifications, and (2) increased costs due to quantities and variation of
price factors. In the table below the impact to cost increase of each category
is presented. The information has been obtained from the project files as
documented by MoID/TANROADS and consultants.
27 TANROADS did not disagree with any final accounts (see chapter 5)
30
Table 4.6: Effect of each category to cost increase of the road projects Cost overrun according to MoID/TANROADS, consultants and
contractors
Additional amount All costs have been approved and found reasonable by MoID/TANROADS.
Reasons for cost increase
Bill Tsh s % According to files and documents and officials at MoID/TANROADS, the
New specification of works (new design) 20.0 23 main causes to the increasing cost and the need to revise the budgets, are
Additional insurance costs 2.1 2 changes in specification or unforeseen increased amount of work that have
to be carried out.
Interest on delayed payment (0.5) and 1.0 1
financial compensation to land owner (0.5)
According to consultants and Association of Consulting Engineers, there
Increased volume and prices are several reasons why road projects often have high cost increase. The
64.6 74
- Increased quantities reasons are inadequate planning, due to failure to come up with the good
(33.5) (38)
- Project cost increase cost estimates of each element. Most of the time, the rates which are used
(31.1) (36)
(VOP) are the ones taken from what has been used by contractors in other projects
TOTAL 87.7 100 and then modified a bit. But there is no thorough study carried out to establish
the actual cost of each work item and used them as a basis for contracting
Source: Project Files and Contract documents with contractors. The way the procurement is executed is another aspect. It
may turn out that the lowest bid may not be the most economical solution in
As seen above volume related factors had great influence on the increasing a long term perspective.
cost. First, it was common with new specifications, which have been shown
earlier (chapter 3 and 4). Such changes often meant higher volume (not only Moreover, inadequate design which resulted into change of scope of work
additional objects). Second, adjustments of volumes occurred quite frequent during the construction stage is a common cause to cost overrun, according
during the implementation stage and the costs for that were quite high, as to both consultants and contractors. There are also problems with inadequate
seen above. Less remarkable to some extent is the cost increase, since project management. As examples they refer to the frequent failures to pay
these projects had a long duration time and were executed in an environment the contractors on time, resulting in interest payment, failure to process
where rapid price increases are rather common. contractors claims, or inspect and approve the completed work of the
contractor.
Design and starting time of the project
Most of these remarks are shared by the contractors and Contractors
As earlier seen, a huge part of the increasing costs are related to miss Registration Board of Tanzania. Final quantities are almost always quite
calculation of some kind already in the design stage. This in turn could for different from the original ones, according to their experience. And the site
instance be linked to insufficient preparation (ground work) when the design conditions do often differ from design and planning documents (this could
was done or by less effective quality control. Other factors like changed include everything from soil profile, borrow pit and water sources, to price
conditions, values, priorities etc. have of course also affected the outcome. materials).
One finding is however less expected: among these road projects there were
not any obvious correlation between short and long delay in commencement
of the projects. The expectation was that projects that started with a design
conducted several years ago ought to have greater difference between
the contract sum and the final costs than other projects. Still its obvious
that those older designs got more expensive than originally planned, due
to the long processing time from having the design ready and starting the
construction work.
32
Chapter Five Generally, these documents are similar except for minor differences
concerning the procurement procedures and some conditions, e.g. for approval
Quality Control of Road Works to release varying finances. Thus, for the single cases the actual choice of
guiding standard documents depends on who is the financier. In addition
TANROADS sets a minimum standard for the road to be constructed.
Good quality of road works is important for both safety and economic reasons
in any society. Thats why governments set quality standards that need to
According to the standard contract document between the client (TANROADS)
be met and require government authorities to establish systems of quality
and the contractor a quality control system shall be established by the client
control. In order to be effective these control systems need to cover the whole
and stated in the contract.30 MoID/TANROADS is responsible for the road
process of planning, conducting and maintenance services.
works, including the quality control.
The Audit Office has found frequent problems among the ten examined road
projects linked to planning and supervising. This can be seen as an indication 5.2 The system of quality control
of a quality control system problem.
The system of quality control covers several activities. The main steps in the
process of building roads are the design phase and the construction phase.
The chapter focuses on the road construction stage.
5.2.1 The design phase

5.1 General standards for planning and conducting road Planning, preparation and review
works The design is a plan or set of drawings and details produced to show the look
and function of the road before it is built. Designing is expected to be done after
Quality control of road works in Tanzania is guided by the national standards thorough investigation of the sites. The investigations should include, but are
and guidelines specially developed for the local environment of the road not limited to, soil investigations, geotechnical investigations, hydrological
sector. The guidelines provide guidance on acceptable quality standards set studies, topographical surveys and interviews with stakeholders, including
as well as procedures for testing the compliance with these standards in local people within the vicinity of the project area. This could be done by
the stages of the road project. The guidance for establishing of standards is use of in-house engineers or outsourcing to private consulting firms. At this
stated in the following documents: stage, specifications need to be set, and bills of quantities, cost estimates
Pavements and Materials Design Manual (PMDM 1999); and tender documents have to be prepared. The design has to be reviewed
Standard Specifications for Road Works (SSRW 2000); in order to safe guard its quality.
Laboratory Testing Manual (2000); and
Field Testing Manual
5.2.2 The construction phase
The general standards and guidelines are supplemented by the standardized Introduction
tender and contract documents, provided by various local and international For the construction stage, contractors are expected to be engaged.31 Based
institutions for works of civil engineering construction.28 These documents on the conducted design with the specifications of quality standards, the
provide the rules and procedures for managing the construction process in contractors provide bids which have to be scrutinized and evaluated by MoID/
order to achieve the desired results and include rights and responsibilities of TANROADS who proves the contractors technical and financial capability of
various parties during the implantation of the different project stages.29 performing road projects.

28 The institutions providing the documents include Fdration Internationale Des Ingnieristes Conseils 30 Contract for consultancy services for the supervision of Roadworks
31
(FIDIC) and Public Procurement Regulatory Authority (PPRA).
The consultants and the contractors are engaged according to the Public Procurement Regulation,
29 For an overview of the road works procedures see chapter 2. 2005 government Notice No. 98 of 15th April, 2005.
34
According to the contract documents, some of the most important items per each day of delay (the daily fee that has to be paid is 0.01% - 0.1% of the
which determine the quality of the roads and need to be reviewed by MoID/ contract sum or a fixed figure of UDS 20,000 for some projects32).33
TANROADS periodically are: Identification of defects; tests of materials;
correction of defects; presence of qualified contractors and consultants Evaluation
staff; and early warning. The evaluation on quality of the work is part and parcel of quality assurance
of the roadwork. TANROADS is supposed to conduct periodic evaluations of
TANROADS/MoID quality control of construction work is conducted by the performance of the engaged consultant and contractor in order to satisfy
supervising, monitoring, inspections and evaluations. Supervising is a itself that the work meets the set standards and quality desired.
continuously ongoing activity, which is supposed to be carried out both
by the responsible project manager at MoID/TANROADS and to a large Monthly meetings
extent by hired consultants. Monitoring is also an ongoing activity, but TANROADS is, through its consultants, expected to continuously check
more periodically, in order to follow how the project is developing in relation the quality of the construction work at site. The purpose is to approve all
to the activity plan etc. Inspections are carried out as monthly inspections materials and to ensure compliance with required technical specifications and
and also in the form of final inspections with the aim to detect problems to qualifications of the staff in accordance with the contracts. The duties imply
be addressed and adjusted. Evaluations are to be conducted during critical different specified tests, evaluation of existing systems and checking that the
steps in the process when more comprehensive and perhaps independent present staff both the contractors and the consultants staff have required
assessments are needed. qualifications. The results of all these activities are dealt with in monthly
meetings which should be well documented. The meetings are expected to
Supervising and Monitoring be conducted jointly by TANROADS or its consultants and the contractor.
MoID/TANROADS is responsible for executing supervising and monitoring Monthly progress reports, mainly as a result of the monthly inspections, have
functions. Laboratory tests and tests done at site have to be performed to to be prepared with the result of the meetings and recommendations.
ascertain compliance with specifications. Defective works should be re-
worked or improved prior to approval by the supervisor. Materials to be used
for the works must also be subjected to tests, where necessary, prior to their 5.3 Quality assurance in practice
use. MoID/TANROADS should also monitor the projects through its own staff Reviewing quality of designs
or through the engaged consultants in participation with the contractors at The design work is in most cases conducted by private consulting firms.
site meetings. Once the designs are completed, the consultants prepare a design report
which is submitted to TANROADS, where it is supposed to be reviewed by
Inspections an in-house engineer to ascertain its adequacy. This is the way quality is
Inspections are required to be conducted monthly as substantial completion expected to be safeguarded. In practice, consultants are often engaged in
and as final inspections of the construction. Both kinds of inspections are this work to assist TANROADS in reviewing the quality of the designs.
expected to be conducted jointly by MoID/TANROADS, the consultant
(if engaged) and the contractor. The monthly inspections should be Design problems were rather common among the examined projects, but
documented in progress reports. In the period in between the monthly and they were far from often discovered by the reviews. In the ten examined
the final inspections, the contractor has to rectify identified snags. When all projects it was for instance common with underestimations of the quantities
adjustments are done, the contractor is relieved from obligations to MoID/ of materials, due poor soil investigations, geotechnical investigations,
TANROADS. If the work is delayed the contractor is required to pay a fee hydrological studies and topographical surveys. There were several projects
32 If there is a sectional handover the liquidated damage is charged on the unremained work
33 The fee for delays could be rather costly for the contractors. Therefore, its within their interest to have
the plan revised if they run the risk of being delayed. Moreover, cost overrun, increased budgets or
minor delays are in general easier for the contractors to cope with than significant delays.
36
with incomplete designs. Since these problems were not detected in the Table 5.1 Supervising, monitoring and inspection activities among the
review, costs consequences and delays appeared during the construction ten examined projects
phase. According to TANROADS officials and other stakeholders, this is a
common phenomenon in road projects. Parameters to be addressed Often Monthly Seldom Never
Identification of Defects V
Similarly, according to TANROADS officials, reviews of earlier approved Tests
designs were not done though it took between 2 to 5 years after its completion Tests on soils and gravel
V
of the design before the commencement of construction started. During that Tests on aggregates and concrete
Tests on Asphalt and Bituminous
time the road was still in use and by the time construction work starts the
Correction of Defects V
design deemed invalid and supposed to be reviewed.
Presence of qualified contractors and consultants
V
staff as identified during the bidding
Quality assurance during the construction phase Early warning in case of poor work of the contractor,
V
delays or cost escalation
In the ten examined projects almost all conducted activities of supervising,
monitoring and supervision were carried out by the engaged consultants
who also prepared the monthly reports. TANROADS thus to a high degree Source: File documents; interviews with consultants and TANROADS
relies on the engaged consultants to carry out the quality assurance work. In officials
other words, TANROADS is fully dependent on their consultants who have
genuine insights. The effectiveness of the quality assurance is to a large As seen above the quality assurance was not executed as expected. The
extent determined by how well the consultant has fulfilled his or her duties. only monthly checking was done on the tests and early warning in case of
poor work of the contractors delays or cost escalation. The other parameters
It has not been within the scope of this audit to examine the quality of the were seldom or never checked, according to the estimations. Not even
work conducted by the TANROADS and (mainly) its consultants. However, evaluations were conducted as expected. This is shown in the table below.
it has been possible to get an estimation of how often different kinds of The table shows the number of conducted evaluations on road quality and
supervising, monitoring and inspection activities have been carried out the reasons for the evaluations, as a routine or something else.
during the construction phase. Such estimation based on documentation
files and interviews with consultants and TANROADS officials are shown
in the table below.
38
Table 5.2 Conducted evaluations of the quality of studied road works no fees for delays were paid regarding the ten examined projects.
Number of conducted eva- Reasons for the eva- To be fair claims from the contractors for additional costs due to delays
Road Projects
luations on road quality luations caused by long processing time of the tax exemptions for donor funds at the
Routine after completion Tanzania Revenue Authority (TRA) was not approved by TANROADS, since
Tinde Shinyanga/Mwanza 1
of the project.
it was considered not to be a problem caused by TANROADS. According to
Routine after completion
Songwe Tunduma 1
of the project. the contractors they got additional cost of several billion Tsh as a result of the
Routine after completion complicated and long procedures at TRA.
Somanga - Matandu 1
of the project.
Shelui Nzega 1
of the project.
5.4 TANROADS and its engaged consultants
Morogoro Dodoma 1
Routine after completion According to standards and good practice its important to engage experts
of the project. that are competent and independent. Even though it may have advantages,
Routine before and after its vital to secure that the same consultant or consultancy firm is not engaged
Makuyuni - Ngorongoro Several
completion of the project.
in conflicting roles.34 This has however not been secured in the ten examined
Routine before and after
Chalinze - Melela Several projects.
completion of the project.
Mutukula Muhutwe 1
of the project. In fact, the same consultancy firm (and often exactly the same consultants)
Routine after completion were used in every stage of the process and for many conflicting tasks.
Kyabakari -Butiama 1 The same consultants could be engaged in design work, monitoring and
of the project.
supervising activities. They provided technical and other advices in various
Source: Files and documents at TANROADS areas to both contractors and TANROADS. They were also mainly the only
ones from TANROADS who conducted monitoring and supervision of the
According to the table above just two of the conducted evaluations were actual construction work35.
performed before and after the completion of the road project. This implies
that TANROADS evaluations dont cover the design stage, where severe In addition, the consultants examined and approved request for revised plans
quality problems seem to start with the way the quality standards are set. or additional costs. They also approve the whole construction stage when
Further on the evaluations just to a limited extent cover the construction the final inspections are conducted.
stage where many problems appear with the poorly set quality standards
and the poorly conducted monitoring and supervision. Another important issue is to what extent the set up system for quality
assurance is transparent. In other words, does the system with the consultants
The completion of the construction stage is thus started by an evaluation, duties and activities provide TANROADS and other concerned interests
also called final inspection. The purpose is to approve the quality of the as financiers and other stakeholders with a proper overview of whether
conducted road work and if this is the case to transfer the responsibility the quality standards are met with. This is depending on the provided and
of the road work from the contractor to TANROADS. Also this inspection is, documented information from the consultants and on TANROADS conducted
however, conducted jointly by TANROADS, its consultant the supervisor evaluations of the system.
and the contractor. Weaknesses noted in quality assurance system imply
that all ten studied road projects had experienced quality problems resulting
in delays and cost overrun.
34 The consultants need to be engaged according to the Public Procurement Regulation, 2005 govern
As seen in chapter 3, it was common with delays. But most of the delays ment Notice No. 98 of 15th April, 2005.
were reduced (from 111 to 17 months) by revised plans. This resulted in that 35 The supervision contract between TANROADS and the consultant covers monitoring, compliance and
good performance of the works discharged by the consultants.
40
However, beyond the documentation in the progress reports, prepared by the Chapter Six
consultants, there is hardly any more regular documentation of conducted
quality control. Moreover, there is no written report showing how TANROADS Conclusions
have assessed the work of the consultants in order to satisfy itself with the
quality of the conducted road works. This indicates that there is no systematic The road works system in Tanzania is not managed efficiently and timely.
monitoring of the satisfaction of the consultants work. The reason given Plans and budgets are often revised, resulting in significant delays and cost
by TANROADS officials is that it is very difficult to go into details with a lot overruns. Consultants are the ones who determine their own schedule, have
of projects for the responsible engineers. TANROADS monitoring of its multiple roles and are not managed well. All put together indicates that ten
consultants is done through monthly site management meetings. According roads built and audited were not produced in a way that best serves the
to TANROADS officials they had no problem with the performance of any public interest.
consultant in the ten studied projects.
Despite of the weaknesses mentioned above, MoID/TANROADS has shown
5.5 Consequences that there is room for improvements since it has already started to take some
actions to address the above mentioned problems.
Despite the fact that TANROADS officials state that its quality control system
is working well, this audit has found that there is still need for improvement.
The quality control in the design phase is obviously not effective. There are Possible causes of delays, cost over runs and quality problems of road
also several problems in the construction phase. Inspections and monitoring constructions
are not conducted as expected, documentation is not in order and the According to the project documents; inadequately prepared designs is the
engaged consultants are given conflicting tasks without any proper follow up main cause of problems in the construction phase. The Audit Office shares
by TANROADS. It might also be worth mentioning in this context even though the view that the design works need to be reviewed. Similarly, the Audit
its not within the scope of the audit to examine this, soon after the finalising Office has also found several other influencing causes to address, as shown
inspection where all studied ten road constructions were approved most below.
roads built started to undergo repairs (not only regular maintenance).36
This situation can exist largely due to the fact that it isnt possible for the 6.1 Organization of tasks and roles problematic
public to get insights into the running of things. Even for the Audit Office it MoID/TANROADS procures contractors for the constructions stage and
has been difficult to get all documents and information needed, due to lack consultants for activities carried out during the design and construction stages.
of transparency and of disorder of document files. As a consequence roads There are good reasons for using experts. But the way MoID/TANROADS has
built in Tanzania end up to be more expensive than needed and with many organized its use of consultants and contractors provides some problems for
quality problems. the road work system.
Consultants are engaged in various steps in the process. They are involved
in planning, preparation and design. They fulfill important tasks in the
construction phase; serving the interest of employers (TANROADS and MoID)
and advises them on the conduct of contractors. The same consultant may
be engaged in controlling activities like supervision, monitoring, inspections
and evaluation of the works on behalf of the client. Consultants are also often
engaged to conduct daily, monthly and final inspections of road construction
projects. The inspection protocol forms the basis for MoID/TANROADS final
approval decision, for which they fully responsible.
36 According to documents and files an interviews with TANROADS officials and various stakeholders.
42
When signing the contract agreement, the contractor can take a proper to be timely. Also, it seems that contractors were systematically getting their
design of the road project for granted. If this is not the case, which is more or requests approved. The contractors seem to systematically be able to get
less always, the contractor is not responsible for being prepared to meet the their requests approved.
situation. This might influence the contractor to put blame on all the problems
arising during the construction on the earlier design which is also the common The quality of the final inspection can also be discussed. All ten studied
argument when problems occur. Thus, an important task for the consultants road projects were approved at the final inspections though most of all the
should be to meet those arguments, in protecting the client by promoting an roads started to undergo repairs soon after this approval. MoID/TANROADS
efficient use of public resources. inspections and evaluations were obviously not able to detect certain
weaknesses of the works. Moreover, sanctions were not properly used for
Consequently, it appears that procurement of different consultancy tackling and correction of the frequent and extended delays, cost overruns
firms makes it difficult for MoID/TANROADS to properly make use of the and also quality assurance problems.
experiences from conducted road works in order to improve the activities. In
fact, the same kind of problems appears repeatedly in a more or less similar
way from case to case. 6.3 Conditions for transparency not fulfilled
The road works system represents a great part of the public sector. A good
Thus, if mixed roles and responsibilities of consultants are not managed transparency and improvements of the activities and the proper use of money
properly they may endanger the economy, efficiency and effectiveness of will increase the trust of an efficient use and an effective exchange of public
the whole road work system. This becomes even more obvious as MoID/ resources. In spite of this, the records show serious weaknesses on time and
TANROADS hires the same consultancy firm for all stages and tasks in each cost management of road works.
project.
In short, MoID/TANROADS is largely dependent on consultancy firms to Last but not least, construction and repair of roads represents a great deal of
fulfill its tasks and has to act with integrity when dealing with consultants the government expenditure and ranged to almost TSh 800 billion, equal to
and contractors. The way the work is organized and conducted, according 13% of the Tanzanian budget 2007/2008. This money is intended for important
to the Audit Office raises questions of TANROADS/MoIDs efficiency and issues of the country as a whole as well as for the individual citizens. The
accountability taking into account of several delays in completing road works, combination of dealing with huge amounts of public money and the severely
cost overruns, poor quality of road works and management of the work of lacking of transparency on the use of this money is a problem in itself. This
consultants. implies there are weaknesses in public administration of public resources.
Proper documentation made available to the public is lacking.
6.2 Management time, costs and quality is weak
MoID/TANROADS has difficulties in managing costs and time. The costs of
the road projects are less calculated and controlled. This makes it difficult 6.4 Unsolved systematic issues cause delays, cost
to manage the process; from assessing designs and contractors bids to overrun and quality problems of road construction
managing contractors requests for additional funding or extended time. Problems in the road work system and for the society
Not properly examined and corrected problems related with delays and cost
During the construction stage, MoID/TANROADS deals with the repeated overruns implies problems for the road work system as well as for the society
problems by revising the originally set time tables and budgets, often more as a whole.
than once and probably in many cases more than what is really needed,
if things had been better planned and managed. Also, contractors are
systematically being paid even for costs that exceed the last revised budgets.
The contractors therefore do not have driving force to keep the costs low and
44
Beyond the above described problems, the audit office has seen many Chapter Seven
problems to tackle in the road work system with the following main
examples: Recommendations
Weaknesses in conducted planning; preparation and design with
underestimations of quantities have caused quality problems during MoID/TANROADS has problems with efficiency in managing its road projects.
the road constructions and are followed by delays, cost overruns and This means that MoID/TANROADS perhaps due to lack of competence
poor quality roads. in certain areas has difficulties in managing its role towards financiers,
Experienced quality problems from the design are not detected and contractors and consultants. MoID/TANROADS is expected to professionally
corrected before decision and delivery of the design report. lead functions like planning, designing, managing and quality control within its
Lacking calculation of the actual costs for the road works implies mandate, but that is not the case today. This in turn has serious consequences
inefficiency for MoID/TANROADS assessment of bids during the for the society. Even though the situation is understandable and may prove
tendering and the procurement of contractors. difficult to change, it needs to be addressed by MoID/TANROADS as well as
Lacking coordination with local authorities implies that relocating of the Government, since the Government has the overall responsibility for the
e.g. issues belonging to water piping system and electrical system conditions concerning national road works in Tanzania.
hamperes the road constructions.
The contractors performance are not measured and not used for This chapter contains recommendations to the Government and TANROADS.
corrections or future improvements of hired contractors. The Audit Office believes that these recommendations need to be considered
Unsolved disputes with the contractors concerning reimbursed taxes. if the national road works in Tanzania are to be better planned and managed
ensuring that the 3Es of Economy, Efficiency and Effectiveness is achieved
The main problem for the society is that the required roads are not completed in the use of public resources.
in time which means increased both social and economic disadvantages.
Calculations based on the ten examined projects indicate the following
increased expenses for the public sector as well as for the society 7.1 Institutional improvements
generally: Its important that MoID/TANROADS has the strength, competence and
With an interest rate of 18 % the delays involve increased capital capacity to manage all kinds of national road works. This means that MoID/
costs, just caused by the time factor to around 31 billion Tshs. TANROADS must be able to recruit and keep strategic competencies, even
MoID/TANROADS and its consultants have to spend more time and if MoID/TANROADS will always have to engage specialists or consultants for
money than expected for prolonged time which is ranging to close to various kinds of work. Moreover, its vital that MoID/TANROADS acts with full
5billion Tshs. professionalism and integrity, regardless of financier, designer, consultant
and contractor. So, if for instance donors dont show sufficient interest in
In a longer perspective and with a greater number of projects these costs economy and efficiency aspects, MoID/TANROADS still has to do so, if
will be even higher, without compensation for increased quality and without MoID/TANROADS are expected to earn the citizens trust.
having the roads in time when they are needed.
The Government must ensure that MoID/TANROADS has the leadership
and capacity required to manage its functions. The Audit Office recommends
the Government and the Ministries concerned to set up a commission to
find solutions to these shortcomings. The Audit Office believes that it is cost
effective to make TANROADS properly equipped for its tasks as regards
human resources.
46
Moreover, MoID/TANROADS needs to discuss how far it should go in 7.2 Project planning and design
supervising contractors. There are risks that too much involvement may
The planning of the projects and the design processes are strategic phases
undermine the contractors responsibilities. The Audit Office realizes that
in road projects, and it is obvious that TANROADS and its consultants are
it is not easy to find the right balance here, but the aim must be to make
unable to conduct these activities efficiently. Preparation work is not done as
contractors (regardless of whether it concerns design or construction works)
expected, calculations are not accurately made, the quality control seems to
more responsible for their undertakings. Consultants and contractors should
be superficial, coordination work has shortcomings etc. This can be seen as
not expect that MoID/TANROADS and financiers will compensate for their
a result of insufficient planning and design. It may also be linked to the fact
shortcomings.
that consultancy firms are engaged in services that stands in conflict with
each other. They may be engaged in design work or in reviewing designs,
MoID/TANROADS needs to specify the responsibilities for the consultants
as well as in supervising activities during the construction phase. As seen in
they use. If for instance a consultancy firm is engaged for design work, it is
chapter 5 the engaged consultants involved in the examined road projects
advisable to set it clear in the contract that the firm is financially responsible
approved almost all requests for additional money from the contractors, and
for malpractice. This could later be used by MoID/TANROADS as a basis for
TANROADS accepted this without questioning the merits of the consultants
complaint against the design work done by the firm, if it is likely to believe
for their previous design work. This means that the financier through
that problems in the construction phase are caused by poor design work. The
TANROADS behaviour systematically had to bear the full financial
same idea is applicable to firms engaged for final inspections. If it turns out
responsibility for poorly done reviews or design works. In addition, no one
that an engaged firm has not detected faults that it ought to have seen, if the
seems to have done anything to change the situation.
inspection would have been carried out professionally, MoID/TANROADS
should put charge on the firm for neglect or malpractice.
The Government and TANROADS are recommended to deliberately
exert efforts to pre-contract stages of projects implementation to ensure
The same kind of thinking applies to MoID/TANROADS when it is fully
that the designs are improved to reflect the reality on the ground and
responsible for the design work. If this work is proved poorly done, the
avoid unnecessary alterations during the implementation. The Ministry of
contractors are entitled to request additional funding when needed to fulfill
Infrastructure Development and TANROADS need to institute a mechanism
the contract agreement. However, if it turns out as for the ten examined
to review the designs and estimates of the project as are prepared by the
projects that projects are systematically affected by poor design work
consultants before they are implemented.
conducted or approved by MoID/TANROADS, the long term solution is not to
continue providing additional funding but to improve the quality of the design
To sum up, the Audit Office recommends to the Government to:
works and the reviews.
On a non regular basis conduct evaluations of the efficiency of
TANROADS design work and how TANROADS procures, instructs
Finally, the Audit Office has found that the way the work is carried out and
and manages its design consultants
filed does not meet reasonable standards of order or transparency. The Audit
Give the earlier recommended commission the instruction to examine
Office recommends to the Government to review the possibility of making
how to best address the above mentioned responsibility issues in
vital documents better available to the public. Designs and final inspections
design works
could perhaps be made available or disclosed as soon as they have been
Based on the work of the recommended commission, give TANROADS
approved to the parties which are supposed to have an access to them.
clear instructions on how to improve the design work and the reviews
of the design work.
To sum up, the Audit Office recommends to the Government to:
Set up a commission to review the possibility of strengthening MoID/
TANROADS integrity and professionalism and its performance of
strategic functions, and in doing so also examine transparency and
accountability issues
Give TANROADS clear instructions on how to manage consultants
48
7.3 Project management and quality control early repair after completion. In addition, the contracts should include clear
sanction clauses for contractors that do not stick to contract conditions of
As shown in this audit, TANROADS need to significantly improve project
time, budgets and quality of the roads. Also, it is important that TANROADS
management and quality control in order to avoid delays, cost overruns, and
states clear conditions in the contracts for reimbursement of taxes to the
to be forced to conduct repair works and maintenance services soon after
contractors.
opening the roads to be used by traffic. The following text contains a number
of suggestions and statements that may serve as a basis on how to move
Since utility companies (Water Authorities, TANESCO and TTCL) often lack
forward.
accurate records about the precise locations of their underground utility
lines, contractors frequently encounter utility lines that need to be moved
In short, the Audit Office recommends to TANROADS and the Ministries
before construction can proceed. This situation result in delays and cost
concerned to consider the following suggestions and principles:
overruns. TANROADS (and the Ministry) should, therefore, take proactive
step to reduce time and cost overruns by continuing its efforts to improve
1. Project management coordination with utility companies and other parties who are involved in the
The Ministry of Infrastructure Development and TANROADS need to improve road construction sites.
start-up activities such as fulfilment of loan conditions and procurement
processes. Since the loan conditions are set and agreed upon during
negotiations (between the government and development partners), the 2. Quality control and learning
government should ensure that loan conditions that are set can be achieved The controlling activities supervision, monitoring, inspection and evaluation
within the anticipated timeframe. should be put in use for detection of delays, cost overruns and quality
problems. In addition, adequate activities should be used for correction and
TANROADS need to have a budget covering the whole of the project and prevention of deviations from the set program and contractual conditions.
strongly affects budgetary control throughout the project. For each project it TANROADS should reduce the time for applying Price Fluctuation Formula.
is important that clear roles and responsibilities among various parties are This might be done through breaking the road projects into packages with
set, one of whom should decide on time, cost and quality issues. Moreover, shorter deadlines.
measures need to be taken for the capacity of identifying and managing risks.
This is crucial for contractors to complete projects within the specified time, The purpose with the final inspections when the road project is approved
within the cost agreed upon and end up with roads of acceptable quality. and handed over to TANROADS has to be improved in order to exclude
early repair of the roads. The system with sanctions stated in the contracts
Files must be kept in order. MoID/TANROADS should establish a register has to be applied in accordance with the conditions for consultants and
to record the performance of contractors and consultants for each road contractors. In addition, evaluations should be used to measure and analyse
project. This will help in monitoring and assessing their performance and the achieved results. Experiences gained should be used for better planning
distinguish performers from non-performers for consideration during awarding and for learning and improvements. In addition, TANROADS should take
of contracts. Also, it is important for the TANROADS to take measures to action to improve its statistics and performance reporting and make it
improve its procedures for documentation. A lot of the files seem to be in available to the public.
disorder, and it has for instance not been easy for the Audit Office to get all
information needed for this audit. Finally, a register or road inventory ought be kept and be monitored over the
life time of the roads to facilitate determination of maintenance needs and
Procurement of contractors should be based on calculations of the final recording of the maintenance activities performed.
costs of completed roads. And the requirements of the road quality in the
contracts should state a standard that clearly excludes the general need for
50
REFERENCES
1. Conditions of Contracts for Works of Civil Engineering Construction,
part I, by FIDIC, 4th ed, 1992;
2. National Population Policy, Ministry of Planning, Economy and

Empowerment, 2006;
3. Pavement and Materials Design Manual by Ministry of Works of the

United Republic of Tanzania, 1999;
4. Performance Audit Handbook
5. Performance Audit Report: Managing Procurement Road Construction

and Restoration Contracts, A Report by the Auditor General, Malta,
2004;
6. Standard Specifications for Roadworks by Ministry of Works of the

United Republic of Tanzania, 2000;
APPENDICES
7. Tanzanias Construction Industry Policy, 2003;
8. Success Factors for Road Management Systems, World Bank, 2005
52
Appendix 1: Genaral Information of the Audited Projects Appendix 2: Organization Structure of the MoID
Length
SN Contract Name Contractor Consultant Financier Client
(Km)
C. Lotti &
Astaldi S. p. European MINISTER
Mwanza Region Associati PROCUREMENT MANAGEMENT UNIT
1 55.741 A Tanzania Development MoW
Transport Project Consulting
Branch Fund PRINCIPAL SUPPLIES OFFICER
Engineers S. p. A
PERMANENT SECRETARY
Opec
Upgrading of China Road
Norconsult Fund for
2 Muhutwe - 24.014 & Bridge MoW
International A S International POLICY AND PLANNING DIVISION
Kagoma Road Corporation ADMINISTRATION & HUMAN RESOURCES
Development
DIRECT0R
Upgrading of China GEO Parkman Ltd in MANAGEMENT DIVISION
3 Somanga - 33.04 Engineering Association with GoT MoW
Matandu Road Corporation M-Konsult Ltd
European
Tinde - Mwanza/ Grinaker - LTA
4 96.7 Louis Berger S.A Development TANROADS
Shinyanga Border Ltd
Fund
SUPPLIES AND SERVICES
China Henan
Mutukula - INTENAL AUDIT UNIT
International
5 Muhutwe Road 113 BCEOM ADB/GoT TANROADS
cooperation
upgrading project
Group Co. Ltd CHIEF INTERNAL AUDITOR EXECUTIVE AGENCIES:-
TAA
Shelui - Nzega China GEO TGFA
Norconsult
6 Road Upgrading 112 Engineering GoT, ADB TANROADS TMA
International A S INFORMATION, EDUCATION AND TANROADS
Project Corporation
COMMUNICATION UNIT TBA
Songwe - TEMESA
China Road
Tunduma Road Norconsult PRINCIPAL INFORMATION UNIT
7 70 & Bridge NORAD TANROADS
Rehabilitation International A S
Corporation
Project
Nzega - Tinde Hydroarch European
Grinaker - LTA
8 - Isaka Road 73 SRL consulting Development TANROADS SAFETY AND TRANSPORT DIVISION COMMUNICATION ROAD DIVISION
Ltd DIVISION
Upgrading Project Engineers Fund ENVIROMENT UNIT
DIRECTOR DIRECTOR
NCC European DIRECTOR DIRECTOR
Morogoro - Carl Bro
9 256 International Development TANROADS
Dodoma (Denmark) SURFACE TRANSPORT REGIONAL
Denmark AS Fund MANAGEMENT SECTION INFORMATION ROADS SECTION
TECHNOLOGIES
Butiama SECTION
10 12 CHICO Ambicon GoT TANROADS
Kyabakari TRUNK ROADS
MARITIME TRANSPORT SECTION
MANAGEMENT SECTION
COMMUNICATION
SERVICE SECTION
AIR TRASPORT
MANAGEMENT &
METEOROLOGY
Proposed or already an Executive Agency
54
56
Appendix 3: Organization Structure of TANROADS

Contract Name Leng Start date Original Revised Actual Origina Revis Actua Total Total Estimated Estimated
th Completion completion completion l time ed l time Additio Addit % Time % Time
(Km) Date date date for time nal time ional Variance Variance
comple above time over and over and
tion revised above the above the
time revised original
time estimated
time
Days
Mwanza Region 1-Nov-00 30-Apr-03 18-Feb-04 22-Jul-05 911 1,205 1,725 520 814 43 89
Appendix 4: Time Variations
Performance Audit Report on Road Works Transport Project

Upgrading of Muhutwe - 5-May-02 5-May-03 5-Oct-03 6-Apr-04 366 519 703 184 337 35 92
Kagoma Road
Upgrading of Somanga 33.0 10-Jul-02 25-Dec-04 10-Feb-05 10-Feb-05 900 947 947 0 47 0 5
Matandu Road 4
Tinde - 96.7 11-Feb-04 11-Feb-06 30-Jun-07 30-May-07 732 1,236 1,205 -31 473 -3 65
Mwanza/Shinyanga
Border
Mutukula - Muhutwe 113 15-Mar-01 17-Dec-03 30-Sep-04 31-Dec-04 1,008 1,296 1,388 92 380 7 38
Road upgrading project
Shelui - Nzega Road 112 14-Aug-02 16-Feb-05 10-Aug-05 10-Aug-05 918 1,093 1,093 0 175 0 19
Upgrading Project
Songwe - Tunduma 70 26-Feb-02 24-Feb-04 13-Jan-05 25-Apr-05 729 1,053 1,155 102 426 10 58
Road Rehabilitation
Project
Nzega - Tinde - Isaka 73 26-May-04 25-May-06 25-May-08 25-May-07 730 1,461 1,095 -366 365 -25 50
Road Upgrading Project
Morogoro - Dodoma 256 28-Jun-04 27-Jun-06 17-Feb-07 17-Feb-07 730 965 965 0 235 0 32
Butiama - Kyabakari 12 19-Feb-04 30-Apr-05 31-Aug-05 31-Aug-05 437 560 560 0 123 0 28
57
Appendix 5: Reasons for the Delays
Additional Additional
S/N Road project Reasons for extensionof time S/N Road project Reasons for extensionof time
month month
Somanga- Increase in volume of work due to Additional work volume due to changes
1. 2 Morogoro
Matandu miscalculations in the original design 4. 8 in site conditions resulting from delay in
Out of date design and survey data: Dodoma
implementing the designs 7
58 days1
Late payment of interim certificates: 69 days for late delivery of survey
30 days2 data (need for re-survey due to late
175 days Mutukula implementation of the design by 8 years)
2. Shelui- Nzega Reduced production due to
(5 months) 5. - Muhutwe 13 30 days for widening of road surfacing
heavy rains: 423 (with no financial
compensation) Road 30 days for additional borrow case 2
Ordered additional works: 45 days4 (additional quantities of borrow materials)
(without additional compensation) 159 days for omitted works
Increase in work volume due to omission of Nzega Tinde
Kyabakari- 6. 24 Additional works8
3. 2 important activities in the original design5 586 - Isaka Road
Butiama
days Change in design due to delay in
1 Due to long period from the design to the commencement of the works, some of the survey points Songwe implementing the design (5 years)
7. 14
including temporary bench marks were either displaced or destroyed and they had to be re-established Tunduma Increased quantities
before works could commence. The works were supposed to start on 14th august 2002. However, the
contractor at this point was not sufficiently mobilised to start works until 1st September 2002 (i.e. delayed New works
for 19 days). The survey data were issued to the contractor on 28th October 2002. This implies a delay of
58 days from the day the contractor was ready for work and 77 days from the contract start date.
Tinde First extension9
Mwanza/ Additional items (rockfill)10
2 During the period between November 2003 and July 2004 the ADB who were funding 89.7% of the 8. 17
project costs, suspended the payments due to expiry of the loan closing date. This forced the contractor
Shinyanga Increase in quantities some existing bill
to slow down the production due to financial difficulties. A total of four IPCs (Nos 6, 7, 8 and 9) amounting Border items11
to US$ 1.02 million were delayed for payment.
3 The extension of time for 88 days (i.e. 58 days due to displaced survey points and 30 days due to
delayed IPCs) fell into the rainy season at the project site. This resulted into a further extension of 42
days to compensate the contractor for reduced rate of production resulting from rainy weather. This
made a total extension of 130 days.
4 TANROADS instructed the contractor to carry out additional works including road reserve marker posts
and additional kerbstones for protection of the edges on built up areas, curves and on bridge 7 It took 4 years between completion of the designs and the start of construction.
approaches. This made a total extension of 175 days.
8 The increase in work volume due to changes in the designs resulted into a cost increase from 20.6
5 Bus bays, access roads, catch water drains, ditch lining and T-junctions details at the start of the road billion to 41.5 billion TSh (over 100%). The road had deteriorated to the extent that the rehabilitation
were not considered in the original design. as provided for in the contract would not suffice (Administrative Order No. 1 -AO1). Other reasons were
During construction, the original design was found to be deficient of the following aspects: poor estimates in AO1, introduction of rockfill to paddy fields and inadequate hydrological studies that
It did not take into account earthwork quantities involved in road widening at sharp curves led to too small drainage channels (AO2).
A number of culverts were found to be shorter than the width of the road and required to be extended to
cover the full width of the road. 9 The first extension approved 252 additional working days which is approximately 15 calendar months
Further, on commencing construction the original design was found to be inadequate in that the road (calendar months include both working and non-working days).
alignment passed through soft and water logged areas. Moreover, the design not incorporate special
design measures for the sections in soft and water logged areas. 10 No item was scheduled for rockfill. New items were introduced for rockfill, i.e. materials from the cut
The associated increase in work volume amounted to TSh 316.5 million. and materials from the crusher sites amounting to 221,825 m3, in addition to this, an item for overhaul
was introduced for the rockfill with a quantity of 1,584,000 m3.km.
6 The request for approval of extension of time as submitted to the TANROADS Tender Board by the
Director of Development indicates an extension from 19th June to 31st August 2005 as being 58 days 11 There was an underestimation of some bill items. The original bill of unsuitable material was 380,000
instead of 73 days. In addition, according to the Final completion Report, the revised completion date m3. During construction the amount of unsuitable material increased to 925,612 m3 (i.e. an increase of
was 19th August 2005 and not 31st August 2005. 144%).
58
Additional Appendix 6: Reasons behind revision of programme of works for each
S/N Road project Reasons for extensionof time road project
month
Additional work volume due to changes
in site conditions resulting from delay in
Muhutwe - Road Project Reasons behind revision of programme of works
9. 5 implementing the designs (7 years)
Kagoma Road
Commencement delay (took long time to
Muhutwe
fulfil loan conditions) Additional quantities to works
Kagoma
Mwanza
Additional work (6 month)12 Delay in effecting payment to the consultant, incorrect setting out
town roads SheluiNzega
data and additional quantities to works quantities
10. 27 Contractors problems not authorized by
Transport
MoID (21 months) Kyabakari
Project -
Butiama
- Modification of overlay sections in different sections of the
Mwanza Town road project
Proj. - Retrospective extension of time due of two months, due to
delayed payments
Somanga
Increased overhaul quantities
Matandu road
Inadequate design, delay in mobilization by the contractor, incorrect
Mutukula
survey data and change of scope of work, variation order and claims
Muhutwe
from contractor
Morogoro Change of scope due to late start of rehabilitation works after
Dodoma completion of design
Design:
Tinde
El Nio rainfall affected the original design
Shinyanga
Construction:
/Mwanza Border
Change of scope of work to overcome unforeseen black cotton soil
Design: change of scope due to late start of rehabilitation works after
completion of design
Construction:
Songwe
- increased scope of works due to delay in commencement
Tunduma
- due to rain season
- additional works (construction of weighbridge, construction of
no mans land and construction of parking areas)
Source: Project Files and Contract documents of 10 road projects audited
12 The extension of time was attributed to omissions of important items, change in specifications (i.e.
widening of 4 existing bridges and modification of pavement layers thickness) due to excessive
deterioration of the because it took a long time to implement the design.
60
Appendix 7: Reasons behind cost increase for each road project of TSh 1,392 million.
audited
Deductions of TSh 17,710 million per day to a maximum of TSh 2,657 million
imply that it would take 150 days to reach this limit. Reaching this limit would
Road Project Reasons behind cost increase for each road project lead to termination of the contract. If the rules were followed this limit would
a) - Additional quantities to works have been reached on 17th July 2004.
MuhutweKagoma b) - Variation of price of inputs
c) - Changes in design due to inadequate design Payment records show that MoID delayed in starting to apply the clause
SheluiNzega d) Additional work quantities for liquidated damages. The deductions started in October 2004 instead of
KyabakariButiama - February 2004.
- Modification of the overlay sections in Mwanza roads project
Mwanza Town Proj.
- Changes in design due to inadequate design Summary of the monthly amounts deductible for liquidated damages
Somanga e) - Increased overhaul quantities in TSh
Matandu Number of days in Rate per day
S/N Month Monthly amounts (TSh)
- Additional works which were omitted during design delays delays (TSh.)
- Variation order 1 Feb 2004 11 17,710,309.56 194,813,405.16
MutukulaMuhutwe 2
- Claims March 2004 31 17,710,309.56 549,019,596.36
- Variation of price of inputs 3 April, 2004 30 17,710,309.56 531,309,286.80
4 May, 2004 31 17,710,309.56 549,019,596.36
- Increased scope of works 5
MorogoroDodoma June, 2004 30 17,710,309.56 531,309,286.80
- Changes in design due to inadequate design 6 July 2004 17 17,710,309.56 301,075,262.52
- Increased scope of works due to inadequate design, Total liquidated damages 2,656,546,434.00
Tinde Shinyanga
- increased cost of works, Deducted amounts (see table below) 1,264,200,110.79
/Mwanza Border
- provisional sums for variation of price and claims Undeducted amount of liquidated damages 1,392,346,323.21
- Increased scope of works due to delay in commencement
- construction of weighbridge, no mans land and two parking
SongweTunduma areas
- Interest on delayed payments to contractor
Summary of the monthly amounts deducted for liquidated damages in
- Variation of price of inputs
TSh
Amount Amount Amount Paid to
Source: Project Files and Contract documents of 10 road projects audited S/N Month IPC No
Certified Deducted Contractor
1 Oct 2004 46 223,446,786.57 -
223,446,786.57
Appendix 8: Partial Deductions of Liquidated Damages 2 Nov 2004 47 240,035,964.89 240,035,964.89 -
3 Dec 2004 48 197,046,626.82 197,046,626.82 -
Case 1: Mwanza road works
The contractor was supposed to be charged liquidated damages at a rate of 4 Jan 2005 49 204,103,881.23 204,103,881.23 -
TSh 17,710 million per day from 19th February 2004 (i.e. monthly certificate 5 Feb 2005 50 235,595,506.30 235,595,506.30 -
for February 2004). The maximum amount of liquidated damages was TSh 6 Mar 2005 51 45,409,060.06 45,409,060.06 -
2,657 million (i.e. 15% of contract price excluding provisional sums and day- Apr 2005 52 36,276,988.66 36,276,988.66 -
works).
May 2005 53 82,285,296.26 82,285,296.26 -
1,264,200,110.79 1,264,200,110.79 -
Evidence of deductions indicates that the amount that was actually deducted
was TSh 1,264 million out of TSh 2,657 million leaving un-deducted amount
62
Case 2: Songwe-Tunduma road
revised contract)
Increase in Cost
17,359,832,309.00
19,483,138,735.20
11,946,379,328.49
(844,406,232.82)
(427,398,663.60)
(in relation to
5,178,295,534.00
2,906,619,053.50
2,614,559,241.00
2,932,296,962.00
The project completion was delayed by 102 days beyond the revised
(TSh)
completion date. Full amount of Liquidated Damages that should have
been deducted from the monies due to the Contractor was TSh 1,529
million. However, through an amicable agreement, only 26% of this amount,
which amounts to TSh 394 million, was deducted from the monies due to
-
the Contractor leaving the un-deducted amount of 1,135 million. The basis
(1,240,705,829.80)
original contract)
Increase in Cost
36,932,132,055.49
23,551,181,397.00
18,640,296,962.00
1,787,222,348.52
for calculation was the percentage of the outstanding works instead of the
3,524,045,804.00
3,942,127,433.50
(in relation to
(292,101,011.20)
337,000,000.00
793,136,616.00
contractual rate of US$ 20,000 for every additional day. In addition, it was
(TSh)
stated that the delays had partially been caused by the resident engineers
disruptive actions through arbitrary decisions since some of the decisions
were not always based on the specifications. The resident engineer, however,
was not held responsible for the said disruptive actions.
18,156,820,171.52
65,176,737,805.49
17,359,832,309.00
19,483,138,735.20
14,135,419,316.50
44,164,559,160.00
43,899,296,962.00
11,994,501,730.80
2,022,000,000.00
5,178,295,534.00
Final contract
sum (TSh)
There is no evidence as to how the supervisor has compensated the client
for causing the delay and subsequent failure to get the contractually agreed
financial remedy.
Instead, the delay has lead to cost escalation of the supervision contract
Revised contract
19,001,226,404.34
53,230,358,477.00
from NOK 11.6 millon to NOK 18.1 million (i. e. an increase of NOK 6.5
12,421,900,394
41,549,999,919
40,967,000,000
11,228,800,263
2,022,000,000
sum (TSh)
million or 56%). The beneficiary of this increase was the supervisor. The fact
that TANROADS did not claim for any compensation from the supervisor
implies that the conditions in the contract are more inclined to favour the
supervisor.

16,369,597,823
12,286,602,742
28,244,605,750
13,835,786,505
20,723,844,565
10,193,291,883
20,613,377,763
25,259,000,000
1,685,000,000
contract sum
4,385,158,918
Original
(TSh)
Appendix 9: Cost Variations
Road Rehabilitation
Muhutwe - Kagoma
Songwe - Tunduma
Shinyanga Border
Upgrading Project
Contract Name
upgrading project
Transport Project
Tinde - Mwanza/
Road Upgrading
Mwanza Region
Muhutwe Road
Matandu Road
Shelui - Nzega
Nzega - Tinde
Upgrading of
Upgrading of
- Isaka Road
Somanga -
Morogoro -
(33.09Km)
Mutukula -
Kyabakari
Butiama -
Dodoma
Project
Project
Road
SN
10
1
9
64
Appendix 10: Reasons for Cost Overruns
SN Road Project Costs (TSh. Reasons for Cost Overruns SN Road Project Costs (TSh. Reasons for Cost Overruns
Million) Million)
Somanga
1
Matandu First revision (15,707,612,741)
Had Cost Savings, however there were elements of Morogoro Additional15 works that led to modification and up dating
increase in costs as follows: Dodoma14 BOQ including new rates for additional works,
2 Shelui Nzega Price adjustment: 3,110,431,123 e.g. the quantity of CRS in reconstruction sections
4 15,707 increased from original 21,400m3 to 148,000m3; The
Financial compensation: 476,881,47
Loss of interest: 38,546,102 quantity of levelling course required has increased
3,900 tones to 43,283 tones; the quantities of asphalt
Revision 316,449,600 increased from 80,900 to 89,600m3; etc.
Inadequacies in the original design13 led to additional
works such as introduction of Access roads, bus bays,
culvert extension catchwater and mitre drains which First Revision (TSh 1,311,008,369)
increased costs as follows: Modifications in the road design; elements affected
Road Bases (5,277,316) for Bus bays and access include: earthworks, surfacing and drainage structures.
316 roads Second Revision (TSh 154,257,732)
Bituminous & Surfacing (3,124,578) for Bus bays Design modification and relocation of Ngono Bridge
Butiama and access roads which was designed as too short and construction of a
3 (But Tanroads
Kyabakari Earthworks (197,417,606) for common excavation, bridge (instead of arch-pipe culvert) at Akimbiri River.
record shows
337) rock excavation, embankment fill, and construction Total: TSh 1,465,266,101
of 3 access roads and 2 bus bays No further revisions were presented for verification.
Extra drainage requirement (57,675,800) for 3,52416 However, the Project Completion Report presented
Mutukula
provision of extra length of concrete culverts 5 millions by TANROADS in February 2006 gave the following
Muhutwe
headwall and aprons at selected areas explanations:
Incidentals (52,954,300) for provision of concrete Increase in quantities due to incorrect design,
and rubble paved water ways adverse ground conditions, underestimations of
quantities: TSh 1,394,068,112;
Additional quantities that were not provided for in
original BoQ: TSh 762,212,910;
Price escalation that was provided for in the
conditions of contract but not provided for contract
price: TSh 1,367,764,782
Total 3,524,045,804
14 It has been reported by TANROADS that there is an additional cost of TSh 8779.34 Million which
involved Claims and Disputes. This amount needs evidence from TANROADS. Also it has been
indicated that there are two revisions in this project, but we have seen only one revision.
13 The length of all culverts was the same without taking note of earthworks above the culverts and the
sharp corners which require widening; Control points by the designer were verified to be wrong without 15 The design of the road was completed in 2000, but it took 4 years to implement the project, and as a
correct levels and coordinates (These were corrected jointly by the contractor and TANROADS. Some of result deteriorated further than anticipated in the design.
the control points were completely changed); The geotechnical study report had inadequate information to
identify all rock outcrops and areas with weak sub grade; Access roads and bus bays were not considered 16 This figure has been computed based on TANROADS report where the final cost has been reported
in the original design; and Minor drainage works like catch water/mitre drains, ditch lining and scour as TSh 17,359,832,309. According to the consultants report, however, the final cost was TSh
checks were not fully addressed in the original design. 17,581,602,207.30 resulting into an additional cost of TSh 3,746 million.
66
SN Road Project Costs (TSh. Reasons for Cost Overruns SN Road Project Costs (TSh. Reasons for Cost Overruns
Million) Million)
First revision (i.e. Administrative Order No.: 3,942,127,933
7,742,785,756) First revision (TSh 43,594,758)
Updating of BOQ including new rates for additional works Workplace interventions on HIV/AIDS/STIs
as a result of changes in the design to accommodate Second revision (TSh 712,624,243)
further deterioration of the existing road (original design Additional work: construction of Mpemba weighbridge
was not adequate). station.
Second revision (i.e. Administrative Order No.: 2: Songwe 3,942 Third revision (TSh)
7
12,383,947,590) Tunduma Not presented for the audit
Updating BOQ to reflect increased cost of works and Fourth revision (TSh 68,954,328)
provision sum of prices due to further changes in the Additional parking area and surface drainage at the No
design that led to additional cut, change of drainage mans land between Tanzania and Zambia
channel cross-section from triangular to trapezoidal, and Fifth revision (TSh 181,499,982)
introduction of rockfill to areas of black cotton soil. Additional quantities based on Addendum No 1 for
Third revision (i.e. Administrative Order No. 3, consultancy services.
23,144 Contractors Claim: 809,888,810) First revision (10,201,182,201)
Updating BOQ to reflect approved claims resulting from: Additional items (rockfill)
Nzega - Tinde
6 But in the haulage of water; additional insurance costs; additional Increase in quantities some existing bill items
Isaka
report is costs for performance bond; and standby costs for Second revision (13,338,961,171)
23,551 crushing and surfacing equipment. Additional works
Fourth revision (i.e. Administrative Order No. 3, Provisional sum for variation of price
Contractors Claim: 2,207,496,886) Tinde Third revision (1,445,609,355)
Contractors proven costs for extension of time, - Mwanza/ Haulage of water: TSh 288,000,000
Escalation related to extension of time claim 8 Additional cost of insurance: TSh 247,903,923
Shinyanga
Claim for costs related to delay of bridge 17 Border Standby costs for crushing and surfacing equipment
design : TSh 857,263,560
Claim related to effect of forex and Additional performance bonds: TSh 52,440,447
Claim for the interest on the reimbursement of Other
VAT, Duties and Levies, late payments Interest on late payments TSh 510,214,639
Other Revisions Variation of price: TSh 9,151,335,989
Destination inspection scheme (DIS): TSh Fuel, VAT, duty and levy: TSh 7,630,780,293
37,062,355
VOP: TSh 150,000,000 First revision (793,136,616)
Emergence repair works: TSh 220,000,000 Increased costs in fuel during the 5 month time
Muhutwe extension
9 793
Kagoma Additional works17 (Addendum No.1 not presented
for audit)
First revision (2,631,628,581)
Mwanza
Reasons
Region
10 2,632 Additional works due to change in specifications and
Transport
modification of overlays, widening of existing bridges
Project
and additional side drains
17 Change of alignment to minimize infringement into properties and water sources for the villagers. This
increased the quantities of earthworks and bases significantly.
68
70
Controller & Auditor General
National Audit Office
Samora Avenue/Ohio Street
P.O. Box 9080,
Dar es Salaam
Tanzania
Telephone: +255 22 2115157/8
Fax: +255 22 2117527
E-mail: ocag@nao.go.tz
Website: http://www.nao.go.tz

72

Roads Works in Tanzania

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Roads Works in Tanzania

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PERFORMANCE AUDIT REPORT ON ROAD WORKS

The Ministry of Infrastructure Development and TANROADS Performance

Performance Audit Report on Road Works 

PREFACE...................................................................................................................................................iii Quality Control of Road Works. ...................................................................................................... 34

My office intends to carry out a follow-up at an appropriate time regarding actions

MoID/TANROADS should have a discussion on how far it should go

MoID/TANROADS should specify the responsibilities for the

The Government should review the possibility of making vital road

The Government should give TANROADS clear instructions on how

The Government and TANROADS should deliberately take steps on

TANROADS should significantly improve project management and

The Tanzanian Road construction industry is also a significant contributor to

The Ministry of Infrastructure Development (MoID) and Tanzania National

Construction and repair of roads utilizes a great part of government expenditure

The countrys road network is estimated to be 85,000 km long and includes

Irrespective of the importance and expenditure recorded above, the road

2007/2008 Budget of Tanzania

Performance Audit Report on Road Works 

From the Work Plan, p. 3-4

Design and methods

The Construction Policy guides roads constructions. The following objectives

Parliament Procurement Packaging and Application for

Call for tenders

TTCL Evaluation tenders

CRB Award of tenders

17 IDA, AfDB, EU and Nordic Fund

Contractually, alterations might also be compared to the original programmes

This chapter provides details on the time variations in road construction

Review of extension of working days

4.2 Original and revised budgets and actual costs

According to the project files, a number of factors causing cost increase

5.2.1 The design phase

2. National Population Policy, Ministry of Planning, Economy and

3. Pavement and Materials Design Manual by Ministry of Works of the

4. Performance Audit Handbook

5. Performance Audit Report: Managing Procurement Road Construction

6. Standard Specifications for Roadworks by Ministry of Works of the

8. Success Factors for Road Management Systems, World Bank, 2005

Proposed or already an Executive Agency

Performance Audit Report on Road Works

Performance Audit Report on Road Works Transport Project

Source: Project Files and Contract documents of 10 road projects audited

Performance Audit Report on Road Works

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Performance Audit Report on Road Works

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