Mogale City falters: R1.9-billion mega-projects riddled with inconsistencies

Mogale City’s two mega-projects to the value of R1.9 billion has been marred by poor planning, implementation and monitoring, which has seen cost overruns for the Krugersdorp CBD taxi rank ballooning from R47.7 million to R98.5 million.

An audit into the projects has revealed that there was no evidence that bids were solicited and evaluated to select the main contractor for the two projects, or that the contractor had expertise or resources to complete the project within the timeframe and budget.

According to the audit, conducted by forensic investigating firm Comperio, there were no guarantees, sureties and insurances (public liability, workers’ compensation and construction all risks) for the R958-million housing project.

With the scope of work on the housing project, funding or the number of units to be built unclear, the audit found that project overruns were inevitable and there was no evidence that the municipality could afford the shortfall for the project.

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The audit found that the funding agreement between the department of human settlements and the municipality confirmed an amount of R311,761,070 – almost 37% of the total cost.

“There was no confirmation from MCLM [Mogale City local municipality] to provide the remaining balance amounting to R522,238,930. The funding agreement [… ] states that an indicative funding of R958,635,895 would be required for the completion of the project and the appointment letter […] stated R834,000,000. With the above information, it’s difficult to confirm the amount required to finalise the project,” the auditors concluded.

The audit report, dated March 2020, lays bare the mess that has resulted in the construction of the Krugersdorp CBD taxi rank and more than 6,000 RDP houses in Brickvale Extension, with R159 million spent on the housing project, though only 60% was complete.

According to the audit report, which The Citizen has seen, there was no evidence to indicate invoices were reviewed prior to payment to ensure compliance to the terms of contract, or that the of quality of work and adequate completion was reviewed prior to approval of progress billings. The audit also established that there was no supporting documentation for invoices and the only progress report made available was that of the bulk services.

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Substantiating documents to justify the bill of quantities attached to the invoices could not be provided, with inconsistencies with amounts as per invoice, payment requisition and remittance advice. There was also no evidence of soliciting of competitive bids and subsequent evaluation, based on defined criteria for the appointment of the main contractor for the taxi rank, with no proof that capacity and risk assessments were approved.

The audit noted that there was an anomaly in Mogale City local municipality issuing an instruction to the main contractor on 22 June 2018, for additional scope of works, yet the permission to proceed from the National Treasury only came on 25 September 2018.

Correspondence from Treasury to Mogale City – permission to proceed with implementation (PPIC) – with additional scope of works dated 25 September 2018, implies that the original budget was not adequate for the project.

The audit also found that the main contractor sub-contracted the project to another contractor, which was against the contract.

There were also discrepancies regarding contract-awarded amounts and extension of time on the progress reports of the sub-contractor:

• Progress report dated 4 June 2019;
• Contract amount: R92,369,036;
• Project completion date: 29 March 2019;
• Extension time: two months;
• New project completion dates: 31 May 2019;
• Progress report dated 28 June 2019;
• Contract amount: R105,893,446
• Project completion date: 29 March 2019;
• Extension time: two months;
• New project completion dates: 30 August 2019;
• Progress report dated 5 August 2019;
• Contract amount: R105 893 446;
• Project completion date: 29 March 2019;
• Extension time: two months;
• New Project Completion dates: 30 August 2019.

The taxi rank is yet to be completed while the projected date for the completion of RDP houses is June.

– siphom@citizen.co.za