Expensive restoration: how government projects are “overgrown” with millions in extra charges
27 August 19:52
In large public infrastructure projects in Ukraine, additional costs for technical supervision, authoring, and consulting services often range from 1% to 6% of the value of the main contract. This was reported by the head of the State Audit Service of Ukraine, Alla Basalaeva, in an interview with Glavkom, "Komersant Ukrainian" reports.
According to her, only in one of the facilities, where the total estimated cost was UAH 3.8 billion, additional costs exceeded UAH 160 million. We are talking about separate contracts for “construction support” that are concluded either without a tender or with a formal tender, which does not ensure real competition.
The essence of the problem is the formality of the procedures and the lack of transparency of costs
The model looks like this: after the main contract for construction or major repairs is concluded, the state agency that is the customer engages contractors for “expert support”, “risk management” or “technical support”. Contracts with such contractors rarely contain specific deadlines, scope of work, or deliverables. As a result, the reports look too general and do not allow for a clear assessment of the quality of services.
What is the added value of these consultants? Why do we pay millions for general wording in reports, when many customers already have their own specialists?” Basalaeva said.
She emphasized that it’s not just about technical experts, but also about engaging law firms to support tenders or monitor risks. And all this is also at great expense from the budget.
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As an example of inefficient allocation of budgetary resources, the head of the SAS mentioned the construction of housing in Borodyanka. According to her, some newly constructed facilities in the affected regions have estimates that exceed the cost of housing in Kyiv.
“How can a square meter in Borodyanka cost more than in the capital? But it does,” emphasized Basalaeva.
According to her, this indicates a lack of effective control and a reduced level of publicity of the processes. She also noted that not all regional procuring entities publish contract terms and annexes in a timely manner, which makes auditing even more difficult.
Auditors demand changes in the rules
Currently, the State Audit Service insists on revising the approaches to concluding contracts for consulting and related services. In particular, it is about
- introducing clear requirements for the scope of work, deadlines and reporting;
- mandatory competitive tender procedures;
- publishing full texts of contracts and specifications to them;
- creating standards for assessing the effectiveness of such services.
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According to Basalayeva, the auditors are ready to cooperate with the Government, the Verkhovna Rada and international donors to make the recovery process more transparent and effective. She emphasized that every hryvnia spent on support should be justified, especially when the country continues to wage war and needs to attract new external funds every month.
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