Variations in cost, design stall Sh2b works for counties' headquarters

Works for the construction of county headquarters in Tharaka Nithi, Tana River, Nyandarua and Isiolo counties worth Sh2.1 billion have stalled owing to changes in the initial designs and location.

This has affected some of the projects according to the Auditor General’s report on national government ministries, departments and agencies for the year 2023/24.

The report also details conflicts between the State Department for Public Works, the projects’ overseeing agency, counties, and contractors that contributed to the delays. None of the counties’ headquarters under construction is more than 60 per cent complete despite extensions for some projects.

="https://www.standardmedia.co.ke/health/national/article/2001490526/five-counties-to-takeover-stalled-sh25-billion-headquarters-projects">For example, the Sh458.2< million proposed headquarters at Kathwana for Tharaka Nithi County was supposed to be done by May 15, 2024, while the Sh617.6 million new headquarters for Nyandarua County at Ol Kalou was to be done by May 16, 2019.

Tana River County’s Sh495.3 million new headquarters which was later revised to Sh500 million was set to be done by September 22, 2021, while Isiolo County’s new head office was to be completed by August 30, 2021.

The contract for Isiolo County was revised from an initial sum of Sh870.7 million. The Auditor General says the review of the project as of June 30, 2022, revealed physical progress was at 50 per cent showing the construction was way behind schedule.

The report states that the contractor had raised an extension of time claim from August 30, 2021, to August 30, 2022. However, approval for this was not provided for audit. Additionally, at the time of the audit, works worth Sh102.3 million - representing 18 per cent of the contract sum had been certified for payment.

This includes Sh3 million related to interest due to delayed payments which the Auditor General says is an extra charge for taxpayers.

“A field visit conducted on the project on October 2024 revealed the contractor had abandoned the site and the project had stalled. The project estimated percentage completion was 60 per cent as indicated in the progress report,” reads the Auditor General’s report.

="https://www.standardmedia.co.ke/article/2001286302/construction-of-sh-1-4-billion-county-headquarters-new-market-starts">For Tana River County,< the Auditor General raises queries on the cost variations of the project that was initially Sh495.3 million then moved up to Sh500 million and now could cost Sh850 million.

The changes are associated with designing and re-designing the project as some amenities were being scrapped for the construction to stay within the budget. The project was to be done in 79 weeks, having a commencement date of March 16, 2020. “However, a field visit conducted on the project in October 2024 revealed that the site was changed after the design stage resulting in cost variation of Sh500 million,” reads the Auditor General report.

“To ensure the cost is contained within the Sh500 million limit, key infrastructure works of lifts installation, generator installation, underground tank, high level and low-level tanks, access roads and parking, and landscaping had been omitted from the initial design,” the report reveals. However, the redesigning of the project in the new site and completion of omitted works was projected to push the cost up by Sh350 million.“No satisfactory explanation was given as to why the change of site had not been factored during the project feasibility study stage to save costs. Further, the feasibility study was not provided for audit,” the report says.

The Sh617.6 million contract for the construction of Nyandarua County headquarters in Ol Kalou was terminated on March 16, 2019, the project’s initial completion date for failure to perform as per the terms.

Court injunction

The contractor had achieved 19 per cent completion. When the county sought a new contractor, the initial one went to court seeking an injunction on the process.

The termination was then lifted and the initial contractor agreed to resume work with the promise to complete the project by July 2021. This has not happened.

Through arbitration, the contractor then agreed to transfer assigned works to another at an agreed amount of Sh24.9 million with no further claims.

The completion date of the project was then extended to December 2022.

During the 2023/24 financial year, the State Department for Public Works paid Sh48.9 million to various contractors working on the project. “However, at the time of termination, payments amounting to Sh101.6 million had already been made to the contractor including Sh13.1 million meant for the installation of lifts.

="https://www.standardmedia.co.ke/nyanza/article/2000065908/construction-of-county-offices-postponed?pageNo=2">However, it was not

The project is reported to have had additional charges totalling Sh83.5 million related to fluctuations in builders’ work and materials, interest on delayed payments and contractual claims that could otherwise be avoided.

A site visit in October 2024 revealed that the perimeter wall was 100 per cent done. “However, the contractor had abandoned the site, a pointer to further delay in project completion,” the report says.

The Tharaka Nithi headquarters that was to be completed by May 2024 was also delayed courtesy of conflicts between the contractor, State Department of Public Works and the county due to slow performance and delayed payments.

The report says that in May and August 2022, the Principal Secretary in charge of the State Department instructed the county to terminate the contract on account of non-performance. This was not successful.

Due to the delayed implementation and payments, there were cost variations that shot the budget to Sh458.2 million from the initial Sh366.8 million. 

“Field inspection of the project in October 2024 revealed the contractor was not on site and the project had stalled. In the circumstances, delayed completion of the project denied the public value for money and service delivery,” the report says.