MRT Line 2: MMC-Gamuda ‘discounts’ 23 percent to the government

This does not happen often but perhaps will be happening more often in the future? MMC-Gamuda offered a 23 percent ‘discount’ to the government through its new price tag for the above-ground portion of the MRT2 project. They are the turnkey contractor and the original price tag for the project was RM22.64 billion. This was achieved through a reduction in cost and rationalisation in work scope without cancelling any of the above-ground stations. (This deal is thus different from the savings achieved in LRT Line 3 yeah because that one entailed station cuts…) Finance Minister Lim Guan Eng said, “Furthermore, the expected cost reduction for the MRT2 project will cut the fares future rail passengers will have to pay, and boost public transport usage in the Klang Valley.”

As per the original plan, the entire MRT2 line is expected to be fully operational by July 2022 and will cater to two million commuters from Sungai Buloh to Serdang and Putrajaya. There’s bad news for MMC-Gamuda for now though. Putrajaya has terminated MMC-Gamuda’s contract to build the underground portion of the MRT Line 2 (MRT2) after the two parties failed to reach an agreement. All unfinished underground work will be re-tendered via an international open tender process. The reason for this was because the government felt it could achieve “further significant savings” as compared to a new offer made by MMC-Gamuda. Lim said, “The Pakatan Harapan government holds steadfastly to obtaining ‘value for money’ on all government expenditure, especially when large borrowings are required to complete any project.” (In brief, the tender will be open to all and who knows the winner may be MMC-Gamuda again?)

Personally, I think majority of Malaysians would not mind cheaper MRT ticket prices in the future. However, it’s equally important that the cuts are only in cost and not in the standard of the whole construction. Whenever we look at the construction sector, when costs are cut, it will affect everyone including the sub-contractors. If I am the sub-contractor and I am given a 23 percent price cut target by my main contractor who was given the same targets, I will have to accept it and just do it. As for how I will do it, this is something to be monitored closely. Finding someone to blame in the future if any untoward incidents happen is not something nice to do. Happy following and I still think the MRT Line 2 will be completed even earlier than the earlier completion of MRT Line 1.

written on 7th Oct 2018

Next suggested article: Later better than never. I want MRT Line 3

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