DEVELOPMENT OF OPF HOUSING SCHEME ZONE-V, ISLAMABAD (PACKAGE-I) (2 May 2017)

Satellite View as on Dec 2015 OPF Housing Scheme Zone-V, Islamabad Satellite View as on Dec 2015

SALIENT Cost of the Proj : Rs 2404 Mn Date of Start 08-Sep-2008 Date of Completion 28-Feb-2011 (30 Months) EOT (x5) 30-Dec-2015 (57 Months) (Total 87 Months till 30 Dec 15) Scope of Work 8 Blocks and 8 Main Roads 6.4 Km Paved Roads* 23.17 Km Paved Streets* Designed by NESPAK; EACL; OPF Total Area 4600 Kanal

SALIENT Site handover 3925 Kanal (Sep-08) – [Bal: 675 Kn (15%)] 193 Kanal (Jan-11) – [Bal: 482 Kanal (10%)] 100 Kanal (Jan-16 - after latest EalT) – [Bal: 382 Kanal (8%)] Total 4218 of 4600 rel Consultant/Supervision NESPAK (Sep 08 to Jun 09) OPF (Jul 09 to Jan 10) EACL (Feb 10 to Sep 14) OPF (Oct 14 till date) Suspension Periodic suspension by OPF for Dam, Block D, Block H Suspension due to litigation (Jun-Jul & Sep 14)

PROGRESS Progress - 98% Item Progress (Completed) Earth Work Asphalt Bal Works Svc incl Ft Path Litigation Item Progress (Completed) Earth Work (149 Mn Cft) 100% Sewerage (58 Km) Water Supply (35 Km) 92% Drains (2.9 Km) Foot paths (54 Km) Roads (26.5 Km) Bridge (01) Soft Landscaping 16% Hard Landscaping 0% 100 Kanals handed over on 6 Jan 2016 Progress - 98%

01: OUTSTANDING AMOUNTS Ser Measured Works Rs (Millions) FWO’s Remarks Work done   a. Total work done as per BoQ rates after rebate 2373.319 After rebate (6.936%) b. Amount paid by client 2317.427 Balance outstanding 55.892 IPA 25 submitted on 22.07.16 2 Price Adjustment a. Price Adjustment due 335.147 Inclusive of Adjustment against IPA 25 (as per OPF formula contrary to Contract allowance) 290.564  3. 44.583  4. Measured works Subtotal (items 1-2) 100.475

02: UNSETTLED AMOUNTS Ser Disputed Amounts Rs (Millions) FWO’s Remarks 1 Price Adjustment   a. Price Adjustment as per Contract allowance 417.897 Due to conflicting view on bid date between OPF & FWO as per Contract clause 70 b. Price Adjustment as per OPF assessment 335.147 OPF considering bid date 11 Aug 2008 after giving rebate Price Adjustment disputed amount 82.75 Bid submission date 24 Jul 2008 2 Profiling of plot areas a. Profiling of plot areas (initial FWO valuation) 56 b. Profiling as vetted by EA Consultants 47.2 Duly approved by OPF BoG in 02 Nov 2012 meeting c. Amount paid by client Balance outstanding Payment due since Jan 2013 3 Damage Rectification a. Damages repair due to insufficient drainage capacity 143.219 The site is a flood plain and consultants failed to provide sufficient drainage. New 32 drainage/ protective structures were built w.e.f May 2015 b. Amount paid by client (Notified)

02: UNSETTLED AMOUNTS Ser Disputed Amounts Rs (Millions) Contractor Remarks 4 Prolongation / Resource Idling   a. 59 months prolongation 533.183 Projected forecast over Rs 433 Mn and Rs 33 Mn already forwarded to OPF in Jul 2014 and Oct 2014 against Prolongation and Involuntary Idling respectively b. Rise in materials prices not covered within Price Adjustment Mechanism (Ser 1) 97.586 Covering the granted EOT period c. Subtotal Item 4 630.769  5 Total Unsettled and Un-agreed Amount (items 1 to 4) 903.938 A marginal figure would have accommodated by FWO within its risk but the scale of uncertainty is beyond reasonable comprehension of a competent contractor

MATTERS OF CONCERN Site constraints Site is essentially a flood plain with natural flow lines now interrupted after construction Rain damages being permanent feature on site seriously questions adequacy of design. FWO has made it clear to the Employer that there is no provision for maintenance in the BoQ as it stands, therefore FWO cannot be held responsible for future damages that may occur. Future site re-profiling either by OPF or residents will be detrimental to roads Opening of streets and areas by services network providers such as IESCO etc is a serious matter of concern for FWO

MATTERS OF CONCERN Payments Payments have not been timely and in accordance with the contract terms/ commitments leading cash flow shortfall against the project impairing FWO’s capacity to undertake further works It took OPF seven months to clear payments (466 Mn) for Works completed in Dec 2015 (Payment initiated in Jan 16 (vide IPA 23 and latest payment received in Aug 2016). IPA-25 (62 Mn) along with its Price adjustment (18 Mn) non-contractually returned to FWO undetermined. A substantial sum of Rs 904 Mn against variations remains undetermined and unsettled despite notifying this effect to OPF numerous times. A considerable amount (124.426 Mn) retained against Security which has now gone way beyond planned period of 3 years

MATTERS OF CONCERN Takeover & Defects Liability OPF’s reluctance to take over completed Segment-I works is delaying commencement of Defect Liability Pd. Circumstances beyond FWO control impairing its capacity to undertake further works

RECOMMENDTIONS Segment-I Takeover, which comprises 3925 Kanals fully developed from FWO and settle final accounts. Although numerous EOTs have been granted to the Contractor but no corresponding VOs (Variation Orders) have been issued, allowing Contractor to recover the over spend. FWO cannot operate on an indefinite Defects Liability Period and it is for this reason that takeover should commence and conclude as a matter of urgency Segment-I works should not be linked to the undeveloped land which is being released after Extension of Time (EOT) which expired on 31 Dec 2015. If this proposal is not adopted, FWO will not be able to provide competitive rates and allocate resources as the legacy of Segment-I will continue to impact productivity. Therefore, a clear line must be drawn between these two work streams

RECOMMENDTIONS Completed works (Segment-I) are ready for final measurement, needs settlement in full Release of Retention Money against Bank Guarantee FWO liabilities and re-evaluate the project cost incorporating scope change and time prolongation. Corresponding VOs to be issued. (refer Appendices) Speedy settlement of contested amounts including timely payment of agreed Price Adjustments and surplus soil All new works (Segment-II) to be carried out under a separate order on market rate Employer to ensure no damages are caused by svc network providers

RECOMMENDTIONS Effective security be ensured to avoid theft / damage to build assets. Independent maintenance contractor to be deployed for regular de-silting. Strict control on heavy vehicles using the roads. Special measures to be taken for levelling of terrain. Regarding development of newly released land, FWO offers conditional cooperation until and unless all with held payments are released, unapproved variations are settled and Segment-I is taken over.

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