MMC Gamuda: Total MRT cost likely more than estimated RM40b

The total cost for the three MRT lines will likely be higher than the RM40 billion estimated in 2010, based on 2009 prices, project delivery partner MMC Gamuda KVMRT Sdn Bhd said.

This is because the estimation did not include the cost of land acquisition and electric trains, and was based on all three lines being built simultaneously.

"The current final alignment for the MRT 1 and MRT 2 are longer in terms of length and have more stations, which have increased the construction cost of the MRT Project," it said in a statement.

"The concept proposal was for all three lines to be constructed simultaneously. Currently, the construction of the three lines is implemented in a staggered manner with one line at a time, which would result in a higher construction cost," it said.

This comes after PKR vice-president Rafizi Ramli said the first MRT line, the first phase of which opened this month, cost double that of similar projects abroad.

Rafizi also said the RM21 billion cost announced by Prime Minister Najib Abdul Razak is off the mark as project owner MRT Corp said the total cost for MRT 1 is RM28 billion.

Najib had said the project cost RM2 billion less than estimated.

Rafizi said the difference between the cost announced by Najib and MRT Corp likely meant that MMC Gamuda was paid RM7 billion in consultation fees.

Refuting this, MMC Gamuda said it was paid six percent of the construction cost of the elevated portion of the project, on condition that it delivered on time and within budget.

This worked out to about RM750 million, and not RM7 billion as claimed by Rafizi.

The RM21 billion was only construction costs and did not include associated fees like engineering consultancy, quantity surveyors, system integration works, site investigations, topographical surveys, overheads and contingencies, it said.

MMC Gamuda said it is international practice to not include these costs in calculating construction costs.

This is because land acquisition costs vary greatly between cities, and could distort cost per kilometre studies for urban rail, it said.

There is also high variation in construction costs due to variations in labour costs, project characteristics and degrees of emphasis on safety, health and environment, it said.

"Our analysis (in 2014) of the construction cost for MRT systems of 49 cities in both developed and developing nations showed that 38 cities had more expensive MRT systems than MRT 1," it said.

The MRT project was initially proposed as a turnkey project but the government decided to appoint project delivery partners (PDP).

MMC Gamuda was appointed to manage construction for the elevated portions of the project.

MMC Gamuda was also selected for the underground portion, but through an international tender called by MRT Corp.

"Ultimately, with a fair and transparent open tender process, the construction cost is decided competitively by the market," it said.- Mkini