Is our highway deal value for money?
The North-South Link: Let’s Get This Straight
The North-South Link: Let’s Get This Straight
China is not building you a free road and infrastructure. In fact, it is costing us far more than if our highways were contracted out American Engineering Firms. Chinese goods may be cheap but their infrastructure is poorly built and come at a very high social, economic and environmental cost for which we will be paying for decades to come.
A 67 km highway costing US$730 million or US$10.5 million per km when the average cost from a World Bank Survey is US$860,000/KM. Is the US$730 million inclusive of the US$195 million spent on the Mount Rosser By-Pass and did the government account for the estimated US$230,000,000 worth of marl gravel used in all the elevated portions of the highway and sub-base?
The people of Jamaica have already paid for the North-South link of Highway 2000 by contributing some US$150 million in marl gravel dug from our mountains and by contributing land, some 1,200 acres, at an estimated value of around US$220 - US$300 million in value.
It makes you wonder about whether our governments over the years can truly say they have been acting in the best interest of the people whenever they are divesting public assets. Now, if the toll rates are indexed to the American dollar then the land values must also be comparable to similar land prices in the USA using the land-residual approach to valuation based on the highest and best use of the land. So the land can only be valued appropriately when the Chinese declare their intended use, which should have been done in the negotiations.
I have been calling for a Congressional-style budget office, as in the case of the US Government to value and price Government's investment decisions, as well as programs, to ensure that taxpayers are getting value for money and to ensure that these policy decisions will have the desired social and economic effects.
The real cost of this Chinese-built highway in Jamaica is actually around US$300 - US$350 million. The land and the marl gravel contributions to building the highway by China Engineering and Construction Company (CHEC) total estimated value is of more or less US$320 million.
According to World Bank reports, the average cost of building a Greenfield highway around the world is US$800,000/km. We paid well over US$10.5 million/km for the north-south link. The 76km Guyaozi-Qingtongxia Expressway (GQE) cost US$357 million or US$4.7 million per km (China), while the 67km north-south link highway costs US$720 million or US$10.5 million per km (Jamaica).
A story 'World Bank lends $250 million to improve roads in China's Ningxia Province ran on May 13, 2010. The objective of the Ningxia Highway Project for China is to provide high-capacity and quality transport connections between targeted development zones and urban areas in Ningxia autonomous region, as well as develop all-weather road access in selected rural areas of Ningxia autonomous region.
There are three components to the project, the first component being Guyaozi-Qingtongxia Expressway (GQE). The scope the GQE is even larger than the north-south link in Jamaica. It will connect Guyaozi to Qingtongxia on a new alignment bisecting nine major national and provincial highways. “It will also include a bridge over the Yellow River. The highway will connect two major industrial areas at the extreme east and west of the corridor as well as link Wuzhong's and Lingwu's urban areas.
These two major industrial areas are the backbone of Ningxia's economy and the engine of its future growth. The second component is the road network improvements program. Under this component, the bank will finance improvements to national, county and township roads with the aim of improving connections to key industrial and agricultural areas, and improving the feeder network to the existing expressway network. Finally, the third component is the institutional strengthening. Provision of technical assistance to strengthen the institutional capacity of Ningxia in the transport sector through, inter alia: (a) carrying out of a study on road safety, a study for developing an optional long-term strategy for road maintenance, and a study for developing a comprehensive plan for the transport logistics industry in Ningxia; (b) carrying out training on issues related to the transport sector in Ningxia; and (c) acquisition and utilization of equipment required for carrying out road maintenance in Ningxia.”
It sounds like real value for money, Are we getting that? How could it be that the Mount Rosser bypass under French contract was supposed to cost US$70 million ended up costing Jamaicans US$195 million with 1,200 acres of land and no geotechnical study?
"They wanted US$70 million to finish the road which we couldn't borrow, we couldn't have, and therefore I had to turn to the Chinese and, in an agreement, asked the Chinese, as an addendum to that agreement, to finish the road where we are now ending," Henry explained.
The Sea-To-Sky Highway In B.C. Cost US$6.3 Million/Km. The Mount Rosser By-Pass In Jamaica Cost US$10.5 Million/Km and the Chinese did not pay one cent for the sub-base (marl dirt) which is more than 30% of the cost. The Sea-To-Sky Highway Linking Horseshoe Bay and Whistle in British Columbia have similar features like the Mount Rosser Road Linking Kingston to the North-coast of Jamaica. The British Columbia Government re-engineered the old existing route by reducing the slopes and the sharp corners traveling through the mountains to the resort town of Whistler. This engineering concept could have been used on the Mount Rosser road to save the taxpayer millions.
April 17, 2015- after conducting a parametric review of the mount Rosser Highway in Jamaica, the US$195,000,000 price tag china is charging the taxpayers is equivalent to an overcharge of more than 200%. Applying the Parametric or Engineering Estimate approach to predict the actual cost of the Mount Rosser Bypass revealed a shocking and disturbing result.
Base on North American Engineering Road Design Standards the estimated cost of a 20km highway should be around US$95,000,000 based on Union Wages in America. In fact, if the contract was for the entire Ocho Rios to Spanish Town a distance of about 65km it would have cost approximately US$110,000,000, based on building side bridges and tunnels along the existing route to reduce the travel time by straightening the old route to Ocho Rios similar to the photo on the left.
"Parametric estimating is the use of a subset of independent variables to predict the cost of a project. These independent variables maybe specifications, features, functions, or some other high-level descriptive elements that are used to define the scope of the deliverables at an early stage of the project when there is a lack of detailed information. Parametric cost estimating is widely used for bidding on a contract, input into a cost-benefit analysis for selection within a project portfolio, and as the initial stage of building a plan for project implementation."
To protect our sensitive watersheds in mountainous road bridges are used to span sinkholes and catchment areas (see a demonstration of bridge construction below). The Chinese just build over the watershed catchment areas creating steep and dangerous inclines. In China and other parts of Aisa, they build bridges and tunnels in their mountainous regions to protect the environment as you can see in the picture below.
(Inserted for Demonstration Only)
