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'No value for money', HAJ slammed for poor governance practices

Published:Wednesday | November 11, 2015 | 11:00 AMEdmond Campbell
Auditor General Pamela Monroe Ellis

The Housing Agency of Jamaica (HAJ) has once again been thrown into the spotlight with Auditor General Pamela Monroe Ellis declaring that the Government did not receive value for money in an almost $9-billion project the agency implemented.

In an activity-based audit report tabled yesterday in the House of Representatives, Monroe Ellis said that the HAJ did not engage the principles of good governance in its implementation of the Jamaica Economical Housing Project (JEHP), which was undertaken at a cost of $8.6 billion.

The auditor general reported that the HAJ entered into a contractual agreement without conducting a feasibility study or without the benefit of design works.

"Consequently, HAJ did not satisfy itself that value would be received for the $8.6 billion," the auditor general noted.

In the absence of proper due diligence before committing funds, the auditor general said the project was significantly scaled down by the HAJ; however, despite a cutback in the scope of the project, the contract value remained unchanged.

The JEHP should have delivered 3,454 housing solutions comprising 937 housing units and 2,517 service lots.

However, the Monroe Ellis-led team discovered that to date, the HAJ has only developed 70 housing units, with another 80 in progress, and 1,980 service lots.

$600M ADVANCE

Continuing, the auditor general said that as at August 2015, the HAJ had paid all the funds over to the contractors, including a $600-million advance for incomplete works.

The developments, which were undertaken in Belle Air and Mount Edgecombe in St Ann and Luana Gardens in St Elizabeth, should have provided 260 two-bedroom houses, 397 one-bedroom houses, 280 studio/starter houses, and infrastructure works for 2,517 service lots.

"The [Government] has not received value for money, based on the initial projections. Only seven per cent and 79 per cent of the deliverables for housing units and service lots, respectively, have been achieved," Monroe Ellis said in her findings.

In addition, the auditor general said that the HAJ did not inform Cabinet of its plans to rescope the deliverables, which prevented the requisite oversight and approval of Cabinet.

The current board of the HAJ inherited the JEHP programme, which means that its members did not have an input in the contract agreement and deliverables.

Monroe Ellis is of the view that the current board had the opportunity to improve the governance practices.

The auditor general noted that the HAJ rescoped the project by reducing the deliverables to 2,130 housing solutions - 1,176 solutions fewer than the 3,306 agreed on at the start of the project.

In another significant development involving this project, the auditor general reported that the HAJ diverted approximately $49 million earmarked for the JEHP to the Hills of Boscobel and Whitehall 3 housing developments before receiving Cabinet approval. The rescope was done by way of change orders dated between April 2014 and June 2015.

The auditor general said the HAJ's weak project management contributed to significant delays on the Hills of Boscobel and Whitehall 3 housing developments, which both suffered time overruns of 856 days and 777 days, respectively.

The delays, according to Monroe Ellis, have contributed to cost overruns of $682 million.

The monitoring reports prepared by the HAJ disclosed that soil suitability, change to design, and rescope of works contributed to the overruns. The HAJ has projected that the Hills of Boscobel will suffer a loss of at least $318 million after factoring in cost overruns of $519 million.

Monroe Ellis recommended that immediate action be taken to review the governance arrangements and project-management practices of the HAJ.

edmond.campbell@gleanerjm.com