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The ERL Extension Project From KLIA to KLIA2

The ERL Extension Project From KLIA to KLIA2

KLEPTOCRAZY SCORECARD

The ERL Extension Project From KLIA to KLIA2

Financial Loss

Importance of Project

Summary:
Coming soon

70%

PROBLEMATIC

Express Rail Link (ERL) is a high-speed rail link commuter service that connects Kuala Lumpur Sentral (KL Sentral) to Kuala Lumpur International Airport (KLIA). The ERL distance is 57km, stops at 3 intermediate stations i.e. Bandar Tasik Selatan, Putrajaya and Salak Tinggi with a total construction cost of RM2.4 billion. It provides 2 types of services i.e. ERL Express and ERL Transit. KLIA ERL Extension Project would serve as the main public transport connecting KLIA main terminal to klia2 with a distance of 2.16km. This project was direct negotiated using design and built method by Express Rail Link Sdn. Bhd. (ERLSB). The project cost of RM100 millions is funded by the Ministry of Transport. Rail Operations Control is subjected to the Railways Act 1991 and later repealed by the Land Public Transport Act 2010. Through the concession agreement dated 25th August 1997, ERLSB was given the rights to operate the ERL from KL Sentral to KLIA. Superintendent Officer (SO) of the project is the Secretary-General (DG) of the Ministry of Transport. This project started on 15th July 2011 was scheduled to complete by 31st October 2012. However, it was only completed on 28th September 2013. Consequently, on 2nd May 2014, ERLSB started its operation after obtaining approval to extend its services from KLIA to KLIA2.

The audit performed from January to April 2015 at the Ministry of Transport Malaysia, Economic Planning Unit (EPU), Public Private Partnership Unit (UKAS), ERLSB and site visits at ERL klia2 in Sepang. The Audit revealed that ERL extension project was completed and started its operation on 2nd May 2014. This project achieved the rail link connection between KLIA and klia2 alongside with the opening of klia2 terminal. This connection increased the number of ERL‟s passengers by 43.2% from 6.44 million in 2013 to 9.23 million in 2014. However, there are some weaknesses caused the Government did not obtained best value for money for the expenses incurred. Some of the weaknesses identified are as follows:

i. Price negotiations were not conducted prior to the submission of project cost estimates for the approval of the Economic Council (EC);

ii. Supplemental Concession Agreement was not finalized to date despite the ERL services from KLIA to klia2 commenced operation since 2nd May 2014;

iii. Compensation claimed by ERLSB amounted to RM2.9 billion yet to be finalized. The computation formula of compensation claimed does not benefit and protect the interest of the Government; and iv. The project cost of RM129 million presented by ERLSB in Value Management (VM) lab exceeded the cost approved by the EC of RM100 million. Thus, the objectives of VM for cost saving are not achieved.

 

7 Comments on this Post

  1. ERL Extension which connects KLIA to KLIA 2 has increased the passengers by 43.2%- 6.4mil in 2013 to 9.23 in 2014. Firstly, the project started in July 2011 and was scheduled to completed in October 2012 but it was only completed in September 2013. But only in May 2014 ERL started its operation which was a year past its schedule. What were the reasons for its delay? MOT did not negotiate the project cost of RM100mil but it was negotiated using design and build approach. This approach is a contracting approach in which both project is sourced to an owner that assumes responsibility of designand construction. It doesn’t make use of competitive bidding, leading to loss of public confidence. MOT should have direct negotiations with ERLSB in order to cut costs. Economic Council has only approved the project fund of RM100mil but it cost a total of RM129mil, RM29mil more than its budget. ERLSB has also claimed compensation of RM2.9 bill. The computation formula is arbitrary and does not benefit the government. How was the amount arrived at? A new formula which benefits both parties should be drawn out to avoid similar problems in the future.

    Reply
  2. Luckystar

    ERL extension that connected between KLIA and KLIA 2 was started on July 2011 and completed on September 2013. A delay of almost one year’s time for this project. This small project was applied “design and built” procurement system which is considered as a fast-tract system, a total distance of only 2.16km between KLIA and KLIA 2, how come it took over two years’ time to complete this small project? What was the reasons to cause this project to be delayed? As applied design and built procurement system, the client should know that this system could cause the cost of the construction project to be higher, why the price negotiations section was no conducted and why the client was not concerned and aware on the cost of the project? Government should aware on every construction project to avoid this similar situation to happen again in the future.

    Reply
  3. Procurement method is design and build. Which means the project is a time constrain project. As i known, the distance is short which this project can considered small size but why it takes 2 years completion and there was delay somemore?
    Government should take initiatif to prevent this kind of situtation happen in future project because delay is common in construction but to certain project. Delay will cause serious impact to the people.

    Reply
  4. Happy boy

    Procurement method is design and build. Which means the project is a time constrain project. As i known, the distance is short which this project can considered small size but why it takes 2 years completion and there was delay somemore?
    Government should take initiatif to prevent this kind of situtation happen in future project because delay is common in construction but to certain project. Delay will cause serious impact to the people.

    Reply
  5. Happy Boy

    Procurement method is design and build. Which means the project is a time constrain project. As i known, the distance is short which this project can considered small size but why it takes 2 years completion and there was delay somemore?
    Government should take initiative to prevent this kind of situation happen in future project because delay is common in construction but to certain project. Delay will cause serious impact to the people.

    Reply
  6. I am not sure where you are getting your info,
    but good topic. I needs to spend some time learning more or understanding more.
    Thanks for magnificent information I was looking for this information for my mission.

    Reply

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