GPL’s lack of supervision of Chinese contractor led to US6M cost overruns

Aug 23, 2015 News

An explosive evaluation report of sacked Chief Executive Officer (CEO) of the Guyana Power and Light Inc. (GPL) is continuing to raise worrying questions about the management of that state-owned company.
The Board of Directors in a scathing report that came to light on Friday singled out three major multi-billion dollar projects which were badly mismanaged.
The Board, headed by Winston Brassington, is claiming that it was sidelined by the CEO, Bharat Dindyal, who was sacked over a week ago following an embarrassing video of him clashing with his deputy, Colin Welch, over the suspension of two staffers.
The Board in an evaluation report to former Prime Minister Sam Hinds, in December last year, recommended that Dindyal’s contract not be renewed and his performance was poor, especially with regards to the management of projects.
The former CEO was arrogant and failed to report to the Board, even challenging the authority and qualifications of the Directors.

Bharat Dindyal (r) and Chairman, Winston Brassington

The internal turmoil within GPL would come as a surprise to many.
The power company, with over 170,000 subscribers, had been under pressure to reduce blackouts and its technical and commercial losses, with billions invested in infrastructure in recent years.
But with little to show, GPL and its management have been facing increasing fire, especially when it was learnt that the former CEO was taking home over $6M monthly. He had been working the entire year without a contract.
GPL’s Infrastructure Development Project, which included the building of seven sub-stations and running new transmission lines along the Coast, was one project that the Board was unhappy about.
This project had an initial contract period of 912 days and was expected to be completed in March 2013. The initial scope of works was prepared by GPL with significant input by the CEO. However, according to the Chairman, due to subsequent changes in the scope of works in November 2011, the completion date of the project was extended by a further 180 days, with a revised completion date of September 06, 2013.
US$6M over
As a result, the overall contract price jumped from US$32M to US$38M.
The timeframe was again extended to March 2014 and then to October 2014.
Brassington and the Board placed the blame squarely on Dindyal’s management. While a Supervising Engineer was hired, the Board insisted that as the client, GPL was responsible.
“The length of time taken to complete the project begs the question whether more should have been done via proper planning, scope of works and oversight of the supervising engineer and contractor. GPL’s management appeared to have adopted a “hands-off” approach and laissez-faire attitude to the oversight of the project.”
The Board was also angry over the 26 megawatts Wartsila plant at Vreed-en-Hoop, West Coast Demerara.
In September 2012, a US$26.59M turnkey contract was entered with Wartsila for the plant. The plant consists of three engines and commercial operation was projected for the third quarter of 2014.
GPL retained responsibility for the construction of all foundation works required for the project. In the absence of the final designs, which were to be provided by Wartsila, GPL tendered for the foundations of the engines based on preliminary quantities.
A contract was awarded to Correia and Correia Ltd. for the sum of $483M with the contract period slated to be four months.
As of December last year, the foundation works were incomplete with the overall costs ballooning to over $1B. “Additionally, associated works for the construction of a wharf and pipe line also encountered delays and cost overruns. The final cost on this project remains uncertain,” the Board said in the evaluation report.
Since 2012, the Board requested the preparation of a detailed brief, project plan, scope of works and budget on the project.
However, Dindyal failed to submit any. “Indeed it appears that no project plan (particularly of the GPL component of the works) was ever developed for the project. There is a chronic lack of planning and proper management of capital projects in the organization,” the report said.
No Plan
Another project that was poorly managed was the US$5.5M Sustainable Operation of the Electricity Sector and Improved Quality of Service.
This investment was viewed as essential for the reduction of technical and commercial losses. As of last December, the project was “extremely” delayed.
“Indeed, despite being the administrator of the project, GPL appears not to have a project plan or operating plan for the project. The Board is extremely concerned on the management of this project as it is the precursor to the upcoming loan agreement with the 1DB for a US$64M Project. Management again depicts “hands-off’ approach and laissez-faire attitude towards the execution of the project.”
The report said that while it is recognised that the CEO is not solely responsible for the administration of GPL’s capital programmes, the lack of proper project management and planning speaks to his approach to management “(or lack thereof)”.
“As the head of management, he is ultimately accountable for the proper management of GPL’s capital programme and expenditure and as such is responsible for ensuring that the relevant systems are in place to ensure achievement.”
The report has raised serious questions why the previous administration of the People’s Progressive Party/Civic (PPP/C) never took actions despite the turmoil between Dindyal and his Board.

1 thoughts on “GPL’s lack of supervision of Chinese contractor led to US6M cost overruns”

jd brotherscontracting June 4, 2016 at 2:57 am

Absolutely not a good idea to do the construction. It should be done in the exact time it was scheduled to be finished. It should be better if they start to plan it very carefully and hire a legitimate company that has high quality work provided to their costumers.