Page 1 of 24 OVERALL FINDINGS, OBSERVATIONS, COMMENTS & REMARKS ON THE PROJECT ENGINEERING IMPLEMENTATION/MANAGEMENT ASPECTS By: Engr. Norberto Oller From the Chronology and Events, and other Sources August 23, 2004 - formation of Iligan City Solid Waste Management Board- Executive Order No. 79 various meetings, field trips to Solid Waste Facilities site (Pagadian, Zamboanga, Malolos, Los Baños, Barangays in Metro Manila, etc) and Bonbonon and other City Barangays - Listening by the ICSWMB of various SWM Technology proponents ____ 4, 2005 – Order of Mayor Cruz for a Task Force to prepare a Feasibility Study report “ for loan requirement from the banks “ September 14, 2005 - Submission of Feasibility Study September 15, 2005 - Meeting and presentations with the DBP officials, Mayor Lawrence Cruz and Councilor Ruiz (MOA of 9M ready for signing by the City Mayor) September 23, 2005 – Letter of Intent from the City Mayor submitted to DBP for loan of P180M September 26, 2005 – Certificate on availability of funds March 23, 2006 - Engr. Quitos designated as Project Manager by virtue of Executive Order No. 101 S. 2006 June 22, 2006 - Loan approval with DBP for P163M August 9, 2006 - First trance ( P69M ) August 16, 2006 - Site development started Remarks: a. It took two (2) years to start site development from the formation of ICSWMB; and b. It took eleven (11) months from first availability of funds to start site devel- opment
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Task Force CMRCF - TECHNICAL - By Engr Norberto Oller
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Page 1 of 24
OVERALL FINDINGS, OBSERVATIONS, COMMENTS & REMARKS ON THE
August 23, 2004 - formation of Iligan City Solid Waste Management Board- Executive
Order No. 79 various meetings, field trips to Solid Waste Facilities site
(Pagadian, Zamboanga, Malolos, Los Baños, Barangays in Metro
Manila, etc) and Bonbonon and other City Barangays
- Listening by the ICSWMB of various SWM Technology proponents
____ 4, 2005 – Order of Mayor Cruz for a Task Force to prepare a Feasibility Study
report “ for loan requirement from the banks “
September 14, 2005 - Submission of Feasibility Study
September 15, 2005 - Meeting and presentations with the DBP officials, Mayor
Lawrence Cruz and Councilor Ruiz (MOA of 9M ready for
signing by the City Mayor)
September 23, 2005 – Letter of Intent from the City Mayor submitted to DBP for loan of
P180M
September 26, 2005 – Certificate on availability of funds
March 23, 2006 - Engr. Quitos designated as Project Manager by virtue of Executive
Order No. 101 S. 2006
June 22, 2006 - Loan approval with DBP for P163M
August 9, 2006 - First trance ( P69M )
August 16, 2006 - Site development started
Remarks:
a. It took two (2) years to start site development from the formation of
ICSWMB; and
b. It took eleven (11) months from first availability of funds to start site devel-
opment
Page 2 of 24
BIDDINGS:
July 5, 2006 - Electronic copy for bid documents to BAC for supply and installation of
CMRCF equipment, infrastructure and appurtenances
July 25-26, 2006- Councilor Ruiz, Engr. Quitos, ML Lagaras, Taban and R. Dumadag visit
Pulilan, Bulacan (LACTO-ASIA) to finalize number of bins for CMRCF
Remarks:
a. It was specifically made known through personal interview that some technologi-
cal document used for bidding were supplied by LACTO-ASIA
August 18-24, 2006 – Publication for Invitation to bid and qualify
MAJOR CONTRACTS:
A. BRIMA CONSTRUCTION (November 3, 2008 , signed) buildings, etc.
for 150 calendar days
P 34,576,359.21
B. DACODECO Package B ( March 31, 2010, signed )
for 150 calendar days
P 27,584, 055.04
C. LACTO-ASIA Package A ( July 8, 2010, signed )
for 150 calendar days
P 29, 683, 485. 77
Remarks:
All these contracts had no proper date of completion.
Total amount for three packages is P 91, 843, 900. 02 with P197, 819,000.00 as total
cost of project. Therefore, for the three, the amount of contract is
91, 843, 900.02 = 46.43%
Page 3 of 24
197,819,000.00
The major component of the CMRCF is only 46.43% of the total project cost.
IRR- RULE IX WASTE SEGREGATION AT SOURCE
Sect. 1. Waste Segregation & Volume reduction at Source.- Volume reduction at the
source shall be the first priority of the ecological SWM system. All LGUs shall actively pro-
mote among its constituencies the reduction and minimization of wastes generated at
source; responsibility for sorting and segregation of biodegradable and non-biodegradable
wastes shall be at the household level, business, commercial, industrial and institutional
centers, and in all other point sources of solid wastes.
actively promote –-> none
no mention of % reduction, much more 25%
no mention of how said reduction be made, unlike in the following rule (Rule X)
wherein the how are spelled out .
RESOLUTION 09-373 STRENGTHENING R.A. 9003
Sect. 20a. Source Reduction.- Waste generators shall think of ways to reduce (generation
of wastes before they enter the solid waste stream).
Sect. 1, Rule IX of IRR specifies LGU's to actively campaign, the local resolution ( in support
of R.A. 9003 ) conferred upon the waste generators the “how” to reduce wastes. There is no
complementarity between the law and the resolution.
3. Per contract, all three should have been completed by December 2010. The years 2011,
2012 and the first half of 2013 would have been used to:
a. make the CMRCF be fully operational; b. know its defects, flaws, problems and corrections made; c. the marketing aspect would have been put in place; d. barangay (and residence) participation would have been in place
Sadly, because of poor project management, all the above ( a,b,c and d ) were not real-
ized and the problem is inherited by the new administration.
Page 4 of 24
ANALYSIS: INTEREST EXPENSES Re: CMRCF
For the loan of P163, 638,000 from DBP signed June 22, 2006, the Project Proponent
of the City Material Recovery and Composting Facility made these withdrawals, to wit:
August 9, 2006 - P69, 978,000.00
January 31, 2009 - P78, 050,000.00
January 31, 2012 - P15, 610,000.00
On first glance, the tranches made looks remarkable, one every three (3) years. On
deeper analysis, it will show such withdrawals caused the project (and the city) unneces-
sary interest expense.
This project did not have cash disbursement schedule – the amount of expenses that
are estimated to be incurred within, say a 3, 6, or 12 months’ time. Had it have such, the
tranches from the bank would have made to coincide with the schedule of payments- such
that the amount withdrawn from the bank would just be enough (or a little more than the
estimated expenses).
Remember, that the interest payment (and that of the principal) starts upon with-
drawal of any amount. Any amount withdrawn and unused after 6 or 12 months incurred
unnecessary interest expense.
The summary (and subsequent computation) will show the unnecessary interest
payments, corresponding to the amounts, cash-on-hand after each indicated dates.
The interest expense is computed at:
COH x 10% x 6/12 = Interest Expense
Page 5 of 24
From the SUMMARY: SUBSIDIARY LEDGER
INTEREST EXPENSES
*2 - P3,323,000 6 months
*3 - P3,498,000 12 months
*4 - P713,000 3 months
*5 - P3,993,000 6 months
*6 - P3,723,000 6 months
*7 - P3,579,000 6 months
*8 - P2,569,000 6 months
*9 - P1,822,000 6 months
*10 - P1,113,000 6 months
*11 - P356,000 6 months
*12 - P862,000 6 months
*13 - P706,000 6 months
*14 - P471,000 4 months to date ( Jan 31,2014) ________________
P 26,729,000
Had there been a cash disbursement schedule tied with the withdrawals from the
bank to insure say P2, 000,000 cash-on-hand at the end of every 6 months, the amount for
interest expenses (unnecessary) for the above periods would have been minimized to
July 31, 2012 7,055,048 15,610,000(03 ) 22,665,048
Dec 31, 2012 17,252,420 *12 5,412,628
June 30, 2013 14,137,615 *13
Sept 30, 2013 14,144,881 *14 3,107,533
Legend:
*1. Amount paid to DBP upon loan approval
01 - 1st tranche
02 - 2nd tranche
03 - 3rd tranche
Page 7 of 24
*3 – P 18,748,706 (December 28, 2007 adjustment on unrecorded debit memo for fur-
ther verification due to insufficient data
= 2,000,000 x 10% x 13 periods
= 2,600,000
The interest expense that would have been prevented or minimized would be:
= P 26,729,000
- 2,600,000
______________________
P 24,129,000 total unnecessary interest expenses in CMRCF project (due to early
drawdowns)
OBSERVATIONS (major):
- Seemingly, a lot of irregularities plagued the projects, to wit:
a. Per chronology of events from Sept. 14, 2005 (Submission of Feasibility Study)
to July 8, 2010 (Contract signed between Lacto-Asia and the City Government
of Iligan)
a1. Four (4) years and ten (10) months from FS to contract signing
a2. This contract was supposedly for 150 calendar days completion (or Dec.8, 2010 )
but was actually “delivered and turned over” March 2011 – delayed by 3months. Same
equipment set up started operation September 23, 2012 (another period of 1 ½ years ),
but still not fully commissioned.
b. From documents (Solid Waste Management Project- Accomplishment Report )
July 14, 2010 April 4, 2012
b1. Lacto-Asia- CMRCF Equipment ( Package B )
P 29,683, 485.27 – project cost
July 14, 2010 – project started
Page 8 of 24
Duration - 150 days
Dec. 10, 2010 - target date of completion
1st Time extension - 92 days (Dec 10, 2010 to march 12, 2011)
2nd time extension - 19 days (March 12, 2011 to March 31, 2011)
Suspension Order - April 1, 2011 (unavailability of power supply/transformer)
“Project had test run on September 24, 2012 but without actual capacity run- NO
COMMISSIONING DONE”
b2. BRIMA- BUILDINGS
P 34,576,359.21 - project cost
3,385,988.60 - 1st Extra Works
2,188,001.19 - 2nd Extra Works
-P 5,573,989 (Total of Extra Works =16.10% of project cost)
40,150,349.00 - total cost
Nov. 26, 2008 - date started
Duration - 150 days
April 16, 2009 - target date of completion
June 26,2009 - revised target date (1st)
Sept 26, 2009 - revised target date (2nd)
“No record of completion date”
June 30, 2011 - last payment (final Billing)
b2. Questionable entries in costs are:
P 3,101,502 - lump sum bid for special items facilities to the engineer
25,680 - five (5) entries- miscellaneous works (reproduction of plans,
Supporting documents, contracts, testing of materials and
permit
Fees (P 128,400- total)
128,400 - similar entries for administrative building only
___________________________
Page 9 of 24
P 3,358,302 -- total
--- A 16.12% Extra Works is too much
--- How would one consider the above amount P 3, 358,302? Highly questionable?
C. DACODECO – Package A
P 27,584,055.53 - contract amount
1,481,128.34 - Change Order No. 1
3,130,309.62 - Extra Work No. 1
1,691,627.02 - Extra Work No. 2
-P 6,305,065.00 total Change order, Extra works 1&2
-22.85% of contract amount
33,889,120.52 - total
May 18, 2010 - date started
Duration - 150 days
Oct. 14, 2010 - target date of completion
Feb. 21,2011 - revised target date, (1st)
May 5, 2011 - revised target date, (2nd)
May 21,2011 - revised target date, (3rd)
“NO record of Completion date”
March 2, 2011 - record of last payment at 98.99% accomplishment
P128,800 - recorded unit price for “miscellaneous works for
(Reproduction of plans, supporting documents, contracts,
Testing of materials and permit fees)”
“Compare this with BRIMA whose amount for same
Miscellaneous Works is P 128,400”
OVERALL REMARKS:
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1. The Project Proponent clearly does not have experience in project man-
agement.
a. People selected similarly lack skills and know-how in project design,
engineering, implementation and overall management
2. There was clear reliance and preferential treatment with a contractor,
from the preparation of the feasibility study, design and consequent
“marketing” of product. Prices and cost of equipment were bloated. ---
LACTO-ASIA
3. In two (2) other contractors:
a. The Extra Works of 16.12% and 22.85% of contract amounts are
subject to Annex “E” Contract Implementation Guidelines for the
Procurement of Infrastructure Projects of IRR-A of R.A. 9184 yet
none were made.
b. There were no record of penalties despite the many revision of
target (contracted completion dates). One contractor, DACODECO,
contributed to so much delay, yet no action was ever made.
c. Both use similar (almost) unit price in a “miscellaneous” item that
one could only think of a very glaring “uniform treatment.”
4. Three (3) units in the financial report “do not have a clear explanation”
D1.from actual expenditure as of 12/31/2013
P 19,257,254.50 -garbage trucks and related expenses
6,228,356.00 - repair and upgrading of seven (7) units existing
Garbage trucks
4,808,847.32 - other expenses (payloader)
______________________
30,294,457.82 - government requirement for the SWM project
“an explanation should be made”
D2. From Subsidiary Ledger (July 1, 2005 to September 30,2013)
P 18,748,706.90 -posted Dec. 28, 2007 “Adjustment on Unrecorded Debit Memo-Trade Operations dated 10/09/07 (for further verification due to insufficient data) “an explanation should be made”
5. The DBP Loan Agreement allowed multiple drawdowns. Once a draw-
down is made, the terms of payment start (principal and interest pay-ments). Had there been a “serious effort in projecting (and making) a pro-
Page 11 of 24
ject disbursement (or expense) schedule”, the drawdowns- amount and number- would have been so scheduled so as to get just the right amount (with little buffer or extra) such that at the end of every 6 months of 12months, the remaining cash-on-hand would be minimal, thereby in-curring high and premature interest payments.
The effect of no proper financial management is the unnecessary premature interest expense of about P 24,129,000.00 Clearly, not only was there poor project management, there was also MANIPULATED financial mismanagement.
CONCLUSION: The major contributions to the tragic result of the project: a. Poor management (project/financial) b. Personality infusion c. Political patronage d. Inadequate experienced personnel e. Non-engagement of proper consultants f. Non-involvement of civil society organizations
PROJECT CONCEPT ANALYSIS
165 165
40? 125
BCS BCS
PSD PSD
PSD Residual residual (+45)
H.M.H.R Hos FuP H.M.H.R. HoS FuP
BMRF (40) B.M.R.F. (40)
Page 12 of 24
85 sorted M 80 sorted M
raw raw
materials materials
compost
residual compost
residual
RESIDUAL AREA RESIDUAL AREA
CURRENT SITUATION
PSD
165
80
raw materials
85
compost
residual
CMRCF (80 tpd) C.M.R.C.F.
H.M.H.R. Hos FuP
CMRCF
Page 13 of 24
option:
Controlled Dumpsite—short/medium term
Sanitary Landfill--- Medium and Long term
PROJECT CONCEPT:
1. Source Reduction (20%)
- Highly unrealistic
- Highly un-implementable
- Needs so much effort or campaign
- Ningas Cogon mentality of the people
2. Use of barangay Materials Recovery and Facility
Areas of concern:
- Continuing budget support from city
- Concept of marketing (highly a dream)
- Needs people to manage and sell
- Space- a question with neighbors
- Needs Barangay collection facilities and people collector
- Residual- for transport to CMRCF or final residual area
3. CMRCF
Areas of concern:
- Budget
Page 14 of 24
- People / Organization
- Operational/ management/ Financial support
- Facilities (dumptrucks, payloaders, etc…)
- Raw materials (for compost)
- Facility maintenance
- Areas ---- sorted materials / residuals
OBSERVATIONS AT SITIO BANGKO, BARANGAY BONBONON: ( JANUARY 07, 2014)
Today, we went to Bonbonon- site of CMRCF
1. Road is uphill most of the time, paved
-will mean more maintenance cost for delivery trucks
2. Area – approach, concreted is too steep downhill. Vehicle/car may slip
3. Bodegas are full of segregated materials, still inside, are eating of lot of space. No end to
disposal problem.
4. Area outside are filled with segregated materials, again eating a lot space- no one re-
design
5. Compost bins – may filled up – appears not moving, or no takers
6. Equipment set-up
a. Receiving Hopper- of thin material will erode in a year or two.
Supports-to light duty-
b. Materials dumped are truly mixed- plastic, cartons, papers, organic, etc.. The
Page 15 of 24
feeding to a small feed conveyor was too slow.
c. conveyors are slow speed, not even 10% filled, plenty of segregates (#20+)
d. Rotary Screen – only one ( 1 )- purely to segregate organic (and small size) from
plastics
e. Hammermill- 2 units, almost empty, (feed end)
f. Compactor – 28 units
-Manually feed by a wheel barrow from the end-of-conveyor-
one wb/45 minutes
-“droppings (wet) goes to floor - had to be swept
g. waste vault – no access for cleaning and withdrawal
h. Transformer- MAIN
- the 3 transformers initially delivered (off-specs and second-hand)
are still inside the compound.
• From the time we arrived (≈9am) up to time we left (≈11am), there was no garbage
delivered
• Discharge points (2 at both ends) of hopper are manned by a person each,
Hooking the garbage to a receiving conveyor. Feed slow, controlled
• All conveyors seem to slow
• All conveyors barely filled
• So much “sorter” at practically all conveyors
• Ground too messy
• Sorted or segregated materials go to another place or bins for further sorting- then
what?
• Only one rotary screen. Normally should have been in tandem so if one conks out,
the other one should remain, no disruption in operation.
• Feed to the rotary composter drums (28) is via conveyor, then to a wheelbarrow.
Discharge with only one /28 RCD was operating.
Page 16 of 24
• Again, spill outs for RCDrums goes down to concrete floor and has to be swept.
Remarks:
A. Manpower
1.too labor intensive- so many sorters
- worker at almost all equipment
-so much manual activities
-so much work, rework , re-rework
• Delivery of garbage
• Feeding to conveyors- CMRCF equipment
• Sorting/segregation
• Watching at/feed and head end (conveyors/rotary screens)
• Removal of sorted materials
• Transfer of dump material from head-
• Sweeping of floors CMRCF buildings, warehouses, open areas)
QUESTIONS:
• Where will the segregated materials go?
• From composting bins, where will the compost go?
• How are hazardous (hospital) waste delivered to its storage area- no means of ac-
cess
Overall Remarks:
1. Project: A failure!
A1. In area of capacity:
Page 17 of 24
Actual garbage collected is 165 tpd. Capacity of CMRCF is only 80 tpd. Reliance on
sources and barangays to reduce by 80tpd not achieved due to: (i) poor Information Educa-
tion Campaign; (ii) misinterpretation of R.A. 9003; (iii) unrealistic assumptions
B. Project Implementation:
• Two major contractors, BRIMA and DACODECO incurred so much delays but with-
out penalties whatsoever
• Same contractors had extra works beyond 10% as allowed by law, but appeared tol-
erated as extra works/changed orders were split to small sizes
The other contractor, LACTO-ASIA plainly went into Dry Run/ Test Run without proper
presentation for a real commissioning run. Yet, the contract was deemed accept-
ed/completed.
• The personnel (City) assigned to oversee. Administration portion of the project took
so long to implement then- with so much cost (P44M).
C. Financial Management
• The project does not have a real honest-to-goodness implementation schedule of
start and implementation such that it did not have a cash disbursement/expense schedule.
With the above, the drawdowns from the bank, DBP would have been so contacted and
scheduled as to have only a minimum amount at the end- every 6 months period, which
would have resulted to minimum interest charges. Per our findings, the City could have
avoided aprroximately P24M in interest payment. Interest payment from Aug 06->Feb2012
is P56,675,000.00
• On administration implementation part of the projects, the salaries and wages was
approximately P11M which was about 25% of the cost, quite unrealistic, and which were
during 2007 & 2009/2010- campaign and election period.
• From financial reports –“subsidiary ledgers”, “summary of expenses and appropria-