The Corruption and kickbacks at UNRA and KCCA that are responsible for the high cost of Road Construction in Uganda
The unit cost per kilometre on average in Uganda costs between $750,000 and $1m (Shs2.5b to Shs3.5b) while the same in Kenya goes for $300,000 (approximately Shs1b) and $330,000 (Shs1.1b) in Rwanda, a country with a mountainous terrain. Recently it was alleged that KCCA is paying as much 14 billion shillings per kilometer to construct city roads. KCCA denies this figure by alleging that before reaching the UGX 14bn per kilometer claim, those alleging this cost used a wrong formula of dividing the amount available ($288m) by the number of kilometers (69.7km) without considering other aspects of the road works. President M7 is convinced that the exaggerated prices are due to high prevailing corruption in public agencies. We agree with the president that the exaggerated prices are due to corruption, nepotism and incompetence.
Generous financing provisions that allow flexible contract financing rather than fixed price contracts
Flexible result based contracts create a situation where the government pays all the expenses incurred by the Contractor to deliver the best possible product. Under this model,”cost overruns and delays are not the contractor’s problem — they are the government’s problem. The government bears the risks of the contractor’s incompetence and fraudulent activity by paying a higher price for the end product than it would pay if it agreed to a fixed price contract.
Under a fixed price contract, “it’s up to the contractor to figure out how to operate efficiently by putting in place efficient work methods, adopting new technologies and properly supervising its work force. Adjusting to the fixed-price model is a challenge most contractors which have long had the luxury of moving slowly and inefficiently due to the knowledge that the government will pay for the inefficiency.
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