How to stop inflation of contract costs

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By Simon J. Mone

Costs of service provision in recent years have become way too high. Variations continue to spin expectations between service provider and clients.

All service providers seem to sing from the same hymn book, when it comes to cash bonanza. Does not matter whether be it services, supplies or works, every contract is now performing well over 130% of actual values. Prices are horrendous.

Something is baffling and as one manager stated, “everybody has resigned to let it continue that way”. In justifying high costs, many reasons are always derived: complexity of doing the job, rising costs of materials, transport and labour, different site conditions from what contract specifications show, etc.

Whereas some reasons are truly genuine, others are annoying. Such costs shoot up due to ‘gamesmanship’ by service providers. Especially when quality of the work is not commensurate with amount of money paid for.

So why things are going wayward now-a-days, certain factors have significantly changed. To stop it, at least three things must happen quickly.

First, there is pressure on districts to utilise unspent moneys before end of financial year. So for fear of losing unspent money to central government, districts award unbelievable contracts so they can be seen to have finished the funds. They loathe the idea of receiving less money in the new financial year. Districts ought to plan better and use all allocated money in time.

Secondly, staff that process payments for service providers are clearly under-paid. They handle hundreds of millions of shillings most times. And yet they take home little money, which today cannot adequately meet their essential needs. Thus, it becomes difficult to resist temptation of putting pressure on the service provider. Salary of workers should improve in order to stop inflation of contract costs. Workers’ salaries across organisations show a big inequality. And naturally, this creates discontent. So many workers are forced to try some other ways to catch up with their counterparts.

After all, they see huge sums of money seep through their hands, so they get involved in some dealings with service providers. That is why some quotations raise eyebrows. Illegal figures are included in order to partake of a piece of the contract after a service provider is paid. Government’s emphasis of prioritising expenditure on infrastructure is good. But costs of these services and infrastructure are always going to be inflated. So, failure to raise salaries will translate into workers getting extra income through certain dealings with service providers. And stopping this practice is not easy.

A good balance must be found between remuneration of workers and providing services at reasonable costs. So that workers remain content with their earning. And will be able to keep their integrity intact by resisting temptation. If these minimum conditions don’t prevail, we will see more cases of people photocopying on A4 sized paper at costs of shillings 100,000.

And infrastructure contracts will cost exorbitant amounts. Service providers are desperate to win contracts. And coupled with vulnerable integrity of many workers, they are easily compromised. So they will pick the money from service providers.

Therefore, in a bid to recover their money, service providers quote high. Or do a shoddy job so that they make profit, their main aim. Today without bribe, performance of contracts is difficult. Certificates are intentionally delayed. And eventually, service providers yield.

So as a minimum, certain conditions must be met to avoid compromising quality and inflation of contracts. At the moment, they are not being met.

The writer is a civil engineer