Election Fever and a CNY Bonanza....

Aaahh... it's the season of double give-aways and the name of the company says it all.

The story from NST provides scarce details on whether it was an open tender or the negotiated type (wink, wink) so favoured by the authorities that tend to add another 40 to 50% variation orders as the project develops its own profit generating spin-offs.

A few comparisons will help:

According to the article,
A similar airport was built about 1998 near Bintulu for RM380m (Deferred Payment Scheme)

10 years later, a smaller airport is being built - let us assume it is 30% smaller overall(runway length is the same). The price increase is derived from

700m/380m x 1.3% or 239%

for a 20% downsize, the price increase is

700/380 x 1.2 or 221%

The price increase appears reasonable after about 10 years after taking into account inflation, building materials and labour increases.

A more comprehensive comparison should be made with airports built around the same time and I found this article that looks interesting.

This B747-rated airport was completed in 1999 at a cost of 230crore or US$58.080m or RM188.337m (all at current money rates).

The article does not specify about land costs but "1300 acres of land was acquired for the construction of the airport from about 2600 land owners and 822 families were resettled under a rehabilitation package" but it appears that land costs are a separate account.

The new airport in Malaysia too does not provide more details like land costs apart from being of "international standard" - such are the types of contracts generously awarded under the OSA regime that many in power will forget the minor details after some years.

Now the Indians could build their airport for RM188m while we doled out RM380m and still continue with the preferred contractor scheme.

Sure some alarm bills should be ringing?
(Click on the clock and watch the action!)

Graphics: Thanks to http://www.animationlibrary.com/animation/25495/Alarm_jumps_2/