| The HDC’s project delivery deficit
Published Thursday 25thJanuary 2009
The Housing
Development Corporation is one of the organizations being reviewed by
the Uff Commission. Thus far, the HDC has been providing information on
the Cleaver Woods housing project – the one which was the source of the
Prime Minister’s pointed queries to the former Minister of Housing.
Readers may be interested to know that Part 1 of the HDC’s submission,
which is available at
www.constructionenquiry.gov.tt, clarifies that the $10M discrepancy
raised by Mr. Manning was the result of errors on their part.
The HDC’s
ambitious development programme has long been an issue of great national
concern. Reasons for this range from concerns as to whether the target
of 100,000 new homes in a decade was realistic, who is going to be
allocated the new homes, their location in relation to existing
communities – shades of voter padding and coded racism there – the
impact of all these new homes on the property market and so on. The
national housing policy is clearly of great importance.
It is my
contention that the national housing programme is chronically
underperforming, by any measure. This week we focus on the output side –
i.e. the number of new homes built as part of that programme. This
edition of ‘Property Matters’ is an edited version of my submission to
the Uff Commission, in which I set out some questions on the HDC’s and
UdeCOTT’s performance in this arena.
My critique
of the output of new homes since the start of the new policy is set out
in Property Matters of 1st January 2009 ‘Learning Lessons’. That article
states that the output of new homes in the 6-year period 2003-2008 under
the national housing policy is about 24,000 units.
The
National Housing Policy was published by the Ministry of Housing on 18th
September 2002 as ‘Showing Trinidad & Tobago a new Way Home’.
That document can be accessed at
http://phe.gov.tt/home/images/stories/housingpolicy.pdf.
The
Introduction to that policy states that the output target is “…the
construction of 100,000 shelter solutions in the next ten (10) years…”,
which implies an annual average output of 10,000 new homes. That policy
comprises a significant part of public sector construction. Having been
implemented for 6 financial years – the period 2003-2008 - this is an
appropriate stage for a review of the Project Delivery aspect of the
programme. Please note that Project Delivery is listed as one of the
Terms of Reference of the Uff Commission.
The annual
target output of new homes was subsequently reduced to 8,000 as
evidenced by the Budget Statement of the Minister of Finance, which can
be accessed at
http://www.finance.gov.tt/documents/publications/pub90A98A.pdf, at
page 29 of which we are told “…Since 2002 to date the Government has
initiated more than 32,000 housing starts, well in line with our
projected 2020 goal of 8,000 housing starts per year for ten years in
the Public Sector…”.
At the most
elementary level of consideration the proposed output figures are not
being achieved. Even if we adopt the Finance Minister’s statement, the
annual average number of homes started is 32,000/6 = 5,333. It stretches
credibility to suggest that this average output, which is two-thirds of
the goal, is “…well in line with our projected…goal…” – i.e. the
reduced annual target of 8,000 new homes. The total output over the
initial 6-year period is so poor that the only way the ‘projected goal’
could be achieved is for 48,000 new homes to be produced over the
remaining 4 years of the program. That would imply an annual average
output of 12,000 new homes in the next 4 years, an incredible increase.
The doubts
raised by these considerations only deepen when one considers the more
detailed Supplementary Public Sector Investment Program (SPSIP) 2009.
The SPSIP 2009 is the document, published by the Ministry of Finance in
the second half of 2008, which sets out the capital programmes of the
State Enterprises and Statutory Agencies. It is used to compile the
national budget and can be accessed at http://www.finance.gov.tt/documents/publications/pub6EA570.pdf,
where, at page 45, we are told that “…The objective of this programme
is to construct 100,000 housing units over a ten (10) year period.…” and
at page 46, that “…HDC commenced construction of approximately 8,458
units including houses, town houses and apartments which are at various
stages of construction. The total estimated cost of these units is
$2,287.0 million…” .
At the very
least, we are witness to utter confusion over the actual targets. Here
we have confusion over both targets and output, with obvious detriment
to policy review. Clarity as to targets is the pre-condition to
measuring performance. We must be able to measure performance in order
to chart our progress towards an improved construction industry.
Using the
SPSIP, which details its statements, one is able to deduce the origin of
the quoted statements of about 24,000 new homes actually completed
during the course of this programme. 32,000-8,458 = 23,452.
The
executing agency of the Ministry of Housing was the National Housing
Authority (NHA), which agency was subsumed into the Housing Development
Corporation in 2005. We should also note that until 2008, both UDeCOTT
and the HDC had responsibility for producing new homes under the
national housing policy. UDeCOTT’s role is clearly spelt out in the
Introduction to that policy.
This
Commission of Enquiry has the power to call for documents, witnesses or
replies to its queries. It is my view that the HDC should be requested
to state clearly the true number of new homes constructed by State
agencies and private sector partners in the course of fulfilling the
national housing policy. UDeCOTT should be requested to provide output
figures for new housing. Both organizations should be asked to provide
details of out-turn costs for the completed projects.
A further
aspect of this large-scale construction programme which warrants the
attention of the Commission is the extent of variations in the capital
programme of the Ministry of Housing.
That data
is extracted from the Estimates of Expenditure, an annual publication of
the Ministry of Finance. The analysis of variances is a useful policy
tool in measuring performance, since with diligent application it is
possible to improve the accuracy of estimating program costs and
outputs. The extent to which these variances have grown in the 9 years
under examination is astonishing. The rapid growth of the overspend and
the failure to clearly declare targets or achievements all belie the
chronic shortcomings in the construction management/project
management/budgeting aspects of this vital, large-scale national
programme.
The actual
output of new homes is less than half the stated target. That is a major
plank of government policy which has signally failed. Why not use this
opportunity to locate and fix the problems?
Some
serious questions need to be asked, and answered - These would include –
What are the reasons for the poor overall performance in terms of output
of new homes? Was there any significant difference in performance
between NHA/HDC and UDeCOTT? If so, can the reasons for these be
identified? What steps can we take to apply benchmarking in order to
improve performance without sacrificing accountability?
Afra Raymond is a chartered surveyor and a director of Raymond & Pierre
Ltd. Feedback can be sent to afra@raymondandpierre.com.
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