KUALA LUMPUR (July 14): Sabah Pan Borneo Highway Phase 1 is now projected to cost nearly double the original estimate following a change in the implementation model, the Works Ministry said.

Construction works, now based on the Federal Conventional Contractor model, will cost RM24.889 billion compared to RM12.86 billion previously under the project delivery partner model terminated in 2019, according to Deputy Works Minister Datuk Seri Ahmad Maslan.

When the project transitioned under the new model, it required a reassessment of remaining works and project scope, he explained to the Dewan Rakyat on Tuesday.

“The change in implementation method also involved certain financial implications, including the settlement of contractual obligations agreed through a settlement agreement,” he said.

Phase 1A of the project is estimated at RM10.9 billion while Phase 1B stands at RM13.989 billion.

Borneo Highway PDP Sdn Bhd, a joint venture between UEM Group Bhd and MMC Corp Bhd, was the original project delivery partner before the termination, ostensibly on the grounds of national interest.

Besides changes in scope as well as variation of works, unforeseen site conditions, rising construction material prices and utility relocation works also added to the project’s overall costs.

Soil investigations identified potential slope failures that required additional work while a substantial portion of the project involved upgrading existing roads within high-density utility areas that consequently required relocation and upgrades, Ahmad said.

Further, it has been five years since the initial cost evaluation and “the domestic and global construction industries were affected by increases in the prices of key construction materials such as steel, bitumen and cement, in addition to higher machinery and labour costs,” he said.

The government bears the full cost of compensation, losses and administrative expenses related to land acquisition.

To date, the government has paid RM1.2 billion in compensation for the first phase of the Sabah portion and RM737 million for the Sarawak side of the massive highway project connecting Sabah, Sarawak and Brunei.

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