Massive cost overrun in infrastructure projects in Singapore in recent years

The media reported on Thu (‘Final stage of Circle Line to cost $4.85b‘, 11 Apr) that the final stretch of Circle Line which would add three more stations linking Marina Bay to HarbourFront is expected to cost $4.85 billion. But in 2015, it was projected that it should cost only $3.7 billion. Hence, there is a discrepancy of $1.15 billion from the initial projection.

In recent years, the costs of a number of infrastructure projects undertaken in Singapore have also deviated from their initial projections.

Marina Coastal Expressway

For example in 2007, the government decided to give approval for LTA to build the 5 km long Marina Coastal Expressway (MCE) at a cost of $2.5 billion.

At the time, the government said, “The MCE will cater to the projected increase in traffic volume generated by the high-density developments in the Marina Bay area and also serve as an essential transport link from the Marina Bay to the rest of the island.”

The project was expected to be completed by 2013. About 2 years later at the ground breaking ceremony of MCE on 28 Apr 2009, in its press release, LTA said it had awarded contracts worth about $4.1 billion for the construction of the MCE.

There was a huge discrepancy of $1.6 billion.

Downtown Line

In 2012, the cost of Downtown Line project was reported to have “soared” by 70% (“Downtown Line costs soar by more than 70%“).

ST reported, “A spike in construction cost has contributed to the MRT Downtown Line bill rising by more than 70 per cent from an original estimate of $12 billion to $20.7 billion.”

“Half of this $8.7 billion increase was attributed to a sharp rise in construction cost, with the other half linked to a number of changes to the project.”

When the report came out, LTA responded by saying that it would “take steps” like “inviting more firms to bid for projects” to rein in prices.

Jewel at Changi

Source: CAG

Then we have the famous Jewel at Changi. The project was projected to cost $1.47 billion in an announcement in Dec 2013 (“Project Jewel at Changi Airport to cost $1.47b“).

This project is a joint venture between the Changi Airport Group (CAG) and CapitaMalls Asia. CAG is the venture’s majority shareholder, with a 51 per cent stake with CapitaMalls Asia (CMA) owning the remaining 49 per cent. CAG is wholly owned by the Singapore government and run by Temasek while Temasek is the controlling shareholder of Captaland which owns CMA.

It is touted to be the iconic centre piece of the Changi Airport and was specially announced by Prime Minister Lee Hsien Loong during the National Day Rally in 2013.

However, when the Jewel opened its doors to the public for preview last week (11 Apr), the media reported that the final cost of the project was already $1.7 billion, or $230 million more.

So, the question is, who is paying for all these cost overruns?

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