The Papua New Guinea Department ofWorks, which is responsible for all capital works and projects provides sound policy advice on development management relating to building, conserving, managing and assuring quality of provision of capital and natural assets as well as management of the interfaces with the building and construction industries.
1.1. In order to fulfill its mission, the department performs the following functions:
1.2. Objectives intended to guide and direct the department in the performance of its functions include the following in relation to capital works and projects:
The investment criteria of the government are based on the Five-Year Investment Plan of the National Government for the development of services and infrastructure for targeted groups of people.
Feasibility studies are required for all large complex projects. These studies include specifications, cost/benefit analysis, social impact analysis and preliminary sketch plans. The following elements are considered during a feasibility study, depending on the scope of the project:
The level of authorisation is based on a proj ect cycle process set by the National Government, which comprises:
These stages are based on the principle of development needs and recognise a variety of sources of finance. Government resources, loan and grant financing, provincial revenues are all in accordance with the objectives of the National Government of Papua New Guinea.
Projects that have been successfully appraised quality for submission in the Annual Budget, with the exception of some pre-feasibility and further feasibility studies. Projects approved after appraisal actually become budget proposals, which are then submitted for approval by the Resources Management Committee (RMC) and the National Executive Council (NEC). Only those programmes and projects that appear in the Approved Budget are then progressed through to Preparation for Start-Up.
Implementation of programmes and projects extending beyond the first budget year of commencement are automatically provided for in subsequent annual budgets unless formally terminated. Annual budgets are re-assessed using the quarterly review and annual report processes.
A completed project ceases to be categorised as a project in the Annual Budget, but is either diffused or consolidated within a recurrent activities programme or restyled as a recurrent activity if requiring a separate budget line entry.
Projects are sometimes funded by foreign aid. However, funds for foreign-aided projects are included in the annual budgetary funding of such projects. Accounts and records are normally kept by project managers.
The Department of Works is responsible for all capital works to be performed directly or subject to supervision by the Department. Basically this depends on the capacity of the organisation, having regard to available resources.
Currently, there are approved positions of 9,584 but staff on strength number only 2,436. This demonstrates the widespread shortage of staff, particularly among technical and professional categories. Only about twenty percent of the staff are based at headquarters, with the remainder engaged in field operations in all nineteen provinces of the Papua New Guinea.
All preparation of detailed designs for all government projects are handled by the Department of Works. A project design is a comprehensive, detailed document describing all the elements of a project and how they will be implemented. The design includes information on the potential impact of a project environmentally, economically and socially.
The Minister for Finance and Planning establishes the Supply and Tenders Board to control and regulate tenders and contracts for public works. The Minister also makes relevant rules for the procedures at Board meetings, the manner of inviting public tenders and methods of dealing with tenders and related matters.
Where tenders are invited in accordance with the prescribed procedures, the Secretary of the Tenders Board prepares, immediately after the closing date, a schedule of tenders for the Board's consideration. Tenders over the limit of Kina 300,000 are considered and approved by the National Executive Council based on the recommendations of the Tenders Board.
The Board considers tenders in the light of the conditions for tender and specifications and plans thereto. The Board may co-opt or seek the advice of persons with specialised knowledge to assist the Board in its examination of the tenders received. The Board gives consideration to capacity, experience, integrity and status of tenderers and such other matters as it deems relevant. The Board, according to instructions of the Minister, accepts or rejects tenders where the value does not exceed Kina 300,000. Where it exceeds Kina 300,000, it recommends to the Minister the acceptance or rejection of the tenders. Where a Minister receives a recommendation, he submits to the National Executive Council all the relevant details for the Council's decision. Thereafter the successful tender is advised.
All projects come under the supervision of Project Managers who ensure that each project is being implemented according to prescribed specifications and plans. Managers carefully analyse variances and take corrective measures in consultation with decision makers. Managers also report major problems and conduct project reviews comparing actual achievements with estimated targets. They ensure that unnecessary write-ups are avoided and sufficient justification is provided where warranted.
Monthly progress reports to management are provided by Project Managers who also provide a final completion report in consultation with the Programme Co-ordinator. The recommended practice is for the Project Manager, Regional Works Manager, Programme Co-ordinator and a Professional Project Auditor to evaluate the project, recover all outstanding debts, make outstanding payments to creditors, close the financial books of the project and disseminate project results and benefits.
Quality control is an integral aspect of the above processes of accounting, reporting and control. Project monitoring facilitates the implementation of quality control procedures.
Tools, equipment, material and skills needed for the project are considered during the project design, estimation and appraisal stages. Normal procurement procedures and tender procedures, as explained earlier, apply where necessary in these instances.
5.1. Management and control of public works implementation is the responsibility of Project Managers where major projects are concerned With smaller projects, the initiating departments or agencies are responsible.
5.2. The purpose of management and control of public works implementation is to carry out the task consistent with the projects designed schedule of activities and to undertake monitoring activities so that necessary adjustments can be made to get the project back on track when problems occur.
5.3. A comprehensive schedule of approved project activities is drawn up. This includes the commitment of resources, including manpower ceilings and budgeted funds, with appropriate financial delegations to the responsible officers. The main requirements necessary for project implementation to proceed are:
5.4. The ultimate output is the implemented project, adjusted where necessary to resolve any problems discovered during the monitoring process. The project Manager and Project Management Committee (PMC) are responsible for the various tasks during the monitoring process to achieve the successful implementation of the project
All public projects when completed become part of the national infrastructure. Where there is a need for continuous maintenance, the required funding is the responsibility of the ministry under whose umbrella the project falls. However, the maintenance of most large projects is supervised by technical examiners of the Department of Works.
As mentioned previously, funds for foreign-aided projects are included in the annual budgetary funding of such projects. Project management takes place through individual project managers or through the implementing department or agency. However, because of loan draw-downs, project managers of loan-funded projects have to communicate with the Office of International Development Assistance (OIDA), a division of the Department of Finance and Planning, which is in ultimate control of all foreign-aided projects. The OIDA liaises with donor agencies and monitors the efficient implementation of the projects involved.
In the accounts and records maintained by project managers, expenditures are in accordance with the financial procedures of the government. However, where provisions are made in loan agreement for specific conditions, such conditions apply. Most donor agencies require annual audited financial statements and appropriate certification to effect future draw-downs of project funds. Such financial statements are produced by project managers for OIDA to audit, before being forwarded to the appropriate donor agency.
The Auditor-General has been given the mandate by the Constitution and the Audit Act to inspect and audit all public accounts and on the control of and on transactions with or concerning the public moneys and properties of the Government of Papua New Guinea. Consequently, all public works and projects are subject to audit by the Auditor-General.
The audit objective of the Auditor-General is to provide an independent and objective review, analysis and evaluation of the operations of the Papua New Guinea public sector and report the results to the parliament, government, auditee organisations and the public. In the process, the Auditor -General is concerned with promoting excellence in public sector accountability and auditing and encouraging the economic, efficient and effective management of resources.
10.1. In carrying out project audits, the limited resources of the Office of the Auditor- General are directed primarily to the evaluation of internal control systems and the examination of the financial accounting procedures. Audit officers inspect the relevant accounts and records, with the object of assessing the reliability and integrity of information being processed and the extent of compliance with applicable laws, regulations and directives.
10.2. In general, the project audit includes the methods and procedures for selecting contractors invited to bid, the system employed for the contractors, the review of contractors' performance, financial status, plant and personnel availability, current viability, the assurance that the relevant contract documents provide for a fair award at the most advantageous price, whether the project management system ensures that the work is properly and effectively supervised and executed and there is accountability throughout the various stages.
10.3. The method followed in each audit varies according to the nature and size of the project Most audits involve the comparison between the programme and actual work done in terms of physical and financial progress and the evaluation of the adequacy of supervision by competent or qualified supervisors. The audit of quality control aspects ensures that the materials and methods of construction comply with the design and specifications and variations are properly authorised, priced and documented. Quantities and method of payment for extra work are checked, interim payments examined and contract claims reviewed.
The scope of audit covers various aspects of the above methods and procedures. In addition, the following comments are applicable:
In Papua New Guinea, as in other countries, investment decisions are mainly policy prerogatives of the government As such, the Auditor-General does not audit policy decisions relating to investments.
At present the Office of the Auditor-General does not have the necessary technical expertise to carry out audits of design. However, specific design procedures may be tested during progress payments or on completion of projects.
As in the audit of design, the Office of the Auditor-General does not have the technical expertise to perform comprehensive audits of estimates. However, it reviews the associated processes and in particular, all material variations in the estimates and the reasons for such variations.
The audit plan generally aims to check that, at each stage in the contract process, there is a recognised system which is properly controlled. It is convenient to divide the approach into the following four steps:
11.4.1. Pre-contract
This is a crucial stage of a project because current mistakes are costly to rectify once contract work begins. Depending on the size of the project, the Audit Office ascertains whether:
11.4.2. Tender Procedures
It is vital at the tender stage that there are regulations or orders clearly establishing strict procedures as a protection against corrupt practices or bad publicity. Accordingly, the Audit Office checks that there are systems for:
(i) the selection of the tendering procedure best suited to each project, e.g:
(ii) administration of tender procedures:
11.43. Administration of the Contract
The Audit Office ascertains that there are clear regulations or instructions for:
11.4.4. Post-contract Appraisal
It is good management practice to carry out post-contract reviews to assess the performance of everyone involved in major contracts - on both sides - in order to improve the cost effectiveness of subsequent projects. The appraisal will be of value to the Audit Office when assessing whether the contract has met the original objectives of the audited body.
Presently most propriety audits are based on compliance with financial procedures relating to all transactions.
The Audit Office is yet to introduce value for money audit of public works and projects.
The audit of all types of procurement are mainly based on compliance with financial procedures relating to the relevant contract documents. Audit extends to the utilisation of the assets involved.
The Auditor-General's Office does not have the necessary expert manpower to undertake such audits. Accordingly all aspects of the technical examination of public works and projects are carried out by technical examiners of the Department ofWorks. These examiners report directly to the departmental head involved who, in turn, reports to the government. Any necessary corrective measures required by the government are implemented by the Department of Works.
Papua New Guinea as a developing nation presently classifies public works and projects as developmental and not on the basis of cost recovery and revenue. However, some feasibility studies take these factors into account.
The development and use of audit resources are continually under review. Accordingly there is an on-going programme within the Audit Office to monitor and measure the efficiency and effectiveness of resource management This initiative ensures a continuing source of highly skilled auditing personnel.
It is the prerogative of the parliament and government to act on the Auditor-General's Reports, as deemed appropriate. Accordingly, both parliament and government are assisted by independent and objective reports, which contain information on the adequacy of public sector organisations and financial resources management These reports are also made available to auditee organisations and to the public.
The Auditor-General has wide powers through the Constitution and legislation in the performance of his duties. He has free access to all necessary documents to assist his audit examination. Where necessary, audit officers inspect works sites in order to ascertain progress and the control of assets. This is not mandatory, but is an audit satisfaction of physical existence.
It is the Auditor-General's constitutional duty to inspect and audit and to report at least once in every fiscal year to parliament on the public accounts, and on the control of and on the transactions with or concerning the public moneys and property of the nation. However, there may be problems in the Audit Office meeting the stipulated timetable.
Limited financial resources preclude the Audit Office from employing experts other than accountants. The Auditor-General is thus obliged to rely on technical examiners from the Department of Works for the audit of the technical aspects of public works and projects.