MANILA - Too many middle men, costly foundations and a rise in prices of raw materials are just some of the reasons why the cost of construction for the Makati City Hall Building 2 spiked to P2.2 billion, a local contractor said Thursday.
Speaking before the Senate inquiry, Hillmarc's assistant vice president for legal Rogelio Peig confirmed that government building projects usually cost more because of the difference in procurement system.
He said real estate developers supply their own materials by going directly to manufacturers or specialty contractors. This produces savings on profit, overhead and taxes of the general contractor, local supplier and the specialty works contractor.
On the other hand, he said the government usually follows a process of project owner consulting the general contractor who goes to the specialty contractor, local supplier and manufacturer.
"There are too many middle men," he said.
He said that for private contracts, the project owner and the contractor do value engineering practices to further reduce costs.
"Sa gobyerno, bawal po yun kasi kung ano yung plano strikto yun ang susundin ng contractor," he said.
He also pointed out that the government building contracts also have an allowance for contingencies that add to the cost.
This is the reason why the project cost for the Makati City Hall Building 2 are higher after steel prices rose by 200 percent at the start of the project in 2008.
"Nung in-estimate, na factor na po yun. During the construction, yung price increase shinoulder ng contractor," he said.
In his presentation, Peig said the construction price for the Makati City Hall Building 2 is comparable to the cost of construction of other government projects such as the Bangko Sentral building in Naga City, the Sandiganbayan building in Quezon City, Calamba City Hall and Iloilo Convention Center.
He also said the use of board piles in the building's foundation would increase the construction costs of these projects.
Peig, however, denied that plain linoleum was used for the floor of the building.
"Hindi po yun linoleum. That is rolled vinyl made in Japan," he said.
Vice-President Jejomar Binay, Makati Mayor Junjun Binay and other Makati officials are facing a plunder complaint for the alleged overpricing of the Makati City Hall Building 2.