AUDIT REPORT ON THE ACCOUNTS OF GOVERNMENT …agp.gov.pk/downloads/audit_reports/PUNJAB WORKS PROVINCIAL... · process of selection of roads, calculation of EIRR and estimation was

AUDIT REPORT

ON

THE ACCOUNTS OF

GOVERNMENT OF THE PUNJAB

CIVIL WORKS

C&W, HUD & PHE, I&P, LG&CD, P&D

AND EP DEPARTMENTS

AUDIT YEAR 2007-08

AUDITOR-GENERAL OF PAKISTAN

i

PREFACE

Article 169 of the Constitution of the Islamic Republic of Pakistan read with

the Auditor-General’s (Functions, Powers, Terms and Conditions of Service)

Ordinance, 2001 requires the Auditor-General of Pakistan to conduct audit of

the accounts of the Federation, the Provinces and any authority or body

established by the Federation or a Province.

This report is based on audit of the accounts of Communication & Works

Department, Housing, Urban Development & Public Health Engineering

Department, Irrigation & Power Department, Local Government &

Community Development Department, Planning & Development Department

and Environment Protection Department, Government of the Punjab, for the

financial year 2006-07. The audit was conducted on a test check basis by the

Directorate General of Audit (Works), Lahore during 2007-08 with a view to

report significant findings to stakeholders.

The findings indicate need for adherence to the regulatory framework,

besides instituting and strengthening of internal controls to avoid recurrence

of similar type of violations/irregularities and mismanagement.

Most Audit observations included in the report were discussed with the

concerned Principal Accounting Officers in the Departmental Accounts

Committee meetings and have been finalized in the light of written responses

and discussions.

The report is submitted to the Governor of the Punjab in pursuance of Article

171 of the Constitution of the Islamic Republic of Pakistan to cause to be laid

before Provincial Assembly.

Islamabad Tanwir Ali Agha

Dated: Auditor-General of Pakistan

ii

iii

EXECUTIVE SUMMARY

Directorate General of Audit (Works) Lahore carried out audit of

Communication & Works Department, Housing, Urban Development &

Public Health Engineering Department, Irrigation & Power Department,

Local Government & Community Development Department, Planning &

Development Department and Environment Protection Department,

Government of the Punjab during 2007-08. The accounts audited relate to

the financial year 2006-07. Accounts of some formations pertaining to

previous years were also audited. Most of the Departmental Accounts

Committee directives were not implemented and there were some cases

where no reply was received at all.

The details of audit output with respect to each auditee are tabulated as under:

(Amount Rs in million)

C&W HUD&PHE I&P LG&CD P&D Environment

FAP Total

Annual

Budget 44,163.09 22,078.89 13,458.71 4,482.19 1,708.35 25.40 85,916.63

Budget

Audited 9,397.32 6,818.08 4,851.02 1,388.32 613.22 18.90 23,086.86

Advance

Paras 763 160 198 33 17 01 1,172

Proposed

Audit

Paras

418 121 176 25 14 01 755

DAC

held 02 02 03 01 01 -Nil- 9

PDPs

included

in the

report

114 45 56 11 07 01 234

PDPs

followed

through

MFDAC

304 76 120 14 07 -Nil- 521

Recovery

pointed

out

2,318.65 4,896.68 1,249.64 141.60 -Nil- -Nil- 8,606.57

Recovery

admitted 100.34 268.96 11.47 5.48 -Nil- -Nil- 386.25

Recovery

effected 37.65 4.32 6.46 0.337 -Nil- -Nil- 48.767

iv

Examination by PAC

The report has not been examined by the PAC as yet.

Key Audit Findings

The systemic issues reflected in the report are summarized as under:

a. The executing agencies awarded works without administrative

approval / technical sanctioned estimate in violation of prescribed

procedure. (Para 1.17)

b. Overpayment was made due to recording excess measurement for

payment. (Para 1.29, 2.16, 3.20)

c. Obsolete / surplus store was not timely auctioned as required under

rule. (Para 3.2)

d. The executing agencies accepted tenders at higher rates.

(Para 1.10, 2.2)

e. The dismantled / excavated material was not utilized / recovered.

(Para 1.41, 2.29, 4.2)

f. Commercialization fee and surcharge was not levied / recovered.

(Para 2.3)

g. Performance security / bond as per agreement provision was not

obtained. (Para 1.12, 2.12)

h. De-escalation for material was not recovered.

(Para 1.13, 2.8, 4.4)

i. The executing agencies could not get the works completed within

stipulated period. (Para 1.3.2, 2.23)

j. Risk and cost charges were not recovered from the defaulting

contractors.

(Para 1.35, 5.3)

v

k. Incorrect / enhanced rates were allowed in violation of government

instructions.

(Para 1.10.4, 3.7)

Recommendations

a. The prescribed requirements like administrative approval, technical

sanctions and budget need to be ensured prior to call of tender.

b. Prior approval to change in scope of work be obtained.

c. The contractual obligations should be watched at every stage of

execution.

d. Price escalation should be paid within the allocated cushion of

contingencies of estimates.

e. Time over-run should be avoided.

f. Government revenues should be immediately realized and deposited

into the treasury / public account.

g. Safeguards for timely and smooth execution of work like performance

/ indenture bond should be checked and valid bank guarantees be

accepted.

h. Dismantled material should be properly measured and deducted from

the cost of works.

i. Detailed engineering design / drawings, lab test reports etc. should be

ensured prior to commencement of works.

j. Encroachments on State land should be removed immediately.

k. Internal controls should be periodically reviewed and made capable to

forestall chances of pilferage.

l. The Principal Accounting Officers should ensure compliance of

Departmental Accounts Committee directives. The internal audit wing

should take particular care of this aspect.

vi

m. The internal audit report should be made available to the external

audit.

n. Government money should be spent prudently.

1

COMMUNICATION & WORKS DEPARTMENT

Punjab Highways and Buildings are under the administrative control of

Communication and Works Department, Government of the Punjab and

Secretary C&W Department is the Principal Accounting Officer. The main

function of the department is the development of the provincial areas by

providing basic facilities of journey to the passengers. The department

comprises Chief Engineers Buildings (North & South), Chief Engineers

Highway (North & South) and Chief Engineer District Support &

Monitoring which are the attached departments. Communication and

Works Department is primarily responsible for planning, designing,

construction, repair and maintenance of all government roads and

buildings in Punjab.

Audit for the financial year 2006-07 was conducted on test check basis

and a summary of audit results is tabulated as under:


Sr.No Particulars Amount Total amount/

%age

1. Budget allocation for the financial year

2006-07

44,163.09 44,163.09

2. Total Expenditure for the financial year

2006-07

39,833.30 39,833.30

3. Audited Expenditure 9,397.32 23.6% *

4. Amount of the observations in this

report

i) Excess payment

ii) Irregular / un-authentic

iii) Un-justified payment

without T.S. estimate

iv) Undue Financial Aid

v) Loss / Doubtful / Theft

vi) Non- recovery

1,108.04

440.26

6,432.77

69.76

4,009.80

378.99

12,439.62

*. High money value sample selection criteria.

2

3

1. COMMUNICATION & WORKS DEPARTMENT

Para 1.1 Non-production of record for works - Rs 4,000.4

million

According to section 14(2) No.XXIII of Auditor-General of Pakistan’s

(Functions, Powers, and Terms & Conditions of Services) Ordinance,

2001, the officer incharge of any office or department is responsible to

provide the record for audit scrutiny.

The Chief Engineer (North), Punjab Highway Department, Lahore did not

produce relevant record i.e. tender documents, project account for

expenditure on construction, maintenance, and collection of toll, financial

modules as per annexure 15 of agreement etc. Non production of record

was a serious violation. Audit of the project accounts could not be

conducted as per best practices and government instructions in February

2008 and expenditure of Rs 4,000.4 million.

Audit pointed out non-production of record in February 2008. The

department did not furnish reply to the audit observation.

The department did not convene the DAC meeting despite best efforts

made by this office till finalization of the report.

(DP.361)

Para 1.2 Loss due to in-ordinate delay in execution of work /

manipulation in the bid/non-utilization of available

earth - Rs 3,804.4 million

As per rule 2.33 of Punjab Financial Rules Volume-I, every government

servant should realize fully and clearly that he would be held personally

responsible for any loss sustained by government through fraud or

negligence on his part.

1.2.1 The Executive Engineer, Provincial Highway Division

Sahiwal allotted a work in October 2003 against the technical sanctioned

estimate cost of Rs 69 million. The contractor started the work at site but

was cancelled by the Secretary Communication and Works Department on

a complaint regarding rigging in tendering in December 2003. No

departmental enquiry was held to fix the responsibility. The work was

again awarded in January 2005 for Rs 83 million. Mismanagement in

project execution resulted in loss of Rs 14.0 million.

4

Audit pointed out the loss in January 2008. The department replied that

usual tender process was carried for allotment of work after due

formalities but the matter was involved in a complaint against which the

Secretary, Communication and Works, Lahore ordered for re-tendering of

the work. Accordingly, the work was reassessed and administrative

approval/technical sanctioned estimate of the work was got revised as

required under the new market rates schedule (MRS) provisions. The reply

was not acceptable because matter for rigging in tendering was not

investigated for fixing the responsibility which resulted in loss to

government.

The matter was discussed in the Departmental Accounts Committee

meeting held from 20th to 27th April, 2009 wherein the Committee did not

agree with the view point of the department and directed for detailed

verification of record. No progress was shown to audit till finalization of

the report.

(DP.145)

1.2.2 The Project Director, Punjab Road Sector, Development

Project did not get executed the works on provincial roads at required pace

and resultantly prepared revised estimates in respect of provincial roads

amounting to Rs 7,869.279 million against original PC-I cost of Rs 4,080

million. Due to inordinate delay of three years in execution of work,

revised estimates were prepared resulting into loss to government for

Rs 3,789.729 million.

Audit pointed out the loss in October 2006. The project management

replied that there was critical default of one financial year between

approval of PC-I by Executive Committee of National Economic Council

(ECNEC) subject to approval by Provincial Development Working Party

(PDWP) in respect of project of having Economic Internal Rate of Return

12% or above, and loan agreement, therefore, performance evaluation

against schedule in PC-I was wrong. The reply was not acceptable as

process of selection of roads, calculation of EIRR and estimation was

required to be done before approval of PC-I for timely completion of the

project. Moreover, the PC-II was not got approved prior to

preparation/approval of PC-I in contradiction to the spirit of Government

of Pakistan, Planning & Development Division memo No.20(40)PIA.I/

PC/2007 dated 10th March, 2007.



(DP.12-FAP)

5

1.2.3 The Executive Engineer, Provincial Buildings Division,

Gujranwala allowed a quantity 102,080 cubic feet of item “Transportation

of earth with lead of 5-mile” @ Rs 2.69 per cubic foot which was not

justified because later on, a quantity 307,452 cubic feet of item “New

earth brought from outside” was allowed @ Rs 3,692.47 per ‰ cubic feet.

If the additional earth for under floor was required then there was no need

to allow transportation of available excavated earth. Furthermore, if the

transported earth was not disposed off and was available at site then the

less quantity by 102,080 cubic feet was required to bring from outside.

This resulted in loss of Rs 651,522.

i) Transportation

=102,080 cubic feet x @ Rs 2.69 per cubic foot Rs 274,595

ii) Unjustified carriage of new earth

=102,080 cubic feet x @ Rs 3,692.47 per ‰ cubic feet Rs 376,927

Total Rs 651,522

Audit pointed out the loss in March 2008. The department replied that 12

feet earth filing was required to safeguard the floor. So it was decided that

excavated clay soil would be disposed off and earth filling would be done

with sandy soil brought from outside. The reply was not acceptable as the

project was also located in the river area of Chenab and excavated earth

was ordinary soil. Further, no extra allowance for clay/daldal was allowed.

No laboratory test report of Buildings Research Station Lahore was

produced to support that the excavated earth was not suitable for filling

under floor.


meeting held from 20th to 27th April, 2009 wherein the Committee

required the lab test report of soil and directive of the Chief Executive in

this regard or recovery within 2 weeks. Compliance of the Committee

directive was not reported to Audit till finalization of the report.

(DP.301)

Para 1.3 Loss due to higher rates/post-bid changes/non-

completion of project – Rs 2,027.9 million

As per rule 2.10(a)(i) of Punjab Financial Rules Vol-I, same vigilance

should be exercised in respect of expenditure incurred from government

revenue as a person of ordinary prudence would exercise in respect of the

expenditure of his own money.

1.3.1 The Secretary, Communication & Works Department

entered into an agreement on 30th September, 2003 with M/s LAFCO for

6

the construction of Lahore-Sheikhupura-Faisalabad dual carriageway on

BOT basis at an agreement amount of Rs 4 billion with a concession

period of 25 years. The project cost was worked out to Rs 2 billion in case

of execution by the government, from its own sources as mentioned in a

summary for the Chief Minister. (Para 2 dated 26th April, 2003). As per

financial module, the contractor would collect Rs 72.359 billion from toll

over the said period. The execution of project on BOT basis was,

therefore, uneconomical/in-appropriate and resulted into loss to

government for Rs 2,000 million.

Audit pointed out loss in February 2008. The department did not reply.



(DP.360)

1.3.2 The Executive Engineer, Provincial Highway Division,

(DOR) Bahawalpur allotted a contract for Rs 100.2 million in June 1996

to a contractor with a completion date upto June 1999. The contractor

failed to complete the work. The contract was rescinded under clause 60 in

January 2005 and balance work had not been awarded. Expenditure of

Rs 27.9 million was incurred upto June 2002 for earth work for making

embankment and laying sub-base course. The executed work was eroded

and, therefore, expenditure incurred became infructuous.

Audit pointed out the infructuous expenditure in February 2007. The

department replied that the final measurement had been taken and sent to

quarter concerned to complete the balance work. The reply was not

acceptable because the department failed to get the work completed within

stipulated period upto June 1999. Moreover, department failed to produce

some record during local audit in June 2002. The audit of said record was

carried out as per PAC directive dated 30th November, 2005 against Draft

Para No.20(233)/2001-02. The executed work was eroded with the

passage of time and expenditure incurred had gone waste.


meeting held from 20th to 27th April, 2009. The Committee did not agree

with explanation of the department and directed for probe and fact finding

inquiry within 60 days. Further, compliance and verification would be

made by the Provincial Highway Division Bahawalpur. No progress was

intimated to Audit till finalization of the report.

(DP.375)

7

Para 1.4 Allotment of BOT project at high toll rate – Rs 1,072.9

million

As per para 6 of minutes of 3rd bid evaluation committee meeting dated

21st April, 2001, the rate of toll per kilometer for motorway project (M-II

Lahore to Islamabad) was Rs 0.41 per kilometer for a car.

The Secretary, Communication & Works Department made agreement

with M/s LAFCO to charge Rs 60 from Lahore to Faisalabad for a car on

account of toll tax which comes to Rs 0.52 per kilometer (60/115).

Further, the toll was to be increased @ 5.74% per annum till the

completion of concession period of 25 years and the toll of a car upto 2028

(i.e. upto completion period) would be Rs 242 i.e. Rs 2.10 per kilometer.

Similarly, the toll rates of other vehicles were also on higher side as

compared to motorway project (M-II). Extra charging of Rs 0.11 per

kilometer (0.52-0.41) i.e. 26.82% above, resulted in extra burden on users

of the road in the shape of toll tax for Rs 1072.9 million (26.82%of

contract cost Rs 4,000.352 million).

Audit pointed out the allotment of toll collection of BOT project at higher

rates in February 2008. The department did not furnish reply to the audit

observation.


meeting held from 20th to 27th April, 2009 wherein the Committee was of

the opinion that the matter of public concern should be deliberated in

Public Accounts Committee meeting.

(DP.359)

Para 1.5 Unjustified payment of mobilization advance -

Rs 303.8 million

As per para 2.85 of Buildings & Roads Department Code, no work should

be commenced on the land not acquired for the work. As per rule 7.36 (b)

of Departmental Financial Rules, mobilization advance is admissible to

the contractor after issuance of acceptance letter.

The Project Director, Lahore Ring Road Project, Lahore allotted the works

without acquisition of land and allowed mobilization advances without

start of work at site, by the contractors. This resulted in un-justified

payment of mobilization advance of Rs 303.8 million.

8

Audit pointed out the irregularity in May 2008. The department replied

that the mobilization advances were allowed to the contractors after

issuance of acceptance letter to start the works at 10% per annum interest.

The reply was not acceptable as the works were allotted and advances

were given without acquisition of land.



(DP.334)

Para 1.6 Loss due to allowing excess overhead charges - Rs 116.5

million

As per para (g) of notification No.RO(TECH)FD 2-3/2004 dated 2nd

August, 2004 issued by the Finance Department, 10% overhead charges

may be added in addition to 10% contractor’s profit already allowed in

rate analysis standardized by the Finance Department for purposes of

estimation. However, works shall be let out on actually tendered rates.


Okara added 25% overhead charges and profit in technical sanctioned

estimate against admissible limit of 20% as contractor’s profit and

overhead charges. Further, tenders were accepted keeping in view higher

rates of overhead charges and profit. Non-adherence to the instructions

issued by the Finance Department resulted in irregular approval of

technical sanctioned estimate for Rs 2,110 million involving loss on

account of additional 5% overhead charges of Rs 94 million.

Audit pointed out the loss in February 2008. The department replied that

the work was allotted as per amended administrative approval/sanction of

revised estimated cost which was within permissible limit of 4.5%. The

reply was not acceptable because 15% overhead charges were added to the

rate analysis of all items of work instead of 10% allowed by the Finance

Department. The revised administrative approval was sanctioned at

Market Rates System in October 2005 at higher rates as compared to the

notified rates of contractor quoted in October 2005.


meeting held from 20th to 27th April, 2009 wherein the Audit informed the

Committee that the tenders were invited on original DNIT on the basis of

TSE accorded on 18th August, 2005. Later on, the cost of DINT was

enhanced and tenders were accepted at 7.43% above. The department

9

explained that 5% extra work was added being a mega project. Revised

AA and revised TSE. And the DNIT was enhanced. The Committee was

not agreed with the view point of department and directed the department

to recover the loss within 60 days. No progress towards recovery was

shown to Audit till finalization of the report.

(DP.108)


Okara got technical sanction with 25% overhead charges and profit

(5% additionally added in technical sanctioned estimate amount prepared

on MRS having 20% contractor’s profit and overhead). Further, tenders

were accepted keeping in view higher rates of overhead and profit. Non-

adherence to the instructions issued by the Finance Department resulted in

irregular accord of technical sanctioned estimate for Rs 460.5 million and

extra expenditure of Rs 22.5 million.

Audit pointed out the extra expenditure in February 2008. The department

replied that the work was allotted as per amended administrative

approval/sanction of revised estimate cost which was within permissible

limit of 4.5%. The reply was not acceptable because 25% overhead

charges were added to the rate analysis of all items of work instead of 20%

allowed by the Finance Department and revised administrative approval

was sanctioned at MRS October 2005 at higher rates to compare the rates

of contractor quoted in October 2005.



Committee that the tenders were invited on original DNIT on the basis of

original AA and TSE. Latter on, AA and TSE were revised and 5% extra

were added in the cost and DNIT was enhanced. The Committee was not

agreed with the departmental view point and directed to recover the extra

expenditure/loss within 60 days. No progress towards recovery was shown

to Audit till finalization of the report.

(DP.111)

Para 1.7 Non-recovery / forfeiture of bank guarantee of

mobilization advance - Rs 88.9 million

As per clause 9 of Contract Agreement, in case the contractor fails to

execute the work in accordance with the terms of contract, the security

10

offered in respect of mobilization advance shall be forfeited and credited

to government.

The Project Director, Lahore Ring Road Project, Lahore allowed

mobilization advance to contractor for the package-04 of project against

the bank guarantee of M/s Askari Commercial Bank. The contractor failed

to complete its contractual obligation. The bank guarantee was not

forfeited and credited to government as per clause-9 of notice inviting

tender of contract agreement. This resulted in non-recovery of

mobilization advance of Rs 88.9 million.

Audit pointed out the non-recovery in May 2008. The department replied

that the bank guarantee was obtained from Askari Commercial Bank,

which was a scheduled bank. The reply was not acceptable because the

work as per contract provision was incomplete. Security offered by

contractor in respect of mobilization advance was not credited to

government as per provision of contract agreement.



(DP.332)

Para 1.8 Irregular acceptance of performance bond - Rs 81.9

million

According to clause 7 of the contract agreement and item (h) of

“Memorandum of Work” and Finance Department instructions vide

No.RO (TECH) FD-1-2/83 (VI) (P), dated 6th April, 2005, Performance

security in the form of “Bank Guarantee” equal to 10% or 5% of tender

price in case of tenders with cost exceeding Rs 25 million or Rs 50 million

should be obtained from the “Bank of Punjab” or any scheduled Bank of

Pakistan within 15 days of the receipt of acceptance letter by the

contractor.

The Executive Engineer, Provincial Road Construction Division, Lahore

accepted the Insurance/Bank Guarantees issued by North Star Insurance

Company Ltd. and Saudi Pak Commercial Bank Ltd. instead of Bank of

Punjab or any scheduled Bank of Pakistan. Acceptance of insurance

company’s guarantees instead of bank guarantees from scheduled bank

resulted in un-justified acceptance of performance security amounting to

Rs 81.9 million.

11

Audit pointed out the irregularity in August 2007. The department replied

that the notification of Finance Department making bank guarantee as

mandatory against performance security was issued on 6th April, 2005.

Thus before 6th April, 2005, the performance security issued by the

insurance company was valid. The reply was not acceptable because the

guarantee was issued on 13th May, 2006 i.e. one year after acceptance of

tender dated 2nd May, 2005 and was not covered under Finance

Department letter dated 6th April, 2005.



(DP.8)

Para 1.9 Non-recovery of compensation for delay - Rs 80.3

million

As per clause 39 of the agreement, in the event of contractor failing to

complete the work within stipulated period, he shall be liable to pay as

compensation, an amount equal to one percent of the amount of the

contract subject to maximum of 10%.


Sargodha allotted the work to contractor on 13th January, 2006 with

completion period of one year. The contractor failed to complete the work

despite repeated reminders and final notices. No action under clause 39 of

the agreement was initiated against the contractor upto June, 2007 to

recover the compensation for delay in completion of work. This resulted in

non-recovery of compensation for delay amounting to Rs 28.2 million.

Audit pointed out the non-recovery in October 2007. The department

replied that the government released the funds in piece meal. The matter

of time extension had to be decided by the competent authority under

clause 37 of contract agreement. The reply was not satisfactory because

clause 37 of agreement asked for grant of extension in time in case the

contractor applied it within 30 days prior to stipulate date for completion

with detailed reasons. But the correspondence exchanged with the

contractor showed that funding was not the reason of late execution. The

Chief Engineer(s) had declared the contractor defaulter in June 2007 under

clause 60 & 61 of agreement for unsatisfactory performance. The action

under clause 60 & 61 of agreement remained incomplete. The contractor

had not applied for time extension under clause 37 of agreement.

Therefore, recovery of compensation was due.

12



with the explanation / view point of the department and directed to refer

the para to the Finance Department for condonation. No compliance of the

Committee directive was made till finalization of the report.

(DP.344)


Rawalpindi failed to impose 10% penalty on the delayed works. Violation

of the contract clause resulted in non-recovery of Rs 21.9 million.

Audit pointed out the non-recovery in January 2003. The department

replied that work was almost completed except false ceiling which would

be fixed on installation of High Velocity Air Conditioning (HVAC)

system in the building. The reply was not accepted as no documentary

evidence was produced.


meeting held on 21st February, 2009 wherein the Committee pended the

para for want of recovery / compliance of previous DAC directive

regarding recovery. No compliance of the Committee directives was

reported till finalization of the report.

(DP.212)


Faisalabad awarded a contract for Rs 161.9 million in January 2005 with

stipulated period of six months for completion. The work remained

incomplete and could not be completed upto September 2007. No action

against the contractor for delay in completion of work was initiated under

clause 39(a) for recovery of compensation @ 10% of contract price.

Moreover, price variation of Rs 13.4 million on bitumen and steel was also

paid to the contractor in the extended period although the contractor was at

fault due to non-completion of work within stipulated period. This resulted

in non-recovery of compensation for delay Rs 16.2 million and un-due

payment of price variation Rs 13.4 million.

Audit pointed out the non-recovery of compensation and undue payment

of price variation in September 2007. The department replied that shifting

of poles by WAPDA, clearance of built up area, change in scope of work

and short funding were reasons in slow progress of work. The reply was

not acceptable because the Executive Engineer/ Superintending Engineer

concerned vide his letter dated 20th and 26th June, 2007 declared the

contractor as defaulter for delay in completion of work and full funds were

available. Further, the Provincial Ombudsman on complaint of delay in

13

construction of this road also ordered the Secretary Communication &

Works Department on 18th August, 2006 to hold enquiry for inordinate

delay in completion of work and not taking timely action under the rules

against the person at fault.


meeting held from 20th to 27th April, 2009 wherein Audit informed the

Committee that this DP was not attended by the department during

verification. The Committee directed the department to probe the matter

for non-compliance and produce complete record for detailed verification

in Audit office within 30 days. No record was produced to Audit till

finalization of the report.

(DP.337)


Bahawalpur awarded two contracts in March and June 1999 with a

completion dates upto July 1999 and June 2000. One work was completed

in November 1999 whereas second remained incomplete. The contractors

did not apply for grant of extension in time limit 30 days prior to the

stipulated dates of completion as per contract. No penal action under

clause 39(a) was taken to recover the liquidated damages for Rs 10.4

million. This resulted in non-recovery of Rs 10.4 million.

Audit pointed out the non-recovery in April 2007. The department replied

that in one case, due to slow progress, the contractor was declared

defaulter under clause 60 in January 2005. Action against the contractor

had been taken. The contractor had got stay order from court of Senior

Civil Judge. The reply was not acceptable because action under clause 39

was not timely initiated to recover the liquidated damages. In second case

it was replied that the para had been sent to the quarter concerned for

reply. No further reply was received.


meeting held from 20th to 27th April, 2009. The Committee directed the

department to probe the matter within 30 days and further compliance be

made by the provincial highway division Bahawalpur. No progress was


(DP.386)

1.9.5 The Executive Engineer, Provincial Buildings Division

Gujrat allotted two works to the two different contractors on 23rd

December, 2000 with the time period of 24 months. The works were

required to be completed on 22nd December, 2002 but the work could not

be completed even upto 30th June, 2003. Hence, the contractors were

14

liable to pay compensation @ 10% of agreed cost for delay in execution of

work. Non-completion of work within stipulated period given in the

agreement resulted into non-recovery of compensation for Rs 2.8 million.

Audit pointed out the non-recovery in March 2003. The department

replied that the funds were not provided for completion of scheme. The

reply was not acceptable because contract clause 39(a) was not

implemented for timely completion of the works. The contractors had not

applied for time extensions 30 days prior to the stipulated dates of

completion.


meeting on 3rd September, 2006. The para was kept pending for

completion of formalities regarding extension in time otherwise recovery

from contractors within 30 days. Para was again discussed in the DAC

meeting on 12th March, 2008. No compliance on the previous

Departmental Accounts Committee directives was shown. The matter was

again discussed in the Departmental Accounts Committee meeting held

from 20th to 27th April, 2009. The Committee took the issue seriously and

directed the department to impose / recover the penalty amount within 15

days. No compliance was made till finalization of the report.

(DP.315)


Gujranwala allotted a work to contractor on 9th March, 2000 with the time

period of 18 months. The same work was required to be completed on 10th

September, 2001 but the work could not be completed even upto

30th June, 2002. Hence, the contractor was liable to pay compensation

@10% of agreed cost. Non-implementation of contract clause resulted in

non-recovery of Rs 766, 990.


replied that the contractor had applied for time extension. The reply was

not acceptable because no action against contractor was initiated as per

contract provisions for recoveries of liquidated damages and timely

completion of work.


meeting dated 12th March, 2008. The department explained that the work

was completed within the extended period upto 30th June, 2004. Audit

informed the Committee that as per record measurements, work was

completed on 24th December, 2004 and check measurement done by Sub

Divisional Officer on 24th June, 2006 which was not possible. Final bill

15

had not been paid. Moreover, extension/recovery of penalty as per contract

was due. The matter was again discussed in the Departmental Accounts

Committee meeting held from 20th to 27th April, 2009. The Committee

directed that Superintending Engineer Provincial Buildings Circle

Gujranwala should probe the matter within 30 days but no compliance was


(DP.313)

Para 1.10 Extra expenditure due to acceptance of tender at higher

rates - Rs 57.4 million

As per para 1(ii) and 3 of Finance Department letter No.RO (TECH)

FD-2-3/85 Vol-IV dated 7th January, 1992, acceptance of tenders shall be

subject to the condition that the rates quoted and/or amount tendered are

such that, total cost of the project will not exceed the amount for which

technical sanction has been accorded by more than 4.5%. The cushion

upto 10% over administrative approval cost allowed under Delegation of

Financial Powers Rules, 1990 for technical sanction, can only be utilized

for adjustment of cost due to change in quantity, specification and scope

of work necessitated because of site conditions and in no case and under

no circumstances, it can be utilized for adjustment of premium/rates.


Lahore accepted a tender for Rs 466 million against the technical

sanctioned estimate cost of Rs 421.4 million (works component) i.e.

10.59% above. The tender was to be accepted within permissible limit for

Rs 440.5 million. The acceptance of tender beyond permissible limit

resulted in extra expenditure for Rs 25.5 million.

Audit pointed out the extra expenditure in January 2008. The department

replied that the requisite adjustments would be made in due course of

time. The department admitted the irregularity but no record was produced

in support of reply.


meeting held from 20th to 27th April, 2009 wherein the Committee was not

agreed with the view point of the department and required detailed

verification of record in Audit office within 15 days. No progress was


(DP.244)


Multan got approved technical sanction estimate at market rates for

16

Rs 170.4 million instead of rates provided in Composite Schedule of Rates

1998. The work was allotted for Rs 175.2 million on the basis of tendering

on 8th June, 2004 against the acceptable cost of Rs 159.6 million on the

basis of Composite Schedule of Rates 1998 (cost of DNIT Rs 152,720,555

+ 4.50%). Preparation of estimate at market rates in violation of said

instructions and allotment of work on item rate basis resulted in extra

expenditure of Rs 15.6 million.

Audit pointed out the extra expenditure in October 2007. The department

replied that the estimate was prepared on the basis of Composite Schedule

of Rates 1998 for Rs 159.5 million and work was put to tender. Two pre-

qualified firms participated. Lowest bid was 17.39% above the estimated

cost therefore, it was not acceptable. Due to urgency of work and being

the mega project, the Chief Engineer conveyed the government desire to

prepare the detailed estimate on market rates. Technical sanctioned

estimate for Rs 175.5 million was accorded by the Chief Engineer

accordingly. The reply was not acceptable because tenders were called

prior to accord of revised technical sanctioned estimate. Therefore

comparison for acceptance of tender was to be made with original

technical sanctioned estimate as per the Finance Department instructions

and not with revised technical sanctioned estimate amount. Further, no

sanction of Finance Department was provided for preparation of estimate

on market rates and calling of tender on item rate basis.



Committee that no record was produced by the department in support of

reply. The Committee took it very serious and directed a fact finding

inquiry within one month. No progress was shown to Audit till finalization

of the report.

(DP.205)


Faisalabad could not award the bridges component of road construction

project (3 bridges) in February 2004 for Rs 15.9 million. Revised

administrative approval due to increased market rates for bridges

component was obtained in May 2005 for Rs 79.9 million (including

bridge component Rs 19.1 million). Two works, of three bridges were

awarded in August/September 2005 for Rs 19.6 million on the basis of

revised technical sanctioned estimate amounting to Rs 19.1 million as

0.57% and 9.6 % below and no additional performance securities were

obtained. The work for one remaining bridge on Sangla Branch Drain”

17

was awarded for Rs 5 million against the revised technical sanctioned

estimate component provision of Rs 3.818 million i.e. @ 30.15% above

against the permissible limit of 4.5% resulting excess tender approval of

Rs 977,743 (3,818,000 x 4.5% = 3,989,810 (-) 4,967,553). Award of work

for bridges component in July/September 2005 instead of November 2003

and acceptance of tender beyond permissible limit resulted in extra

expenditure of Rs 4.72 (3.13 +0.978) million.

Audit pointed out the extra expenditure in September 2007. The

department replied that the work of bridges was asking for expertise of

peculiar in nature and were awarded separately in the interest of work. The

reply was not acceptable because administrative approval of the work

including three bridges was accorded in October 2003 and road work was

technical sanctioned in November 2003. But technical sanctioned estimate

of the three bridges was accorded in June 2005. Moreover, the Secretary,

Communication & Works Department while according revised

administrative approval of the work directed to call for the explanation of

the Executive Engineer concerned for inordinate delay in putting the

bridge work into tendering which lead to cost enhancement by Rs 5.4

million. Additional security bonds for award of two bridges works below

technical sanctioned estimate were not obtained. One component was

awarded beyond permissible limit of 4.5% without obtaining approval of

Finance Department.



committee that this draft para was not attended by the department during

verification. The Committee directed the department to probe the matter

for non-compliance and produce the complete record for detailed

verification in Audit office within 30 days. No record was produced to

Audit till finalization of the report.

(DP.336)


Rahim Yar Khan prepared and got approved the technical sanctioned

estimate at higher rates than provided in the MRS of 3rd quarter, 2006 for

District Rahim Yar Khan. The percentage above technical sanctioned

estimate with admissible rates of Market Rate System, came to 7.9%

instead of 4.5%. Accord of technical sanctioned estimate on incorrect rates

of Market Rate System resulted in extra expenditure of Rs 2.9 million.

Audit pointed out the extra expenditure in November 2007. The

department replied that the limit of acceptance of tender was 3.8% above

the technical sanctioned estimate which was well within the permissible

18

limit of acceptance of tender. The reply was not acceptable because

incorrect higher rates were incorporated in the technical sanctioned

estimate in violation of Finance Department instruction.


meeting held from 20th to 27th April, 2009 wherein the audit informed the

Committee that department prepared and got approved the technical

sanctioned estimate at higher rates then provided in MRS of 3rd quarter

2006 for district Rahim Yar khan. The department replied that the scheme

was beyond 200 million therefore analysis is based on input rate including

10% contractor profit and 15 % overhead charges. The Committee was not

agreed with the contention of the department and directed the department

to submit a fact finding report to Audit for verification. No progress was


(DP.30)


Multan got approved the technical sanction estimate at market rates for

Rs 49.3 million instead of rates provided in Composite Schedule of Rates

1998. The work was allotted for Rs 49.3 million on the basis of tendering

dated 8th June, 2004. Whereas on the basis of composite schedule of rates

1998, the cost of DNIT worked out to Rs 46.6 million and the tender

acceptance amount came to Rs 49.3 million with 4.5% of admissible limit

to award the work. Preparation of estimate at market rates in violation of

said instruction and allotment of work on item rates basis resulted in extra

expenditure of Rs 2.7 million to the government.

Audit pointed out the extra expenditure in October 2007. The department

replied that the estimate was prepared on the basis of Composite Schedule

of Rates 1998 for Rs 51.4 million and work was put to tender. Two firms

participated and after preparation of comparative statement, the lowest bid

was 20.71% above the estimated cost which was not acceptable and then

on the direction of government, estimate was prepared on market rates and

allotted. The reply was not acceptable because no sanction for relaxation

of rules/instruction of the Finance Department for accord of technical

sanctioned estimate/call of tender on items rates basis instead based on

Composite Schedule of Rates 1998 was produced to audit.



Committee that no record was produced by the department in support of

reply, The Committee took it very serious and directed for finding inquiry

19

within one month. No progress was shown to Audit till finalization of the

report.

(DP.204)


Dera Ghazi Khan evaluated the bid and awarded the work @ 3.25% above

the quoted rates of Rs 4, 162.20 per% square feet (plant pre mix

carpeting), Rs 2,710.05 per % cubic feet (sub-base course) and

Rs 3,504.33 per% cubic feet (base course) instead of the technical

sanctioned estimate rates of Rs 4,145.55 per % square feet Rs 2,597.25

per% cubic feet and Rs 3,390.26 per % cubic feet respectively. According

to technical sanctioned estimate rates with quoted premium 3.25% above,

the payable rates worked to Rs 4,282.35 per % square feet, Rs 3,500.4 per

% square feet and 2682.28 per % cubic feet for the said items. Whereas

rates of Rs 4,297.47 per % square feet, Rs 3618.22 per % cubic feet and

Rs 2,798.12 per % cubic feet were incorporated in acceptance letters and

paid to the contractor. Acceptance of tenders on incorrect rates resulted in

extra expenditure of Rs 2.2 million.


department replied that some of the relevant record of the works awarded

by Provincial Highway Division, Multan was to be obtained to confirm

whether some variation in percentage above DNIT amount at the time of

award was really occurred or not. After comparison of the percentage

above DNIT amount at the time of finalization of the work, recovery

would be made. But no recovery was made.


meeting held from 20th to 27th April, 2009 wherein the department

explained that work was split into there groups having different kinds of

lead for sub base course, base course & TST but the total lead of the

groups were within the lead provided in the TSE / analysis. The

Committee directed verification of the lead of 3-Nos DNIT with reference

to the lead provided in the TSE / analysis within 7 days. No progress was


(DP.130)


Multan got technical sanctioned estimate for Rs 12.7 million against the

administratively approved cost of Rs 10.8 million which was 17.83 %

above the approved cost against the permissible limit of 10%. The work

was awarded for Rs 13.6 million to the contractor @ 6.63% above

technical sanctioned estimate, against the permissible limit of 4.5%. Non-

20

adherence of the government instruction resulted in irregular accord of

technical sanctioned estimate for Rs 12.7 million beyond 10% limit and

extra expenditure of Rs 1.6 million to government due to acceptance of

higher tender rates.

Audit pointed out the extra expenditure in August 2007. The department

replied that the work was splitted into two groups and group-I was allotted

against partly technical sanctioned estimate amount of Rs 9.6 million and

group-II was allotted after the approval of design from Bridge Directorate

Highway Department and actual cost of bridge comes to Rs 12.7 million

against originally approved cost of Rs 10.8 million. The reply was not

acceptable because remaining work of Group-II was sanctioned for 12.7

million against the approved cost of Rs 10.8 million and allotted for

Rs 13.6 million which was beyond the permissible limit of 14.5% of

approved cost.



agree with the view point of the department and directed to probe the

matter for fact finding report. No progress was shown to Audit till


(DP.76)


Lahore allotted a work in April 2005 for Rs 466 million for dualization of

15 kilometer road. The work was in running stage, another work contract

allotted in same location in June 2007 against which payment of

Rs 1,165,874 vide first and final bill was allowed. In the presence of

original allotted contract, the allotment of second contract was irregular.

Therefore, the whole payment of Rs 1.2 million without technical

sanctioned estimate provision to second contractor for part of already

allotted work resulted in extra expenditure.

Audit pointed out the extra expenditure in January 2008. The department

replied that the recovery of difference of rates between M/s Way Makers

and M/s Khalid Rauf & Co. amounting to Rs 105,019 would be effected in

due course of time. The reply was not acceptable as neither the detail of

admitted recovery of Rs 105,019 was produced nor the observation was

properly replied for allotment of the second contract in presence of the

original contract. The second contract was allotted without initiating penal

action against original contractor under clause 60 & 61 of agreement.

21


meeting held from 20th to 27th April, 2009 wherein the Committee directed

clarification regarding separate tender out of contingency amount of the

one and same technical sanctioned estimate from the Finance Department.

No progress was shown to Audit till finalization of the report.

(DP.240)


Bahawalpur provided the rates in technical sanctioned estimate more than

the rates depicted in administrative approval for some items in violation of

the Finance Department instructions dated 7th January, 1992. Resultantly

technical sanctioned estimate was accorded on incorrect rates and the

tenders accepted were @ 6.17 and 5.93% above. The accord of technical

sanctioned estimate on incorrect rates resulted in extra expenditure of Rs 1

million to government.

Audit pointed out the extra expenditure in August 2007. The department

replied that the work was technically sanctioned by the competent

authority on the basis of approved rates which were notified by the

government during the period of technical sanctioned estimate. The reply

was not acceptable because the technical sanctioned estimate was to be

accorded on the administrative approval rates basis because 10% cushion

could not be utilized for change in rates.



explained that work was allotted to contractor after approval by the

competent authority within permissible limit. The question for acceptance

of tender on higher rates did not hold good. The Committee did not agree

with the view point of the department and directed the department for

detailed verification / recovery by audit. No progress was shown to Audit

till finalization of the report

(DP.126)

Para 1.11 Overpayment due to non-deduction of cost of less used

bitumen - Rs 57.2 million

As per condition No.6 of Finance Department Notification vide No. RO

(TECH) FD2-3/2004 dated 2nd August, 2004; rate for item of carpeting

shall be fixed by the Chief Engineer on the basis of different percentage of

bitumen i.e. 3% to 6%. However, payment will be made to contractor as

per job mix formula or actual bitumen used in the work.

22


Sialkot made payment for the item “Providing/laying plant premixed

bitumen carpeting i/c compaction finishing to required camber and grade

density 2" thick complete in all respect” for 864,862 square feet @

Rs 3,055 per % square feet with 4.5% ratio of bitumen without obtaining

the job mix formula from the Road Research and Martial Testing Institute.

Non-obtaining the recommended job mix formula from the laboratory

before the execution of item resulted in overpayment of Rs 26.4 million.

Audit pointed out the overpayment in January 2008. The department

replied that as per approved job mix formula, the percentage for use of

bitumen was 4.2% to 4.8% and ratio of 4.5% was well within the range of

tolerance limit. The reply was not acceptable because the payment was

made without job mix formula. Laboratory test reports were not produced

to audit to ascertain the actual consumption of bitumen on work.



explained that the work was carried out as per job mix formula of another

work at Lahore allowed by the concerned Executive Engineer. The

Committee did not agree with the view point of the department and

directed to get advice from Road Research Material Institute at Lahore

regarding use of material of another work at Lahore could be utilized in

Sialkot road. No progress was shown to Audit till finalization of the

report.

(DP.230)


Okara made payment for the item “Providing/laying Plant Premixed

bituminous carpeting i/c compaction finishing to required camber and

grade density 2.5" thick and 2" thick complete in all respect” for

3,622,800 square feet @ Rs 3,750 per % square feet and 1,238,240 square

feet @ Rs 2,425 per % square feet respectively using bitumen with ratio

4.5% of bitumen whereas actual bitumen used in work was 3.92% as per

laboratory test report of Junior Research Officer Regional Research

Laboratory Provincial Highway Circle Lahore No.1060-A/Sd dated 17th

July, 2007. The recovery of cost of 0.58% for less use of bitumen was not

made from the contractor. Non-recovery of cost of less used bitumen

resulted in overpayment of Rs 9.8 million.

Audit pointed out the overpayment in February 2008. The department

replied in one case, that recovery would be effected from the contractor

23

but no recovery was made. In other case, it was replied that the work was

transferred to Provincial Highway Division Lahore. No further reply

received.



explained that the matter was sub-judice and recovery would be made if

court of law permitted. The Committee directed the department to recover

the amount within 60 days. No progress towards recovery was shown to


(DP.116)


Gujrat made payment for the item “Providing laying Plant Premixed

bitumen Carpeting including compaction finishing to required camber and

grade density complete in all respect” @ Rs 3,300, Rs 3,400, Rs 3,600,

and 4,900 per % square feet using bitumen with ratio 4.5%. Whereas

actual bitumen used in work was 4.1 to 4.2 % as per Laboratory Test

Report dated 28th August, 2006. The recovery of cost of 380.46 ton for

less use of bitumen was not made from the contractor. This resulted in

overpayment of Rs 4.6 million.

Audit pointed out the overpayment in December 2007. The department

replied in three (3) cases that recovery of Rs 3.8 million would be effected

from the next bill of the contractor but no recovery was made. In one case

it was replied that actual bitumen @ 4.5% was used but no documentary

evidence was provided to Audit.


meeting held from 20th to 27th April, 2009 wherein Audit intimated that

recovery / adjustment of Rs 3,844,443 (Rs 498,336+Rs 268,292+

Rs 30,77,815) relating to para No.3, 4, 5 was verified. The Committee

reduced the para to Rs 766,482 relating to para No.6. No progress towards

balance recovery was reported till finalization of the report.

(DP.265)

1.11.4 The Executive Engineer Provincial Highway Division,

Okara made payment for the item “Providing laying Plant Premixed

bitumen Carpeting including compaction finishing to required camber and

grade density 3" thick complete in all respect” for quantity of 1,504,404sft

@ Rs 3,600 per % square feet using bitumen with ratio 4.5%. Whereas the

average ratio of actual bitumen used in 2" and 4" thick layer of asphaltic

24

base course was 3.92% according to Junior Research Officer Regional

Research Laboratory Provincial Highway Circle Lahore letter No. 101/RL

dated 28th August, 2006. The recovery for cost of 0.58% excess bitumen

was not made from the contractor. This resulted in overpayment of Rs 3.9

million.


replied that the recovery would be effected from the next bill of the

contractor. No recovery was made.



explained that the schemes were in progress and price variation would be

recovered on finalization of accounts. The Committee was not agreed with

contention of the department and directed to recover the amount within 60

days. No progress towards recovery was shown to Audit till finalization of

the report.

(DP.113)


Sialkot made payment for the item “Providing/laying Plant Premixed

bitumen Carpeting i/c compaction finishing to required camber and grade

density 2" thick complete in all respect” for 1,984,992 square feet and

1,567,200 square feet with 4.5% ratio of bitumen whereas it was to be paid

with the ratio of 4.1 % as per job mix formula recommended by the Road

Research and Material Testing Institute Lahore. Recovery of cost of 0.4 %

less use of bitumen was not made from the contractor. This resulted in



replied that average rate of packed and bulk bitumen was adopted in the

analysis of rate for the said item. The reply was not acceptable being

irrelevant. Payment was to be made as per actual use of bitumen in the

work.



explained that as per job mix formula supplied by road research and

material testing institute Lahore indicated 4.4% + 0.3% tolerance = 4.1 %

to 4.7 % which was within the range of 4.1% . The committee did not

agree with the view point of the department and directed to recover the

amount within two weeks. No progress towards recovery was reported till


(DP.234)

25


Sahiwal made payment for an item of work “Providing/laying plant

premix carpeting 3.5" thick with Tack/Prime coat using 6% bitumen

content @ Rs 7,417.50 per % square feet. Rate of Rs 7,000 per % square

feet was quoted by contractor. Payment for said item @ Rs 3,600 per %

square feet for first layer of 2 inch thickness was allowed without approval

of job mix formula from the Director Road Research and Material Testing

Institute Lahore. Further, in all other groups of the same scheme, bitumen

@ 4.2% by weight was used as recommended by Director Road Research

and Material Testing Institute Lahore vide No.G-6/Sahiwal/2168 dated

29th April, 2006. Therefore payment of Rs 13.1 million made without

approval of job mix formula and the rate of premix carpeting @ 6% was

unjustified which involved overpayment of Rs 2.91 million.


replied that the bitumen used in carpeting ranges between 4.2% to 4.5%

ratio of bitumen which was within tolerance limit and no recovery was

required to be made, any how, the matter of any abnormality would be

looked into, while finalizing the contract. The reply was not acceptable

because the item of carpeting was to be executed after the approval of job

mix formula from the Road Research and Material Testing Institute

Lahore. Payment was to be made as per actual use of bitumen on work as

per direction of the Finance Department.



agree with the view point of the department and directed for detailed

verification of recovery and final bill by Audit. No progress was shown to


(DP.143)

1.11.7 The Executive Engineer, Provincial Highways Division,



grade density 2" thick and 4" thick complete in all respect” for 1,215,600

square feet @ Rs 3,200 per % square feet and 265,200 square feet

@ Rs 6,400 per % square feet respectively using bitumen with ratio 4.5%.

Whereas the average ratio of actual bitumen used in 2" and 4" thick layer

of asphaltic base course was 3.92% of weight according to Junior

Research Officer Regional Research Laboratory Provincial Highway

Circle, Lahore letter No.101 / RL dated 28th August, 2006. The recovery

for cost of 0.58% for less use of bitumen was not made from the

contractor. This resulted in overpayment of Rs 2.9 million.

26



contractor but no recovery was made.



explained that the schemes were in progress and recovery on account of

less use of bitumen would be effected on finalization of accounts. The

Committee was not agreed with contention of the department and directed

to recover the amount within 60 days. No progress towards recovery was


(DP.112)




grade density 2" thick complete in all respect” for 1,846,800 square feet @

Rs 2,300 per% square feet with ratio 4.5% of bitumen. Whereas only 4.2%

bitumen was to be used by weight of mixture in the item of plant premixed

bituminous carpeting for 2" thick for 100 square feet area, according to job

mix formula for Bituminous carpeting surface course 2.5" thick as

recommended by the Director Road Research and Material Testing

Institute, Lahore vide No.2475/SWO dated 26th September, 2005. The

recovery of cost for less use of 0.3 % bitumen was not made from the

contractor. Non-recovery of cost of less used bitumen resulted in




contractor. No recovery was made.



Committee that admitted recovery was not effected by the department.

The Committee directed the department to effect the recovery within 30


the report.

(DP.109)

1.11.9 The Executive Engineer, Provincial Road Construction

Division, Rawalpindi made payment for an item of work, “Providing and

laying plant premixed bituminous carpeting 2" thick” per% square feet for

a quantity of 314,880 square feet. The same was paid for 4.5% ratio by

27

weight of mixture. Whereas, it was to be paid with ratio of 4.1% as per

recommended ratio and rate was to be reduced for less use of bitumen.

This resulted in overpayment of Rs 326,860.

Audit pointed out the overpayment in October 2007. The department

replied that the work was in progress. The quantity/rate would be adjusted

as per job mix formula or bitumen used in the work as per results of

bitumen test and instructions displayed on website by the Finance

Department. The reply was not acceptable as adjustment of less use of

bitumen cost was not made in interim payments of contractor. Moreover,

no recovery was made.



committee that no recovery was made by the department. The Committee

directed the department to effect the recovery within one month. No

progress towards recovery was reported till finalization of the report.

(DP.22)


Jhelum made payment for the item “Providing/laying Plant Premixed

Bitumen Carpeting” i/c compaction finishing to required camber and

grade density 2" thick complete in all respect” for 348,000 Square feet @

Rs 3,151 per % square feet with 4.5% ratio of bitumen. Whereas only

4.2% bitumen was to be used by weight of mixture in the item of plant

premix bitumen carpeting for 2" thick for 100 square feet area, as per job

mix formula recommended by the Director Road Research and Material

Testing Institute Lahore vide No.G-6/Chakwal/2157 dated 13th May, 2006.

The recovery of cost of 0.3 % less use of bitumen was not made from the

contractor. Non-recovery of cost of less used bitumen resulted in

overpayment of Rs 269,780.

Audit pointed out the overpayment in November 2007. The department

replied that recovery would be made from the contractor. No recovery was

made.


meeting held from 20th to 27th April, 2009 wherein the view point of the

department that the job mix formula came to 4.6% instead of 4.2% was

not accepted by the Committee and directed for detailed verification from

Audit. No progress was shown to Audit till finalization of the report.

(DP.99)

28




density 2" thick complete in all respect” for 628,800 square feet with 4.5%

ratio of bitumen whereas it was to be paid as per job mix formula @ 4.4%

recommended by Road Research and Material Testing Institute Lahore

vide No G-6/Sialkot/1975 dated 26th June, 2006. The recovery of cost of

0.1 % for less use of bitumen was not made from the contractor. This

resulted in overpayment of Rs 209,566.


replied that as per approved job mix formula the percentage of bitumen

was 4.1% to 4.7% and ratio of 4.5% was well within the range of

tolerance. The reply was not acceptable because department had admitted

that the bitumen contents used were 4.4% (4.1 + 4.7/2). No laboratory test

reports of actual work done were produced to verify the facts. Payment

was to be made as actual use of bitumen on the work.



explained that as per job mix formula, supplied by road research and


to 4.7 % which was within the range of 4.1%. The Committee did not


amount within two weeks. No progress towards recovery was shown till


(DP.231)



bitumen Carpeting i/e compaction finishing to required camber and grade


Rs 1,942 per % square feet with 4.5% ratio of bitumen. Whereas as per job

mix formula bitumen @ 4.4% was to be used as recommended by the

Senior Research Officer, Road Research and Material Testing Institute

vide No.G-6/ Sialkot/2238 dated 22nd May, 2006. The recovery of cost of

0.1% bitumen less used was not made from the contractor. Non-recovery

of cost of less used bitumen resulted in overpayment of Rs 143,447.


replied that as per approved job mix formula the percentage of bitumen



29

that less ratio i.e. 4.4% (4.1 + 4.7/2) of bitumen was actually used on

work, for which recovery was to be made. Further, laboratory test reports

were also not produced to audit to verify the actual consumption of

bitumen.



(DP.370)





Rs 3,000 per % square feet for each group with 4.5% ratio of bitumen.

Whereas as per job mix formula bitumen @ 4.4% was to be used as

recommended by the Senior Research Officer, Road Research and

Material Testing Institute vide No.G-6/Sialkot/2238 dated 22nd May, 2006.

Recovery of cost of 0.1 % for less use of bitumen was not made. This



replied that as per approved job mix formula, the percentage of bitumen



that bitumen contents used were 4.4% (4.1 + 4.7/2). No laboratory test

report of actual work done was produced to verify the facts. Payment was

to be made as actual use of bitumen on the work.



explained that as per job mix formula supplied by road research and


to 4.7 % which was within the range of 4.1%. The Committee did not


amount within two weeks. No progress was shown to Audit till


(DP.233)

Para 1.12 Undue financial aid to contractors due to non-

submission of performance security – Rs 56.5 million

According to clause 7 of the contract agreement and item (h) of

“Memorandum of Work” and Finance Department instructions vide

No.RO(TECH) FD-1-2/83 (VI) (P), dated 6th April, 2005, Performance

30

security in the form of “Bank Guarantee” equal to 10% or 5% of tender

price in case of tenders with cost exceeding Rs 25 million or Rs 50 million

should be obtained from the “Bank of Punjab” or any scheduled Bank of

Pakistan within 15 days of the receipt of acceptance letter by the

contractor.


Dera Ghazi Khan awarded the works for Rs 74.7 million, Rs 238.1 million

and Rs 202.3 million to the contractors but did not obtain the performance

security in shape of bank guarantee @ 5% of contract sum. Non-adherence

to the agreement clause resulted in undue financial aid to the contractors

amounting to Rs 25.8 million.

Audit pointed out the undue financial aid to contractors in November,

2007. The department replied that the performance security was required

to safeguard the interest of government regarding execution of work and

the same was to be released after three month or final bill which ever was

earlier as per clause-7 of the contract agreement. Further, the works were

allotted in 2005-06 and the contractors had successfully performed the

contracts, therefore recovery of performance security was not justified at

this stage. The reply was not acceptable because the contracts stipulations

regarding obtaining of bank guarantees were not implemented. It required

condonation from the Finance Department.


meeting held from 20th to 27th April, 2009 wherein the explanation of the

department was not accepted by the Committee and the department was

directed for condonation from Finance Department. No progress was


(DP.135)


Rahim Yar Khan did not obtain the performance security in the form of

bank guarantee @ 5% from the contractor against the work allotted for

Rs 332.5 million within fifteen days after the allotment of work. Non-

adherence to agreement clause resulted in undue financial aid to the

contractor amounting to Rs 16.6 million.

Audit pointed out the undue financial aid to the contractor in November

2007. The department replied that the bank guarantee was available with

the department. The performance security/bank guarantee was not

produced during audit and also with reply.

31


meeting held from 20th to 27th April, 2009 wherein the audit informed the

Committee that performance security was not obtained within 15 days of

issuance of acceptance letter. The Committee directed the department to

seek condonation from Finance Department. No progress was shown to


(DP.27)

1.12.3 The Executive Engineer, 6th Provincial Buildings Division,

Lahore awarded contract for Rs 297.6 million but neither obtained the

performance security in the shape of bank guarantee @ 5% of contract

sum, nor earnest money of the contractor amounting to Rs 6.4 million was

confiscated in violation of clause-7 of contract agreement. This resulted in

non-forfeiture of earnest money of Rs 6.4 million.

Audit pointed out the non forfeiture of earnest money in January 2007.

The department replied that the work was of urgent nature and

performance of contractor was satisfactory. The period more than three

(03) months had been elapsed and performance security could not be taken

at this stage after that period. The reply was not satisfactory because

according to clause-7 of the contract, the department was bound to obtain

performance security otherwise the earnest money was to be forfeited.


meeting held from 20th to 27th April, 2009 wherein the Committee took a

serious view regarding non-obtaining of performance security and directed

to refer the case to the Finance Department for condonation after obtaining

the performance security. No progress was shown to Audit till finalization

of the report.

(DP.294)


Multan did not obtain the performance security in the form of bank

guarantee @ 5% of contract cost of Rs 78 million within fifteen days after

the allotment of work. Non-adherence to the agreement clause resulted in

undue financial aid to the contractor amounting to Rs 3.9 million.

Audit pointed out the undue financial aid in August 2007. The department

replied that the contractor had been directed to provide the performance

security. The reply was not acceptable because the department failed to

fulfill contractual obligation. The irregularity needed condonation from

the Finance Department.

32



agree with the view point of the department and directed to probe for fact

finding regarding performance security. No progress was shown to Audit

till finalization of the report.

(DP.77)


Okara, allotted the work for Rs 47.2 million against the estimated cost of

Rs 50.9 million which was 7.46% below on 12th December, 2006 but did

not obtain the additional performance security in form of bank guarantee.

Non-observance of instructions issued by the Finance Department resulted

in undue financial aid to the contractor amounting to Rs 3.8 million.

Audit pointed out the un-due financial aid to the contractor in February

2008. The department replied that the work was at completion stage and

sufficient security deposit was available with the department. The reply

was not acceptable because the additional bank guarantee was not

obtained. The irregularity needed condonation from the Finance

Department.



explained that the work was completed and recovery of performance

security at this stage was not required. The Committee was not agreed

with the view point of department and directed to refer the case to the

Finance Department for condonation. No progress towards recovery was


(DP.120)

Para 1.13 Non-recovery/overpayment due to non-deduction in

rate on account of price variation - Rs 46.4 million

As per clause 55(1) of contact agreement, where price (increase or

decrease) to the extent of 5% or more, in the price of any item takes place

after the acceptance of tender and before the completion of contract, the

amount payable/recoverable shall be adjusted to the extent of actual

variation in the cost of item concerned.


Faisalabad allowed the contractor to use bitumen of bulk supply (in

Bouzer) for laying of premix carpeting but did not recover the cost.

33

Further the base and current rates for bitumen were taken as Rs 17,960 and

Rs 26,950 per ton for price variation payment. Whereas those were to be

taken as Rs 19,920 (on 28th September, 2004 the date of administrative

approval) and Rs 24,700 (date of measurements in measurement book on

15th May, 2007). This resulted in unjustified payment of price variation of

Rs 14.6 million and non-recovery of Rs 7.6 million for bitumen used in

bulk supply.

Audit pointed out the non-recovery in September 2007. The department

replied that the deduction pertained to triple surface treatment work

whereas they had laid plant premixed carpeting of bulk bitumen as per

analysis of rate of premix and prime coat. The reply was not acceptable

because the department had allowed price variation showing base rate

Rs 17,960 per ton whereas web site rate was Rs 19,920. Moreover,

analysis of rate was not produced in support of reply.



agree with the view point of the department and directed to effect recovery

of difference of rate of bulk supply of bitumen and packed supply. No

progress was shown to Audit till finalization of the report.

(DP.71)

1.13.2 The Executive Engineer, 6th Provincial Building Division,

Lahore did not recover the price for de-escalation on steel/cement because

the base rates of steel and cement were reduced by the manufacturers from

Rs 42,000 per ton to Rs 38,000 per ton and from Rs 310 per bag to Rs 225,

Rs 181 and Rs 180 per bag respectively during the period of execution

from October 2006 to December 2007. Non-adherence to the agreement

clause resulted in non-recovery of Rs 7.3 million.


replied that recovery on account of decrease in rate of steel/cement would

be made. But no recovery made.


meeting held from 20th to 27th April, 2009 wherein the PDP consisting of

5 No. APs out of which recovery of Rs 61,254 regarding AP No.1709 was

verified. The remaining APs were deferred for recoveries. The para was

reduced to Rs 7.263 million. No progress was shown to Audit till


(DP.296)

34

1.13.3 The Executive Engineer, Provincial Building Division,

Gujranwala did not recover the difference of rates of cement from the

contractors because the base rates of cement were reduced during the

execution of work i.e. from June 2006 to January 2008 from Rs 228 per

bag to Rs 180 per bag and Rs 204 per bag, from Rs 310 per bag to Rs 225,

Rs 204 and Rs 181 per bag, from Rs 275 per bag to Rs 230, Rs 228,

Rs 225, Rs 204 and Rs 180 per bag and from Rs 280 per bag to Rs 225

and Rs 181 per bag respectively as per input rates issued by the Finance

Department. Non-adherence to the agreement clause resulted in non-

recovery of Rs 4.9 million.


replied that either the recovery had been effected or would be effected in

next running bills. No recovery was got verified from audit.


meeting held from 20th to 27th April, 2009. As regard AP No. 1722, the

recovery of Rs 1.799 million was verified. The recovery of remaining APs

was directed to effect within 30 days. The para was reduced to Rs 3.108

million. No progress towards recovery was shown to Audit till finalization

of the report.

(DP.311)

1.13.4 The Executive Engineer, 5th Provincial Building Division,

Lahore did not recover the difference of rates of cement from the

contractor because the base rates was reduced from Rs 310 and Rs 280 per

bag to Rs 275, Rs 228, Rs 225 and Rs 204 per bag during the period of

execution of work from August 2006 to June 2007 as per input material

rates displayed on the Finance Department web site for Lahore District.

Non-adherence to the agreement clause resulted in non-recovery of Rs 3.5

million.

Audit pointed out the non-recovery in December 2007. The department

replied that the recovery, if due, would be effected at the time of

finalization of the contractor’s account. But no recovery was made.



informed the Committee that the recovery was not made because the

works were in progress. The Committee directed the department to effect

the recovery within one month. No progress towards recovery was shown

to Audit till finalization of the report.

(DP.293)

35


Division Rawalpindi did not recover the amount of price variation on

account of decrease in base rates of cement from Rs 280, Rs 275 and

Rs 260 per bag to Rs 235, Rs 228 and Rs 205 per bag and steel from

Rs 39,000 and Rs 40,200 to Rs 34,200 per ton during execution of work

from April 2006 to July 2007 to the extent of 5% or more issued by the

Finance Department. This resulted in non-recovery of Rs 3.4 million.


replied that neither the contractor was made payment on account of

increase in prices of bitumen and steel nor their decrease in prices was

adjusted. Necessary variation i.e. increase/decrease would be adjusted in

accordance with notified rates by the competent authority. The reply was

not acceptable because variations i.e. decrease in price of cement to the

extent of 5% or more was not made in running bills of the contractor.

The matter was discussed again in the Departmental Accounts Committee


accepted the recovery of Rs 438780 effected by the department and

reduced the amount of para to Rs 3,001,543. The Committee also directed

the department to effect the balance recovery within 30 days. No

compliance towards balance recovery was reported till finalization of the

report.

(DP.24)


Jhelum did not recover the price de-escalation on cement because the base

rates of cement were decreased by the manufacturers from Rs 5,840 and

Rs 5,600 per ton to Rs 4,000 and Rs 3,900 per ton respectively during the

period of execution from October 2006 to June 2007. Non-adherence to

the agreement clause resulted in non-recovery of Rs 3 million.

Audit pointed out the non-recovery in November 2007. The department

replied that recovery on account of decrease in rate of cement would be

made. But no recovery was made.



Committee that the department made the price variation statement on the

basis of rates notified by the Chief Engineer Building. The Committee did

not agree with the departmental view point and directed to effect recovery

on the basis of rates issued by the Finance Department. No progress was


(DP.97)

36


Dera Ghazi Khan could not recover the price de-escalation on cement

because the rate of cement was decreased by the manufacturers from

Rs 310 per bag and Rs 292 per bag to Rs 190 per bag during the period of

execution of work. Non-adherence to the agreement clause resulted in

non-recovery of Rs 4.4 million.


replied that the record of the schemes was being thrashed out and recovery

on account of decrease in the rate of cement above 5% would be effected.

No recovery was made.


meeting held from 20th to 27th April, 2009 wherein regarding para No.169,

the amount was reduced to Rs 600,217 by the Committee. The department

explained that the Para No. 176 for Rs 710484 was transferred to

provincial Highway Division Muzafargarh. The para No.177 was reduced

to Rs 10,49,078 and the para No.178 was reduced to Rs 448,031 by the

Committee after verification by the Audit. Overall DP amount was

reduced to Rs 20,97,326. No progress towards verification of the balance

amount was shown to Audit till finalization of the report.

(DP.46)


Gujranwala did not recover the difference of rates of cement and bitumen

from the contractor because the rates of cement were reduced during the

period of execution i.e. October, September, August 2006, May, July,

August 2007 to February 2008 from Rs 310 per bag and Rs 275 per bag to

Rs 204 per bag, Rs 225 per bag and Rs 275 per bag respectively and

bitumen from Rs 30.20 per kilogram to Rs 27.90 per kilogram as per input

material rates issued by the Finance Department. Non-adherence to the

agreement clause resulted in non-recovery of Rs 2 million.

Audit pointed out the non-recovery in February 2008. The department

replied that the adjustment in price variation would be carried out in next

bill of contractor. But no recovery was made.



accepted the recovery of Rs 384,595 and reduced the para to Rs 1.698

million with the direction to effect the balance recovery within 2 weeks.

No progress towards balance recovery was shown to Audit till finalization

of the report.

(DP.270)

37


Mianwali did not recover the difference of rates of cement from the

contractor because the rates were reduced from Rs 292 per bag to Rs 180,

Rs 228, Rs 225 and Rs 275 per bag during the period of execution of work

from January 2006 to October 2007 as per rates displayed on the Finance

Department web site for Mianwali District. Non-adherence to the

agreement clause resulted in non-recovery of Rs 2 million


replied that after completion of project, the increase/decrease would be

calculated and recovered accordingly. The reply was not acceptable

because recovery from each contractor’s payment was required. The due

recovery as per agreement was not made.



Committee that admitted recovery was not made by the department. The

Committee directed the department to effect the recovery within one

month. No progress towards recovery was shown to Audit till finalization

of the report.

(DP.346)


Sahiwal did not recover the price de-escalation on cement because the

base rate of cement was decreased from Rs 310 per bag to Rs 182 per bag

during the period of execution from January 2007 to September 2007.

Non-adherence to the agreement clause resulted in non-recovery of Rs 1.8

million.


replied that the recovery would be made from the contractor on

finalization of work after adjustment of price variation. But no recovery

made.



detailed verification of statement/recovery amounting Rs 145,629 from

M.B regarding AP No.1639, 1642, 1645, 1647 & 1651. The department

stated that these paras were transferred to the Executive Engineer,

Provincial Building Division, Lodhran alongwith relevant record and no

record of these paras was produced. The Committee took a serious view

and directed record for verification by Audit. No progress was shown to


(DP.182)

38


Gujrat did not recover the difference of rates of cement from the

contractor because the base rate of cement was reduced during the period

of execution i.e. March 2005 to August 2006 from Rs 310, Rs 292, Rs 280

and Rs 185 per bag to Rs 275, Rs 228, Rs 225, Rs 185 and Rs 175 per bag

respectively as per input material rates issued by the Finance Department.

Non-adherence to clause-55 of agreement resulted in non-recovery of

Rs 1.6 million.


replied that no formal notification of price of cement had been issued since

1996, so the allowance for escalation/de-escalation could not be adjusted.

The reply was not acceptable because the rate was decreased by more than

5% as per material input rate displayed on website of Finance Department.


meeting held on 21st February, 2009 wherein the Committee deferred the

para for recovery/adjustment. No compliance of the Committee directive

was reported till finalization of the report.

(DP.168)


Sahiwal did not recover the price de-escalation on mild steel bars and

cement because the base rates of both items were decreased by the

manufacturers from Rs 35,200 per ton and Rs 292 per bag to Rs 32,200

per ton and Rs 185 per bag respectively during the period of execution of

work from August 2006 to November 2007. Non-adherence to the

agreement clause resulted in non-recovery of Rs 905,794.


replied that the recovery of price variation would be made at the time of

completion of contract. But no recovery was made.



explained that the Para was transferred to the Executive Engineer,

Provincial Building Division, Lodhran alongwith relevant record. No

record was produced by the department for verification. The Committee

took a serious view and directed record verification within fifteen days.

No progress was shown to Audit till finalization of the report.

(DP.176)

39


Mianwali did not recover the difference of rate of cement because the base

rate was reduced from Rs 292 per bag to Rs 170, Rs 180, Rs 225 and

Rs 275 per bag during the period of execution of work from January 2006

to October 2007 as per rates displayed on the Finance Department web site

for Mianwali District. Non-adherence to the agreement clause-55(I)

resulted in non-recovery of Rs 892,296.


replied that after completion of project increase/decrease would be

calculated and recovery would be effected. The reply was not acceptable

because recovery was due in each payment to contractor. Undue financial

benefit was given to contractor.



agreed with the explanation of the department and directed to effect

recovery within one month. No progress towards recovery was shown to


(DP.348)


Faisalabad did not recover the difference of rate of cement from the

contractor because the base rates of cement were reduced during the

period of execution i.e. July 2006 to June 2007 from Rs 310, Rs 290 and

Rs 225 per bag to Rs 275, Rs 225, Rs 170 and Rs 228 per bag as per input

material rates issued by the Finance Department. Non-adherence to

agreement clause resulted in non-recovery of Rs 766,043.

Audit pointed out the non-recovery in August 2007. The department

replied that the price variation of concerned item would be made in the

next running bill of the contractor accordingly. No recovery was made.



accept the view point of the department regarding non-issuance of rate of

Javadan cement Karachi and directed to effect recovery within 30 days.

No progress towards recovery was reported till finalization of the report.

(DP.209)


Faisalabad did not recover the difference of rate of cement from the

contractor because the rate of cement was reduced during the period of

40

execution of items pertaining to cement from Rs 275 per bag to Rs 170,

Rs 180 and Rs 225 per bag as per input rates displayed on web site for

Faisalabad District. Non-adherence to agreement clause resulted in non-

recovery of Rs 758,060.


replied that necessary adjustment would be made in the next bill of the

contractor. But no recovery was made.




amount of price variation within 30 days. No progress towards recovery

was shown to Audit till finalization of the report.

(DP.49)


G.O.R. Lahore did not recover the price de-escalation on cement from the

contractors due to decrease in the base rates of cement from Rs 310 per

bag to Rs 180 per bag i.e to the extent of 5% or more, during the period of

execution from May 2006 to October 2007 as per input material rates

displayed by the Finance Department through website. Non-adherence to

the agreement clause resulted in non-recovery of Rs 479,397.


replied that the recovery would be made from the contractor but recovery

was not made.


meeting held on 21st February, 2009 wherein no record was produced by

the department. The Committee deferred the para for recovery /

adjustment. No compliance of the Committee directive was reported till


(DP.217)


Sargodha did not recover the difference of rate of cement from the

contractor because the base rate was reduced from Rs 310 per bag to

Rs 175 and Rs 228 per bag during the period of execution of work from

February 2007 to April 2007 as per rates displayed on the Finance

Department website for Sargodha District. Non-adherence to agreement

clause resulted in non-recovery of Rs 474,955.

41


replied that actual recovery of items where rates had been decreased by

more than 5% would be adjusted. No progress toward recovery was shown

to audit.


meeting held from 20th to 27th April, 2009. The Committee was not

satisfied with the explanation of the department and directed the

department to effect recovery of Rs 474,955 within 15 days. No progress

towards recovery was shown to Audit till finalization of the report.

(DP.343)


Rawalpindi did not recover the difference of rates of cement from the

contractor because the base rate of cement was reduced during execution

i.e. from 29th May, 2006 to March, 2007; from Rs 310 per bag to Rs 275,

Rs 237 and Rs 205 per bag as per input rates issued by the Finance

Department. Non-adherence to agreement clause resulted in non-recovery

of Rs 440,970.


replied that the price variation of cement was not allowed on the basis of

website. The base price of cement for variation was to be taken on the

rates notified by the Secretary Communication and Works Department

through the Chief Engineer concerned as per Finance Department letter

No.RO(Tech)FD-1-2/82 (vi)(p) dated 6th April, 2005. The reply was not

acceptable as technical sanctioned estimate rates were approved on the

basis of input material rates issued by the Finance Department and the

market rates of cement during execution was decreased by more than 5%.

Hence recovery was to be made.


meeting held on 21st February, 2009 wherein the department promised to

effect the recovery. No compliance of the Committee directive was


(DP.69)


Rawalpindi paid price variation of bitumen on base rate of Rs 20,454 per

ton instead of admissible rate of Rs 22,410 per ton notified by the Chief

Engineer at the time of tendering. Incorrect application of base rate


42

Audit pointed out the overpayment in September 2007. The department

replied that in the same bill not only the price variation of bitumen had

been paid but the price variation of cement was also made which was

Rs 76,754 less then the admissible amount. Thus the recovery of

Rs 64,487 was made from the contractor’s security. The reply was not

acceptable being irrelevant. Incorrect base rate for calculation of price

variation of bitumen was applied which resulted in overpayment to

contractor.


meeting held from 20th to 27th April, 2009. The Committee was not agreed

with the contention of the department and reduced the para to Rs 76754

and directed to effect balance recovery or detail record verification for

adjustment of price variation be produced to audit within 15 days. No

compliance of the Committee directive was made till finalization of the

report.

(DP.106)

Para 1.14 12 Nos. lost measurement book involving expenditure

without audit – Rs 44.7 million

As per instruction No. 18 printed on preface of measurement book, in case

a measurement book is lost, an immediate report should be made of the

facts of the case forwarded to the government together with the

explanation of all parties concerned or responsible for the loss.

The Executive Engineer, 6th Provincial Buildings Division Lahore lost 12

measurement books involving record entries of work done for Rs 44.7

million by a Sub-Engineer of division on 25th September, 2007. Despite

the laps of considerable period neither measurement books were traced out

nor any action against the person at fault was taken. Audit of work done of

measurements recorded in said measurement books could not be carried

out. This resulted in lost of 12 No.MBs involving expenditure of Rs 44.7

million without audit.

Audit pointed out irregularity in January 2008. The department replied

that the bag containing measurement books fell down from the motorcycle

of the sub-engineer on his way to home. The First Investigation Report

regarding the missing measurement books were lodged with police and

also advertised in the newspaper. No progress was reported by the police.

However, efforts were made to recover the measurement books. The reply

was not acceptable because the measurement books were the most

important record of payment and should always be kept in safe custody in

43

office. Reasons why the Sub-Engineer was taking the measurement books

to his home were also not explained. No departmental action against the

official concerned was intimated.



informed that the inquiry was under process. The Committee directed the

department to complete the inquiry within 30 days under intimation to

audit. Compliance of the Committee directive was not reported to audit till


(DP.297)

Para 1.15 Loss due to non-recovery of cost of blasted material Rs

20.2 million

Cost of the surplus stone for 13.8 million cft quantity was to be recovered

@ Rs 300/- % cft from the contractor as per condition No.6 of the

acceptance letter.

The Executive Engineer, Provincial Highway Division, Mianwali paid an

item of work “Excavation of hard/medium rock” for 11,084,862 cubic

feet. Out of which 4,358,055 cubic feet quantity of stone was shown used

in work. But cost of surplus stone for 6,726,807 cubic feet was not

recovered as per provision of acceptance letter. This resulted in non-



replied that the quantity of cutting rock was not hard rock but consisting of

different type of material like hard rock, soft rock, and slate shale etc. The

revised estimate of project was in the process for revised administrative

approval and technical sanctioned estimate. The reply was not convincing

because the amount of recovery was mentioned in acceptance letter hence

revision of estimate would not prevail over contract provision as per note-I

below rule 7.28 of Departmental Financial Rules.



explained that a committee had already been constituted by the C&W

department to resolve the issue/matter. The Committee directed for

findings of the committee with the request to expedite the proceedings. No

progress was shown to audit till finalization of the report.

(DP.345)

44

Para 1.16 Undue payment of compound interest - Rs 19.7

million

Section 6, 17(4) and 34 of the Land Acquisition Act, 1894 provides that in

case of urgency, the provincial government through no such award has

been made, take possession of land needed for public purpose. When the

amount of such compensation (award) is not paid on or before taking

possession of land, the collector shall pay the amount awarded with

interest thereon @ 8% per annum from the time of taking possession until

it shall have been so paid.

The Land Acquisition Collector, Punjab Highway Department, Lahore and

Ring Road Project, Lahore allowed the payment of interest w.e.f. 31st

October, 2002 and 15th September, 2003 to the land affectees instead of

w.e.f. 15th August, 2006, 18th November, 2006 and 10th May, 2007. The

dates of notification issued under section 17(4) and 6 of Land Acquisition

Act 1894 for urgent taking over possession of 80 kanal @ Rs 100,000 (1st

case), Rs 25,000 & Rs 10,000 (Residential), Rs 80,000 & Rs 20,000

(Commercial) and Rs 4,000 (Agriculture) for second case. This resulted in

undue payment of interest for Rs 19.7 million.

Audit pointed out the undue payment in July 2007. The department did not

reply.



(DP.367)

Para 1.17 Irregular award of works - Rs 16.75 million

As per para 2.61 and 2.82 of Buildings & Roads Department Code, tender

should always be invited after the estimates have been technically

sanctioned and contract documents have been approved. No work shall be

commenced unless administrative approval by competent authority is

given and proper detailed design and estimate have been sanctioned.


Gujranwala called and opened the tenders for Rs 404.2 million without

getting technical sanctioned estimate. Administrative approval of work

was accorded in November 2006 and technical sanctioned estimate was

accorded for Rs 408.9 million in January 2007 and work was allotted on

Market Rate System (MRS) of 1st quarter 2007 instead of 4th quarter 2006.

Delay in calling/opening tender without T.S. estimate resulted in extra


45

Audit pointed out extra expenditure in February 2008. The department

replied that the tenders were called on urgent basis and after obtaining

approval of the DNIT well before the opening date of tenders. The

acceptance was issued after technical sanctioned estimate. The reply was

not acceptable because the tenders were called and opened without

technical sanctioned estimate, further delay in accord of technical

sanctioned estimate also caused for revision of MRS rates of first quarter

2007 instead of rates of 4th quarter of 2006 which caused acceptance of

tender at higher rates.


meeting held from 20th to 27th April, 2009. The Committee directed the

department to probe the matter for irregularities and financial loss within

30 days. No progress was shown to Audit till finalization of the report.

(DP.224)

1.17.2 The Executive Engineer, Provincial Machinery

Maintenance Division, Rawalpindi incurred expenditure of Rs 3.6 million

without prior technical sanctioned estimate of the work. Further ex-post-

facto sanction of estimate to annual running of premix plant was accorded

by the Executive Engineer instead of obtaining sanction from the Finance

Department. Disregard of the government instructions resulted in irregular


Audit pointed out the irregularity in December 2003. The department

replied that sanction was accorded in the best interest of the government to

avoid audit observation. The reply was not acceptable because expenditure

was incurred in violation of para 2.82 of Buildings & Roads Department

Code.


meeting held on 14th May, 2008. The Committee directed the department

to get the technical sanctioned estimate verified by the Audit. No

compliance was made. The matter was discussed again in the

Departmental Accounts Committee meeting held from 20th to 27th April,

2009. The Audit informed the committee that the department did not

produce the TSE for verification in compliance of previous Committee

directive. The department explained that TSE would be produced for

verification within 2 weeks. No compliance of the Committee directive

was made till finalization of the report.

(DP.321)

46


Bahawalpur (DOR Bahawalnagar) called the tender in May 1995 against

DNIT cost of Rs 24.5 million without prior availability of administrative

approval/technical sanctioned estimate (administrative approval accorded

in November 1995 and technical sanctioned estimate in March 1996).

Tender was accepted for Rs 28.7 million i.e. 16.94% above the amount put

to tender of Rs 24.5 million of the permissible limit of 4.5% amounting to

Rs 25.6 million [i.e Rs 24.5 million + (Rs 24.5 x 4.5% above)]. Higher

tender rates received in May 1995 were accepted by comparing prevailing

rates of March 1996. This resulted in irregular calling / acceptance of

tender for Rs 28.7 million, indicating loss of Rs 3 million (Rs 28.7 million

– Rs 25.6 million).

Audit pointed out the irregularity in February 2007. The department

replied that the acceptance letter issued by the competent authority was

within the permissible limit of 4.5%. The estimated cost for the road in

question was Rs 27.4 million and acceptance letter amount was Rs 28.7

i.e. 4.4% above. The reply was not acceptable because DNIT of work to

be done was Rs 24.5 million in May 1995 and contractor’s rates for

Rs 28.7 million. No administrative approval/technical sanctioned estimate

was available on the tender opening dates. The department had compared

the higher tendered rates of May 1995 with the amended administrative

approval/technical sanctioned estimate accorded on the prevailing rates of

March 1996. Tender was to be accepted on the amount put to tender in

May 1995 and not with rates of March 1996. The department should

obtain condonation sanction from the Finance Department for calling of

tender without administrative approval/technical sanctioned estimate

besides recovery of loss.


meeting held from 20th to 27th April, 2009. District Officer Road Bhawal

Nagar stated that relevant record of para was not transferred to that

formation from Provincial Highway Division Bahwalpur. The Committee

directed to provide relevant record to Audit for compliance within one

month. No progress was shown to Audit till finalization of the report.

(DP.371)


Maintenance Division, Lahore called the tender on 15th April, 2006 for

Rs 2.5 million without administrative approval/technical sanctioned

estimate and acceptance letter issued for Rs 2.9 million which was 18%

above the unsanctioned estimate against the permissible limit of 4.5%.

47

Later on, the estimate for Rs 2.4 million was sanctioned on 31st August,

2006. This resulted in irregular award/execution of work for Rs 2.9

million.

Audit pointed out the irregularity in August 2007. The department replied

that the quantity of work was not defined by the client department and

tender was invited on the basis of quantities shown in administrative

approval. At site, the scope of work was altered/ changed by the client

division, so the second acceptance letter was issued on the basis of

technical sanctioned estimate and not on the basis of administrative

approval. The reply was not acceptable because the committed irregularity

was not covered under any rule and also resulted in non-transparent

tendering due to undefined work.



with the explanation of the department and directed that irregularity stands

established and requires condonation sanction from the Finance

Department. No progress was shown to Audit till finalization of the report.

(DP.87)


Maintenance Division, Lahore called the tenders / awarded the work

without administrative approvals and technical sanctioned estimates.

Further, the accepted tenders were beyond the permissible limit of 4.5% of

technical sanctioned estimates accorded after award of works. Irregular

award of contracts for Rs 22 million resulted in loss of Rs 1.7 million to

government.

Audit pointed out loss due to irregular allotment of work in August 2007.

The department replied that the division was performing its role as a task

force to execute and complete the urgent/emergent works of the

department in a tight schedule of time frame. All those works were carried

out under the express directions of the government i.e. Secretary to

Government and at the time of execution, all the concerned departments

were aware of the facts. This division accepted the work to the entire

satisfaction of the client rather the balance funds were still awaited to clear

the liabilities. The department admitted the irregularities. The work could

be awarded/ executed without technical sanctioned estimate/administrative

approval and fund in emergent cases only in the manner prescribed in para

2.89(2) of Punjab Public Works Department Code and para 2.82(2) of

Buildings & Roads Department Code. No such express order of competent

authority under para 2.89(2) or 2.82(2) ibid were issued to execute the

48

work without fulfillment of codal formalities. Further, the tenders were

accepted beyond permissible limit of 4.5% over the technical sanctioned

estimate. The department may obtain condonation sanction from the

Finance Department and also make good loss sustained from those

responsible.



with the explanation of the department and directed that irregularity stands

established and requires condonation sanction from the Finance

Department. No compliance of the Committee directive was made till


(DP.86)


Maintenance Division, Lahore awarded the contract in April 2007 without

prior approval of technical sanctioned estimate. The tender was accepted

for Rs 6.5 million @ 18.2% above the estimate costing Rs 5.5 million

which was accorded in May 2007 after contract was awarded. As per

above instruction the admissible amount of acceptance was to be Rs 5.7

million. This resulted in irregular award of work of Rs 6.6 million and

excess acceptance of tender at higher rate by Rs 750,000.

Audit pointed out the irregular award of work in August 2007. The

department replied that the quantities of work were not properly defined

by the client division and tenders were invited on the basis of quantities

shown in administrative approval. On ground, the scope of work was

altered / changed by the client division at a number of times, so the

acceptance was issued on the basis of technical sanctioned estimate. The

department had admitted the irregularity which depicted that the work was

allotted without any transparent tendering process which led to loss to

government and irregular award of work.



with the explanation of the department and directed that the irregularity

stands established and requires condonation sanction from the Finance

Department. No compliance of the Committee directive was made till


(DP.72)

49

Para 1.18 Short recovery on account of tender fee – Rs 15.7

million

As per Communication & Works Department notification No.SOB (II)-2-

11-178-11 dated 3rd September, 1997, Government of the Punjab re-fixed

price of tender documents at rate 0.030% of the cost of work involved.

The Secretary, Communication & Works Department issued the bid

document to the contractors on charging tender fee @ Rs 2,000 per set

from 12 bidders against the admissible rate of Rs 1.3 million (0.030% of

the tendered amount i.e Rs 4,376 million) for one set for one bidder. This

resulted in short recovery of tender fee for Rs 15.7 million (i.e Rs 1.3

million x 12) for twelve sets for twelve bidders.

Audit pointed out the short recovery in February 2008. The department

neither furnished the reply to the audit observation nor defended advance

para inspite of availability of the record.



(DP.356)

Para 1.19 Loss due to non obtaining of bank guarantee – Rs 10

million

The Executive Engineer, Provincial Highway Division, Bahawalpur

awarded a contract for Rs 100 million in June 1996 with a completion

period of three years. Performance bond as per item (h) of Memorandum

read with clause 7 of contract for Rs 10 million was not obtained from

contractor. The contractor left the work incomplete. The contract was

rescinded under clause 60 and performance bond could not be forfeited in

favour of government. This resulted in loss of Rs 10 million.

Audit pointed out the loss in April 2007. The department replied that the

then Executive Engineer was murdered in 2000. The copy of para was sent

to the then Divisional Accounts Officer to explain the reason of non-

recovery of performance bond. The reply was not acceptable because the

contract stipulation in time was not implemented which resulted in loss.


meeting held from 20th to 27th April, 2009 wherein department explained

that the required security of the work in the shape of the bank guarantee

50

was not obtained by the Executive Engineer of that time. Now he has been

expired. The Committee directed the department to obtain condonation

from the Finance Department and further compliance should be made by

the Provincial Highway Division Bahawalpur. No progress was shown to

audit till finalization of the report.

(DP.376)

Para 1.20 Non-recovery of utility charges - Rs 9 million

As per clause 10.2.1 of concession agreement, the Road Built and

Operating Company (RBOC) shall be responsible for all cost and expense

associated with the removal or diversion of public utilities currently

existing in the right of way and services ancillary thereto such as sui-gas,

electricity, water, sewerage and telecommunication including coaxial

cable and optic fiber facilities required for the work.

The Executive Engineer, Provincial Highway Division Sheikhupura paid

Rs 9 million to WAPDA, Sui-gas and PTCL for removal of their

installations in June 2002. Removal of installations was the responsibility

of the contractor (M/s LAFCO). No recovery from the contractor was

made whose tender was received in April 2002. This resulted in non-


Audit pointed out the non-recovery in February 2008. The department did

not reply to the audit observation.



(DP.352)

Para 1.21 Unjustified payment of slush/daldal allowance beyond

contract specification - Rs 6.9 million

Item No.106 (a) of contract specification (Vol II Item No. 106.3.1)

provides that when the contractor is directed to excavate un-suitable

material below the surface of original ground in full areas, the depth to

which these unsuitable materials are to be removed will be determined by

the Engineer. The contractor shall schedule his work in such a way that

authorized cross-sections can be taken before and after the material has

been removed.


Division, Lahore allowed an amount of Rs 6.7 million for extra allowance

for slush/daldal/dewatering which was covered under item “Excavation of

51

un-suitable or surplus material” and “Removal or diversion of water.”

Further neither it was provided in original estimate nor any provision of

“Extra allowance for slush/daldal” existed in contract specification

(Vol-II). The payment for “Extra allowance for slush/daldal” resulted in

unjustified payment of Rs 6.7 million.

Audit pointed out the unjustified payment in August 2007. The department

replied that the item “excavation of unsuitable common material” did not

cover the removal of slush/daldal/dewatering so the authority approved the

non-BOQ rate. The reply was not acceptable because the fourth (4) para of

item No.106.2 (Construction requirement) of contract specification clearly

depicted that the rate of excavation of unsuitable material included the

cost of unsuitable material to be removed below standing water level. No

provision existed in agreement/technical sanctioned estimate for this

payment. The rate approved later on, by the Superintending Engineer was

not in confirmity with contract provision.



(DP.5)

1.21.2 The Project Director, Lahore Ring Road Project allowed

the quantity 27,020.36 cubic meter of item “Compaction of natural

ground” in those reaches where other item “Excavation of unsuitable

material” was also paid. In the presence of item “excavation of unsuitable

material”, the payment for item “Compaction of natural ground” was not

admissible. This resulted in unjustified payment of Rs 155,524.

Audit pointed out the unjustified payment in September 2007. The

department replied that the work had been measured and paid as per work

done at site and technical sanctioned estimate. The work was verified by

the consultant. The reply was not acceptable because the payment for item

of compaction of natural ground was not admissible on the area where the

excavation of unsuitable material was removed as per contract

specification.


made by this office till finalization of the report

(DP.19)

52

Para 1.22 Non-recovery of income tax – Rs 6.8 million

As per section 151(1)(c) of Income Tax Ordinance 2001 read with Central

Board of Revenue letter No. 4(2)@WHT/91-PI dated 27th December,

2004, income tax on interest income is recoverable @ 20%.

1.22.1 The Land Acquisition Collector, Punjab Highway

Department, Lahore and Ring Road Project, Lahore paid land

compensation of Rs 71.9 million along with 8% compound interest for

Rs 22.8 million. The recovery of with holding tax at source @ 20% due

under section 151 of Income Tax Ordinance, 2001 on 8% compound

interest was not made from the land affectees and remitted to Income Tax

Department. This resulted in non-recovery of Rs 4.6 million.

Audit pointed out the non-recovery in July 2007. The department did not

reply the observation. Audit stressed to effect the recovery of Income Tax.



(DP.366)

1.22.2 The Executive Engineer, 5th Provincial Buildings Division,

Lahore made payment to the contractor without deduction of income tax

@ 6%. This resulted in non-recovery of Rs 1,845,551.


replied that according to the section 153(5) of the Income Tax Ordinance

2001, the income tax was not to be deducted from an importer of goods

who himself was the contractor in the same work. The reply was not

acceptable because as per clarification of Central Board of Revenue dated

12th December, 2006 that tax might be deducted on payment made on

account of services incidental to the installation of lift/imported items and

their maintenance.



committee that deduction of income tax was not got verified from Audit.

The Committee directed the verification of deduction of income tax in the

measurement book regarding record entry of installation item. Compliance

of the Committee directive was not reported to audit till finalization of the

report.

(DP.291)

1.22.3 The Executive Engineer, Provincial Buildings Division

Rawalpindi made payment to the contractor on account of mobilization

53

advance for Rs 7.221 million but did not recover income tax from the

payable amount. Further, interest on mobilization advance was short

recovered. Non-adherence to the rule resulted in non-recovery of

Rs 320,464.


replied that deduction of income tax from advances would defeat the

purpose of advance payment. However, it was being deducted from the

running bills of the contractor for work done. The reply was not

convincing as income tax and interest was not recovered as per rules.


meeting held on 14th February, 2008 wherein it was decided to effect

recovery within 30 days. The matter was again discussed in the DAC

meeting held on 20th to 27th April, 2009 wherein the Committee directed

for strict compliance of previous directive dated 14.02.2008 and got

verified from Audit within a week. Compliance of the Committee

directive was not reported to Audit till finalization of report.

(DP.299)

Para 1.23 Overpayment due to allowing higher rates than

provided in the Market Rates System / T.S.Estimate –

Rs 6.7 million

According to para 7.28 (1) of Departmental Financial Rule, if the contract

agreement does not specify the rates to be paid for the several classes of

work or supply, but merely states that the estimated rates, or a certain

percentage below or above them, will be allowed, it should be seen that

the standard rates adopted are those of the sanctioned estimate which was

in force at the time the agreement was executed, or, if the agreement was

preceded by a tender, on the date the tender was assigned by the

contractor. Subsequent sanctions to original or revised estimates have no

effect on the terms of such an agreement.


Faisalabad paid rates of Rs 2,365.01 per % cubic feet each in three

contracts against the admissible rates of Rs 800, Rs 1400 and Rs 960 per

% cubic feet for item of work “Excavation in ordinary soil for making

embankment with all lead and lifts”. Allowing of excess rates resulted in



replied that during the course of execution, the required quantity of earth

could not be available due to built up area. So the earth was to be carted

54

from ½ mile, which was incorporated in revised technical sanctioned

estimate. The reply was not acceptable because rates provided in revised

technical sanctioned estimate had no effect on contract rates. Contract

rates were with all leads and lifts therefore no revision of rates were

required on the plea of non-availability of earth at site of work. Further,

Executive Engineer’s letter dated 16th June, 2006 addressed to the

Superintending Engineer described that Irrigation Department did not

allow the excavation of earth in the vicinity of canal but the said reply

disclosed the location existed in built up areas.



agreed with the explanation of the department and directed to probe the

matter for recovery of overpayment. No progress was shown to Audit till


(DP.153)


Multan allowed payment for local transportation from port to site of work,

loading un-loading, placing on foundation for machinery of HVAC system

@ Rs 1.7 million per lot under Pt-II of the bill whereas as per additional

condition, the contractor was responsible for making arrangements for

loading, local transportation from port to site, unloading at site and safe

storage being cost covered in respective items for supply and installation.

Non-adherence to provision in technical sanctioned estimate resulted in



replied that the local transportation of imported equipment was agreed to

be paid to contractor as per approval of the scheme and technical

sanctioned estimate which was done by the contractor. The reply was not

acceptable because the contractor was responsible for making

arrangements for loading, local transportation from port to site, unloading

at site and safe storage as per technical sanctioned estimate and clause

84(f) (6) at page 63 of agreement.



Committee that the payment was made in violation of agreement clause.

The department explained that detailed estimate was technically

sanctioned and payment was made as per provision of T.S Estimate. The

Committee was not agreed with the view point of the department and

55

directed to get the record verified from Audit within 15 days. No progress

was shown to audit till finalization of the report.

(DP.207)


Sahiwal made the payment of certain items at higher rate than approved in

the technical sanctioned estimate and accepted. Non-adherence to the

technical sanctioned estimates provisions resulted in overpayment of

Rs 1.01 million.


replied that the recovery of Rs 574,430 would be made from the

contractors. But no recovery was made. Further, for balance amount of

Rs 436,558, it was replied that the rates were correctly paid as earth was

brought from three miles lead. The reply was not acceptable because, the

lead of one mile was provided in technical sanctioned estimate/contract

agreement, and the rates given in contract were required to be paid.



explained that the para had been transferred to Provincial Building

Division Lodhran. The Committee showed its displeasure on the statement

of the department and directed to get the detailed verification of record

within 15 days. Compliance of the Committee directive was not reported

to audit till finalization of the report.

(DP.180)


Gujrat made payment for an item pacca brick work in foundation and

plinth with (1:6) cement sand mortar @ Rs 7,738/40 per % cubic feet

against the rate of Rs 4,216/89 per % cubic feet provided in the technical

sanctioned estimate. Payment of incorrect rate resulted in overpayment of

Rs 758,146.


replied that the payment was made as per Market Rate System in July

2005 of district Gujrat. The reply was not acceptable because payment was

to be made as per provided rates in technical sanctioned estimate plus

admissible premium.


meeting held on 2nd March, 2008 wherein the department was asked to

produce the rough cost estimate/original technical sanctioned estimate/

comparative statement to check the percentage accepted above with rate of

56

Rs 7,738 per% cubic feet and calculation made in technical sanctioned

estimate. The matter was again discussed in the Departmental Accounts

Committee meeting held from 20th to 27th April, 2009 wherein Audit

informed the Committee that the department did not produce any record in

the light of previous DAC directive. The Committee took the serious view

and directed the department to produce the complete record within 15

days. Compliance of the committee directive was not shown to audit till


(DP.314)


Gujranwala allowed inadmissible item “Plain cement concrete (1:4:8) @

Rs 8,413.08 per% cubic feet and Rs 8,050.80 per % cubic feet in

foundation of walls and columns in different groups of work without

provision in technical sanctioned estimate. As per acceptance letter

admissible item “Plain cement concrete (1:6:12) @ Rs 5,302.33 per%

cubic feet and Rs 5,301.83 per % cubic feet was payable to contractor.

This resulted in unjustified payment of Rs 335,931.

Audit pointed out the unjustified payment in March 2008. The department

replied that the recovery would be made in next bill. But no recovery was

made.



for probe regarding recovery of difference of rates on revised technical

sanction estimate and final bill. No progress was reported till finalization

of the report.

(DP.310)

Para 1.24 Unjustified payment due to allowing cost of dykes

beyond contract specification - Rs 5.7 million

As per item No. 100.5 “Removal or Diversion of Water” under chapter

“Earthwork” of adopted specification (Volume-II), the contractor shall

provide necessary facilities for dewatering and for draining or diverting

water course when necessary for the protection of the work.

The Executive Engineer, Provincial Road Construction Division, Lahore

allowed an item “Construction of Dyke” (Coffer-dams) for Rs 5.7 million

which was not provided in estimate prepared under specification

(Volume-II) because the cost of this item was covered in the bid price of

other earthwork items and allied activities. This resulted in unjustified

payment of Rs 5.7 million.

57


replied that out of total length of 1,900 meter of project, 1,250 meter

passed through wide pond. Prior construction of dyke was inevitable. The

same was approved by the competent authority on recommendation of the

consultant. The reply was not agreed because the contractor submitted his

bid price keeping in view the site conditions. Payment on account of

earthen dyke was not justified separately as it was covered in the rate of

other items.



(DP.94)

Para 1.25 Non-recovery of imbalance rate – Rs 5.5 million

As per notification issued by Finance Department vide No. RO (TECH)

FD 1-2/83-VI dated 29th March, 2005, the final cost of tender/payment

shall be the same percentage above/below the amount of revised

sanctioned estimate as were at the time of approval of the tender to

pre-empt excess payment.


Dera Ghazi Khan accepted the tender @ 4.45% above technical sanctioned

estimate amount and payment for Rs 67.6 million was allowed to the

contractor which was 8.21% above. The recovery of difference percentage

between quoted and actual paid amount, on the executed work, was not

made. Non-compliance of the instructions issued by the Finance

Department resulted in non-recovery of Rs 2.8 million.


replied that some of the relevant record of the works awarded by

Provincial Highway Division, Multan was to be obtained to confirm

whether some variation in percentage above D.N.I.T amount at the time of


above D.N.I.T amount and at the time of finalization of the works would

be recovered but no recovery was made.


meeting held from 20th to 27th April, 2009 wherein the audit informed that

the non-physical items which were not floated in DNIT were paid just to

balance the premium at final stage. The department explained that these

items could not be provided in DNIT as these were provided in rate

analysis of concerned items. The Committee was not agreed with the view

58

point of department and directed the department to refer the case to

Finance Department for condonation and complete record may be got

verified from audit. No progress was shown to audit till finalization of the

report.

(DP.43)

1.25.2 The Executive Engineer Provincial Highway Division,

Multan accepted the tender @ 4.45% above technical sanctioned estimate

amount and payments for Rs 55.4 million were allowed to the contractor

which was 8.60% above technical sanctioned estimate amount. The

recovery due to difference between quoted percentage and actual paid was

not effected. Non-compliance of instructions issued by the Finance

Department resulted in non-recovery of Rs 2.1 million.


replied that the recovery would be made at finalization of work. The reply

was not acceptable because the tender percentage should have been

maintained in interim payments to the contractor.



agree with the view point of the department and directed to probe the

matter regarding unbalance rates within 9 months. No progress was shown

to audit till finalization of the report.

(DP.39)

1.25.3 The Executive Engineer Provincial Highway Division

Dera Ghazi Khan accepted the tender @ 3.75% above technical sanctioned

estimate. Payment for Rs 24.3 million was allowed to the contractor which

was 5.927% above technical sanctioned estimate amount. The recovery of

difference of quoted percentage and actual paid amount for the executed

work was not made. Non-compliance of the instructions issued by the

Finance Department resulted in non-recovery of Rs 620,958.



Provincial Highway Division, Multan was to be obtained to confirm



above DNIT at the time of finalization of the work would be recovered but

recovery was not made.

59



agree with the view point of the department and pended the para and

directed the department to get condonation of the irregularity from FD for

enhancement of DNIT. No progress was shown to Audit till finalization of

the report.

(DP.47)

Para 1.26 Loss on account of incorrect approval of bill of

quantities - Rs 5 million

As per Finance Department letter No. RO (Tech) 1-2/83-VI dated 29th

March, 2005, the bill of quantities to be attached with tender documents

should be based upon technical sanctioned estimate.

The Executive Engineer, 6th Provincial Buildings Division, Lahore

provided higher rates in DNIT as compared to rates sanctioned in the

technical sanctioned estimate of the work. Against the excess rates

mentioned in the DNIT, contractors quoted their own higher rates and

received payment thereof. Provision of incorrect rate in tender document

resulted in loss of Rs 5 million.

Audit pointed out the loss in January 2008. The department replied that

the contention of audit was not correct. The rates provided in DNIT were

according to technical sanctioned estimate rates. The reply was not

satisfactory because the rates provided in DNIT were higher than the rates

of technical sanctioned estimate as was evident from record.


meeting held from 20th to 27th April, 2009 wherein the committee did not

agree with departmental explanation and stated that non-fiscal provision

like contingency, overhead, lump sum provision premium etc. cannot be

included in the works outlay put to tender which was agreed. However,

listening explanation by the department, the Committee directed to get the

revised parallel estimation verified & recovery if any be effected. No

progress was reported till finalization of the report.

(DP.295)

Para 1.27 Non-recovery of renewal/enlistment fee – Rs 4.8 million

As per Communication & Works Department Notification No.SOB (11)

2-78 Volume-II dated 15th July, 2000, the Chief Engineer is empowered

for enlistment/renewal of category ‘B’ contractors subject to payment of

required fee by the contractor/applicant.

60

The Chief Engineer, Punjab Buildings Department (South) Lahore

renewed/enlisted 113 contractors without receipt of prescribed fees during

the years 2004-07 and its accountal in cash book/payment into treasury.

This resulted in non-recovery of Rs 4.8 million.

Audit pointed out the non-recovery in July 2007. The department replied

that the enlistment/renewal letters were issued to the contractors with the

direction to deposit the fees including penalty etc. with any Executive

Engineer of South zone within 30 days, otherwise enlistment/ renewal

would automatically be cancelled. The copies of government receipt of

fees deposited by those contractors during 2006-07 were available. The

reply was not convincing because the enlistment/renewal fee was to be

recovered at source and accounted for in its cash book. Recovery made

was not on record.



Committee that the department effected the recovery of Rs 1,400,500. The

Committee reduced the para amounting to Rs 3.405 million with the

direction to effect the balance recovery and got it verified from Audit.

Compliance of the Committee directive was not reported to Audit till


(DP.283)

Para 1.28 Non-recovery of hire charges of machinery & deposit

work – Rs 4.5 million

As per rule 7.130 of Departmental Financial Rules, no expenditure should

be incurred in excess over deposit and without prior receipt of funds from

client department/agency and hire charges of machinery should be

recovered in advance as per para 4.16 of Public Works Department Code.

The Executive Engineer, Provincial Machinery Maintenance Division,

Lahore failed to recover the hire charges of machinery let out to different

formations and also allowed payment in excess over deposits without

obtaining full funds from the client department. This resulted in

non-recovery of Rs 12.4 million for hire charges and payment excess over

deposits.


replied that it was a routine practice to execute most of the deposit works

without advance payment and after completion of task, the dues were not

61

cleared by the sister division. The department had admitted the irregularity

which may be taken up at high level.



explained that an amount of Rs 7.968 million from other department were

received and same had been accounted for in cash book / monthly account

and was also verified by audit. The Committee reduced the para to Rs 4.87

million and directed to effect the balance recovery at the earliest. No


(DP.13)

Para 1.29 Overpayment due to excessive measurement and

inadmissible payment for dressing of earth – Rs 2.9

million

Equal quantity of regular excavation in trenches and its backfilling with

better fill material and item of asphaltic base course and prime coat was to

be paid as per provision of technical sanctioned estimate. Further, no

dressing of unsuitable excavated earth was required at site for which no

payment was admissible.

The Executive Engineer, Provincial Highway Division, Okara made

payment for item of earthwork “Regular excavation dressed” and its

disposal for 4,202,420 cubic feet and “Providing/laying Premix Plant

carpeting 2" thick layer” for 1,238,240 square feet against which the

payment for items of “Filling with better fill material” was paid for

4,485,995 cubic feet and “Providing/laying Prime coat with 10 lbs

Bitumen” for 1,257,520 square feet which was not justified because equal

quantities of those items were to be paid as per provision of technical

sanctioned estimate. Moreover, payment of Rs 626,819 for dressing and

disposal of earth available from item of “Regular excavation dressed” was

allowed. Dressing of the disposed off earth with one mile lead was not

required. Excessive measurements and undue payment for dressing of

disposed off quantity of earth resulted in overpayment of Rs 2.9 million.


replied that the recovery of cost of better fill material of Rs 2.3 million

would be made from the contractor whereas the item of prime coat was

paid at lesser side than the area of carpeting. The reply was not acceptable

because the item of prime coat quantity was to be allowed according to

62

paid quantity of laying of premix carpeting as per provision of technical

sanctioned estimate. Further no recovery of promised amount was made.



explained that the matter was sub-judice and recovery would be made if

court of law permitted. The Committee directed the department to recover

the amount within 60 days. No progress towards recovery was shown to


(DP.117)

Para 1.30 Extra expenditure due to application of incorrect

rate – Rs 2.6 million

As per Para (ii) of Finance Department notification No. RO (TECH) FD

18-23/2004 dated 21st September, 2004, the rate analysis for the item rate

(non standardized) shall be prepared by the Executive Engineer clearly

giving the specifications of the material used and approved by the

competent authority to accord technical sanction (not below the rank of

the Superintending Engineer) before the work is undertaken.

The Executive Engineer, Provincial Buildings Division, Bahawalpur made

payment for an item of work “Fabrication of TOR steel G-60” for 398,945

kilogram @ Rs 6,267.60 per % kg as non-standardized item against

estimated rates of Rs 6,200 per % kilogram plus 1.09 % above as per input

material/labour rate of October 2005. Whereas the actual estimated rate

worked out to Rs 5,543.02 per% kilogram. The payable rate with quoted

premium worked out Rs 5,603.44 per% kilogram. The preparation of

incorrect rate for item of fabrication of TOR steel resulted in extra


Audit pointed out the extra expenditure in September 2007. The

department replied that the analysis of rate for the item calculated by audit

was not correct and the payment was made at correct rate of Rs 6,200

per% kilogram. The reply was not agreed because the rate worked out by

Audit was based on the input material/labour rate placed at Finance

Department web site for Rahim Yar Khan District for the month of

October 2005. Similar rates had been calculated and issued by the Finance

Department vide No.RO(TECH)FD-6-3/2006 dated 17th February, 2007 to

the Superintending Engineer, Provincial Buildings Circle, Faisalabad.

63



Committee that the department did not produce record in support of reply.

The Committee took a very serious view and directed the department to

produce the complete record for detailed verification within one month in

Audit office. No progress was shown to audit till finalization of the report.

(DP.190)

Para 1.31 Overpayment due to allowing extra rate in violation of

specification - Rs 2.5 million

As per provision of section 411-10 read with section 411.2 of

Specification for Roads and Bridges Construction 1971, all material

excavated shall be unclassified paid for as regular excavation regardless

the material encountered. It shall include the excavation and disposal of

muck, clay, rock or any other material that is unsuitable in its original

position within the limits of road way limit. It shall also include any

excavation done below sub-grade level to remove unsuitable material. It

shall be measured in its original position generally by the method of

average and areas. All measurement for regular excavation shall be by

volume and include full compensation for all costs.

The Executive Engineer, Provincial Highway Division, Faisalabad paid

two extra items of work “Earth work in ashes derbies unsuitable material

undressed disposal lead up to 2 km for 1,759,479 cubic feet @

Rs 2,089.62 per ‰ cubic feet for removal of unsuitable material from

roadway. Whereas the rate of Rs 700 per ‰ cubic feet was admissible for

the said purpose as per item 5 of contract / BOQ and section 411.2 &

411.10 of Specification for Roads and Bridges Construction 1971.

Payment of undue extra items resulted in overpayment of Rs 2.5 million.


replied that during the currency of execution certain changes in scope of

work emerged which necessitated the provision of extra item. The reply

was not satisfactory because as per agreement and specification, the item

of "Regular excavation” for removal of unsuitable material was

admissible. No extra payments for said purposes were admissible keeping

in view available item of regular excavation in contract / bill of quantity.



Committee that undue items were allowed for excavation of unsuitable

64

material and its disposal due to which extra amount was paid. Audit

further informed the committee that no record was produced. The

Committee directed the department to probe the matter for

non-compliance and effect recovery within 15 days. No progress was

shown to audit till finalization of the report.

(DP.335)

Para 1.32 Overpayment due to inadmissible price variation on

Petroleum, Oils, and Lubricants - Rs 2.5 million

As the Finance Department notification vide No.R.O (Tech) F.D.1-2/83

(VI) (P) dated 6th April, 2005, for price variation on POL, no price

variation on POL was admissible in the agreements conducted prior to

notification i.e 6th April, 2005.


Okara allowed the price escalation on POL against the work which was

allotted on 4th March, 2005 on the basis of tender dated 16th December,

2004. The violation of instructions issued by the Finance Department

dated 6th April, 2005 resulted in overpayment of Rs 1.3 million.


replied that the price variation paid on POL would be recovered from the

next running bill of the contractor but no recovery was made.



Committee that price variation was paid on inadmissible item i.e. POL.

The department explained that the firm had been declared defaulter in

term of clause 39 by the Chief Engineer (North) Zone. The Security had

been forfeited. Now the recovery was not possible. The Committee was

not agreed with the view point of the department and directed the

department to recover the amount within 30 days. No progress towards

recovery was shown to audit till finalization of the report.

(DP.115)


Division, Lahore allowed an amount of Rs 1.2 million as price escalation

for POL without provision in the agreement. This resulted in overpayment

of Rs 1.2 million.

Audit pointed out the overpayment in August 2007. The department

replied that the price variation was allowed as per agreement. The reply

65

was not acceptable because no provision in agreement existed for price

variation on POL.



(DP.90)

Para 1.33 Overpayment due to incorrect/double measurements -

Rs 2 million

All payments for work or supplies based on the quantities recorded in the

measurement book. It is incumbent upon the persons taking measurements

to record the quantities clearly and accurately as per rule 7.17(b) of

Departmental Financial Rules.


Faisalabad measured and paid 2" thick plant premixed bitumen carpeting

for 54,200 square feet. But subsequently measured 1½" thick carpeting

over the area of 2" as 64,100 square feet. In this way excess area of 9,900

square feet (64,100-54,200) for Rs 56,400 square feet was measured

which resulted in overpayment of Rs 1 million to the contractor.


replied that wearing course was laid in the exact proportion of base course.

The reply was not acceptable because the quantity of 1½" laid over 2"

thick was to be same. But measurement recorded 9,900 square feet more

than first layer.



Committee that no record was produced by the department for

verification. The Committee took it very serious and directed the

department to produce the record for detailed verification within 30 days.

No progress was shown to audit till finalization of the report.

(DP.155)


Gujranwala had to raise the portion of road at RD 154-176 of main work.

The item “Sub-base course” was allowed / laid in the widened portion on

both sides at RD 130-176 containing the raising portion. Later on, the item

“Sub-base course” was again allowed in RD 154-176 for raised portion.

So the laying of sub-base course at RD 154-176 in widened portion


66


replied that the error would be rectified while recording overall

measurements of the work. The department admitted the overpayment but

could not get it verified.


meeting held from 20th to 27th April, 2009 wherein the committee was not

agreed with the explanation of the department and directed for probing the

matter within 30 days. No progress was shown to Audit till finalization of

the report.

(DP.225)


Lahore measured and allowed a quantity 1,541,750 cubic feet of item

“Earth work for making embankment” at RD 32+00-47+00 (RHS) and RD

32+00-47+00(LHS) on 7th June, 2005 in 2nd running bill but later on, in 4th

running bill, another item “Uprooting stumps” for quantity of 1186

number was allowed at same RDs. This was not justified because the earth

work embankment was already allowed in those reaches. The amount for

uprooting stumps after laying of earthen embankment in the same reaches,

stood unjustified payment of Rs 225,340.

Audit pointed out the unjustified payment in January 2008. The

department replied that the quantity of earth work was allowed against the

provision of 3,675,464 cubic feet upto 4th running bill and total length RD

320 – 479 which was yet to be finalized. However, the uprooting stumps

were cleared and paid fully and completely. The reply was not acceptable

as the uprooting stumps were paid at the site wherein the earth was laid

already.



the department to verify the record showing the record entries of earth

work embankment after record entry of uprooting of stumps. No progress

was shown to audit till finalization of the report.

(DP.247)


Gujranwala allowed the item “Providing and laying base course” at left

side RD 120-130 without laying sub-base course and regular excavation.

The execution of quantity for 6,000 cubic feet of base course without

regular excavation and without prepared surface with sub-base course


67


replied that laying of sub-base course was not recorded and omitted

erroneously which would be got regularized through overall

measurements. The department accepted the overpayment to contractor

but no recovery thereof was made.


meeting held from 20th to 27th April, 2009 wherein the committee was not

agreed with the explanation of the department and directed for probing the

matter within 30 days. No progress was shown to audit till finalization of

the report.

(DP.219)

Para 1.34 Loss due to incorrect preparation of rates – Rs 1.9

million

As per para (c) of notification issued by Finance Department vide No. RO

(TECH) FD 2-3/2004 dated 2nd August, 2004, the Chief Engineer on the

basis of input rates fixed by Finance Department shall fix the rate of each

item of work for rough cost estimates for administrative approval and

detail estimate for technical sanction and placed them on website.


Dera Ghazi Khan allowed payment @ Rs 4,257.72 per % square feet for

Group-I and @ Rs 4,297.47 per % square feet for Group-III for items of

work for 2-1/2" thick with 4% ratio of bitumen against estimated rate of

Rs 4,147/55 per % square feet. Further, the rates analysis for said items

was prepared with higher rate for cost of crushed stone @ Rs 2825 per %

cubic feet against Rs 1,600 per % cubic feet as per input material rates.

Accordingly, admissible rate came to Rs 4217/87 per % square feet for

2.5” thick (2.5x1634/04 + 3.25%). Incorrect adoption of material rate in

technical sanctioned estimate for tendering resulted in extra expenditure of

Rs 1.5 million.


department replied that some of the relevant record of the works awarded

by Provincial Highway Division, Multan was to be obtained to confirm

whether some variation in percentage above Draft Notice Inviting Tender

amount at the time of award was really occurred or not. After comparison

of the percentage above, Draft Notice Inviting Tender at the time of

finalization of the works would be recovered. The reply was not tenable

being irrelevant.

68


meeting held from 20th to 27th April, 2009 wherein the para was discussed

in detail wherein the department explained that the rate of crush stone paid

to the contractor. Due to non-production of PC-I to the Committee, the

Committee directed the department to get detailed verification of original

PC-I. No progress was shown to audit till finalization of the report.

(DP.131)


Sargodha while preparing analysis of rate of an item of work “P/L Plant

Premixed Bituminous Carpeting” the input rate of bitumen was provided

@ Rs 28,775 per ton in the analysis of rate instead of admissible rate of

Rs 27,150 available in 3rd quarter, 2006. Excess rate provided in the

analysis of rate resulted in loss of Rs 389,386.

Audit pointed out the loss in October 2007. The department replied that

the competent authority had allowed the rate of Rs 28,775 for bitumen

packed in the analysis of rate. The reply was not satisfactory because the

rates of Rs 30,400 and Rs 27,150 per ton were for packed and bulk

bitumen in third quarter of 2006. Therefore, the application of rate for

Rs 28,775 was incorrect. No documentary evidence for price variation

payment was provided for verification of rates applied.



agreed with the explanation of the department and directed to refer the

issue to Finance Department for clarification / advice. No progress was


(DP.341)

Para 1.35 Non-forfeiture of security – Rs 1.7 million

Clause 60 and 61 of agreement are dependent upon each other and would

be operated simultaneously. Revision of contract (rescinding of the

contract) is subject to a certificate that action under clause 3(c) (now

clause 61(a) of agreement was not possible as there are no dues of the firm

or any of its partner in the department for effecting recovery (i.e. risk and

cost) and has been removed from the approved list of the department in

accordance with the conditions laid down in enlistment letter as per Law

and Parliamentary Affairs Department Letters No DP-15(119)/2001/

400/392/C dated 25th October, 2001 and No. FD(D-11) 3(5)81 volume-II

dated 6th February, 1990.

69

The Executive Engineer, Provincial Highway Division, Bahawalpur

awarded a contract for Rs 100.2 million in June 1996 with a completion

date of June 1999. The contractor executed the work for Rs 27.9 million

upto June 2002 and failed to complete the balance work. The contract was

rescinded under clause 60 in January 2005 without invoking clause 61 as

per Law and Parliamentary Affairs letter 25th October, 2001 and Finance

Department letter dated 5th February, 1990, for completion of balance

work on defaulting contractor’s risk and cost. Contractor’s security deposit

of Rs 1.7 million was not forfeited under clause 60 of the agreement. The

contractor was not removed from the approved list of the department as

per provision of enlistment letter. Despite the above, the balance work was

not awarded to any contractor. This resulted in irregular rescinding of

contract and non-forfeiture of security deposit of Rs 1.7 million.

Audit pointed out the non-forfeiture of security deposit in April 2007. The

department replied that forfeited security deposit could not be credited to

government due to suspension of order of the Divisional Officer by the

court of Senior Civil Judge. The reply was not convincing because

contract clauses 60 and 61 were not simultaneously invoked for rescinding

the contract. The contractor was not black listed as per condition of the

enlistment letter. The contractor’s security deposit was not timely forfeited

and credited to government revenue.



Committee that the contract was rescinded under clause 60 but the laying

security of contractor worth Rs 1.725 million was not forfeited. The

department explained that the action of forfeiture of security was in

process in the meantime the contractor filed suit against departmental

action. Now the case was in court of law. The Committee directed the

department to probe the matter and conduct fact finding inquiry. Further,

compliance should be reported by the Executive Engineer Provincial

Highway Division Bahawalpur. No progress was shown to Audit till


(DP.378)

Para 1.36 Non-auction of scrap material – Rs 1.6 million

As per para 4.40 of Public Works Department Code, the auction of store

should be made on book value nearer to market rates after getting sanction

of survey report from the competent authority.

70

The Executive Engineer, Provincial Highway Division, Faisalabad

obtained scrap material (steel) as a result of dismantling of Global

Transaction Services bus stand in September 2004, but the same was not

auctioned, although a period of about three years had been elapsed. This

resulted in non-auction of scrape material amounting to Rs 1.6 million.

Audit pointed out the non-auction of scrap in September 2007. The

department replied that the survey report of material was in process of

approval. Auction would be made as and when the survey report would be

approved. The reply was not tenable because a considerable period of

about three years had been elapsed and the material was being deteriorated

with the passage of time.



Committee that neither the department auctioned the scrap material nor

produced any record for verification. The department explained that the

process of auction of scrap material was in pipe line. The Committee

directed the department to expedite the process of auction and got it

verified by audit. No progress was shown to audit till finalization of the

report.

(DP.156)

Para 1.37 Overpayment due to allowing extra rate - Rs 1.4 million

As per Finance Department letter No.R.O (TECH) FD 11-47/2004 dated

24th February, 2005, item of reinforced cement concrete work i.e. item No.

5(a) of Composite Schedule of Rates 1979 (page 52) includes rate of

reinforced cement concrete in any shape and design.

The Executive Engineer, Provincial Buildings Division, Multan accepted

the tender rate for an item of work “Reinforced Cement Concrete in roof

slab, beams, column, lintels, girders and other structural members laid in

situ or pre-cast etc. in required shape and design complete in all respect”

without horizontal shuttering type ‘C’ ratio 1:2:4 @ Rs 100 per cubic feet

which was measured and paid upto 13th running bill. This rate was

changed to Rs 113 per cubic feet with the reason for involvement of some

change in design of reinforced cement concrete work requiring more side

shuttering. No change in rate was due as tendered rate was accepted for

reinforced cement concrete work in required shape and design as per

Finance Department letter dated 24th February, 2005. Incorrect

enhancement of rate resulted in overpayment of Rs 1.4 million.

71


replied that the design of R.C.C. footing was received from consultant

after allotment of work and footings of column were designed in the shape

of conical prism which required much more side shuttering. In original

technical sanctioned estimate, rate of Rs 100 per cubic feet was provided

expecting the straight running feet footing but after receipt of design and

as per requirement of structure, the rate of Rs 113 per cubic feet was

prepared and approved by the Chief Engineer and cleared by the Planning

and Development Department Lahore in revised approval. The reply was

not convincing because the original rate of Rs 100 per cubic feet was for

reinforced cement concrete work in required shape and design hence no

rate revision was due as per Finance Department letter dated 24th

February, 2005.


meeting held from 20th to 27th April, 2009 wherein the Committee was

agreed with the view point of audit and directed the department to recover

the amount with upto date consumption of R.C.C quantities within 30


the report.

(DP.198)

Para 1.38 Unjustified payment for use of material from

unspecified quarry/below specified work - Rs 1.1

million

As per clause 10 of the Agreement, the contractor shall execute the whole

and every part of the work both as regards material and otherwise in every

respect in strict accordance with specification.

The Executive Engineer, Provincial Highway Division, Sargodha allotted

the work “Widening/improvement of road work” to a contractor from

kilometer 0 to 15.12 kilometer (Group-I) to a contractor for Rs 35.403

million in January 2005 with a completion period of six months. The work

remained incomplete upto March 2006 and the contractor received

payment for Rs 24 million upto 13th running bill. No action for delay in

completion and non execution of balance work for Rs 11.403 million was

initiated under clause 39, 60 and 61 of the agreement but the new contract

had been executed in January 2006 to another contractor (M/s Nazir &

Co.) for Rs 282 million for execution of work from kilometer 0 to 46 at

higher rates including the reach of 0-15.10 kilometer (already awarded).

This resulted in unjustified expenditure of Rs 1.1 million.

72

Audit pointed out the unjustified expenditure in October 2007. The

department replied that during execution of work at site, the private land

owners of the adjoining area of one side of road refused to surrender their

land for widening of road. Resultantly, it was decided to widen the road

one side 4 feet instead of 2 feet on both sides. As such, there was minor

saving of work executed by M/s Al-Farooq & Co. and no such work was

executed by other contractor i.e. Nazir & Co. The reply was not acceptable

because cost of balance work Rs 11.4 million was not minor. The

department had awarded the second contract from kilometer 0-46 included

already awarded work of 0-15.1 kilometer. The balance work of contract

of 0-15.1 kilometer was to be completed from the original contractor but

was got done from second contractor at higher rates. The matter was discussed in the Departmental Accounts Committee

meeting held from 20th to 27th April, 2009 wherein the Committee was

not agreed with the view point of the department and directed to probe the

matter of financial loss within one month. No progress was shown to audit


(DP.340)

Para 1.39 Overpayment due to incorrect application of rate- Rs 1

million

As per Addendum and Corrigendum No. 5 to Market Rates Volume-III,

Part-II applicable w.e.f. 1st March, 2005, the rate of item No 13(a) (iii)

Chapter No 16 (Providing/Weaving GI wire netting for wire crate) was

revised to Rs 1, 391.30 per % square feet from Rs 2, 426.15 per % square

feet, vide Finance Department No. RO (TECH) FD.2-3/2007 dated 1st

January, 2007

The Executive Engineer, Provincial Highway Division, Dera Ghazi Khan

allowed rates of Rs 2426.15 per % square feet and Rs 2600 per % square

feet to two contractors for the items of work” Providing/Weaving G.I.

Wire netting for wire crates” with G.I. Wire of approved size (including

sewing and partition to make crates) against the admissible rates of

Rs 1,391.30 and Rs 1,491.06 per% square feet respectively as per

addendum and corrigendum No. 5. Incorrect application of rates resulted

in overpayment of Rs 1 million.



Provincial Highway Division, Multan was to be obtained confirmity

73



above D.N.I.T amount at the time of finalization of the works, would be

recovered. The reply was not tenable being irrelevant.


meeting held from 20th to 27th April, 2009 wherein Audit intimated that

department had not made the recovery. The department explained that

recovery would be made in next running bill of contractor. The Committee

directed the department to get verification of recovery. No progress was


(DP.132)

Para 1.40 Premature release of security deposit – Rs 1 million

Clause 50 of the contract agreement provides that security of the work was

to be released after one year of the completion of project.

The Executive Engineer, Provincial Highway Division, Okara made

payment to the Executive Engineer, Machinery Maintenance Division,

Lahore for hire charges of machinery used by the contractor from his

security deposit during execution of work. Payment out of contractor’s

security deposit was not due because it could be released one year after

completion of work. Non-adherence to the agreement clause resulted in

premature release of security deposit of Rs 1 million.

Audit pointed out the issue in February 2008. The department replied that

the work was transferred to Provincial Highway Division, Lahore. No

further reply was received.



explained that the balance work of contractor was carried out by the

provincial MM division Lahore in accordance to clause 43(4) of

agreement and payment was made from security deposit of contractor. The

Committee was not agreed with the view point of the department and

directed the department to recoup the security from claim of contractor in

next running bill. No progress was shown to audit till finalization of the

report.

(DP.121)

74

Para 1.41 Loss due to non-adjustment of blasted material -

Rs 749,541

As per technical sanctioned estimate, 50% stone obtained from blasting of

hard rock was to be used as base course after blasting and breaking into

specified size of base course with 20% stone screening @

Rs 2,154 per% cubic feet.

The Executive Engineer, Provincial Highway Division, Dera Ghazi Khan

allowed payment for excavation in hard rock requiring blasting and

disposal upto 50 feet lead including dressing and leveling to designed

section complete in all respect for 112,184 cubic feet @

Rs 2,500 per % cubic feet instead of utilization of 50% blasted material as

base course as per provision of estimate. Disposal and non-utilization of

available material resulted in loss of Rs 749,541 (683,991 + 65,550) to

government.

Audit pointed out the loss in November 2007. The department replied that

blasted material was spread over vast area and it was not possible to

collect and reuse the blasted material. The reply was not convincing

because blasted material was to be used as per provision in the technical

sanctioned estimate to save the government from loss.



explained that 50% ballasted stone could not be used due to being

unsuitable. Audit informed that no evidence in support of its reply was

produced. Committee directed to probe into the matter within 30 days. No


(DP.129)

Para 1.42 Non-recovery of secured advance - Rs 629,096

As per letter issued by the C&W Department, Government of the Punjab

vide No. SOR III (C&W)2-14/1997 dated 29th May, 1997, under normal

circumstances the secured advance has to be recovered within three

months.

The Executive Engineer, Provincial Buildings Division Rawalpindi

granted secured advance for Rs 3,013,500 to the contractor in January

2003 for hollow pipes but failed to recover within three month. This


75


replied that the adjustment on account of secured advance would be made

on utilization of material. The reply was not satisfactory because recovery

of secured advance was outstanding despite elapse of a period of five

years.


meeting held on 14th February, 2008. The department was directed to

recover the advance within 30 days alongwith finalization of the accounts

of the contractor. The matter was discussed in the Departmental Accounts

Committee meeting held from 20th to 27th April, 2009 wherein the

Committee directed strictly for compliance report of previous directive

dated 14.02.2008 may be made & got verified from Audit within a week.

No compliance of the Committee directive was made till finalization of

the report.

(DP.300)

Para 1.43 Non-recovery of professional tax – Rs 565,000

As per Public Accounts Committee directive dated 11th August, 2004,

recovery of professional tax is to be made from contactor.

The Chief Engineer, Punjab Buildings Department (South), Lahore

enlisted/renewed the enlistment of contractor of category ‘B’ without

recovery of professional tax. This resulted in non-recovery of Rs 565,000.

Audit pointed out the non-recovery in July 2007. The department replied

that it was duty of the Executive Engineer / Divisional Accounts Officer

concerned to see that recovery of professional tax was being made

regularly. The reply was not convincing because professional tax recovery

was a departmental responsibility as per PAC directive. It should have

been watched at the time of renewal/enlistment of the contractor or

through the Executive Engineer concerned.


meeting held from 20th to 27th April, 2009 wherein the contention of the

department i.e to recover the professional tax was not the responsibility of

the Chief Engineer’s office, was not accepted by the Committee and

directed the department that at the time of renewal / enlistment, the

professional tax may be recovered.

(DP.282)

76

Para 1.44 Overpayment for allowing inadmissible item -

Rs 325,280

As per remarks No. 1 against item No. 10 of Chapter “Surface rendering”,

the item “Plaster under soffit” shall be applicable to buildings meant for

human habitation. It shall not be admissible on godown, cycle stands,

garages etc.

The Executive Engineer, Provincial Buildings Division, Rahim Yar Khan

at Lahore allowed a quantity of 34,748 square feet of item “Cement

Plaster under soffit” in basement site meant for parking stand, garages etc.

This resulted in overpayment of Rs 325,280.


replied that it was a very prestigious building and would be used by the

VVIP. The cafeteria, mosque and staff offices were also located in

basement due to which the ceiling of basement was plastered. Moreover,

the work was carried out as per estimate and bill of quantities. The reply

was not convincing because no site was exempted. The area of mosque

and cafeteria could be deleted. Provision made in technical sanctioned

estimate was violation of instructions given in Market Rate System and

required special sanction from Finance Department otherwise recovery

was to be made.



(DP.57)

77

HOUSING, URBAN DEVELOPMENT & PUBLIC HEALTH

ENGINEERING DEPARTMENT

HUD & PHE Department is the administrative department of Rawalpindi

Development Authority, Gujranwala Development Authority, Faisalabad

Development Authority, Lahore Development Authority, Multan

Development Authority, Punjab Housing and Town Planning Agency, and

Punjab Public Health Engineering Department. The secretary HUD &

PHE Department is the principal accounting officer. The functions of

HUD & PHE Department are controlled under the Rules of Business 1974

and the Punjab Development of Cities Act 1976.

Functions: HUD & PHE Department, Government of the Punjab

mainly deals with matter of housing, physical planning, public health

engineering and formulation of environmental policies.


and a summary of audit results is tabulated as under: (Amount Rs in million)

Sr.

No

Particulars Amount Total amount /

%age


2006-07

I- Public Health Engineering Deptt

II- Development Authorities

III- Punjab Housing and Town Planning

Agency

3,832.76

17,945.53

300.60

22,078.89


2006-07




Agency

2,315.70

10,566.48

87.74

12,969.92

3. Audited Expenditure




Agency

-

2,315.70

4,441.39

60.99

6818.08

4. Amount of the observations in this report

i) Excess Payment


iii) Undue Financial Aid

iv) Loss / Doubtful / Theft

v) Non-recovery

2.85

6.58

4.33

77.05

245.93

336.74


78

79

2. HOUSING, URBAN DEVELOPMENT & PUBLIC HEALTH

ENGINEERING DEPARTMENT

Para 2.1 Non-recovery of cost of land/plot from GEPCO -

Rs 81.8 million

As per letter No.GDA/EM/159 dated 25th July, 2007, the Gujranwala

Development Authority, Gujranwala was required to recover the cost of

the land of plot allotted to the Gujranwala Electric Power Company.

The Director Estate Management, Urban Development Wing, Gujranwala

Development Authority, Gujranwala did not recover the cost of plot

No.565-A, Model Town, Gujranwala from the Gujranwala Electricity

Power Company (GEPCO). It resulted into non- recovery of Rs 81.8

million.

Audit pointed out the non-recovery in December 2007. The Authority

replied that proceeding for recovery from GEPCO was under way.


meeting held on 23rd December, 2008 wherein audit informed the

Committee that the authority failed to recover the cost of plot from

GEPCO. The department explained that the proceeding for recovery from

GEPCO was underway. The Committee directed that the matter be taken

up by the Administrative Department with the Chief Executive of

GEPCO. No progress was intimated till finalization of the report.

(DP.22)

Para 2.2 Loss due to award of work above permissible limit of 4.5% over technical sanctioned

estimate - Rs 75.5 million

As per para 2 (ii) of the preface of Delegation of Financial Powers Rules

1990, the acceptance of tender shall be subject to the condition that the

rates quoted or amount tendered are such that the total cost of the project

will not exceed the amount for which technical sanction was accorded by

more than 4.5%.

The Director Engineering, UD Wing FDA, Faisalabad awarded a work for

Rs 821 million against technical sanctioned estimate of Rs 713.4 million

which was 15.08% above the amount of technical sanctioned estimate.

Acceptance of tender beyond the permissible limit of 4.50% over TSE

resulted in loss of Rs 75.5 million.

80

Audit pointed out the loss in December 2007. The Authority replied that

FDA Governing Body accorded revised administrative approval. The

reply was not acceptable as work was awarded on higher side from the

original technical sanctioned estimate. Moreover, technical sanctioned

estimate was revised on the basis of higher quoted rates of the contractor.


meeting held on 23rd December, 2008 wherein audit informed the

Committee that the work for Rs 821.031 million was got executed against

the TSE amount of Rs 713.432 million which was 15.080% above the

estimated cost. The department could not justify this position in support of

his action. The Committee directed the department to refer the matter to

the Finance Department for clarification within 15 days. No progress was

reported to Audit till finalization of the report.

(DP.100)

Para 2.3 Non-recovery of commercialization fee - Rs 66

million

As per policy issued by the Secretary Housing Urban Development &

Public Health Engineering Department, Government of the Punjab, vide

No.SO(D-II) 5-2/81/ Vol-II dated 2nd July, 2001, existing/unauthorized

commercialization may be regularized by the commercialization

committee on payment of the prescribed commercialization fee @ 20% of

value of urban land based on valuation table prepared under the Stamp Act

1899 and 10% surcharge.

2.3.1 The Deputy Director, PHATA Sub-Region, Multan did not

recover the commercialization fee from various allottees of plots of

various housing schemes. This resulted in non-recovery of Rs 31.6

million.

Audit pointed out the non-recovery in August 2007. The Authority

admitted the recovery of Rs 1.8 million. In case of balance recovery of

Rs 30.7 million, Authority admitted that commercial activity was being

performed in some areas & notices were served to them to close the

commercial activity and in some areas a fresh survey was being made to

check the commercial activities. The reply was not agreed as the

commercial activities were being performed in these areas evident from

the report of Excise & Taxation Officer (ETO) Khanewal but the Agency

did not take concrete steps to realize commercialization fee.


meeting held on 14th May, 2009 wherein the audit informed the

81

Committee that the department got verified the recovery of Rs 891,090

which has been verified by Audit. The Committee settled (para No.3). The

para was reduced to Rs 31.6 million. No progress was reported till


(DP.37)

2.3.2 The Deputy Director, PHATA Sub Region, Jhang did not

recover the commercialization fee from the owners of plots/houses of

different schemes who were using their properties for commercial

purposes/activities. The Authority neither stopped commercial activities

nor recovered the commercialization fee plus 10% surcharge from them.

This resulted in non-recovery of Rs 22 million.

Audit pointed out the non-recovery in November 2007 but the Authority

did not reply.


meeting held on 14th May, 2009 wherein the audit informed the committee

that the department failed to recover the commercialization fee. The

Committee pended the para for detailed verification within 15 days. No


(DP.59)

2.3.3 The Deputy Director, PHATA Sub-Region, Sahiwal did not

recover the commercialization fee from the owners/allottees of building

plots housing schemes. This resulted in non-recovery of Rs 9.8 million.


admitted that some properties were being used as partially commercial and

some fully commercial but their commercialization fee could not be

assessed as commercial policy was ceased by govt. of the Punjab. The

commercialization fee would be recovered after restoration of new policy.

The reply of the department was not tenable as the cases were for the

period when the commercialization policy was operative.

The executive view point could not be incorporated so far in the para due

to non-convening of SDAC meeting by the department despite best efforts


(DP.36)

2.3.4 The Director Town Planning, Urban Development Wing,

MDA, Multan did not recover commercialization fee and surcharge

82

thereon from owners of three residential plots being used for commercial

purpose without prior approval of the Authority. This resulted in non-

recovery of commercialization fee for Rs 2.2 million.

Audit pointed out the non-recovery in January 2008. The Authority replied

that actual fee would be recovered. The reply was not agreed as no

concrete steps for recovery were taken by the Authority.


meeting held on 23rd December, 2008 wherein Audit informed that MDA,

Multan could not recover the commercialization fee and surcharge from

the owners of three plots being used for commercial purpose. The

department explained that the cases of two Nos. plots were under trial in

the court of law and in other case, efforts were being made to recover the

commercial fees. The Committee pended the para for effective follow up.

The para was again discussed in detail in the Departmental Accounts

Committee meeting held on 14th May, 2009 wherein the audit informed

the Committee that complete record was not produced by the department

during verification. The department explained that due to shortage of time,

complete record could not be produced. However all record is available

and would be produced for verification. The Committee pended the para

for detailed verification within 15 days. No progress was conveyed till


(DP.10)

2.3.5 The Director Town Planning, Urban Development Wing,

MDA, Multan allowed three residents of khewat No.1068/1060 to utilize

twenty one (21) marlas for commercial purpose whereas extra fourteen

(14) marlas over and above the allowed area of 21 marlas were also being

used for commercial activities. This resulted in non-recovery of

commercialization fee of Rs 415,800.


that the owners of plots had submitted separate building plans and

commercialization fee would be recovered. The reply was not agreed as

the property was already under commercial use but no concrete steps for

the recovery of dues were taken by the Authority.


meeting held on 23rd December, 2008 wherein Audit informed the

Committee that the department could not recover the Commercialization

fees and 10% surcharges for the areas of 14 marals. The department

83

explained that efforts were being made to effect the recovery. The para

was deferred by the Committee for want of recovery. No progress was

intimated till finalization of the report.

(DP. 11)

Para 2.4 Non-recovery of aquifer, water and sewerage charges

from commercial/industrial users - Rs 32.5 million

According to Punjab Gazette Notification No.2190/DDR (D)/WASA/FDA

/2006 dated 12th December, 2006 issued under The Punjab Development

of Cities Act 1976, the Agency was required to recover the aquifer, water

and sewerage charges from commercial/industrial users at the prescribed

rates.

The Director Revenue and Recovery, WASA FDA, Faisalabad did not

recover aquifer, water and sewerage charges from the commercial/

industrial users of above mentioned facilities. This resulted in non-


Audit pointed out the non-recovery in August 2007. The Agency admitted

recovery in principle and further replied that an amount of Rs 19.3 million

had already been included in the previous year. The reply with regard to

repetition of recovery was not tenable because no documentary evidence

in support of reply was produced.


meeting held on 23rd December, 2008 wherein Audit informed the

Committee that DP No.25 for the year 2005-06 and DP No.1 for the year

2006-07 as mentioned in the department reply was not produced to audit

for verification. The recovery statement was produced to Audit but the

Agency could not justify the recovery made with reference to audit

observation. The department also failed to justify that the amount of

previous DPs was included in the amount of this DP No. 80 for the year

2007-08. The Committee deferred the para for detailed verification. No

progress towards compliance of the Committee directive was intimated till


(DP.80)

Para 2.5 Non-recovery of fine/penalty - Rs 14 million

According to Para 1 of section II read with para 12 (iii) of section IV of

Building Regulations, LDA Lahore, every prospective builder shall

construct building in strict accordance with the requirements of building

84

regulations, and the Authority may impose penalties for violation of the

provisions of these regulations at such rates and in such manner as are

specified.

2.5.1 The Director Town Planning, Urban Development Wing

LDA, Lahore did not recover the penalty imposed due to construction of

buildings in violation of building plan. During site visit of commercial

buildings, it was pointed out that some land lords had constructed

buildings in deviations of approved plan but the Authority did not recover

the penalty from the defaulters. This resulted in non-recovery of Rs 13.6

million.

Audit pointed out the non-recovery in November / December 2007. The

Authority did not reply.




(DP.116)

2.5.2 The Director Town Planning, Urban Development Wing

LDA, Lahore did not recover the penalties from the owners of the

buildings constructed in deviation of approved building plan. During site

visits it was reported that the owners of house No.60 Block, A-I Johar

Town and 78 Rachna Block Allama Iqbal Town, Lahore had constructed

and completed their houses in deviation of building plans approved by the

Authority. The Directorate did not recover the penalty amounting to

Rs 158,885 and Rs 303,800 respectively from the defaulter owners. This


Audit pointed out the non-recovery in November / December 2007. The





(DP.120)

Para 2.6 Non-recovery of lease money - Rs 7.7 million

In terms of clause 2 and 5 of the lease agreement made between the LDA

and the tenants of Godown/ Bays underneath the Data Nagar Over Head

Bridge, Badami Bagh Lahore, the lessees shall pay lease money on or

85

before 10th of January each year in advance and lessor has right either to

cancel the lease agreement or to accept payment with penal interest @

17.50 % P.A. on delayed amount, if lessee failed to deposit the lease

money within stipulated time.

The Director Estate Management, Urban Development Wing LDA,

executed four lease agreements for bay No. 8,10,11, and 12 under Data

Nagar Over Head Bridge Badami Bagh, Lahore in May 1992. But the

lessees did not deposit the lease money even after lapse of considerable

period. The Authority neither recovered the rent alongwith penal charges

nor cancelled the allotment and re-auctioned the property. This resulted in

non-recovery of lease money of Rs 7.7 million.

Audit pointed out the non-recovery in 2007 but the department did not

reply.

The matter was discussed in detail in DAC meeting held on 14th May,

2009 where in audit informed the Committee that department has not

recovered the amount of lease. The department explained that an amount

of Rs 3,330,416 had been recovered. The balance amount would be

recovered after decision of court as the matter is in the court of law. The

Committee pended the para for verification of recovered amount and

directed the department and pursue the matter in court of law and effect

the balance recovery.

(DP.113)

Para 2.7 Less-recovery due to excessive use of area than

provided in agreements - Rs 7.5 million

According to clause I (A) of agreements made on 14th January, 2005 and

20th December, 2006 between WASA, FDA Faisalabad, Telenor Pakistan,

PVT Limited Company and Pakistan Mobilink PVT Limited, the Water

and Sanitation Agency was supposed to rent out 1400 sft areas of WASA

over head reservoirs at various sites in Faisalabad to the companies for

installation of telephone accessories.

The Director Water Resource, WASA FDA, Faisalabad rented out areas of

1400 sft at different locations of WASA over head water reservoirs to the

Telenor and Mobilink companies for the installation of radio base stations

and base transceiver stations in Faisalabad. The companies were utilizing

areas of 3753.92 sft against the agreed area of 1400 sft. The Agency could

not recover the rent of excessive areas of 2353.92 sft under the use of the

companies. This resulted in less-recovery of Rs 7.5 million.

86

Audit pointed out the less-recovery in October 2007. The Agency replied

that lump sum amount was realized from the companies which was much

more than the rent of the area. The reply was not relevant as recovery of

rent of additional area which was being utilized by the companies must be

recovered separately in addition to lump sum rent as pointed out by the

Deputy Director (WR), WASA FDA, Faisalabad.


meeting held on 23rd December, 2008 wherein the department admitted

the recovery. The para was kept pending by the Committee to verify the

admitted recovery by audit within 15 days. No progress towards recovery

was shown till finalization of the report.

(DP.85)

Para 2.8 Overpayment due to non-recovery of price variation on

account of decrease in cost of cement - Rs 6 million

According to clause -55 of contract agreement, if any variation (increase

or decrease) to the extent of 5% or more in prices of any item mentioned

in sub clause -2 takes place after the acceptance of tenders and before the

completion of contract, the amount payable under the contract shall be

adjustable to the extent of actual variation in the cost of the item

concerned and base price shall be price prevalent in the month in which

the last day of submission of tenders fall.

2.8.1 The Executive Engineer, Public Health Engineering

Division, Rawalpindi measured and paid quantities of different items of

works in which cement was consumed from July 2006 to June 2007 but

recovery due to decrease in price of cement(more than 5%) was not

effected from the contractors. Non-adherence to agreement clause resulted

in overpayment of Rs 5.6 million to the contractors.


replied that rate for item was paid as provided in technical sanctioned

estimate. The reply was not tenable because the department was to deduct

the amount of price variation as per clause of contract agreement.


meeting held on 14th May, 2009 wherein the audit informed the committee

that department has not effect the recovery of price variation. The

Committee also pended the para for recovery with in 30 days. No progress

subject to recovery was reported till finalization of the report.

(DP.42)

87


Division, Sialkot called/accepted tenders in 4th quarter, 2006 with base

rate of cement Rs 225 per bag. The cost/price of cement was decreased

during 1st quarter, 2007 to Rs 175 per bag. The department did not effect

recovery on account of price variation of cement consumed during the

quarter. Non-recovery of price variation resulted in overpayment of

Rs 221,880 to the contractor.


replied that according to clause-55, no price adjustment was allowed as

government had not issued any notification in this regard. The reply was

not tenable because input rates on website were being notified by

government on quarterly basis.

The Departmental Accounts Committee meeting held on 14th May, 2009

wherein the audit informed the committee that department has not effect

the recovery of price variation. The Committee pended the para for

recovery with in 15 days. The para was kept pending. No progress was


(DP.45)

2.8.3 The Director Engineering, Urban Development Wing,

Rawalpindi Development Authority, Rawalpindi made payment without

recovery of price variation due to decrease in cost of cement. The base rate

of cement in September 2006, at the time of tender, was Rs 275 per bag.

This was reduced for more than 5% in subsequent quarters during which

cement was consumed. Non-adherence to agreement clause resulted in

overpayment of Rs 139,795 to the contractor.

Audit pointed out the overpayment in October 2007. The Authority replied

that payment was made as per tendered / accepted rates. The reply was not

agreed because recovery was required to be made in accordance with

provision of agreement clause.


meeting held on 23rd December, 2008 wherein the Committee directed the

department again to effect the recovery and got verified form Audit within

(30) days. No progress towards recovery was intimated till finalization of

the report.

(DP.7)

88

Para 2.9 Non-recovery on account of advertisement taxes on

Daewoo Buses - Rs 5.9 million

As per rule 4.7 (1) of Punjab Financial Rules vol-I, it was the primary duty

of the department/ Authority to watch that all revenue due to the

government was correctly and promptly assessed, realized and credited to

accounts.

Parks and Horticulture Authority, Lahore did not recover the dues of the

Authority on account of tax on publicity on public service transport, at the

rate prescribed by the Authority from the Daewoo buses for the period

from 2004-07. This resulted in non-recovery of advertisement taxes of

Rs 5.5 million. Moreover, the campaign was also floated on other local

city buses i.e. New Khan, Niazi, Makks and Metro but no recovery was

made from these transport companies.

Audit pointed out the non-recovery in October 2007. The Authority

replied that Rs 264,000 were recovered from M/s Daewoo on 25 buses

during the year 2006-07 and Authority had issued notices to other bus

companies to pay the due taxes but they had refused to pay. The reply of

the Authority was not convincing as Daewoo Company was running 77

buses and actual area of one bus was 720 sft. The recovery at the rates

prescribed by PHA notifications and as per actual area 720 sft per bus

came to Rs 5.5 million w.e.f January 2004 to December 2007. The amount

of para might enhance if the calculation of city bus service of other

companies was made.



recovered the amount which was required to be recovered from Daewoo

and other companies buses on account of advertisement charges. The

department explained that partial recovery has been made which would be

got verified from audit. The Committee pended the para for detailed

verification of recovery within the 3 days. No progress was intimated till


(DP.79)

Para 2.10 Non-receipt of performance security valuing - Rs 4.9

million

According to clause 7 of contract agreement read with item (b) of

memorandum of work, the contractor was required to provide performance

89

security in the form of bank guarantee @ 10% of the accepted tender price

within 15 days of receipt of acceptance letter.


Division, Lahore awarded work ‘Extension urban water supply scheme at

Sheikhupura City” vide No.1450-55/E dated 5th August, 2006 to the

contractor and made payment up to 18th running bill but failed to obtain

performance security valuing Rs 3.2 million . Non-receipt of performance

security of Rs 3.2 million put the government interest at risk.

Audit pointed out the non-receipt in August 2007. The department replied

that 2% earnest money and security @ 5 &10% was deposited by the

contractor which was sufficient. The reply was not relevant because

deduction of security from payments made/earnest money could not be

linked with performance security.


wherein the audit informed the committee that department has not

attended the audit during verification and no one came from division in

discussion. The Committee took it very serious and directed the

department to call the explanation of the Executive Engineer, PHE

Division, Lahore for non-compliance of SDAC meeting. The Committee

also pended the para for detailed verification. No progress was reported till


(DP.76)

2.10.2 The Director Planning and Design, WASA Faisalabad

Development Authority, Faisalabad did not obtain the performance

security bond amounting to Rs 1.7 million from various contractors to

whom the works for Rs 16.4 million were awarded on extraordinary below

percentages. No action against the contractors was initiated under the said

clauses. Non-adherence to contract clause / instructions and non-receipt of

performance security of Rs 1.7 million put the Agency’s interest at risk.

Audit pointed out the non-receipt in September 2007. In first case, the

Agency stated that detail reply would be submitted after verification of

record. In second case, the Agency replied that the relevant letter of

Finance Department was not in their knowledge. The reply in both cases

was not agreed as it was obligation of the Agency to secure its interest by

obtaining performance security.


meeting held on 23rd December, 2008 wherein the Committee reduced the

para from Rs 1.715 million to Rs 1.342 million after verification (i.e

90

Rs 1.715 million - Rs 227,281- Rs 147,000) and directed the Agency to

get condonation of the irregularity from the administrative level/Board.

(DP.73)

Para 2.11 Non-recovery of demolition charges - Rs 4.2 million

As per para 15 (i & ii) of section IV of building regulations LDA, in the

event of non-compliance with the requisition as made under the

regulation, any officer authorized by the Authority shall be competent to

order in writing cessation of work or order demolition of such construction

which may contravene any of the provisions of these regulations and

expenses thereof shall be paid by the owner.

The Director Town Planning, Urban Development Wing, LDA Lahore

paid huge amount for demolition of Ahsan Tower constructed on plot

No.43-A industrial area Gulberg-II Lahore. The Authority did not recover

the expenditure incurred on demolition from the defaulter owner of the

Tower. This resulted in non-recovery Rs 4.2 million.

Audit pointed out the non-recovery in November/December 2007. The





(DP.119)

Para 2.12 Non-recovery of fees / fine / penalties - Rs 3.1 million

According to para 12 (i) & (iii) of section IV of Building Regulations

LDA, the Authority shall charge scrutiny fee of building plans required to

be submitted under these regulations and other matters arising during the

disposal of plans or in course of its construction, in such manner as may

be fixed from time to time.

The Director Town Planning, Urban Development Wing LDA, Lahore did

not recover the scrutiny fee from the owners of the buildings. The

Directorate raised the demand under the heads fees/fines/penalties against

various persons, during the financial year 2006-07 but they did not deposit

the requisite amount. The Authority did not take steps for the recovery of

out standing dues. This resulted in non-recovery of Rs 3.1 million.

91

Audit pointed out the non-recovery in November/December 2007. The





(DP.118)

Para 2.13 Non-recovery of rent and non-renewal of lease

agreement - Rs 2.9 million

The lease agreement made between WASA Faisalabad Development

Authority, Faisalabad and Mobilink on 20th December, 2006 was expired

w.e.f 31st December, 2006. The WASA authorities were required to renew

the agreement and receive enhanced rate of rent from the lessees.

The Director Water Resource, WASA FDA, Faisalabad rented out the

over head reservoirs at four sites to Mobilink Company for base

transceiver stations. The lease agreements were expired on 31st December,

2006. The Agency neither renewed the lease agreements nor received rent

for the period from 1st January, 2007 to 31st December, 2007 from the

lessees. This resulted in non-recovery of Rs 2.9 million.

Audit pointed out the non-recovery in October 2007. The Agency

admitted recovery of rent and explained that the Agency intended to

double the rates as compared to previous year, thus the renewal of

agreement could not be finalized.


meeting held on 23rd December, 2008 wherein the Audit informed the

Committee that the Agency neither renewed the lease agreement nor

received rent for the period from 1st January 2007 to 31st December, 2007

from the lessees so far. The Committee deferred the para for detailed

verification of recovery plus 10% increase within (15) days. Compliance

of the Committee directive was not intimated till finalization of the report.

(DP.84)

Para 2.14 Non-recovery on account of cost of excess area of plots - Rs 2.9 million

As per condition No. 12 of terms and conditions of auction of commercial

/residential plots in Area Development Schemes and other Housing

schemes in Punjab, “if the plot sold is found to measure more or less than

92

the area advertised, the total price of the plot shall proportionally be

increased or decreased as the case may be at the rate of the accepted bid”.

The Deputy Director, Punjab Housing and Town Planning Agency

(PHATA), Sub-region, Faisalabad did not recover cost of excessive area

of plots of various Area Development Schemes (ADS) in Faisalabad. The

Authority advertised and auctioned plots of various categories to the

bidders. While handing over the physical possession of plots, the cost of

excess over auctioned area was not recovered from the allottees. This

resulted in non-recovery of Rs 2.9 million.


that the allottees had deposited the amount but they did not provide copies

of challans of payment. Further, it was pointed out that the notices were

being issued to the allottees for depositing outstanding amount. The reply

was not convincing as it based on presumption.


meeting held on 16th & 17th February, 2009 wherein the department

reiterated its previous stand. The contention of the department was not

accepted by the Committee and directed for probe within 15 days. The

para was again discussed in DAC meeting held on 14th May, 2009 where

in the audit informed the committee that!

A) the department failed to recover the cost of excess areas of the

plots at market rate. The Committee pended the (part-a) of the

para for recovery of excess areas of plots.

B) no progress has been made by the department. The Committee

take serious view and directed for early recovery.

C) the department got verified from photocopies of the challans.

The Committee directed the department for detailed verification of

recovery from original challan. Para was kept pending for record

verification. No progress was reported till finalization of the report.

(DP.106)

Para 2.15 Non-recovery of rent of open spaces of restaurants

Rs 2.4 million

As per item No.11 of terms and conditions of lease of open spaces in

Hockey Stadium, Madina Town, Faisalabad, advance rent should be paid

by the tenants on yearly basis.

93

The Director Estate Management, Urban Development Wing, FDA

Faisalabad rented out the open spaces of Hockey Stadium, Madina Town

Faisalabad to various tenants for food business purposes. The Authority

did not recover the rent of open spaces in advance as per lease agreement

since 01.09.2005. This resulted in non-recovery of rent of Rs 3.7 million.

Audit pointed out the non-recovery in November 2007. The Authority

replied that the matter related to the Director Admn. and the detailed reply

would be given after getting the record from the concerned directorate.


meeting held on 14th May, 2009 wherein the department explained that

amount of Rs 1,232,848 was recovered and was got verified from audit

during verification. The Committee reduce the para to Rs 2,432,247 and

directed the department to recover the balance amount with in 7 days and

got it verified from audit. The para was kept pending.

(DP.103)

Para 2.16 Overpayment due to excessive measurement - Rs 2.1

million

As per condition 10 of the estimate sanctioned technically by the Chief

Engineer, PHE Department (South Zone) Lahore vide memo No.69-A-3-

830/P&D dated 21st December, 2006, payment of dismantling and

restoration of brick pavement and road metalling and P.C.C in street shall

be made after its personal verification by the Engineer in-charge and

quantity shall not be exceeded than the provision of technical sanctioned

estimate. 2.16.1 The Executive Engineer, Public Health Engineering

Division, Sargodha paid for providing/laying of PVC pipes of different

dias either measured in excess of the provided length or without its

provision in the revised technical sanctioned estimate. This resulted in

excess payment of Rs 1.3 million.

Audit pointed out the excess payment in August 2007. The department

replied that no work was executed beyond the provision of revised

technical sanctioned estimate. The reply was not convincing because the

measurements were made and paid in excess of the revised technical

sanctioned estimate.

The para was discussed in detail in DAC meeting held on 14th May, 2009

wherein the audit informed the committee that the department measured

and paid the excess quantity of PVC pipe of different dia over and above

94

the provision of revised technical sanctioned estimate. Moreover the

record entries in measurement book were recorded without mentioning the

exact location. The department explained that the paid quantities are

within the revised T.S. Estimate. The Committee did not accept the view

point of the department and directed the department to probe the matter at

Administrative level within 15 days. The para was kept pending. No


(DP.90)


Division, Lahore made payment to the contractor for the quantities of

items of work “Earth filling watering, ramming from out side lead 5 miles

and 2 miles” respectively without provisions / more than provisions of

technical sanctioned estimate/acceptance letter. Allowing payment with

out provision, excessive quantities without prior approval of the competent

authority resulted in overpayment of Rs 483,218.


replied that payment of the said items was made after getting approval

from the Superintending Engineer. The reply was not satisfactory because

approval was required to be obtained from the authority that accorded

administrative approval and technical sanctioned estimate. Further, with

the enhancement of quantity of earth, the department also enhanced the

lead from 2 miles to 5 miles.




(DP.46)

2.16.3 The Director Building, Urban Development Wing, LDA,

Lahore executed and made payment for an item of work “RCC 1:1-1/2:3

for deck slab” for the width of 93.5 feet and depth of 3.68 inches and 4.5

inches against the width of 57.5 feet and depth of 3 inches provided in

A.A/technical sanctioned estimate. The excessive measurements than

design resulted in overpayment of Rs 299,081.

Audit pointed out the overpayment in July 2007. The Authority replied

that consultants recommended 3 inches additional RCC slab to strengthen

the existing deck slab. When the wearing course was removed, it was

found that lot of undulations existed in the deck slab which were

previously covered in the asphalt layer. As such to maintain a smooth

level and grade, the Authority had to execute the work as per survey

95

carried out. The reply was not agreed as the Authority was not allowed to

execute any excessive works with out prior approval of the competent

authority.


meeting held on 23rd December, 2008 wherein the department explained

that measurement of 93.5 feet was the length (longitudinal distance) from

expansion joint to expansion joint. The explanation was not accepted by

the Committee. The Committee directed the department to take up the

matter with Buildings Research Station, Lahore for opinion regarding

width & length and fact finding report be probed at the level of

Administrative Department within 15 days. Compliance of the Committee

directive was not reported till finalization of the report.

(DP.29)

Para 2.17 Non-recovery of cost of land/development charges from

the inhabitants of katchi abadies - Rs 1.9 million

According to policy regarding katchi abadies issued by the Director

General, Katchi Abadies and Urban Improvement, Government of the

Punjab, LG&RD Development Department Lahore vide No.DG (KA&UI)

ADM/1-140/98 dated 27th March, 2002, the recovery of government dues

from the dwellers of katchi abadies Faisalabad on account of cost of land

and development charges were to be made at prevailing rates.

The Director Katchi Abadies, UD Wing FDA, Faisalabad failed to recover

the cost of land and development charges from the dwellers of various

katchi abadies. This resulted in non-recovery of Rs 1.9 million.


admitted the recovery. Audit stressed for early recovery.


meeting held on 14th May, 2009 wherein the Committee was not agreed

with the view point of department regarding recovery position and

directed the department to produce the survey reports for verification

along with detail record of recovered amount. The para was kept pending.

(DP.104)

Para 2.18 Irregular expenditure on account of removal of Melba,

Plantation charges - Rs 1.7 million

According to clause 14 of part-III of Parks and Horticulture Authority,

Lahore notification No.DG/PHA/PS/4/99/153 dated 29th April, 1999, if the

96

mulba found placed in the green areas/ parks etc. and green verges are not

properly maintained as per specified requirement, the Authority shall

undertake development/up-keeps and recover from the owner/occupants

all development charges.

2.18.1 Parks & Horticulture Authority, Lahore made payment on

account of removal of mulba from various verges/ green belts and up

keeping of parks/verges and plantation there in and did not recover the

said amount from the owners/occupants. Secondly, heavy payments had

been made for the purchase of plants despite the authority had its own

nurseries. This resulted in irregular expenditure of Rs 1.4 million (Rs 0.1

million + Rs 1.3 million)

Audit pointed out the irregular expenditure in August 2007. The Authority

replied that constant request were made from the citizens of vicinity

regarding deplorable condition of Parks and it was done/removed after

observing codal formalities through press. The reply was not satisfactory,

because as per PHA Notification, the recovery of mulba was due from the

owners/occupants. Further, the Authority did not produce stock registers

of any nursery to verify the kinds of plants available in nursery and

purchased from out side nurseries.



made the admitted recovery. The Committee directed the department to

recover the amount with in 10 days and got it verified from audit. The para

was kept pending.

(DP.23)

2.18.2 Parks & Horticulture Authority, Lahore did not recover the

development charges (removal of mulba and plantation etc) of the verges/

green belts/ parks in the areas Jinnah Colony Samanabad and Gilgishit

Colony from the inhabitants of the areas. The Authority developed verges

& parks and made payment to the contractors but did not recover the

expenditure incurred on this account from the owner of the houses and

shops as were required. This resulted in irregular expenditure of

Rs 287,055.

Audit pointed out the irregular expenditure in August 2007. The Authority

replied that constant request made from the citizens of the vicinity

regarding deplorable condition of Parks, the work was done after

97

observing codal formalities through press. The reply was not satisfactory.

As per PHA instructions, the recovery was due from the owner/occupants.


2009 where in audit informed the Committee that department made

irregular payment for removal/clearance of Malba. The Committee

directed the department to recover the amount with in 7 days and got it

verified from audit. The para was kept pending.

(DP.18)

Para 2.19 Overpayment due to final payment at higher percentage

than that of bid – Rs 1.4 million

According to clarification issued by the Finance Department vide

No.R.O(Tech) F.D 1-2/83-vi dated 29th March, 2005, the final cost of

tender / payment would be the same percentage above / below the amount

of revised sanctioned estimate as was at the time of approval of the

tenders.

2.19.1 The Director Construction-I, WASA Faisalabad

Development Authority, Faisalabad accepted tenders and awarded various

works at different percentages above the estimated costs and made final

payments to the contractors at the higher percentages than that of bid/

acceptance letters. This resulted in overpayment of Rs 738,058 to the

contractors.

Audit pointed out the overpayment in August 2007. The Agency replied

that the minor increases or decreases of quantities were approved by the

competent authority. The total amount paid was covered in technical

sanctioned estimate. The reply was not acceptable as the Agency was to

pay at the same above/below percentages at which the works were

awarded.



that the minor increase or decrease of the quantities was approved by the

competent authority. The total amount paid was covered in the technical

sanctioned estimate. The Committee was not convinced due to non-

production of record to audit for verification and deferred the para for

detailed verification in main office within a week. Compliance of the

Committee directive was not intimated till finalization of the report.

(DP.75)

98

2.19.2 The Director Construction-II, WASA Faisalabad

Development Authority, Faisalabad accepted tenders and awarded various

works at different percentages above the estimated costs and made final

payments to the contractors at the higher percentages than that of

bid/acceptance letters. This resulted in overpayment of Rs 476,594 to the

contractors.

Audit pointed out the overpayment in September 2007. The Agency

replied that the minor increases or decreases of quantities were approved

by the competent authority. The total amount paid was covered in

technical sanctioned estimate. The reply was not agreed as the Agency

was not allowed to pay at higher percentages than that of agreed at the

time of award of work.



that the payment was made as per site condition/ agreement. The

Committee deferred the para for detailed verification in audit office within

(10) days. Compliance of the Committee directive was not made till


(DP.89)

2.19.3 The Deputy Director, PHATA Sub-Region, Jhelum

accepted tenders at 1.994% above the estimated cost/rates but the

contractor was paid at the rate of 2.598% above the estimated cost rates

upto 6th running bill. Allowing of high percentage against the permissible

rate resulted in undue benefit of Rs 159,898 to the contractor.

Audit pointed out the undue benefit in November 2007. The Agency

replied that change occurred due to variation in quantities of different

items which was approved by the competent authority. The reply was not

agreed because as per Finance Department instructions, final cost would

be the same %age above on revision of estimate as at the time of

acceptance of the tender.




(DP.62)

99

Para 2.20 Execution of below specification work costing - Rs 1.2

million

As per technical sanctioned estimate accorded vide No. CE/LDA/101

dated 15th February, 2007, the Authority was required to use 8 Lbs. steel

in each cft of deck slab RCC 1:1/2:3 in the work of “Strength Evaluation

and Rehabilitation of Data Nager Overhead Bridge”.

The Director Buildings, Urban Development Wing LDA, Lahore got

executed an item of work R.C.C. 1:1/1/2:3 for deck slab in the work

“Strength Evaluation and Rehabilitation of Data Nager Overhead Bridge”

and used steel 5.75 Lbs instead of 8 Lbs per cft as per provision of

technical sanctioned estimate. This resulted in execution of below

specification work costing Rs 1.2 million.

Audit pointed out the execution of below specification work in July 2007.

The Authority replied that keeping in view the depleted condition of the

bridge and direction received from the Chief Minister Punjab, the lump

sum provision of 8 Lbs per cft of steel was made for strengthening of deck

slab. Later on, the consultants (University of Engineering & Technology,

Lahore) provided the structural design and drawings and work was carried

out accordingly. The reply was not tenable because the technical estimate

was sanctioned after finalization of drawing and design and change in

design could not be made without approval of the sanctioning authority.



that work was carried out according to the specification/drawing by the

consultant i.e. UET, Lahore which was not accepted by the Committee.

The Committee showed deep concern and directed to obtain the report of

Building Research Station (as a third party) to authenticate the load

bearing strength of the structure. Compliance of the Committee directive

was not reported till finalization of the report.

(DP.27)

Para 2.21 Overpayment due to incorrect measurement of thickness of

bricks – Rs 1.2 million

According to remarks against item No.19 chapter 18 (road and road

structure) of Market Rates System of October 2005, the thickness of bricks

for an item of work “Providing/laying dry bricks in pavement” was

required to be measured and paid as 0.364′.

100

The Director Roads, Urban Development Wing LDA, Lahore measured

and paid 0.375′ thickness of bricks in item of work “dry bricks in

pavements” instead of 0.364′. This resulted in overpayment of Rs 1.2

million.

Audit pointed out the overpayment in August 2007. The Authority replied

that the bricks used in the brick pavement were of standard size 4″ x 4.5″ x

3″. The reply was not agreed as the Authority was required to measure and

pay the thickness of bricks in accordance with the instructions of the

Finance Department.



that they used brick for brick pavement of standard size which was not

agreed by the Committee and after detailed discussion, the department

admitted the recovery and promised to get it verified by Audit.

Compliance of the Committee directive was not shown to Audit till


(DP.32)

Para 2.22 Non-recovery of building period penalty - Rs 1.1

million

According to HUD & PHE Department notification No.SO(D-11)

HP&EP/2-3192 dated 19th October, 1993, no waiver of surcharge/penalty

shall be allowed by any authority and approval of extension in building

period and deviation in plan shall only be allowed with surcharge.

2.22.1 The Deputy Director, Punjab Housing and Town Planning

Agency Sub-Region, Multan did not recover the building period penalty

from 12 allottees who did not construct buildings within the stipulated

period. This resulted in non-recovery of Rs 804,000.


admitted the recovery of Rs 180,000. For balance recovery of Rs 624,000,

Authority replied that completion certificates were being issued to some

allottees after fulfilling the codal formalities & some areas were exempted

from building period penalty. The reply was not acceptable as admitted

recovery was not realized. Further waiver/ exemption from building period

penalty was not allowed.


wherein the audit informed the committee that no progress regarding

101

recovery has been made by the department. Only notices issued to

concern. The Committee pended the para for record verification. No


(DP.38)

2.22.2 The Director Estate Management, Urban Development

Wing FDA, Faisalabad did not recover the penalty from the allottees of

Millat Town Faisalabad who did not construct their buildings within

stipulated period. This resulted in non-recovery of Rs 600,192.


admitted recovery and stated that notices had been issued to the defaulter

allottees to deposit the outstanding amount.


meeting held on 23rd December, 2008 wherein the Audit intimated the

Committee that actual part recovery of Rs 4,87,716/- against the part

pointed out recovery of Rs 347,551 (i.e. Rs 287,078 + Rs 60,473)

recovered by the department was verified. The Committee reduced the

para to Rs 252,648 (i.e. Rs 600,192 – Rs 287,071 – Rs 60,473). No

progress towards balance recovery was reported till finalization of the

report.

(DP.83)

Para 2.23 Non-recovery of cost of excess area over entitlement -

Rs 990,940

In terms of para 1(i & ii) of the office order No ADD/LDA/ 132 dated 28th

May, 2001, the Director concerned shall work out the price of excess area

upto three marlas of allotted / exempted residential plots @ 40% above the

DC’s current evaluation table and in case of commercial and residential

plots sold in auction during last ten (10) years, auction rates shall be

charged for the excess area upto three marlas. The Director Town Planning, Urban Development Wing LDA, Lahore did

not recover the price of excess area upto three marlas from the owners of

the commercial / residential plots. The Directorate sanctioned building

plan and revised building plan of 2-H Gulshen-e-Ravi, 74- Rachna Block

Allama Iqbal Town, 4-D and 14-E Civic Center Faisal Town, Lahore in

1984, 1990 and 1993. As per technical reports, the owner of the plots were

in possession of excess areas of 552 sft, 200 sft and 146 sft ( commercial)

respectively, in excess of ownership entitlement but the Authority did not

recover the cost of excess area. This resulted in non-recovery of

Rs 990,940.

102

Audit pointed out the non-recovery in December 2007. The Authority did

not reply.




(DP.117)

Para 2.24 Overpayment due to allowing undue / imbalance rates -

Rs 580,037

Re-handling of total quantity of 1,928,183 cft earth work for different

leads, according to provision of agreement/estimate and rates were agreed

as tabulated below:

Sr. No. Lead up to Quantity Cft Rate agreed Rs % o cft

(i) 50' 101767 Rs 495

(ii) 300' 195554 -do-

(iii) 500' 477789 250

(iv) 1000' 1153073 -do-

Total 1928183

The Deputy Director, Punjab Housing and Town Planning Agency,

Jhelum measured and paid quantity of 2799124 cft on account of

re-handling of earth up to the lead 50' & 300' at the rate of Rs 495/ per % o

cft instead lower rates at leads agreed as above. The payment of total

quantity of earth at higher rates resulted in overpayment of Rs 580,037 to

the contractor.

Audit pointed out the overpayment in November 2007. The Agency

replied that during execution of work at site, quantity of filling was

increased and cutting decreased and earth was available within lead of 50'

& 300'. The variation was approved by the competent authority. The reply

was not tenable because leads provided in estimate / agreement was based

on surveys of site. Secondly, the rates quoted/agreed were irrational. Rates

of lesser leads were higher as compared to rates of higher lead. The

imbalance / irrational rates indicated that government interest had not been

watched at the time of execution and payment.

The para was discussed in detail in DAC meeting held on 14th May, 2009

wherein the committee was not agreed with the explanation of the

department and after detail discussion the para was pended for probe by

the Chief Engineer (North) within 10 days. The para was kept pending. No


(DP.16)

103

Para 2.25 Loss on account of non-recovery of last installment of

gate entry of Gulshen-e-Iqbal park - Rs 497,000

As per clause 2 of the agreement made between Parks and Horticulture

Authority and Muhammad Jamil S/o Muhammad Aslam (lessee) on

account of running gate entry, the lessee was required to pay in four equal

quarterly installments i.e. Rs 1.1 million each, 1st installment before

commencement of the agreement and other three before 7th of August,

November, 2002 and February 2003. The lessee was also required to

provide a revolving bank guarantee for Rs 1.1 million (equal to one

installment) from any Schedule Bank in favour of the lessor. As per clause

3 of the agreement, if the lessee fails to pay the installment amount by due

dates, the bank guarantee will be encashed by the lessor for adjustment

against the unpaid installment amount due against the lessee. In that case,

the lessee shall provide a fresh bank guarantee before the due date of next

installment. Bank guarantee should remain valid till the expiry of the

agreement.

Parks and Horticulture Authority, Lahore did not recover/adjust a part of

the last installment from the contractor. The gate entry of Gulshen-e Iqbal

park Lahore was leased out to the contractor for the period from 7th May,

2002 to 6th May, 2003 at quarterly rent of Rs 1.1 million. The contractor

did not pay a part of 4th and last quarterly installment. This resulted in loss

of Rs 497,000 to the Authority.

Audit pointed out the loss in August 2007. The Authority replied that

efforts were being made for recovery under Land Revenue Act. The reply

was not convincing because the said amount could not be

recovered/adjusted as the Authority did not obtain the revolving bank

guarantee of Rs 1.1 million of any Schedule Bank from the contractor in

violation of the above agreement.


2009 where in audit informed the Committee that department has failed to

recover the last installment of gate entry of Gulshan-e- Iqbal Park Lahore.

The department explained that efforts were being made for recovery under

land Revenue Act. The Committee was not agreed with the explanation of

the department and directed the department to recover the amount

immediately and also directed to call the explanation of concern project

director for non-obtaining the revolving bank guarantee of Rs 1,100,000

from contractor and non-recovery of last installment at time. The para was

kept pending.

(DP.69)

104

Para 2.26 Non-forfeiture of security deposit - Rs 477,818 and non-

execution of balance work - Rs 4.3 million

Clause 60&61 of the contract agreement provides that in case contractor is

not executing the work in accordance with the contract or is persistently or

flagrantly neglecting to carry out his obligations under the contract, the

engineer-incharge may rescind the contract and the security deposit of the

contractor shall stand forfeited, and such work should be done at the risk

and cost of the contractor.

The Project Director, Punjab Community Water Supply & Sanitation

Project, awarded the work to a contractor with date of commencement as

28th July, 2004 and date of completion as 27th November, 2005. The

contractor did not complete the work within stipulated period and was

served with eighteen (18) letters/notices up to 23rd November, 2005. The

contractor was liable to forfeiture of security deposit amounting to

Rs 477,818 and execution of balance work worth Rs 4.331 million was to

be done at risk and expense of the defaulting contractor. Non-adherence to

the contract provision resulted in non-forfeiture of security deposit

amounting to Rs 477,818 and non-execution of balance work for Rs 4.331

million.

Audit pointed out the issue in March 2006. The project management

replied that the matter regarding action under the terms of contract had

been recommended and was under process. The reply was not agreed as

considerable period of 15 months had been elapsed since stipulated date of

completion and only 44% and 51% progress was achieved by the

contractor. The contractor was required to be proceeded under the

governing clauses of the contract agreement.


meeting held on 13th March, 2007. The Committee directed to expedite the

completion of work and keep the para pending for further action towards

imposition of penalty/rescission of contracts. No further progress was


(DP.10-FAP)

Para 2.27 Loss to government due to encroachment – Rs 450,000

As per clause 13 to 17 of terms & conditions of auction in Housing &

Physical Planning scheme read with para 7 of HUD and PHE Department,

Government of the Punjab notification No.SO(D-II)2-7/2002 dated 1st

November, 2002, the allottee will not sub-divide the plot & shall not

105

change the use for which it was allotted. Otherwise, his allotment will be

cancelled and in case of encroachment the committee may allow sale of

plots in special circumstances at market rate plus 10% for sale through

private treaty.

The Deputy Director Sub-Region, Punjab Housing and Town Planning

Agency, Sahiwal could not cancel the plot No5-6/3 & got vacated the plot

No.7/3 from the encroacher. The owner of the shop No.5-6/3 in Tariq Bin

Ziad Colony encroached shop No.7/3 and merged all the three shops into

one unit and got installed tower of Mobilink Company over there with out

approval of the department and without payment of shop No.7/3. This

resulted in loss of Rs 450,000.

Audit pointed out the loss in August 2007. The department replied that

notices were served to the allottee as well as Mobilink Company to

remove the installation of tower. The reply was not convincing because

the department was required to cancel the shop No. 5-6/3 and also to get

vacate the encroachment i.e shop No. 7/3.




(DP.58)

Para 2.28 Loss due to non-utilization of available earth -

Rs 423,210

In terms of item 11 of chapter No. 17.1 (A) regarding “Excavation &

Embankment” (Earth Work General) of specification for excavation of

works, if cutting and filling were being done simultaneously all suitable

material obtained from excavation shall be used in filling.

The Deputy Director, Punjab Housing and Town Planning Agency Sub-

Region, Layyah did not utilize the available earth as a result of excavation

of RCC sewer and water supply lines and paid for the filling of earth,

brought from two miles lead, in embankment for road. This resulted in


Audit pointed out the overpayment in January 2008. The department did

not reply.

106




(DP.35)

Para 2.29 Overpayment due to allowing higher rates - Rs 359,644

As per undertaking of the contractor mentioned in acceptance letter

No.1451-55/E date 5th August, 2006, the department was supposed to pay

to the contractor at the estimated rates as the contractor had withdrawn the

quoted above percentage i.e. 4.5% above the estimated rates.

The Executive Engineer, Public Health Engineering Division, Lahore

made payment to the contractor at 4.5% above the estimated/market rates.

The contractor tendered rates 4.5% above the estimated rates and agreed to

work at estimated rate. Later on, in his undertaking the contractor

withdrew the percentage of 4.5 tendered over and above the estimated

rates. Instead of making payment on rates agreed upon as per undertaking,

the department made payment at the rates originally tendered by the

contractor. Non-reduction of rates as agreed resulted in overpayment of

Rs 359,644 to the contractor.


submitted interim reply stating that the reply would be given after detailed

scrutiny of record.


wherein the audit informed the Committee that department has not

attended the audit during verification and no one came from division in

discussion. The Committee took it very serious and directed the

department to call the explanation of the Executive Engineer, PHE

Division Lahore for non compliance of SDAC meeting. The Committee

also pended the para for detailed verification. No progress was reported till


(DP.63)

Para 2.30 Excess payment due to irregular measurement -

Rs 197,000

As clarified by the Communication & Works Department, Government of

the Punjab vide No.PAC(C&W) 17-6/90 dated 28th October, 1997, the

deficiency in the sub base course should be removed before laying the

107

base course. Similarly, deficiency in thickness of base course should be

improved before applying Triple Surface Treatment.

The Director Roads, Urban Development Wing LDA, Lahore measured

and paid an item of work “Earth work making embankment etc” to the

extent of 43089cft. After providing/laying of sub-base course and base

course the overall quantities of earth work making embankment were

again measured as 47190 cft. by increasing the breadth and depth of the

item of work. This resulted in excess payment of Rs 197,000.

Audit pointed out the excess payment in August 2007. The Authority

replied that the payment was made as per technical sanctioned estimate.

The reply was not agreed as the re-measurement and payment for earth

work embankment after laying of sub-base course and base course was

irregular.


meeting held on 23rd December, 2008 wherein the Audit informed that the

department increased the quantity of item of earth work by increasing the

breadth & depth after laying subsequent item. The department explained

that the payment was made as per TSE. The Committee did not agree with

the departmental contention and kept the para pended for detailed

verification regarding cross section and record entries. Compliance of the

Committee directive was not made till finalization of the report.

(DP.30)

Para 2.31 Loss due to purchase of bleaching powder at higher rate

– Rs 184,678

According to rule 2.10 of Punjab Financial Rules Vol-I, same vigilance

should be exercised while making expenditure from government money as

a person of ordinary prudence would exercise for spending money from

his own pocket.

The Director Water Resources, WASA FDA, Faisalabad purchased

bleaching powder for store from various contractors/suppliers at rate of

Rs 43.50 per kg whereas ex-factory rates inclusive of all taxes of the

bleaching powder of Sitara Chemicals Industries Faisalabad were in the

range of Rs 20 to Rs 25 per kg, during the year 2006-07 which was almost

half of the rates of the supply for the said item. Purchase of bleaching

powder from suppliers @ Rs 43.50 kg instead of @ Rs 20 per kg to Rs 25

per kg from manufacturer resulted in loss of Rs 184,678.

108

Audit pointed out the loss in October 2007. The Agency replied that

purchase of bleaching powder was made through contractor after

necessary sanction from the Competent Authority. The reply was not

convincing as ex-factory rate, including all taxes, of bleaching powder

during August 2006 was Rs 20610 per metric ton whereas in the analysis

produced for verification the base rate, exclusive of all taxes, was taken as

Rs 23500 per matric ton, Moreover, the analysis of rate revealed that two

(2) trucks were required for transportation of 1000 kg (1-M-Ton)

bleaching powder whereas the receipts of the manufacturers and sales tax

invoices revealed that more than 1000 kg (1-M-Ton) bleaching powder

was transported on one truck which revealed that analysis of rate was

prepared on higher side.


meeting held on 23rd December, 2008 wherein para dealt with loss to the

agency due to purchase of bleaching powder from the supplier at rate Rs

43.50 per kgs instead from “Sitara Chemicals Industries “Faisalabad at

rate Rs 20 to 25 per Kgs. The department neither produced the record as

mentioned in its fresh reply shown in working paper nor justified the issue

in question. The Committee deferred the para for detailed verification in

main audit office within seven (7) days.

(DP.81)

109

IRRIGATION & POWER DEPARTMENT

Punjab Irrigation and Power Department was established in the sub-

continent in 1854 for the purpose of administrative control over the

Irrigation System. The Punjab Irrigation System was divided into six field

zones and each field zone is controlled by a Chief Engineer with the

assistance of the Superintending Engineer. They are assisted by the

Executive Engineers and Sub-Divisional Officers etc. The Divisional

Engineer is the basic accounting unit assisted by a Divisional Accounts

Officer. The main functions of the department are:

i) Operation and upkeep of irrigation system of the province;

ii) Planning, prioritization and implementation of maintenance of

works through approved operation and maintenance works

plans and under third party top supervision;

iii) To optimize the use of water resources in the province by

equitable distribution of irrigation water supplied through canal

outlets;

iv) Assessment of water rates based on actual field inspections by

revenue staff of the department; and

v) Implementation of the development programme portfolio and

foreign aided projects;




Sr.No Particulars Amount Total amount /

%age


2006-07

13,458.71

13,458.71


2006-07

11,964.30

11,964.30



report

i) Excess payment





v) Non- recovery

8.35

193.12

227.80

191.40

52.63

673.3


110

111

3. IRRIGATION & POWER DEPARTMENT

Para 3.1 Expenditure incurred in excess over deposits - Rs 227.8

million

As per rule 7.30 of Departmental Financial Rules, no deposit work should

be under-taken by Divisional Officer without prior approval of

administrative head of the department concerned and no expenditure

should be incurred in excess over deposit.

The Executive Engineer, River Diversion Division, Basira incurred excess

expenditure on deposit works than the amount received in advance and

placed the amount in Misc. PW Advances as recoverable from sister

Public Works Davison. This resulted in incurring of expenditure in excess

over deposits for Rs 227.8 million.

Audit pointed out the excess expenditure in September 2007. The

department replied that the same observation was already taken by Audit

in 2000-01. The reply was not agreed as the observation of such kind was

not taken in the previous Audit Reports.


meeting held on 25th September, 2008. The divisional representative

explained that the construction of Ghazi Ghat bridge complex was

undertaken by both Irrigation and Highway departments as deposit work

for the period from 1980-84. During this period expenditure in question

was incurred in excess of deposit received and placed in P.W Misc.

advances pending adjustment on receipt of funds. The requisite funds had

not yet been received and the amount was still lying unadjusted. However,

no record was got verified by the department in support of reply. The

Committee was not convinced and desired explanation for non-verification

of record and kept the para pending for verification of record by Audit

within 30 days. No compliance of the Committee directive was reported


(DP.36)

Para 3.2 Non-auction of unserviceable material - Rs 191.4 million

According to para 4.35 and 4.37 of Buildings & Roads Department Code,

surplus store be evaluated at the end of each financial year and put to

auction as per laid down procedure.

112

3.2.1 In Central Store Division, (Irrigation Branch Mughalpura

Lahore), 586 number tubewells amounting to Rs 165.2 million were

declared surplus/unserviceable and approval of the same was accorded by

the Superintending Engineer Mechanical Circle, Lahore but the material of

the tubewells was not put to auction. Non-adherence to the codal

procedure resulted in non-auction of unserviceable material for Rs 165.2

million.

Audit pointed out the non-auction in February 2008. The department

replied that the said material would be auctioned shortly and results of

auction would be got verified by Audit.


meeting held on 25th September, 2008 wherein it was explained that 586

Nos. tube wells had been declared surplus vide Secretary I&P

No.SO(T&M)10-11/2000(PT-1)TM/C-S, dated 03.04.2007. The list of

surplus equipment/machinery along with reserve price fixed by the

Committee had been approved by the competent authority. The Committee

advised the administrative department to complete the auction process

within 90-days. No progress towards auction was reported till finalization

of the report.

(DP.57)

3.2.2 The Executive Engineer, Excavator Division, Faisalabad

neither used nor auctioned the unserviceable/surplus material lying in the

store since long. Non-auction of unserviceable/surplus material resulted in

loss of Rs 16.2 million.

Audit pointed the loss in October 2007. The department replied that the

auction of unserviceable/surplus material of obsolete model machinery

was under process of auction. The reply was not acceptable because no

concrete efforts in this regard were shown to audit.


meeting held on 25th September, 2008 wherein the division reiterated its

previous reply. The Committee advised to complete the auction process

within 90-days.The administrative department was to take up the matter.

No compliance of the Committee directive was reported till finalization of

the report.

(DP.72)

113

3.2.3 The Executive Engineer, Bhalwal irrigation workshop

Division did not auction the unserviceable material available with the

division. This resulted in non-auction of material for Rs 10 million.

Audit pointed out the non-auction in July 2007. The department replied

that process of auction of unserviceable material was already taken up

with the higher authorities and auction would be held in due course of

time after approval of the competent authority. The reply was not tenable

as no auction was held till date.


meeting held on 25th September, 2008 wherein the division explained that

survey report was sanctioned by the Secretary I&P department Lahore

vide dated 16th February, 2004. The material was put to auction three

times but reserve price could not compete the bid. A lot of time had been

elapsed. The Committee directed that auction procedure be got expedited

keeping in view latest instructions of the department over the issue within

90 days. No compliance of the Committee directive was reported till


(DP.35)

Para 3.3 Unjustified expenditure due to non carriage of stone

from nearest quarry - Rs 63.6 million As per Finance Department notification No.RO(Tech.) FD-2-3/2004 dated

2nd August, 2004, material from nearest approved quarry shall be used.

However, if rate of the finished product from other quarry is cheaper than

lowest rate shall be used.

The Executive Engineer, Development Division, Mandi Bahauddin made

payment for 12,283,069 cft quantity of carriage of pitching stone from

Sikhanwali/Tarki quarry with average lead of 92 KM to 155 KM to site of

works. The nearest approved quarry i.e. Baghanwala quarry was at a

distance of 50 KM and the department could have easily managed at least

50% quantity of total quantity i.e.6,141,534 cft stone required at site from

this quarry. Non-procurement of stone from nearest quarry resulted in

unjustified expenditure of Rs 63.6 million.

Audit pointed out the unjustified expenditure in January 2008. The

department replied that Baghanwala quarry had very limited capacity to

manufacture stone. The reply was not acceptable because non-availability

certificate was not sought from Baghanwala quarry regarding non-

availability of stone.

114


meeting held on 25th September, 2008. The department reiterated its

previous stance and added that as per contract agreement of Baghanwala

quarry for the period 01/7/03 to 30/6/06, quarry contractor was required

manufacturing of 882,000 cft stone to meet with the requirements of UJC

Jhelum / Gujrat / Khanki Head - Works / Small Dams Division Jhelum /

Chakwal / Rasul Head-Works Division Rasul etc. The Committee directed

that detailed verification of the following documents be got made from

audit within 15-days otherwise recovery be effected: -

1. Capacity of Baganwala quarry.

2. Prescribed procedure for manufacturing of stone of desired

grade.

3. Stock condition of Sikhanwala quarry.

4. NOC alongwith availability status of stone at Baghanwala quarry

and other documents.

Compliance of the Committee directive was not made till finalization of

the report.

(DP.77)

Para 3.4 Non-achievement of targets due to unauthorized

retention of deposits - Rs 51.1 million

As per rule 2.2 of Punjab Financial Rules Volume-I, unexpended amount

was required to be surrendered in time.

The Executive Engineer, Irrigation Workshop Division, Bhalwal did not

utilize an amount received on account of deposits from the Executive

Engineer, Sadqia Canal Division, Bahawal Nagar and the Executive

Engineer, Mughalpura Workshop Division, Lahore in 06/2004. This

unspent amount was not surrendered to govt. for utilization on other

development works. This resulted in non-achievement of targets due to

unauthorized retention of deposits available with the division worth

Rs 51.1 million

Audit pointed out the issue in July 2007. The department replied that

funds were received at belated stage while sanction to the estimate was

under process. The reply was not convincing as the amount in question

was forthcoming as deposits received since 06/2004. Neither it was

utilized nor surrendered.

115


meeting held on 16th & 17th February, 2009 wherein no record was

produced by the Division. It was directed that in detailed verification be

got completed within 15-days from audit office failing with followed by

disciplinary action against the Division. No compliance of the Committee

directive was reported till finalization of the report.

(DP.121)

Para 3.5 Unauthentic stock balances due to non-submission of

stock returns – Rs 38.2 million

As per rule 6.17 and 6.28 of Punjab Financial Rules, half yearly stock

returns were required to be submitted by the sub-divisional officer and as

per rule 5.11 of Departmental Financial Rules, reserve stock limit was also

to be approved by the competent authority.

3.5.1 The Executive Engineer, Bhakkar Canal Division, Bhakkar,

depicted the balance of Rs 12.8 million in Form PWA-29 stock account

but detail of stock was neither available with the division nor half yearly

stock return was submitted to authenticate the availability of stock. Non-

conducting of physical verification of stock and non-maintenance of stock

returns as per reserve stock limit resulted in unauthentic stock balances for

Rs 12.8 million.

Audit pointed out the unauthentic stock balance in November 2007. The

department replied that stock was transferred from other sister divisions.

The reply was not substantial because all the stock was now property of

the division.


meeting held on 25th September, 2008 wherein the XEN Bhakkar Canal

Division took the stance that the material in question had been purchased

for flood protection to meet with the emergency during flood season and

to safeguard the Irrigation system. The material so purchased had been

taken on stock register. Viewpoint of the department was not agreed by

the Committee and it was directed that the department would initiate the

inquiry proceedings against the delinquents for not preparing the stock

returns in time. No compliance of the Committee directive was reported


(DP.58)

116

3.5.2 The accounts record maintained in Q.B. Link Division,

Farooqabad showed a balance of stock valuing Rs 10.5 million but neither

the stock returns were showing the balance nor physical verification of

stock was made. This resulted in unauthentic stock balances of Rs 10.5

million.

Audit pointed out the unauthentic stock balance in August 2007. The

department replied that case of shortage of stone had already been taken

up by Audit during 2001-2002. The reply was not acceptable because

balance was taken from the June 2007 account and also no steps for re-

coupment of shortage of stone were reported.


meeting held on 25th September, 2008 wherein as per DAC directive dated

12th August, 2006 inquiry was already under process with the SE,

Drainage Circle, Faisalabad. The Committee decided that the awaited

inquiry report be got submitted within 15-days otherwise disciplinary

proceedings would be initiated against the inquiry officer. No compliance

of the Committee directive was reported.

(DP.25)

3.5.3 The Executive Engineer, CBDC Division, Lahore depicted

the balance of Rs 8.8 million in stock account (form PWA-29) but neither

detail of stock was available (as no transaction was recorded against it) nor

half yearly stock return was submitted to authenticate the availability of

stock. Non-conducting of physical verification of stock and non-

maintenance of stock return as per reserve stock limit resulted in

unauthentic stock for Rs 8.8 million.

Audit pointed out the unauthentic stock balance in July 2007. The

department replied that the Division was very old and stock was lying

since long. Efforts were being made to clear the amount of stock. The

reply was not acceptable because department neither prepared half yearly

stock returns nor assessed the net value of stock by making physical

verification of stock as per prevailing market rates.



explained that the amount of stock was falling since very long period and

efforts were being made to clear the amount of stock. The Committee kept

the para pending for physical verification, preparation of survey report to

see whether it was surplus material or not, sent to the disposal Committee

117

within 60 days and results / actions thereof be got verified from Audit. The

compliance of the Committee directive was not reported till finalization of

the report.

(DP.137)

3.5.4 The Executive Engineer, Upper Chennab canal Division,

Gujranwala showed the stock valuing Rs 6.1 million under grant-9 and 37

in stock account form PWA 29 for the month 6/2007 but no stock

returns/stock paper showing the quantity and value of stock was available.

Non-maintenance of stock returns, its physical verification and latest value

of articles resulted in unauthentic stock of Rs 6.1 million.

Audit pointed out the unauthentic stock balances in January 2008. The

department replied that the concerned sub-divisions were directed to

undertake the physical verification as per prescribed rules. The reply was

not agreed because neither stock returns nor sanction to reserve stock limit

and value account were produced to audit to verify the stock balance.


meeting held on 16th & 17th February, 2009 wherein the reply of the

division was not found convincing. The Committee directed that a probe

may be completed within a period of 30-days, and for fixing

responsibilities against the delinquents. The compliance of the Committee


(DP.167)

Para 3.6 Non-recovery/adjustment of amount placed in Misc.

P.W Advances on account of retrenchments / losses –

Rs 23 million

As per rule 5.7 and 5.14 of Departmental Financial Rules read with Article

54 to 57 of Account Code Vol-III, the head Misc. P.W. Advances is of

temporary nature which should be cleared as early as possible by

adjustment / recovery in cash or transfer to the work.

3.6.1 The Executive Engineer River Division, Basira did not

adjust / recover the amount placed in Misc. P.W Advances on account of

retrenchments/ losses. This resulted in non-recovery/adjustment of Rs 11

million.

Audit pointed out the non-recovery/adjustment in September 2007. The

department replied that the observation was already taken up by Audit in

AIR 2000-01. The reply was not tenable because no such observation was

already taken up.

118



explained that the actual amount of Rs 10.966 million were related to

other heads which were inadvertently kept under the head losses. The

contention was not accepted by the Committee and directed for detailed

probe within one month. No compliance of the Committee directive was


(DP.160)

3.6.2 The Executive Engineer, Lahore Drainage Division, Lahore

did not recover an amount of Rs 7.2 million from the officers / officials

lying recoverable against them in the Misc. P.W Advances on the basis of

different reasons. Non-adjustment of Misc. P.W Advances resulted in non-


Audit pointed out the non-recovery/adjustment in July 2007. The

department replied that the correspondence was being made to

recover/adjust the amount placed in Misc. P.W Advances. The reply was

not satisfactory as no strenuous efforts were made/shown to Audit for

adjustment since 2003.


meeting held on 25th September, 2008 wherein the Division explained that

these amounts were outstanding since 1955-99. The concerned

officers/officials had been asked for arranging funds to adjust the

outstanding amounts. The para was discussed at length and it was decided

that the details of journeys performed by the field officers, out turns

prepared, vetted log books by the competent authority be collected and if

found in order, additional funds be asked from the Finance Department for

adjustment of these amounts otherwise recovery should be made. No

compliance of the Committee directives was reported till finalization of

the report.

(DP.71)

3.6.3 The Executive Engineer Balloki Sidhnai Link Division did

not adjust / recover the amount placed in Misc. P.W. Advances against

various Divisions. This resulted in non-recovery/adjustment of Rs 4.3

million.

Audit pointed out the non-recovery/adjustment in October 2007. The

department replied that the amount pertained to old period i.e. 1965 to

2004 and efforts were being made to recover/adjust the outstanding

balance. The reply was not tenable as no recovery/adjustment was made so

far.

119



explained that outstanding amount pertained to the old period that was

1965 to 2004 and no current items included. However, recovery of

Rs 2,301 against the pointed out recovery of Rs 4.263 million was got

verified from audit. The Committee kept the para pended for detailed

probe within 30 days. The compliance of the Committee directive was not


(DP.129)

3.6.4 The Executive Engineer, Lower Jhelum Canal Kirana

Division, Sargodha did not adjust amount placed in P.W Misc. Advances

against some officers on account of non-closing of manufacture account.

This resulted in non-recovery/adjustment of amount for Rs 506,069.


replied that recovery was being pursued. The reply was not tenable as no

recovery was reported so far.


meeting held on 25th September, 2008 wherein after verification of record

and recovery effected, the amount of the para was reduced to Rs 458,212.

For the balance amount, it was decided by the Committee that the log

books as well as details of journeys performed by field officers be

collected and got verified from Audit within 15 days. In case, the journeys

performed were in order, the case be referred to the Finance Department

for regularization. No compliance of the Committee directive was reported


(DP.15)

Para 3.7 Excess payment due to application of incorrect rate –

Rs 16 million

As per Finance Department addendum & corrigendum No.5 to Market

Rate System Vol-III, Part-II dated 1st March, 2004 w.e.f. 1st March, 2005

for District Khushab, rate for 6" mesh & 8 SWG wire crate was reduced.

3.7.1 The Executive Engineer, Khushab Irrigation Division,

Mianwali made payment for 6" mesh 8 SWG wire crates @ Rs 2,350

per% sft. instead of at reduced rates of Rs .1,416.05 per% sft. Application

of incorrect higher rate and non-adherence to the Finance Department

instructions resulted in excess payment of Rs 7.3 million.

120

Audit pointed out the excess payment in January 2008. The department

replied that rates were accepted on item rates basis and A&C referred

above did not apply in that case. The reply was not convincing because the

department should have adopted the A&C rates in technical sanctioned

estimate and proportionately reduced the item rates.


meeting held on 16th & 17th February, 2009 wherein The Committee was

not convinced with the explanation and advised that requisite clarification

be sought from the FD. The case would be processed by the Division

concerned within 15 days. The para was kept pending. The compliance of

the Committee directive was not reported till finalization of the report.

(DP.112)

3.7.2 The Executive Engineer, Layyah Canal Division, Layyah

calculated rates and made payment for wire crates of different sizes by

taking rate of G.1.wire as Rs 2,416.25 per hundred square feet instead of

Rs 1,381.40 per hundred square feet. Rate of Rs 600 and Rs 900 per

number wire crates of 32 square feet with 12 cubic feet capacity, 42 square

feet with 18 cubic feet capacity were paid instead of admissible rate of

Rs 442.05 and Rs 580.18 per number respectively. The payment of excess

rates resulted in an overpayment of Rs 4.7 million.


replied that the contractor quoted the rates on the basis of Market Rate

System (MRS) of January 2006 of District Layyah. The reply of the

department was not satisfactory because the corrected rates of the said

item were to be paid as per direction of the Finance Department w.e.f.

1st March, 2005.


meeting held on 25th September, 2008 wherein the Division intimated that

the tenders for work were received on 26th April, 2006 and the contractor

quoted rate of providing and weaving GI Wire netting with approved size

including siding and partition to make crate i.e. with rates Rs 600 for 12cft

capacity and Rs 900 for 18 cft while the rate of crates as per approved

MRS of District Layyah from 1st April to June 2006 were Rs 773.20 for

12cft and Rs 1,014.83 for 18-cft wire crates. Audit informed the

Committee that the rates were reduced by the Finance Department vide

A&C No.5. The Committee referred the case to the Finance Department

for necessary advice. The para was kept pending for seeking clarification

121

within one month. The compliance of the Committee directive was not


(DP.21)

3.7.3 The Executive Engineer, Small Dams Division, Chakwal

made payment for item of work “Providing & weaving G-I wire netting

for wire crates (6” mesh & 8” SWG) @ Rs 3,000 per hundred square feet

instead of Rs 1,401.20 per hundred square feet as per addendum and

corrigendum referred above. The payment of excess rate of Rs 1,598.80

per hundred square feet over and above the admissible rate resulted in

overpayment of Rs 1.6 million


replied that the contractor was paid as per his tendered rate. The reply was

not tenable because payment was not made as per addendum and

corrigendum issued by the Finance Department.


meeting held on 16th & 17th February, 2009 wherein The Committee

decided that the clarification from F.D be sought at the earliest. The para

was kept pending. The compliance of the Committee directive was not


(DP.125)

3.7.4 The Executive Engineer, Punjnad Headworks Division,

paid rate of item G.I. wire netting mesh 6” SWG 8 @ Rs 2,416.25 per

hundred square feet instead of 1,406.15 per hundred square feet. This

resulted in overpayment of Rs 1.2 million.


replied that the A&C No.5 was issued on 1st March, 2007 by the Finance

Department whereas the estimate was sanctioned technically by the

competent authority on 29th December, 2006 and the work was allotted on

5th February, 2007. The reply was not tenable because the observation was

regarding payment made at excess rate in violation of the Finance

Department instructions applicable w.e.f. 1st March, 2005.


meeting held on 16th & 17th February, 2009 wherein the division explained

that the A&C No.5 was issued on 1st March, 2007 by the Finance

Department whereas the estimate was sanctioned by competent authority

dated 29th July, 2006. The works were allotted/ executed and completed on

dated 5th February, 2007 and 10th March, 2007. Audit intimated that the

122

Finance Department categorically stated the effect of date of reducing the

rate. The Committee decided that clarification from Finance Department

be sought. The compliance of the Committee directive was not reported


(DP.109)

3.7.5 The Executive Engineer, Bhakkar Irrigation Division,

Bhakkar made payment for item of work “Providing and Weaving

Galvanized Iron wire (G.I. wire) netting for wire crates with G.I. wire of

approved size including siding and partition to make crates 6" mash 8

SWG wire” @ Rs 2,450.90 per hundred square feet instead of admissible

rate of Rs 1,416.05 per hundred square feet. This resulted in overpayment

of Rs 766,214.


replied that the rate was paid as per provision in the technical sanctioned

estimate. The reply was not tenable because the rate was not paid as per

addendum and corrigendum issued in this regard.


meeting held on 25th September, 2008 where-in the Executive Engineer

Bhakkar Canal Division pleaded that the rate of crates & SWG Wire @

2,450.90 per hundred square feet was paid according to the technical

sanctioned estimate by the Chief Engineer, Sargodha. Audit informed the

Committee that the said rate had already been reduced by the Finance

Department vide A&C No.5. It was decided by the Committee that the

case be referred to the Finance Department for necessary advice. No

compliance of the Committee directive was reported till finalization of the

report.

(DP.13)

3.7.6 The Executive Engineer, Burala Division, Lower Chenab

Canal (East) Faisalabad paid Rs 1,775.40 per hundred square feet instead

of admissible rate of Rs 1,115.40 per hundred square feet for item of work

“providing and weaving Galvanized Iron Wire (G.I.Wire) netting for wire

crates of approved size including siding and partition to make crates 6”

mash 10 SWG”. The payment of excess rate resulted in overpayment of

Rs 452,740.


replied that the rate of item of work in question was paid as per provision

in the technical sanctioned estimate. The reply was not agreed because the

rate for item of work was to be paid as per instructions issued by the

Finance Department.

123


meeting held on 25th September, 2008 where-in the Division explained

that the rates for item of work “providing weaving GI wire netting for wire

crates of approved size including siding and partition to make crates was

correctly paid @ Rs 1,775.40 per hundred square feet as depicted in the

Market Rates System (MRS) 1st quarter 2007 relating to District Toba Tek

Singh. Audit informed the Committee that the said rate had already been

reduced by the Finance Department vide A&C No.5. The Committee

referred the case to the Finance Department for necessary advice within

one month. No compliance of the Committee directive was reported till

finalization of report.

(DP.22)

Para 3.8 Non-receipt of gate and gearing system - Rs 13.7 million

As per rule 6.9 of Departmental Financial Rules, all material received

should be examined, counted, measured or weighed as the case may be

when delivery is taken by the store keeper or the sectional officer

concerned.

The Executive Engineer, Ahmadpur Canal Division, Ahmadpur paid

Rs 13.705 million to the Executive Engineer Development Division No.II,

Multan, for manufacturing and installation of gate and gearing system of

Abbasia Canal. The Executive Engineer, Development-II, Multan did not

install machinery. This resulted in non-receipt of gate & gearing system of

Rs 13.7 million.

Audit pointed out the non-receipt of material in January 2008. The

department did not reply to the audit observation.



explained that Rs 13.7 million was made on 12th May, 2007 to the

Executive Engineer Development Division No.II, Multan through cheque

who intimated the Executive Engineer Ahmad Pur (East) Canal Division

on 20th June, 2007 that funds were received late from your end. On

1st June, 2007, 2nd June, 2007 and 19th June, 2007 tender were invited but

no tender was received. The Committee pended the para for detail probe

within 30 days. The compliance of the Committee directive was not


(DP.146)

124

Para 3.9 Irregular expenditure due to change in specification of

work - Rs 10.2 million

Clause 10 of the contract agreement provides that the contractor shall

execute the whole and every part of work in the most substantial and work

like manner and both as regards material and otherwise in every respect in

strict accordance with specification. The work executed by the contractor

shall also conform to design and drawings.

The Executive Engineer, Development Division, Mandi Baha-ud-Din

made payment for construction of 5 Nos. cattle ghats made of stone

masonry. The cattle ghats were required to be made of brick masonry as

per PC-I / estimated provision. Change of specification without prior

approval of the competent authority resulted in irregular expenditure of

Rs 10.2 million.

Audit pointed out the irregular expenditure in January 2008. The

department replied that cattle ghats with stone masonry were constructed

on recommendation of consultants and these changes were incorporated in

variation orders. The reply was not satisfactory as neither variation

statement was got approved nor the drawings were revised.


meeting held on 25th September, 2008 wherein the department reiterated

its previous reply. The Committee directed that the Chief Engineer,

Sargodha be requested to submit a probe report within 60-days, keeping in

view the original estimates of 5-Nos. cattle ghats and the change of

specifications. No compliance of the Committee directive was reported till


(DP.76)

Para 3.10 Non-adjustment of suspense – Rs 9.8 million

According to para 6.16(vi) of Punjab Budget Manual, the suspense head is

of temporary character and all transactions there under should be removed

either by payment or by book adjustment. The amount of credits should be

equal to the amount of debits and effect of suspense should be nil.

3.10.1 The Executive Engineer, Dera Ghazi Khan Construction

Division, Dera Ghazi Khan incurred an expenditure of Rs 5.8 million

against the provision of suspense funds of Rs 4.4 million. As such Rs 14

million was incurred in excess of the suspense budget. This resulted in

non-adjustment of Rs 14 million.

125

Audit pointed out the non-adjustment of suspense in October 2007.

Department admitted the Audit observation & said that on receipt of

further budget in the next financial year the adjustment would be made.

Departmental reply was not agreed because liability of Rs 1.355 million

was created to be paid in the next financial year without availability of

funds which was against codal rules.


meeting held on 16th & 17th February, 2009 wherein The Committee

directed that verification of form No.27 pertaining to flood fighting plan,

stock purchased stock adjusted be got completed from audit office within

15-days. No compliance of the Committee directive was reported till


(DP.104)

3.10.2 The Executive Engineer, Rahim Yar Khan Canal Division,

Rahim Yar Khan did not equalize the amount of debit and credit at the end

of financial year i.e. on 30th June, 2006 (Rs 1.3 million + Rs 3 million) due

to incurring of expenditure from suspense head without allocation of

funds. This resulted in non-adjustment of expenditure of Rs 4.3 million.

Audit pointed out the non-adjustment of expenditure in December 2007.

The department replied that due to serious erosion/direct hit of river Indus

on J-Head spur, the stone and trangers were procured and taken on stock

register. During any emergency at J-head spurs, the material would be

issued and credit would be given to proper head. The reply was not

convincing because reserve stock was procured without allocation of

funds.



the expenditure had been incurred after fulfilling all codal formalities i-e

sanction of reserve stock limit accorded by the Chief Engineer,

Bahawalpur dated 21st February, 2006 and estimate technically sanctioned

by authority vide SE, RYK dated 17th March, 2006. The stone had been

issued to flood protection works and credit given under proper head of

account. The Committee directed that the details of debits and credits there

against at the end of 30th June, 2006 be got verified, based on entries of

Form PWA 29 from Audit Office, Lahore within a period of 7days. No


the report.

(DP.65)

126

3.10.3 The Executive Engineer, Kot Adu Canal Division, Kot Adu

showed a balance of Rs 2.8 million under suspense head as debit in the

monthly account for 6/07 against the credit of Rs 950,589. Non-

equalization of debit & credit resulted in non-adjustment of Rs 2.8 million.

Audit pointed out the non-adjustment in November 2007. The department

stated that reply would be given after thorough verification of record.


meeting held on 16th & 17th February, 2009 wherein the explanation

submitted by the department was not found convincing and it was desired

by the Committee that probe be got completed within a period of 30-days

by the Administrative Department. No compliance of the Committee


(DP.139)

3.10.4 The Executive Engineer, Development Division No.1,

Sidhnai incurred expenditure of Rs 2.2 million from suspense head in the

month of June 2006 out of which Rs 934,571 was adjusted. This resulted

in non-adjustment of expenditure for Rs 1.3 million.

Audit pointed out the non-adjustment in December 2007. The department

replied that reserve stock of quantity of 8.00 lacs cft had been granted by

the Chief Engineer. The stock was to be maintained for emergency, so the

balance was unavoidable. The reply was not tenable because the balance

of debits and credits had not been equalized as per above codal procedure.

Further, the expenditure was incurred without allocation of funds.


meeting held on 16th & 17th February, 2009 wherein it was pleaded by the

division that as per reserve stock for quantity 8.50 lac Cft. Stone had been

granted by the CE, Multan dated 9th October, 2006. The stock was to be

maintained on any emergency so the balance was unavoidable. The

Committee was not convinced with the explanation submitted and directed

that probe be got completed over the issue by deputing a responsible

officer from the Administrative Department within 30 days. No


report.

(DP.143)

Para 3.11 Irregular expenditure due to execution of items not

provided in PC- I/estimate - Rs 8.5 million


execute the whole and every part of work in the most substantial and work

127

like manner and both as regard material and otherwise in every respect in

strict accordance with specification. The work executed by the contractor

shall also conform to the design and / or drawings.

The Executive Engineer, Development Division, Mandi Baha-ud-Din

made payment on account of certain items of work which related to

construction of new building rather than rehabilitation works against the

provisions in the PC-I / estimate. Execution of such items of work not

provided in the PC-I / estimate resulted in irregular expenditure of Rs 8.5

million.

Audit pointed out irregular expenditure in January 2008. The department

replied that owing to heavy rains, the office buildings were badly damaged

and after inspection of buildings, the Superintending Engineer/Project

Manager decided that instead of rehabilitation of building, new office

building be constructed. The reply was not convincing as technical

sanctioned estimate was not got revised and the work started without

seeking prior approval of the competent authority.


meeting held on 16th & 17th February, 2009 wherein the position explained

by the department was not accepted by the Committee and directed to

refer the case to Finance Department for condonation after detailed probe.

The compliance of the Committee directive was not reported till


(DP.126)

Para 3.12 Irregular expenditure due to execution of excessive

quantity - Rs 2.8 million


execute the whole and every part of work in the most substantial and

workman like manner and both as regard, material and otherwise in every

respect in strict accordance with specification. The work executed by the

contractor shall also conform to the design and/or drawings.

The Executive Engineer, Development Division, Mandi Baha-ud-din

made payment for 26980 No, bamboos having size 10 feet to 12 feet long

with 2½” to 5” dia under “Staunching bamboos” against the estimated

provision of 1461 Nos only. This resulted in irregular expenditure of

Rs 2.8 million.

128

Audit pointed out the irregular expenditure in January 2008. The

department replied that work was executed as per actual requirements and

excess quantities were incorporated in variation order for seeking approval

of the competent authority. The reply was not acceptable as no variation

statement was got approved till now.


meeting held on 25th September, 2008 where in the division explained that

while preparation of scheme/estimate, the length of bamboos was

considered as per sounding in the running water at various intervals.

During execution of work it was observed that mostly the bamboos having

length 10-12’ were required at site. So keeping in view the exact site

situation, the bamboos of 10-12' were utilized as per actual of site

conditions. The Committee took a notice that the number of killa bushing

was 1,400 and why these had been enhanced to 26,980. The para was kept

pending with the directions that a fact finding report be conducted and

report submitted to Department/Audit within 30-days. No compliance of

Departmental Accounts Committee directives was reported till finalization

of the report.

(DP.45)

Para 3.13 Overpayment due to tampering of tender documents -

Rs 2 million

Clause 9 (iv) of agreement provides that if it is found that the tenderer has

not entered any unit rate and amount against any of the pay items of the

bid (i.e. above or below), the Engineer incharge shall fill in the blank by

noting the word “NIL” in such blank at the time of opening of the tender.

Such pay items shall deem to be covered by the rates of other items.

Further, as per clause of agreement, no correction shall be permissible in

the rate or amount of the bid schedule or in the tendered price after the

opening of the tender.

The Executive Engineer, Lower Bari Doab Canal Division, Okara paid

premium 42.50% on Building portion, 25% on public Health Work, 20%

on electric work and 42.5% on all other items whereas the contractor had

not quoted any premium on the above mentioned items. This resulted in

overpayment of Rs 2 million.


replied that the contractor quoted above premium in the bid schedule of

group-I but unfortunately he did not mention any percentage in group-II. It

was just a pen mistake. The Superintending Engineer presumed as the

contractor had quoted rate mentioned on tender form group-II above from

129

Composite Schedule of Rates 1998 because in group No.1 contractor had

mentioned rate already above from Composite Schedule of Rates 1998.

The reply was not acceptable because the contractor did not mention any

rate as premium on Composite Schedule of Rates 1998, above so he did

not deserve benefit on presumption of the Superintending Engineer and

statement of contractor. Hence, the amount was to be recovered from the

contractor/person at fault.


meeting held on 16th and 17th February, 2009 wherein during discussion of

para, serious financial irregularities were appeared and accordingly, it was

directed by the Committee that inquiry of the case be got conducted by the

Administrative Department within a period of 30-days. The compliance of

the Committee directive was not reported till finalization of the report.

(DP.106)

Para 3.14 Non-recovery / adjustment due to non-adjustment of

stock - Rs 1.9 million According to para 6.16 (vi) of Punjab Budget Manual, Misc. P.W

advances is of a temporary character which should be cleared either by

actual recovery or by adjustment during the same financial year.

The Executive Engineer, Chakbandi Division, Lahore did not

adjust/recover the amount placed in Misc. P.W. Advances against various

officers due to non-adjustment of stock during the fiscal year 2000-2001.

This resulted in non-recovery/adjustment of Rs 1.9 million.

Audit pointed out the non-recovery / adjustment in October 2007. The

department replied that payment was made as per directives of the Chief

Engineer, Lahore Zone to avoid contempt of court. The reply was not

acceptable as no progress towards recovery / adjustment was made.


meeting held on 25th September, 2008 where in the division explained that

the following two works were executed during flood of 1995 but could not

be paid due to non-availability of funds: -

1. Protecting apron of spur RD:224/L BRBD link to face the flood of

July 1995 (flood fighting) Rs 1.4 million.

2. Constructing stone stud at RD:4,000 of shank bund with tractor

trollies hired through contractor Rs 478,258.

130

The contractor filed civil suit and court awarded decree. The appeal of

department was not accepted even in Supreme Court of Pakistan against

the decree. The payment was made to the contractor as per direction of the

Chief Engineer, Lahore Zone dated 28th June, 2001 to avoid the contempt

of court. The adjustment would be made as soon as funds received. The

view point of the department was not accepted by the Committee and it

was directed that the details of para 2.89 of PWD Code invoked be got

rechecked. The Administrative department was advised to get complete a

probe by responsible officer and furnish to the Finance Department for

condonation within 60-days. No compliance of Committee directives was

reported till finalization of report.

(DP.83)

Para 3.15 Overpayment due to measuring excessive quantity -

Rs 1.9 million

As per Finance Department letter No. FD (D-11)10(3)90 dated June 1991,

the cost, scope and specifications of a scheme involving material

deviations from the original proposal once approved can not be modified

without prior approval of the authority competent to grant administrative

approval.

The Executive Engineer, Punjnad Headworks, Punjnad allowed quantity

of 992,862 square feet instead of actual admissible quantity of 905,148

square feet for the item of work “Providing weaving G.I. wire netting for

16779 Nos. wire crates having capacity of 27 cft (3x3x3) as per record

entry/including siding & partition to make crate with 8 SWG 4” mesh

(16779 x 54). The payment of excessive quantity of 87,714 square feet

resulted in overpayment of Rs 1.9 million


replied that till 4th running bill, the quantum of stone i.e. 475,062 cft was

carried and wire netting 992,862 sft was procured at site. The stone

453,045 cft was filled in wire crates, by consuming 906,089 square feet

wire netting. The balance wire netting 86,773 square feet and stone 24,072

cft was still lying at site. The actual requirement for the successful

completion of work was 498,581 cft stone which was decreased by 45,536

cft at that time. Later on, a quantity 45,536 cft was carried and by

including balance stone lying at site 24,072 cft was filled in wire crates at

site and thus the entire crates were consumed. The reply was not

acceptable because as per last paid bill 453,045 cft stone was filled and

dumped (453,045 / 27) in 16,779 Nos. wire crates having capacity of 27

131

cft. each. This became 16,779 Nos. crates for 906,089 sft wire netting

whereas the department paid 992,862 sft. Hence, 86,772 sft wire netting

was paid in excess and not lying at site for further utilization as

department could not produce stock register.


meeting held on 25th September, 2008 wherein the division produced the

record of payments 4th running bill and 5th & final bill regarding the work

restoration of damage J-Head spur at RD:36+700 upstream Punjnad. After

discussion over the para as well as verification completed by audit, it was

decided by the Committee that probe would be conducted by

Superintending Engineer, Mailsi Canal Circle, Multan. The report would

be received within a period of 60-days. No compliance of committee’s

directives was reported till finalization of report.

(DP.95)

Para 3.16 Unjustified payment due to non-dressing of earthwork -

Rs 1.7 million

If any part of the work is being insufficiently consolidated, earth work

shall be stopped till the consolidation is done to the satisfaction of the

Engineer-in-charge. If the contractor fails to carry out specified

compaction, the Engineer-in-charge may either add labour at the

contractor’s expenses or take over the whole or part of consolidation and

do it departmentally.

The Executive Engineer, River Diversion Division, Basira made payment

on account of 1086037 cft earth work excavation outside borrowpit as

undressed. Further payment on account of dressing was not made showing

that earth work was insufficiently consolidated. This resulted in unjustified

payment of Rs 1.7 million.

Audit pointed out the unjustified payment in September 2007. The

department replied that work executed by the contractor was found below

specification. He was also stressed upon to carry out dressing but he did

not turn up and his accounts were being finalized by forfeiting withheld

amount of Rs 308,608 alongwith forfeiture of 10% security amounting to

Rs 165,000. The reply was not acceptable as no progress towards

withholding of amount and forfeiture of security deposit was shown so far.


meeting held on 25th September, 2008 wherein the divisional

representative pleaded that the running payment of work executed at site

132

was made to the contractor without dressing. In fact the dressing made by

the contractor but was not found satisfactory during course of execution of

the work. As such, the payment amounting to Rs 308,668 was withheld in

1st running bill. Thereafter, on rectification of defects and proper dressing,

the overall measurements were done and the withheld amount was

released in 2nd and final bill. However, the Committee desired that the

facts finding report be produced to Audit after vetting by the Executive

Engineer Operation, Dera Ghazi Khan Zone within 60-days. Further

action be taken on receipt of recommendations of the officer deputed &

detailed verification of record in audit office. No compliance of the

Committee directives was reported till finalization of the report.

(DP.38)

Para 3.17 Unjustified expenditure due to hire charges of private

pickups / Dallas – Rs 1.5 million

As per rule 2.10(a)(1) of Punjab Financial Rules Vol-I, same vigilance is

to be exercised by government servant in respect of expenditure incurred

from government revenue as a man of ordinary prudence will exercise in

respect of expenditure incurred from his own money.

3.17.1 The Executive Engineer, Upper Chenab Canal Division,

Gujranwala made payment on account of hire charges of private

pickups/Dallas for patrolling of Beldars at canal bank to prevent the theft

of canal water in the presence of government vehicles provided to each

sub division. The incurring of expenditure on hire charges of Private

Pickups / Dallas had resulted in unjustified expenditure of Rs 836,475.

Audit pointed out the unjustified expenditure in January 2008. The

department replied that private Pickups/Dallas was hired for transportation

of beldars for removal of unauthorized pipes etc. The reply was not

acceptable because the division had itself a large number of vehicles and

beldars were deployed in each section specifically for watch & ward to

prevent the theft of canal water.


meeting held on 25th September, 2008 where in it was pleaded that

Gujranwala Irrigation Division was one of the highest canal operation and

maintenance division of Irrigation Department. In peak flow season, the

rate of water theft cases risen multiple, in the shape of installing syphon,

pipes, Z-shaped pipes installing concrete pipes under surface of canal

banks. For removal of theft of water through pipes heavy strength of

manpower was required on the spot for prompt action etc. Therefore, pick-

133

ups were hired for the purpose explained. The Committee was not

convinced with departmental explanation and directed that a probe be

conducted by the Chief Engineer, Lahore within 30 days. No compliance

of DAC directives was reported till finalization of the report.

(DP.27)

3.17.2 The Executive Engineer, Upper Chenab Canal Division,

Sheikhupura made payment on account of hire charges of Private Pickups

and Dallas for patrolling of Beldars on canal banks to control the theft of

water in the division. This resulted in unjustified expenditure for

Rs 703,416.

Audit pointed out the unjustified expenditure in December 2007. The

department replied that expenditure was incurred after obtaining sanction

by the competent authority and the private vehicles were used to carryout

the staff and police to prevent the theft of water. The reply was not

acceptable because the divisional and sub-divisional vehicles should be

used to watch and ward the canal banks as million of rupees in budget

were allocated for official vehicles. The separate payment for hiring was

quite unjustified.


meeting held on 25th September, 2008 wherein the Executive Engineer

UCC division Sheikhupura. The provision also existed in approved work

plan 2006-07. The Committee advised that the details of vehicles may be

collected and the journeys performed during the days involved may be got

verified from audit office. The para was kept pending for detailed

verification of record/probe by the Administrative Department.

(DP.59)

Para 3.18 Non-recovery due to non-execution of work - Rs 1

million


execute the whole and every part of work in most substantial and

workman like manner both as regards to material and otherwise according

to specification.

The Executive Engineer, Shahpur LJC Division, Sargodha awarded the

work on certain rates quoted by the contractor. The contractor in bill No.II

& III offered to execute the items as free of cost. The contractor executed

the items mentioned in bill No.1 upto Rs 9.3 million against contract

amount of Rs 9.3 million but did not execute the items offered to be

134

executed without any cost in bill No. II & III. In 2nd case items valuing

Rs 479,667 relating to bill No. 2, 3, 4 were also not executed. Non-

adherence to the clause of agreement and non-execution of items free of

cost resulted in non-recovery of Rs 1 million.

Audit pointed out the non-recovery in February 2008. The department

replied that work relating to bill No.II & III were carried out by the

contractor and entered in the measurement book and in other case (2nd)

work would be completed on risk and cost of the original contract. The

reply was not acceptable because terms and conditions of the contract

agreement were neither adhered to nor progress thereof was got verified

from the Audit.


meeting held on 25th September, 2008 wherein the division pleaded that

the executed work (construction of outlets) had been recorded in the MB

No. 1366 and final bill passed against Vr: No.19 dated 16th June, 2008

(Miani sub division). During verification of record, it was revealed that on

finalization of bill, the amount had gone into minus. The Committee was

of the view that why the bill had gone into minus, the details be got

checked from audit office and if the recovery is established, that be

effected within 30-days positively. The record of work “lining of Jhalpha

sub Minor” was not submitted during verification. It was intimated that the

contractor had failed to complete the remaining work; hence an amount of

Rs 99422 (estimated cost if removing items) had been recovered from the

security deposit of the contractor. The para was kept pending for

verification of record & probe by the Chief Engineer within 15 days. No

compliance of committee’s directives was reported till finalization of

report.

(DP.32)

Para 3.19 Overpayment due to measuring excessive quantity of

earth work - Rs 943,387

As per rule 2.33 of Punjab Financial Rules Volume-I, every government

servant should realize fully and clearly that he will be held personally

responsible for any loss sustained by govt. through his fraud and

negligence.

The Executive Engineer, Development Division No.II, Balloki paid for

item excavation in foundation and borrowpit earth work 10,081,004 cft

against which the item of work ramming of earth work behind retaining

135

wall was paid 9,595,304 cft. The measurement of excessive 485,700 cft of

borrowpit earth work resulted in an overpayment of Rs 943,387. (485700

x 2039 %0 - 4.76% tender rate).


replied that the quantity of excavation of borrowpit outside earth work was

equal to ramming of earth work. The reply was not acceptable because the

department shown on the quantity of excavation of earth work 10,081,004

cft whereas as per last paid bill a quantity of ramming of earth work was

paid for 9,595,304 cft.


meeting held on 16th & 17th February, 2009 wherein The department

reiterated its previous stands. The Committee deferred the para for

detailed probe. The compliance of the Committee directives was not


(DP.134)

Para 3.20 Overpayment due to excessive measurement of earth -

Rs 651,201

According to rule 2.10(a)(1) of Punjab Financial Rules Volume-I (PFR),

same vigilance is to be exercised while incurring expenditure from Govt.

Revenue as a person of ordinary prudence would exercise in respect of the

expenditure of his own money.

The Executive Engineer, Burala Division Lower Chenab Canal (East),

Faisalabad measured and paid item of work “borrowpit excavation

undressed lead 100 feet” for a quantity of 556,221 cft for the work

concrete lining of Kanya feeder. The same quantity was to be compacted

at 90% maximum modified American Association of State Highway and

Transportation Organization (AASHTO) dry density whereas the

compaction of earth was paid for a quantity of 321,776 cft which means

that 244,445 cft earth was excessively borrowed than requirement. The

excessive borrow of earth resulted in an overpayment of Rs 651, 201.


replied that the quantity in question i.e. 244,445 cft related to bank filling

and its compaction was withheld by the consultant. The reply was not

tenable because as per technical sanctioned estimate, the whole quantity of

earth work should have been compacted and record entry showed that the

said quantity was borrowed for filling the canal and was also not withheld.

136



explained that the quantity of 244445 cft was related to bank filling and its

compaction was with held by the consultant. The contention of the

Department was not accepted. The para was kept pending for detail

effecting recovery within 30 days. The compliance of the Committee

directives was not reported till finalization of the report.

(DP.165)

Para 3.21 Non-receipt of earnest money while accepting tenders –

Rs 624,000

Clause 14 of the agreement provides that no tender without earnest money

shall be entertained. The earnest money amount calculated @ 2% of the

estimated cost of the work shall be in the form of deposit at call shall be

received as mentioned.

The Executive Engineer, Western Bar Division, Thingi entertained the

tenders of the two works “concrete lining minor 2.4 RD” package-I&III of

a distributary without receiving earnest money through call deposit. This

resulted in non-receipt of earnest money Rs 624,000 (Rs 267,000 +

Rs 357,000).

Audit pointed out the non-receipt of earnest money in September 2007.

The department replied that at the time of opening of tender, the contractor

presented bank draft in support of call deposit. After detailed discussion

with chairman of tendering committee, it was decided to accept bank draft.

The bank draft was sent to National Bank of Pakistan Vehari alongwith

challan which was not acknowledged by the bank. In due course of time,

the contractor executed the work and submitted his bill for payment. The

department deducted Rs 267,000+Rs 357000 from his running bill. The

reply was not acceptable because the tenders were accepted without

receipt of earnest money.



Western Bar Division intimated that at the time of tendering process, the

contractor presented bank drafts in support of call deposits. After detail

discussion, the tendering committee directed to accept bank drafts. The

bank drafts were sent to National Bank of Pakistan, vehari alongwith

challans for clearance which were not cleared by the bank. The

department, however, deducted Rs 624,000 from 6th running bill of the

137

contractor paid vide Vr.No.1 dated 1st November, 2006 which was equal

to the amount of earnest money. The viewpoint of the department was not

accepted by the Committee. The para was kept pending with the directions

that action should be taken against the contractor for black listing and

departmental action be initiated against the then Executive Engineer for

not abiding the financial discipline at that time. No compliance of


(DP.2)

Para 3.22 Excess payment due to non-deduction of shrinkage -

Rs 516,138

As per chapter earth work of Market Rate System, 10% deduction for

shrinkage from the bank measurement when the earth work is done by

manual labour, was required.

The Executive Engineer, Muzaffargarh Canal Division, Muzaffargarh did

not deduct 10% shrinkage from 2,273,971 cft earth work quantities

brought from outside borrowpit dressed lead upto one mile. This resulted

in overpayment of Rs 741,810.

Audit pointed out the excess payment in September 2007. The department

replied that mode of measurement was adopted as “borrowpits

excavation” rather than bank measurement hence shrinkage was not

required. The reply was not acceptable because as per specification

No.17.1 to 17.5 measurement of deadman or any other distinct mark was

not shown which provide basis for recording the borrowpit measurements,

whereas no measurement on account of deadman or any distinct mark was

found recorded in measurement books to ascertain height of borrowpits.



representative explained that as verified from the record entries, the mode

of measurement adopted for earthwork was barrowpits excavation rather

than bank measurement. Although 100-feet tape had been used, but it was

not presumed that it was bank measurement. The measurements had been

recorded in widths and depth of the pits which showed that it was clear

borrowpits measurement. Necessary certificate to the fact that no deadman

was left in borrowpits had been received. The version of the department

was not accepted by the Committee & directed that the recovery @ 4% be

made and got verified by Audit. The para was deferred. No compliance of

DAC directives was reported till finalization of the report.

(DP.43)

138

Para 3.23 Non-forfeiture of earnest money - Rs 493,000

Clause 15 of the contract agreement provides that the successful tenderer

will be required to enter into a contract and to commence the work within

the time specified in the memorandum of work. Should the successful

tenderer refuse or fail for any reason to commence the work within the

time specified in the memorandum of work, it should constitute a just

cause for the annulment of the award and in the event of such annulment,

the entire earnest money shall be forfeited to government as compensation

for such default as described.

The Executive Engineer, Eastern Bar Division, Pakpattan awarded the

work concrete lining of 2-I/3-L minor RD 0 to 36,800 (tail) to M/s

Al-Memar Associate on 31st May, 2006 vide No.1232/151-W. The work

was to be started w.e.f. 6th June, 2006 i.e. within 7 days after issuance of

acceptance letter. The contractor did not start the work upto 3rd July, 2006

as evident from the Executive Engineer’s letter No.1484/Package File

dated 3rd July, 2006 which was against the contractual obligations and

resulted in non-forfeiture of earnest money of Rs 493,000.

Audit pointed out the non-forfeiture of earnest money in September 2007.

The department replied that the contractor did not start the work up till 3rd

July, 2006. The contractor shifted his camp at site during the month of

June 2006 and started the work on 5th July, 2006 as evident from his

memo No. Nil dated 5th July, 2006 addressed to the concerned Executive

Engineer under the circumstances, the forfeiture of earnest money was

neither required nor justified. The reply was not tenable as the department

had admitted that the work was not started by due date as required under

acceptance letter.



reiterated its previous stand. The Committee was not convinced with the

explanation submitted and directed that in detailed verification of record

be got completed from main audit office Lahore. The para was kept

pending for detailed verification within 15 days. The compliance of the

Committee directives was not reported till finalization of the report.

(DP.118)

Para 3.24 Overpayment due to application of incorrect rate -

Rs 475,186

According to provision of Market Rate System (MRS) 2005, rate of

Rs 148.73 per cft for Reinforced Cement Concrete (RCC) in roof slabs,

139

beams, column, lintels, girders and other structural member laid in situ or

precast type “C” 1:2:4 is applicable where both kind of shuttering i.e.

horizontal as well as vertical shuttering is involved.

The Executive Engineer, Development Division, Mandi Baha-Ud-Din

made payment for 5,325,114 cft RCC in roof, slabs, girders, columns,

lintels and other structural members type (C) 1:2:4 @ Rs 148.73 p.cft.

This quantity included a quantity of 14,584.58 cft RCC work ratio 1:2:4

which was casted on ground involving single shuttering i.e. horizontal

shuttering only. Hence, payment was to be made @ Rs 116.15 per cft

instead of Rs 148.73 per cft. Application of incorrect rate resulted in



replied that rate for RCC slabs, beams, columns lintels & girders and other

structural member type “C” was paid correctly as it involved both kind of

shuttering. The reply of the department was not acceptable because rate of

Rs 148.73 per cft was payable when R.C.C. work was executed involving

both kind of shuttering. Whereas out of total concrete work i.e. 5,325,114

cft, a quantity of 14,584 cft RCC on account of concrete, beams, girders

and other structural member was casted on ground which involved

horizontal shuttering only. This also stand proved from the fact that same

quantity of RCC work was paid for lifting and placing pre-cast concrete

girders and other structural members on bridge.



Development Division Mandi Bahauddin explained that as per item No.6

(a) e.g RCC roof slabs beams columns lintels girders and other structural

members laid in site or precast laid in position or pre-stressed member cost

in site complete in all respects (1:2:4) which clearly depicts that concrete

beams lintels, girders and other structural members laid in site or precast

pertains to this items. Hence, question of application of incorrect rate did

not arise and there was no excess payment what so ever involved in the

para. After discussion over the para, the Committee directed that complete

record as per verbal explanations be furnished to audit within 60-days for

necessary verification otherwise recovery as pointed out be effected. No


the report.

(DP.78)

140

Para 3.25 Unauthorized payment due to non inclusion of an item

of work - Rs 399,383

An item of work “extra for wet earth” was not included in the original

technical sanctioned estimate approved by the Chief Engineer, Irrigation

Multan Zone, Multan.

The Executive Engineer, Development Division No.1, Sidhnai paid an

item of work “extra for wet earth” without provision in technical

sanctioned estimate and approval of competent authority i.e,

Superintending Engineer before execution of work. This resulted in

unauthorised payment of Rs 399,383.

Audit pointed out the unauthorized payment in November 2007. The

department replied that the item of wet earth was mentioned in the

technical sanctioned estimate approved by the competent authority. The

reply was not acceptable because the technical sanctioned estimate

produced by the department did not show any provision of said item.


meeting held on 16th & 17th February, 2009 wherein the recovery during

discussion was admitted by the department. The para was kept pending for

verification of admitted recovery by Audit within 30 days. The


the report.

(DP.149)

Para 3.26 Overpayment due to change of distance approved in

technical sanctioned estimate - Rs 394,667 As per Finance Department letter No. FD(D-11)10(3)/90 dated 16th June,

1991, no cost, scope and specification of a scheme involving material

deviation from the original proposal once approved can be changed

without prior approval of authority competent to grant technical

sanctioned estimate and administrative approval.

The Executive Engineer, Ahmadpur Canal Division, Ahmadpur paid an

item of work “Filling earth work excavation in ashes sand, soft soil & silt

clearance undressed lead upto 3 miles” against the provision of 200' lead

in the Technical Sanctioned Estimate. The lead once approved in

Technical Sanctioned Estimate could not be changed. The increase in lead

from 200 feet to 15,840 feet (3 x 5,280) in violation of instructions


141

Audit pointed out the overpayment in January 2008. The department did

not furnish the reply up till now.


meeting held on 16th & 17th February, 2009 wherein the recovery during

discussion was admitted by the department. The para was kept pending for

verification of admitted recovery by Audit within 30 days. The

compliance of the Committee directives was not reported till finalization

of the report.

(DP.110)

Para 3.27 Unjustified payment due to execution of unapproved

item - Rs 337,271

As per estimate sanctioned by the Chief Engineer Irrigation Zone,

Sargodha vide No.1666/1-W dated 10th June, 2004, the items of extra for

wet earth and slush or daldal was sanctioned subject to site verification by

the Superintending Engineer before execution of items to see whether the

wet earth and slush or daldal existed or not at site of work.

The Executive Engineer, Lower Jhelum Canal Development Division,

Sargodha executed the item, “Extra for wet earth and slush or daldal”, and

withheld the amount, whereas the site of work was not physically

inspected/verified by the Superintending Engineer before execution of

these items to see whether the wet earth and slush daldal existed or not at

sites of work. These items were got executed at site without approval of

the Superintending Engineer. This resulted in unjustified payment of

Rs 337,271.


replied that payment on this account was not yet made. The reply was not

acceptable because the items were got executed at site and amount was

withheld. The Superintending Engineer approval was still not sought

whereas measurements for extra for slush / daldal were recorded without

physical verification/inspection of site by the Superintending Engineer.



the audit calculated Rs 337271 on account of extra allowance for wet &

slush earth work in the work i-e rehabilitation of Southern branch

RD:0+000 RD:53+000 (Package A,B &C). The observation of audit was

erroneous as the wet & slush allowances had not been paid in these works.

The works had been finalized; the payment on account of wet and slush

142

allowance had not been made. The viewpoint of the concerned division

was not agreed by the Committee and it was decided that recovery of Rs

337,271 be effected from the next running bill and its accountal be got

verified from the audit office. The compliance of the Committee directives


(DP.84)

Para 3.28 Unjustified payment due to execution of re-handling of

earth and extra for puddling of earth work without

any excavation of earth work - Rs 270,886

The items of work “rehandling and puddling of earth work was sanctioned

in the revised technical sanctioned estimate without its allied items such as

excavation borrowpit outside or loading/unloading of berm cutting etc.

The Executive Engineer, Ahmadpur Canal Division, Ahmad Pur paid the

item of work re-handling of earth and extra for puddling earth work

without execution of its allied item such as excavation borrowpit from out

side, loading/unloading berm cutting etc. and the place of re-handling viz

bed, slope, bank or dowel or outside the canal was not mentioned in the

measurement book. This resulted in unjustified payment of Rs 270,886.

Audit pointed out the unjustified payment in January 2008. The

department did not reply.

The matter was discussed in the DAC meeting held on 16th & 17th

February, 2009 wherein The department explained that the item of earth

work in soil lead 100 ft to 2750 ft, quantity of 287,743 cft (250,077 cft +

37,666 cft) was completed and paid and then the job sand filling,

re-handling of earth and pudding was made to fill the hollow reaches. The

contention of the department was not accepted by the Committee and

directed for detail probe within 30 days. The compliance of the Committee


(DP.145)

Para 3.29 Overpayment due to allowing higher rates - Rs 270,813

As per provision of Market Rate Schedule, rate for earth work excavation

in irrigation channels through excavation drainage lines and condition (dry

wet, slush and under water) includes rate of de-watering.

143

The Executive Engineer, Drainage Division, Mandi Bahauddin made

payment for 427,420 cft earth work excavation of drains, irrigation

channels through excavator drainage lines and condition (dry wet slush

under water including dewatering / bailing out water @ Rs 1,240 per%o

cft. No measurement on account of de-watering was recorded. Hence, the

rate was to be reduced by Rs 633/60 on account of dewatering / bailing out

water at site. Non-reduction of rate resulted in overpayment of

Rs 270,813.


replied that payment was made as per technical sanctioned estimates. The

reply was not acceptable because rate of excavation in drains etc, includes

rate of dewatering / bailing out water whereas no record measurement on

account of dewatering / bailing out water was made available, hence, rate

was to be reduced accordingly.



the work was executed by departmental machinery and payment was made

according to rates approved for bed clearance of drains of all type soil @

Rs 1,240 per % cft approved by the Superintending Engineer, Machinery

circle, Lahore (competent Authority) so no separate measurement was

made for wet & slush. The para was kept pending by the Committee with

the direction that if the item of dewatering got executed / measured in the

M.B then the para would be settled if not existed in the MB, recovery

would be effected. The verification was to be done within a week. The


the report.

(DP.47)

Para 3.30 Overpayment due to allowing excessive rate -

Rs 267,293

As per Bid Schedule approved by the competent authority, contractor

quoted rate of Rs 960 per% cft for earth work excavation from outside

borrowpit lead 1,000 feet.

The Executive Engineer, Development Division No.II, Balloki made

payment for 498,494 cft. earth work excavation from outside borrowpit

lead 1000 feet @ Rs 1,496.20 per%o cft against the contractor’s quoted /

accepted rate of Rs 960 per %o cft. Application of incorrect rate resulted


144


replied that the item of work “earth excavation from outside borrow pit

lead 200 feet + ramming of earth work behind retaining wall paid with

lead upto 1,000’ as provided in the technical sanctioned estimate. As per

related measurement book, the rate of Rs 1,496.20 per %o cft paid was

correct and item of earth work 200 feet lead was incorrectly written in the

voucher. No overpayment was involved. The reply was not agreed because

as per record measurements rate for earth work lead 200 feet + ramming

cft worked out to Rs 1,032.15 per%o cft instead of Rs 1,496.20 per%o cft.

As per acceptance letter, payment was to be made @ Rs 960.20 per %o cft

as item earth work lead 200 feet + ramming did not exist.

The matter was discussed in the SDAC meeting held on 16th & 17th

February, 2009 wherein the version of the department was not accepted

and deferred the para by the Committee to probe the matter within 30

days. The compliance of the Committee directive was not reported till


(DP.117)

Para 3.31 Overpayment due to execution of the items of work

without provision in technical sanctioned estimate -

Rs 247,551

As per Finance Department letter No.FD(D-11)10(3)90 dated 16th June,

1991, no cost, scope and specification of a scheme involving material

deviation from the original proposal once approved, can not be modified

without prior approval of the authority, competent to grant administrative

approval.

The Executive Engineer, Central Bari Doab Canal (CBDC) Division,

Lahore executed and paid the item cement plaster 1:4 ratio and earth work

borrowpit undressed lead upto 100 feet without provision in the technical

sanctioned estimate. Execution of items without provision resulted in


Audit pointed out the overpayment in July 2007. The department replied

that cement plaster was executed in 1:3 ratio as measured and paid in the

MB. Further, the item of earth work was sanctioned in the revised

estimate. The reply was not acceptable because the department did not

show the provision of cement plaster 1:4 and earth work in the estimate.

The matter was discussed in the DAC meeting held on 16th & 17th

February, 2009 wherein the department explained that the work was

executed as per TSE. The Audit informed the Committee that recovery of

145

enhanced lead was not made from the contractor. The Committee directed

the department to work out the recovery of enhanced lead and got verified

from Audit within 30 days. The compliance of the Committee directive


(DP.136)

Para 3.32 Overpayment due to allowing quantities, not provided

in the technical sanctioned estimate - Rs 243,870

Clause 10 of contract agreement provides that the contractor shall execute

the whole and every part of the work, in the most substantial and workman

like manners and both as regard material and otherwise in every respect in

strict accordance with the specification.

The Executive Engineer, Rajanpur Canal Division, Rajanpur got executed,

measured and paid the quantities of earth work in those RDs which were

not included in technical sanctioned estimate. This resulted in



replied that no excess payment over sanctioned estimate was made. The

reply was not convincing because the work was not executed as per

X-sections of estimate which means that department executed lesser

quantities in other reaches to keep the whole quantities within the

technical sanctioned estimate.



representative explained that the quantity of earth measured in MB No. 4/5

page 5-A at RD: 7,000-8,000, 5 x 100 x (25+85) 2x12=330,000cft. There

was no excess of earthwork quantity as recorded in the TS estimate. In

RD: 7-8 the reach level was 5000ft and at RD:8-9, it was 1000ft but it was

sanctioned in detailed technical sanction estimate as 7,500 to 9,000 =

1,500ft. The version of department was not agreed by Audit and

accordingly it was decided by the Committee that recovery of Rs 243,870

be effected from the contractor within 60-days. The compliance of the

Committee directive was not reported till finalization of the report.

(DP.12)

Para 3.33 Overpayment due to allowing excessive lead -

Rs 192,384

As per provision of para 334 of Public Works Department Code, record

entries/measurement provides basis for making payment on account of

work done by the contractor.

146

The Executive Engineer, Muzaffargarh Canal Division, Muzaffargarh

allowed payment for 421,213 cft carriage of stone lead of 150 miles last 5

miles katcha upto 6th running bill. However, in the 7th running bill, the

payment was made for last 38 KM katcha. This resulted in overpayment of

Rs 192,384.


replied that cutting of 38 KM to 5 KM was made by some culprits. The

reply was not agreed because upto 6th running bill, record measurements

for carriage of stone were made by taking last 05 miles as katcha

allowance in a total lead of 150 kilometer. The extra payment made on

account of last 38 kilometer katacha was also not justified as its

measurement for last five kilometers were recorded as katacha hence lead

in the next bills could not be changed. The matter was discussed in the SDAC meeting held on 16th & 17th

February, 2009 wherein the department explained that the lead of 38 km

from 5 km was changed by some culprit / writing changed by lead pencil.

The Committee directed to effect the recovery and get verified from the

audit within 30 days. The compliance of the Committee directive was not


(DP.122)

Para 3.34 Overpayment due to allowing excessive/inadmissible

quantity of earth - Rs 192,013

As per technical sanctioned estimate, the quantity of the earth work

borrow pit excavation undressed lead upto ½ mile for diversion and the

quantity of compaction of earth work should be equal.

The Executive Engineer, R.Y Khan Canal Division, R.Y. Khan paid an

item of work borrowpit excavation undressed lead upto ½ mile for

diversion for a quantity of 598270 cft but its compaction was paid for a

quantity of 1,164,850 cft. The payment of excessive compaction resulted



replied that as per detail of quantity (earth work), the provision was made

as 1,466,750 cft but incorrectly, the quantity of 610,750 cft was brought in

the abstract of cost. The payment was made as per work done basis and

necessary correction would be made in the revised estimate. The reply was

not agreed because quantity of outside borrowpit and its compaction

should be equal to the technically sanctioned estimate.

147



the revised estimate had been prepared and submitted to the

Superintending Engineer, Rahim Yar Khan dated 13th June, 2008 for

arranging sanction from competent authority. The Committee was not

convinced with the explanations submitted and observed that the variation

order was without any competent authority. Directions were issued to

effect the recovery of Rs 192,013 from the next running bill and its

verification be got completed from main Audit Office, Lahore within one

month. The compliance of the Committee directive was not reported till


(DP.66)

Para 3.35 Overpayment due to allowing excessive rate -

Rs 175,402

As per acceptance letter, the rate of item of work “pacca brick work other

than building in 1:3 ratio cement sand mortar” was admissible @ Rs 5,425

per % cft.

The Executive Engineer, L.B.D.C. Division, Khanewal paid rate of

Rs 5800 per % cft of the item of work pacca brick work 1:3 cement sand

mortar instead of admissible rate of Rs 5,425 per % cft. This resulted in



replied that the rate of Rs 5,425 % cft pertained to the quantity of 2,253.64

cft recorded at page 138-164 of M.B. 1035 for the item “ pacca brick work

1:3 cement sand mortar executed for construction of out-lets which had

erroneously been paid at rate Rs 5800. The recovery of Rs 8451 would be

effected. As regard to the balance quantity of 49,031.36 cft pacca brick

work other than building upto 10’ height ratio 1:3 cement sand mortar

pertained to the construction of bridge / falls etc. and the correct rate of

Rs 5800 had been applied / paid. The reply was not agreed because the

record entries were made as “pacca brick work other than building 1:3

cement sand mortar” without indicating the height of 10’ feet in

M.B.No.1051 page 47, 50, 53, 57, 61, 66, 68, 71, 74, 98, 133, 135, 139,

142 than the rate Rs 5,800 per% cft paid was incorrect.



the contractor had quoted two different rates of Rs 5,425 and Rs 5,800 for

100 cft for the two items i-e pacca brick work other than building 1:3

148

cement sand mortar and pacca brick work other than building in 1:3

cement sand mortar upto 10” height “depicted in the bid schedule. The

rate of Rs 5,425 pertained to the quantity of 2,253.61 (1591.69 + 661.92)

recorded at page 138 – 164 of MB 1035 for the item “Pacca brick work

1:3 cement sand mortar” executed was erroneously paid @ Rs 5,800. The

recovery of Rs 8451/18 (5800 -5425 = 375 x 2253.64/100) had been made

in 15th & final bill vide Vr: 3 Jia dated 24th July, 2008. As regards the

balance quantity of 49031-36 cft pacca brick work other than building

upto 10ft height in 1:3 cement sand mortar” pertains to the construction of

bridges / falls etc and correct rate of Rs 5,800 had been applied/paid. The

contention of department was not accepted. The Committee decided that

the amount should be recovered within 60 days. The compliance of the

Committee directive was not reported till finalization of the report.

(DP.69)

Para 3.36 Excess payment due to execution of excessive quantities

- Rs 135,660

As per provisions of technical sanctioned estimate, quantities for

“providing and laying crush stone bajri under pitching having size 1/2 inch

to 1/8 inch” were to be equal to the quantities of, “providing and laying

crush stone bajri under pitching having size 1/2 inch to 1 ½ inch”.

The Executive Engineer, Upper Jhelum Canal Division, (UJC) Gujrat

made payment 30,530 cft of “providing and laying crush under pitching

1/8” to 1-1/2” whereas its allied item “providing and laying crush ½” to

2-1/2” was paid to the extent 35,052 cft. This resulted in excess payment

of Rs 135,660.

Audit pointed out the excess payment in December 2007. The department

replied that quantity was paid as per provision of technical sanctioned

estimate. The reply was not acceptable because bajri of both sizes were

laid on same area / dimension and these quantities were to be equal to each

other as provided in the technical sanctioned estimate.

The Departmental Accounts Committee meeting held on 16th & 17th

February, 2009 wherein it was pleaded by the Executive Engineer, Gujrat

that a quantity of 35052 Cft for “Providing & laying crush size ½ to 1 ½”

was paid to the contractor which was correct and as per T.S estimate. The

para was kept pending for clarification from the consultant regarding

usage of bajri on banks. Audit was of the opinion that the laying of loose

149

bajri on banks without structural strength was the wasteful expenditure.

Compliance of the committee directives was not reported till finalization

of the report. (DP.123)

Para 3.37 Overpayment due to allowing excessive quantity of

extra wet earth - Rs 123,335

As per Market Rate System, the Superintending Engineer will sanction the

quantity of extra wet earth work after visit of the site.

The Superintending Engineer, sanctioned 4,63,759 cft for extra wet earth

whereas the Executive Engineer, Lower Bari Doab Canal, Sahiwal made

payment for the item as 730,721 cft. This resulted in overpayment of

Rs 123,335.


replied that estimate was submitted to the competent authority for

technical sanction with tentative figures of item 15% extra wet length

work (463,760) and 65% extra for slush. During the course of sanction of

the estimate, X-sections were drawn after observing actual field data and

quantities for wet earth 731,035 cft (i.e. 23.6%) was executed. The work

was executed as per estimate technically sanctioned by the competent

authority, and measurements were made and paid accordingly. The reply

was not acceptable because the extra wet earth was assessed by the

Superintending Engineer in first instance as 15% and also approved by

him. The Chief Engineer was not competent to increase the quantity

without consent of the Superintending Engineer as directed in the MRS.

The revised technical sanction was accorded after execution of work

which was not acceptable as the quantity of wet earth/slush, daldal could

only be measured before execution of the work.

The matter was discussed in the SDAC meeting held on 16th & 17th

February, 2009 wherein the contention of the department was not accepted

by the Committee and directed to effect the recovery within 30 days. The


the report.

(DP.111)

Para 3.38 Unauthorized / irregular expenditure due to non-

utilization of budget - Rs 123,329

As per para 13.1(a) of Punjab Budget Manual, the disbursing officers are

directly responsible for the expenditure incurred against the funds allotted

to them.

150

The Executive Engineer, Kalabagh Headworks Division, Daud Khel

utilized office contingencies (Grant No.A03202-establishment budget) on

repair works under Grant No.PC 221009/A 13401 Main Canal and

D 21009/A 13501/C Main embankment. Non-utilization of establishment

budget for repair work resulted in unauthorized/irregular expenditure of

Rs 123,329.

Audit pointed out the unauthorized/irregular expenditure in January 2008.

The department replied that due to paucity of funds under relevant head,

the payment out of Executive contingency was charged to Main Canal

with the approval of the Superintending Engineer, Thal Canal Circle,

Mianwali. The reply was not acceptable because expenditure was incurred

irregularly.


meeting held on 25th September, 2008 wherein it was replied that due to

paucity of funds under head “contingency” payments were made with the

approval of the Superintending Engineer, Thal canal circle in the work

plan for the year 2006-07. The Committee was not convinced with the

explanation submitted, as the Superintending Engineer was not competent

to issue approval for utilization of Commodities & Services funds under

head main canals & embankments. It was decided by the Committee to

keep the para pending asking the Executive Engineer, Kalabagh H/Works

Division, Daud Khel to explain his position for not attending the SDAC

meeting. It was further directed to submit the case to Irrigation and Power

department within 30-days alongwith fixing responsibility for the

irregularity committed. Then the case be referred to the Finance

Department for necessary condonation. No compliance of the Committee

directives was reported till finalization of the report.

(DP.17)

Para 3.39 Unjustified payment due to overlapping of item -

Rs 104,849

According to para 2.10(a)(i) of Punjab Financial Rules Volume-I, same

vigilance is to be exercised by the Public Officer while incurring

expenditure from govt. revenue as a person of ordinary prudence would

exercise in respect of the expenditure of his own money.

The Executive Engineer, Irrigation Division, Kasur made payment on

account of concrete lining of canal RD 13,500 – 25,000. Further, berm

cutting to the extent of 71,720 cft was also paid for Rs 104,849 for the

same RD. Making payment on account of berm cutting on such RDs

which had already stood concrete lined resulted in unjustified payment of

Rs 104,849.

151

Audit pointed out the unjustified payment in December 2007. The

department replied that in the RD 12,500 – 25,500 the item of earth work

excavation in ashes, sand soft soil or silt clearance undressed lead 50’ was

executed instead of berm cutting. The reply was not acceptable because

record entry on measurement book No.2,025 page-68 was made for berm

cutting which clearly indicated the execution of item against the provision

of technically sanctioned estimate.


meeting held on 16th & 17th February, 2009 wherein The XEN, Kasur

division was not appeared in the meeting. The Committee directed that

explanation of XEN Kasur be called. Further, revised departmental reply

was submitted by the division. The Committee directed to probe the matter

within 30 days. The compliance of the Committee directive was not


(DP.174)

152

153

LOCAL GOVERNMENT & COMMUNITY DEVELOPMENT

DEPARTMENT

The Local Government and Community Development Department

comprises attached department of Director General LG&CD, Punjab

Local Government Board, and Director General Katchi Abadis. The

LG&CD Department administers the affairs of devolved institutions i.e

District Government, Tehsil/Town Municipal Administrations, and Union

Councils. At provincial level, the department is directly responsible for the

execution of Tameer-e-Punjab Programme being sponsored by the

provincial legislators. The Director General LG&CD through his field

formations executes the development schemes of Tameer-e-Punjab/Chief

Minister Accelerated Programme and Community Uplift Programme

which fall under the audit jurisdiction of Director General Audit Works

Lahore. The primary responsibility of the department is to develop the

rural area of the Punjab.




Sr.No Particulars Amount Total amount

/ %age


2006-07

4,482.19

4,482.19


2006-07

2,515.9

2,515.9



report

i) Excess payment





v) Non- recovery

0.72

0.66

45.22

0.84

1.59

49.03


154

155

4. LOCAL GOVERNMENT & COMMUNITY

DEVELOPMENT DEPARTMENT

Para 4.1 Unauthorized payment in excess of provision in PC–I

- Rs 45.2 million

As per para 2.86 of Buildings & Roads Department Code, no change in

design, quality and scope of work can be made without prior approval of

the competent authority.

The Project Director, Southern Punjab Basic Urban Services Project,

Lahore incurred an expenditure of Rs 93.683 million against provision in

PC-I for Rs 48.456 million on account of land acquisition and

compensation in Tehsil Municipal Administration Kot Adu and Tehsil

Municipal Administration Jampur up to 30th June, 2006. This resulted in

unauthorized payment of Rs 45.227 million in violation of above codal

provisions.

Audit pointed out the unauthorized expenditure in October 2006. The

project management replied that the increase in expenditure was due to

price escalation over the years. The component wise expenditure on the

project as a whole had not exceeded and Tehsil Municipal Administration

wise expenditure would be got regularized in the revised PC-I if the total

expenditure on the project increased beyond 15% of the approved cost.

The reply was not acceptable as increase in cost against land acquisition

component was substantial i.e. almost 100% and as such required revision

of PC-I and administrative approval.


meeting held on 24th April, 2007. Audit stressed to get the excess

expenditure regularized from competent forum. The Committee decided to

keep the para pending. No further progress towards revision of PC-I/

regularization was reported to Audit till finalization of the report.

(DP.13-FAP)

Para 4.2 Loss due to non-utilization / recovery of dismantled

material - Rs 848,289

As per item No 9, chapter 18 of Specification for Execution of Works

Vol –I, the dismantled material was the property of the government and as

such, it was required to be reused / adjusted or accounted for accordingly.

156

The Assistant Director, Local Government & Community Development,

Pakpattan did not reuse the available dismantled material (brick

pavement). In the execution of work “Metalled Road”, the department

dismantled bricks pavement for quantities of 59,300 sft and 41,450 sft (for

two works) out of which only 11,700 sft and 24,525 sft were shown

utilized. Instead of reusing the available material 64,525 sft with labour

rate only, the department laid new material as sub-base course of stone

aggregate. This resulted in loss of Rs 848,289


replied that the work was executed by the District Officer Road and he

was requested to furnish detailed reply.


meeting held on 28th May, 2009 wherein the Committee expressed his

displeasure upon the non attendance of DO Roads Pakpattan and directed

to effect the pointed out recovery upto 30th June, 2009. No compliance of

the Committee directive was reported till finalization of the report.

(DP.19)


Rs 843,975

As per Communication & Works Department instructions vide

No.PAC(C&W) 17-6/90 dated 28th October, 1997, the deficiency in the

sub-base course should be removed before laying the base course.

Similarly, deficiency in thickness of base course should be improved

before applying triple surface treatment. 4.3.1 The Assistant Director, Local Government & Community

Development, Rajanpur measured and paid an item of work “Earthwork

making Embankment etc” to the extent of 159,120 cft. and 82,000 cft (for

two works). After providing/laying of sub-base course and base course the

overall quantities of earthwork making embankment was again measured

as 334,180 cft and 200,900 cft by increasing the breadth and depth of the

item of work. This resulted in excess payment of Rs 366,512.


did not reply.




(DP.13)

157

4.3.2 The Assistant Director, Local Government & Community

Development, Lodhran measured and paid an item of work “Earthwork

making embankment etc” in various works. After providing / laying of

sub-base course and base course the overall quantities of earth work

making embankment were again measured by increasing the breadth and

depth of the item of work. This resulted in excess payment of Rs 294,000

Audit pointed out the excess payment in October 2007. The department

replied that the payment was made as per estimate. The reply was not

acceptable as the re-measurement of the hidden item was not allowed after

the execution of subsequent item over it.


meeting held on 28th May, 2009 wherein the departmental contention was

not agreed and the Committee directed to probe the matter for excess

payment with in 30 days. No compliance of the Committee directive was


(DP.15)

4.3.3 The Assistant Director, Local Government & Community

Development, Muzzafargarh measured and paid an item of work

“Earthwork making embankment etc” to the extent of 228,300 cft. After

providing/laying of sub-base course and base course, the overall quantities

of earthwork making embankment was again measured as 278,820 cft by

increasing the breadth and depth of the item of work. Further, the

department did not deduct the quantity of camber and slope. This resulted


Audit pointed out the excess payment in November 2007. The department

stated that detailed reply would be furnished on its receipt from the DO

Roads.




(DP.17)

Para 4.4 Overpayment due to non-recovery of price variation on

account of decrease in cost of cement and steel –

Rs 730,909

According to clause 55 of contract agreement read with condition No. 2 of

acceptance letter, any variation (increase or decrease) to the extent of 5%

158

or more in the price of any item mentioned in sub-clause (2) takes place

after the acceptance of tenders and before completion of contracts, the

amount payable under the contract shall be adjustable to the extent of

actual variation in the cost of item.

4.4.1 The Tehsil Municipal Administration, Attock being

executing Agency of the Assistant Director, Local Govt. & Community

Development, Attock called / opened tenders on 24th June, 06 for the

execution of works under Tameer-e-Punjab Programme. The base rate of

cement for District Attock was Rs 310 per bag. The rates were decreased

more than 5% in subsequent quarters during which cement was consumed

but the recovery on account of price variation was not made from the

contractor. Non-adherence to agreement clauses resulted in overpayment

of Rs 346,565 to the contractor.

Audit pointed out the overpayment in October 2007. The agency stated

that the detailed reply would be submitted in due course of time.


meeting held on 28th May, 2009 wherein the department admitted the

recovery. The Committee directed the department to effect recovery and

get it verified by Audit prior to 30th June, 2009. No compliance of the

Committee directive was reported till finalization of the report.

(DP.1)

4.4.2 The Assistant Director, Local Govt. & Community

Development, Nankana Sahib awarded various works in December 2006

when the base rate of cement was Rs 225 per bag. The input rate of grey

cement of Nankana Sahib District was reduced to Rs 180 per bag in 1st

quarter of 2007, during which the cement was consumed. The variation in

rate of cement was more than 5% but price variation was not recovered.

This resulted in overpayment of Rs 280,185 to the contractor.

Audit pointed out the overpayment in October 2007 but the department

did not reply.


meeting held on 28th May, 2009 wherein the department stated that the

schemes of Tamir-e-Punjab programme were being executed as per

amount of administrative approval and no cushion over AA amount and

TSE was permissible. There were restrictions upon utilization of

contingency amount of TSE for price escalation adjustment. Hence, the

159

decrease or increase in price was not possible in LG&CD department.

Audit apprised the Committee that the financial rules and standard

agreements were equally applicable to LG&CD department. After

discussion, the Committee directed the department to review the case with

reference to guideline / modalities of Tamir-e-Punjab programme and

effect recovery as pointed out by Audit upto 30th June, 2009. No


report.

(DP.5)

4.4.3 The District Officer Roads, Rawalpindi, being executing

Agency of Assistant Director, Local Government & Community

Development, Rawalpindi received / accepted tenders in December 2005

with the base rate of steel Rs 42,200 per ton. The price of steel was

reduced for more than 5% in subsequent quarters in which steel was

consumed but recovery on account of price variation was not made from

the contractor. Non-adherence to agreement clause resulted in



replied that reply would be submitted on receipt of detailed reply from

Works & Services Department as work was got executed through them.




(DP.20)

Para 4.5 Unjustified payment due to allowing sub-base course

item in hard rock/shingle surface - Rs 729,270

As per para 2.22 (I) of Buildings & Roads Department Code, the estimates

should always be prepared in detail as this ensures that the officer who is

responsible has given proper consideration to the requirements of the

work.


Jhelum paid for item of works providing/laying sub-base course shingle

etc. in the same reaches where cutting of hard rock and shingle gravel was

measured and paid. Whereas there was no need for providing/ laying sub-

base course as the excavation in rock was made to design section and thus

natural surface was consisted of hard rock / shingle. This resulted in

unjustified payment of Rs 729,270.

160

Audit pointed out the unjustified payment in November 2007. The

department stated that detailed reply would be submitted on the receipt of

reply from executing agency i.e. TMA Sohawa.




(DP.21)

Para 4.6 Non-recovery of increased rent - Rs 530,253

Clause 6 of agreement made between Local Government & Community

Development Department, Rajanpur and lessees / tenants of nine shops,

the amount of monthly rent, on the expiry of first three years, will be

increased @ 10% every year.


Rajanpur did not recover the rent at increased rates. The department leased

out nine shops adjacent with the office to nine different tenants at the

monthly rent of Rs 1,000 each with effect from October 1996. The

department was required to recover the rent at the rates enhanced by 10%

per annum with effect from October 1999 but it continued to receive the

same at the original rate. This resulted in non-recovery of rent of Rs

530,253.

Audit pointed out the recovery in December 2007. The department did not

reply.


meeting held on 28th May, 2009 wherein the Committee directed the

department to effect the pointed out recovery within 30 days. No


report.

(DP.16)

Para 4.7 Overpayment due to allowing unnecessary carriage on

tuff tiles - Rs 152,499

As per input rates of material for Market Rates System for the 3rd quarter,

2006, the rate of tuff tiles 60 mm thick of Izhar Ltd, for District Jhang,

was Rs 32 per sft.


Jhang sanctioned technical estimate and made payment for tuff tiles @

161

Rs 52 per sft considering it as non-schedule items for the execution of two

works. The rate was enhanced due to inclusion of undue carriage from

Lahore to Jhang whereas the Finance Department had notified the input

rates of Rs 32 per sft tuff tiles for District Jhang. The input rates of the

item for district Jhang issued by the Finance Department revealed that the

same was available in the City. The payment of unnecessary carriage



replied that dealer of Izhar Ltd. available at Jhang, only booked order for

supply and carriage charges were to be borne by the customer. The reply

was not acceptable as the Finance Department had notified the input rate

of the item categorically for District Jhang.


meeting held on 28th May, 2009 wherein the department admitted the

recovery. The Committee directed the department to effect recovery and

get it verified by Audit prior to 30th June, 2009. No compliance of the

Committee directive was reported till finalization of the report.

(DP.2)

162

163

PLANNING & DEVELOPMENT DEPARTMENT

Planning & development department is the administrative department of

Cholistan Development Authority, Barani Area Development Authority, Dera

Ghazi Khan Rural Development Project, and Bahawalpur Rural Development

Programme. The Cholistan Development Authority was established under the

Development of Cities Act, 1976. The functions of the Authority are as under:

i) To provide means of irrigation & irrigational channels.

ii) To provide drinking water for human being & cattle.

iii) To carry out extensive ground water survey to locate sweet water

points & sinking of wells & tubewells for drinking & irrigation

purpose.

iv) To provide the facilities of road, parks, live stock farms, dairy farms,

sheep farms, poultry farms etc.

v) Arrangements for the marketing of the produce and goods of

Cholistan.

vi) To promote tourism & establishment of recreational parks, holiday

camps & villages.

Audit for the financial year 2006-07 was conducted on test check basis and a

summary of audit results is tabulated as under:

(Amount Rs in million) Sr.

No

Particulars Amount Total amount /

%age

1. Budget allocation for the financial year 2006-07

Foreign Aided Projects:

I- DGK RDP

II- BRDP

III. Cholistan Development Authority

454.29

130.32

1123.74

1708.35

2. Total Expenditure for the financial year 2006-07


I- DGK RDP

II- BRDP


a- Capital Account

b- Revenue Account

c- Other Fund

454.12

96.50

548.38

358.20

271.50

1728.68

3. Audited Expenditure


I- DGK RDP

II- BRDP


454.12

96.50

62.60

613.22

35.4%

4. Amount of the observations in this report

i) Excess Payment

iii) Loss / Doubtful / Theft

iv) Overpayment / Non-recovery

0.85

12.8

11.00

24.65


164

165

PLANNING AND DEVELOPMENT DEPARTMENT

Para 5.1 Non-recovery due to non-adjustment of bitumen -

Rs 9.9 million

Clause 30 of the contract agreement provides that the value of material /

store supplied to the contractor shall be deducted from the sums due or to

become due to contractor.

Cholistan Development Authority did not recover the cost for 398.5419

metric ton bitumen issued to the different contractors. This resulted in

non-recovery of Authority’s dues amounting to Rs 9.9 million.

Audit pointed out the non-recovery in September 2006. The Authority

replied that recovery was in process.


meeting held on 19th March, 2009. Audit informed the Committee that the

bulk storage of bitumen by the Authority was irregular as it was the

responsibility of the contractor to arrange bitumen from National Oil

Refinery Karachi as per agreement and government instructions. After

listening view points of both departments, the Committee pended the para

to get verified the consumption of bitumen with reference to indents and

stock register by Audit within 15 days. No compliance of the Committee

directives was made till finalization of the report.

(DP.4)

Para 5.2 Wasteful expenditure due to non-execution of left over

works - Rs 6.6 million

As per acceptance letters issued by Project Management, contractors were

bound to complete the works within stipulated period and award of works

were subject to observance of financial regulations and terms & conditions

of contract.

The Project Director, Bahawalpur Rural Development Project,

Bahawalpur awarded four road works at an agreed cost of Rs 50.4 million

to various contractors in December 2002, October 2003, July 2004 and

September 2004 with stipulated period of completion as 165 days, 500

days, 180 days and 150 days respectively. The contractors just executed

the works costing of Rs 31.2 million and did not execute balance works

costing Rs 19.2 million. The project management, subsequently

terminated the contracts due to failure of the contractors but had not got

166

executed the balance works despite lapse of considerable period.

Termination of contract due to default of the contractors and

non-execution of balance work within reasonable time due to laxity of

management resulted in wasteful expenditure of Rs 31.2 million.

Audit pointed out the wasteful expenditure in September 2007. The

department replied that the Project authorities were trying to get the works

complete. The reply was not acceptable because it was the responsibility

of management to get the works completed within stipulated period and no

concrete steps were taken for timely execution of left-over works.


meeting held on 11th February, 2008. Department explained before the

Committee that the works had been re-tendered and would be restarted

after release of funds from Finance Department. Audit demanded the

decisions taken against defaulting contractors, which were not shown to

Audit. The Committee directed the department to produce PC-I and policy

decision for re-tendering. No further progress was reported so far. The

matter was again discussed the Departmental Accounts Committee

meeting held on 19th March, 2009. The department explained that out of 4

works, 3 works were taken up duplicate by Audit. The para was reduced to

Rs 6.6 million by the Committee by deleting those three works from draft

para. No further progress was reported till finalization of the report.

(DP.4-FAP)

Para 5.3 Loss to government due to non-execution of left over

works at risk and cost of original defaulting contractors

- Rs 6.2 million

As per clause 60 and 61 of contract agreement, in case the contractor

failed to fulfill his obligations as per contract, either the contract would be

rescinded and his security deposit be forfeited to government or balance

work would be executed at the risk and cost of the defaulting contractor.

The recovery of risk and cost charges would be made from the defaulting

contractor. Clause 60 and 61 are interdependent and would be operated

simultaneously as per Law & Parliamentary Affairs Department letter

No.OP-15(119)/2001/400/392/C dated 25th October, 2001.


Bahawalpur rescinded the contracts of four works due to default/failure of

the contractors to complete the works within stipulated period. The left

over works costing Rs 13.6 million were re-estimated for Rs 19.8 million.

167

No penal action including forfeiture of security deposits or recovery of

risk and cost from the original defaulting contractor was taken by the

management. Non-adherence to the agreement clauses resulted in loss of

Rs 6.2 million.

Audit pointed out the loss in September 2007. The department replied that

previous estimates were prepared on the basis of market rates and now

left-over works would be completed on rates given on website of Finance

Department and the cost over-run was un-avoidable due to changes in

rates. The reply was not acceptable as timely execution of works was the

responsibility of contractor and due vigilance was not exercised by the

management to watch the interest of government by applying risk and cost

clauses of the contract / agreement.


meeting held on 11th February, 2008. The department explained that the

works had been re-tendered and would be restarted after release of funds

form Finance Department. Audit demanded the decision taken against

contractor which was not produced. The Committee directed the

department to produce PC-I and policy decision for re-tendering. No

further progress was reported so far. The matter was again discussed the

Departmental Accounts Committee meeting held on 19th March, 2009.

The Audit stated that the recovery was required to be effected for

differential of cost in completion of works. The Project Management

intimated that efforts for recovery from performance security of the

contractor were being made. The Committee directed to expedite the

process of recovery and its verification by Audit. No compliance of the


(DP.1-FAP)

Para 5.4 Excess payment due to allowing inadmissible escalation

- Rs 677,886

As per clause 55(8) of standard contract agreement for execution of works,

no escalation shall be allowed to the contractor in respect of the period

extended for the completion of the work due to his own fault.


Bahawalpur allowed escalation to the contractor due to price variations in

various items even after the expiry of extended period for the completion

of work. The contractor was granted extension in time up to 30th June,

2005 but he could not complete the work even within the extended period.

168

Total escalation allowed to the contractor was Rs 745,484 whereas

admissible escalation up to extended period was Rs 67,598. Escalation

beyond extended period was not admissible as the contractor could not

complete the work due to his own fault. Non-adherence to contractual

obligations resulted in excess payment of Rs 677,886 to the contractor.


replied that time extension was granted after justification of the argument

of the contractor with the condition that rate of escalation would freeze on

7th October, 2005. As per clause 70(8) Vol-II of tender document, the

escalation would be paid up to approved date of extension but the project

management froze the escalation approximately 6 months before such

date, in a shape of penalty to the contractor. The reply was not acceptable

as freezing the escalation for only a part of the revised extended period

was undue favour to the contractor and no record/ justification for further

extension was shown. Moreover, the penalty in the shape of freezing the

date also indicated the fault of contractor for completion of work in the

extended period for which the escalation was not permissible.


meeting held on 9th April, 2007 and again on 11th February, 2008 wherein

it was decided to defer the para for verification of record by Audit. No

further progress was reported to Audit till date. The matter was again

discussed the Departmental Accounts Committee meeting held on 19th

March, 2009. After listening view points of the department and Audit, the

Committee directed the department to refer the para to Finance

Department for advice. No compliance of the Committee directives was


(DP.2-FAP)

Para 5.5 Overpayment due to change of rates in final bill -

Rs 622,862

In terms of serial No. 2 & 3 of acceptance letter bearing No. CDA-2003/

Dev/ 202 dated 28th October, 2003, the rate of items “sub-base course”

and “base course” were approved as Rs 2,681 & Rs 2,589 %cft

respectively.

Cholistan Development Authority made payment for the items “sub-base

course” and “base course” @ Rs 2,681 & Rs 2,589 per %cft respectively,

in accordance with the acceptance letter, up to 8th running bill. Whereas in

9th and final bill these items were paid @ Rs 2,861 and Rs 3068 per% cft

against the rates agreed upon This resulted in overpayment of Rs 622,862.

169

Audit pointed out the overpayment in September 2006. The authority

replied that insertion of reduced rates in the acceptance letter was typing

mistake. The reply was not tenable. The contractor had accepted the said

rates up to 8th running bill and for 9th and final bill and submitted all his

claims regarding the typing mistake.


meeting held on 19th March, 2009. After listening view points of the

department and Audit, the Committee kept the para pending for detailed

probe within 30 days. No compliance of the Committee directive was


(DP.92)

Para 5.6 Non-recovery due to non-adjustment of de- escalated

rate of steel and cement - Rs 480,622

As per clause 55 of the contract agreement for execution of work, where

any variation (increase or decrease) to the extent of 5% or more in the

price of any of the item mentioned in sub-clause (2) takes place after the

acceptance of tender and before completion of contract, the amount

payable under the contract shall be adjustable to the extent of actual

variation in the cost of the item concerned.

The Project Director, DG Khan Rural Development Project, DG Khan did

not adjust the downward variation in the price of steel and made payment

to the contractor @ Rs 40,200 per ton (base price of steel at the time of

award of contract) instead of applicable reduced rate of Rs 34,200,

Rs 34,700 and Rs 38,200 (during the execution of works) as required

under contractual provision. Due to non-adherence to agreement clause,

the contractor was overpaid for Rs 480,622.


replied that two types of steel i.e Grade 40 and grade 60 were used. A

recovery of Rs 110,527 was made against Grade 40 steel and no such

recovery was required on Grade 60 steel being a non-scheduled item. The

reply was not satisfactory as price variation clause was equally applicable

on scheduled and non-scheduled items and no evidence in support of

stated recovery was produced to Audit.


meeting held on 2nd April, 2008. The Committee directed the management

to reconcile the effected recoveries and effect the due recovery from

170

non-scheduled item. The matter was again discussed in DAC meeting held

on 7th April, 2009 wherein the Project Director in the context of last DAC

meeting informed that no price variation has been paid on non-scheduled

items. The rates quoted by the contractor for 60 Grade steel is also non-

scheduled item as approved by the Chief Engineer, Highway Punjab in the

approved estimates. Being non-scheduled item, no price variation is to be

paid on either side. The due recovery as per schedule item has already

been made and accordingly audit para was reduced to Rs 370,095

(480,622 – 110,527 = 370,095). The audit authority on the other hand

viewed that price variation on non-schedule (based on schedule) shall also

be paid accordingly. The recovery may be effected from the contractor

against non-scheduled items. After detail discussion it was decided to refer

the case to the Finance Department, to get opinion whether price variation

clause was applicable on the non-scheduled items quoted by the contractor

in the bid schedule or otherwise. Para was kept pending by the Committee

and will be decided in the light of the opinion from the Finance

Department. No further progress was reported to audit till finalization of

the report.

(DP.7-FAP)


Rs 173,063

As per clarification of Communication & Works Department Government

of the Punjab, vide No.PAC(C&W) 17-6/90 dated 28th October, 1997, the

deficiency in the sub-base course should be removed before laying the

base course. Similarly, deficiency in thickness of base course should be

improved before applying Triple Surface Treatment.

The Executive Engineer, Cholistan Development Authority, Bahawalpur

measured and paid an item of work “Earth Work Making Embankment

etc” to the extent of 845,295 cft, from RD-00 to 16,400, in the running

bill. The quantity of the same item in same reach increasing the depth of

the embankment was measured for 981,402 cft when the road was black

topped. This resulted in excess payment of Rs 173,065.

Audit pointed out the excess payment in November 2007. The Authority

replied that the position shall be watched before finalization of work. The

reply was not acceptable as measurement and payment for earthwork

embankment after completion of the road is against the clarification ibid.

171


meeting held on 19th March, 2009 wherein the department admitted the

recovery. The Committee directed to effect the admitted recovery within

30 days and got it verified by the Audit. No compliance of the Committee


(DP.93)

172

173

ENVIRONMENT PROTECTION DEPARTMENT

Kasur Tannery Pollution Control Project is being administered by the

Environment Department, Government of the Punjab and its Secretary is

the Principal Accounting Officer of the project. The project is a foreign

aided and in its operation and maintenance phase. Its office is located at

kasur. The main objective of the project is to treat the tanneries released

waste water and its recycling for beneficial purposes.




Sr.No Particulars Amount Total amount /

%age


2006-07

25.40

25.40

2. Total Expenditure for the financial

year 2006-07

18.90

18.90

3. Audited Expenditure 18.90 100% *


report

i) Overpayment / Non-

recovery

8.70

8.70


174

175

6. ENVIRONMENT PROTECTION DEPARTMENT

Para 6.1 Less-collection of share for operation and maintenance

of the Project from sponsors - Rs 8.7 million

As per provision of PC-I of the project, Kasur Tannery Waste

Management Agency is responsible for operation and maintenance of the

Kasur Tannery Pollution Control Project for the first five years to be

sponsored by the under mentioned sharing agencies.

1. Government of the Punjab 20%

2. District Government Kasur 15%

3. Tehsil Municipal Administration Kasur 15%

4. Tanneries Association 50%

The project management, Kasur Tanneries Pollution Control Project,

Kasur (KTWMA) collected a sum of Rs 6.58 million from Tehsil

Municipal Administration Kasur and Tanners Association Kasur against

due share of Rs 15.28 million on account of operation and maintenance of

the project during the year 2005-06. This resulted in less-collection of

Rs 8.7 million from the users /sponsors.

Audit pointed out the less-collection to the project management in

September 2006. The project management replied that Tehsil

Administration and Tanners Association were reluctant to provide their

share properly and the matter would be discussed at higher level.

The reply was not acceptable as concerted efforts were required to be

made at appropriate level for early collection of due share to save the

government to bear the extra cost of operation and maintenance. The

matter was reported to the Principal Accounting Officer in October 2006

but no reply / further progress towards collection of share from the users

was received till finalization of the report.

(DP.14)

176

177

COMMENTS ON INTERNAL CONTROLS

Internal controls are the set of rules, regulations, technical memos, policy

instructions and standard operating procedures which have been

prescribed by the departments/organizations for efficient operation &

economical development activities in the domain of works affairs.

The management of Communication & Works Department, Housing,

Urban Development & Public Health Engineering Department, Irrigation

& Power Department, Local Government & Community Development

Department, Planning & Development Department and Environment

Protection Department, Government of the Punjab could not ensure the

enforcement of adequate Internal Controls within their organizational

set up. The consequential effects of financial indiscipline for Rs 13,532.04

million due to loose internal control systems are depicted in the audit

report in hand.

The departments /organizations failed to place adequately the Internal

Audit Wing in their management set up and enforce upto the mark

working of internal controls in their working environment. Hence, audit

emphasizes to enhance the effective role of internal audit system in the

managerial set up of these departments/organizations and independent

internal audit wing should be established directly reporting to the Principal

Accounting Officers through Audit Committees.

Significant issues included in this report are as under: -

1 The project implementation involves documentation and

estimation of the projects. Provisions of cost estimate, cost sharing

formula, installment schedule, rates, special conditions &

incentives and remedial measures are the ingredients of project

planning and management. There were twenty (20) instances of

breach of inbuilt internal controls having cost effect of Rs 1,120.81

million in project management which have been highlighted in the

report for the consideration of stakeholders.

2 For effective financial management, certain internal controls like

prompt receipt & deposit into the treasuries, revision of

premium/interest, risk safeguards, timely utilization of the funds

and rational human resource management are to strive for

achieving the organizational objectives economically and

efficiently. Thirty-four (34) cases of loose financial management

have been depicted in the report costing Rs 640.62 million.

178

3 The prior approval of the authority/forum mandated to accord

administrative approval for allowing subsequent changes in the

scope and design of the works is a significant laid down

internal control for the executing agency. Eleven (11) cases of

abrupt changes in design/scope of works leading to audit

observations of Rs 6,705.79 million have been highlighted in

the report.

4 The Bill of Quantity is the basis for fair tendering and acceptance of

contracts. The violation of Bill of Quantities has financial repercussion

upon the cost of works and tentamount undue favour to the contractors.

Six (6) cases of Rs 74.09 million were reported wherein Bill of Quantities

were violated.

5 Proper maintenance of record and adherence to laid down procedures

are the control measures to pre-empt chances of theft, pilferage and loss of

government property. Twenty-five (25) cases of Rs 4,291.89 million have

been mentioned wherein government interest was not taken care of

because of laxity in implementation of management controls.

6 Rules, regulations and procedures are means for timely realization

of government dues and incurring expenditure. One hundred and

thirty eight (138) issues amounting Rs 698.84 million of

overpayment and non-recovery have been included in the report

where regularity, assessment and control measures were not

followed.

179

LIST OF ABBREVIATIONS USED

A&C Addendum & Corrigendum

AA Administrative Approval

AP Advance Para

B&R Buildings & Roads

BOQ Bill of Quantities

BOT Build Operate & Transfer

CE Chief Engineer

Cft Cubic Feet

Cum Cubic Meter

DAC Departmental Accounts Committee

DFR Departmental Financial Rules

DNIT Draft Notice Inviting Tender

DOR District Officer Revenue

DP Draft Para

DPC Damp Proof Course

ECNEC Executive Committee on National Economic Council

FD Finance Department

FDA Faisalabad Development Authority

GDA Gujranwala Development Authority

GI Galvanized Iron

I&P Irrigation & Power

JMF Job Mix Formula

LBDC Lower Bari Doab Canal

LDA Lahore Development Authority

LJC Lower Jhelum Canal

MB Measurement Book

MDA Multan Development Authority

180

MFDAC Memorandum for Departmental Accounts Committee

MRS Market Rate System

NOC No Objection Certificate

P/L Providing and Laying

PAC Public Accounts Committee

PCC Plain Cement Concrete

PDP Proposed Draft Para

PDWP Provincial Development Working Party

PFR Punjab Financial Rules

PHA Parks & Horticulture Authority

PHATA Punjab Housing & Town Planning Agency

POL Petrol Oil & Lubricants

PTCL Pakistan Telecommunication Company Limited

PW Public Works

RBOC Road Built Operate Company

RCC Reinforced Cement Concrete

RD Reduced Distance

RDA Rawalpindi Development Authority

Rft Running Feet

SE Superintending Engineer

Sft Square Feet

SWG Standard Weight Gauge

TSE Technical Sanctioned Estimates

TST Triple Surface Treatment

UJC Upper Jhelum Canal

WASA Water & Sanitation Agency

XEN Executive Engineer

181

Appendix

MEMORANDUM FOR DEPARTMENTAL ACCOUNTS COMMITTEE

1. COMMUNICATION & WORKS DEPARTMENT

Sr.No PDP No Subject Amount Rs

in million

1. 349 Irregular award of work 4,000.4

2. 354 Non-examination of project a/c 4,000.3

3. 357 Non obtaining approval of debt equity

ration from competent authority 4,000.3

4. 369 Non-Mutation the Title of land 2675.0

5. 93 Unjustified acceptance of tender 542.6

6. 358 Irregular award of work 347.8

7. 333 Non-deduction of compensation 294.4

8. 256 Irregular calling of tender 115.7

9. 249 Unjustified Payment 107.7

10. 351 Excess provision agreement 102.0

11. 383 Irregular award of work &

Overpayment 100.2

12. 75 Loss to Govt. 90.6

13. 350 Non-obtaining operation &

maintenance 70.0


15. 290 Non Recovery 51.3

16. 364 Unjustified payment 48.1

17. 48 Below specification of work 36.7

18. 187 Irregular Payment 34.1


20. 368 Short Recovery 28.1

21. 122 Loss to Govt. 23.4

22. 365 Unjustified expenditure 21.1

23. 18 Excess Payment 17.8


25. 17 Excess Payment on a/c of non-reuse of

dis. material 17.0

26. 157 Loss to Govt. 15.0






32. 139 Un due financial aid to contractor 8.8


182



36. 118 Non recovery 8.0

37. 85 Irregular expenditure 7.6

38. 379 Irregular award of contract 7.4

39. 73 Irregular acceptance of tender 6.9





44. 200 Loss to Govt. 5.5


46. 265 Overpayment 4.6














60. 29 Un-due financial aid 3.2







67. 9 Excess allotment of work 2.3









76. 83 Non-Recovery 1.9


183

78. 330 Un authorized expenditure 1.9









87. 151 Non forfeiture of earnest money 1.5






93. 33 Loss 1.3



96. 81 Loss 1.1




100. 236 Undue Payment 1.0











111. 104 Overpayment due to double record

entries 0.7







118. 362 Undue payment of interest 0.6



184






126. 284 Undue Payment 0.5

127. 322 Extra Expenditure 0.5

128. 377 Irregular Expenditure 0.5


130. 23 Overpayment due to incorrect

application of base rate 0.4





135. 199 Loss to Govt. 0.4

136. 280 Excess Payment due to allowing excess

quantity 0.4


138. 318 Extra Expenditure 0.4






144. 98 Over payment 0.3

145. 197 Loss to Govt. 0.3

146. 214 Un-authorized exp. 0.3








154. 15 Payment with out record entry in MB 0.2



157. 42 Irregular division of contingencies 0.2

158. 54 Non forfeiture of security deposit 0.2





185


























188. 100 Overpayment due to non deduction of 0.1



191. 163 Un justified payment 0.1




195. 206 Loss to Govt. 0.1












186


208. 319 Non Recovery due to imbalance rate 0.1





*. 92 PDPs have been resolved / settled after compliance / discussion.

187


2. HOUSING AND URBAN DEVELOPMENT / PUBLIC

HEALTH ENGINEERING DEPARTMENT

Sr.No DP No. Subject Amount Rs

in million

1 1 Excess payment 0.265

2 2 Loss 1.54

3 6 Short recovery 0.195

4 12 Irregular grant 7.4

5 13 Un-authorized payment 1.7

6 14 Over payment 0.119


8 17 Less recovery 0.103


10 20 Non recovery 5.00

11 21 Loss due to theft 0.547

12 24 Less deposit 3.6

13 25 Less recovery 0.314

14 26 Doubtful adjustment 11.795


16 31 Execution of below 2.732




20 40 Extra expenditure 0.207

21 41 Non deduction 0.294


23 44 Non imposition 6.7

24 47 Loss 0.076



27 52 Loss 0.115





32 60 Loss 0.088



35 65 Irregular award of work 56.00



38 71 Irregular payment 6.445

188




42 82 Irregular expenditure 1.5


44 87 Irregular purchase 4.449

45 91 Un-justified payment 2.859



48 96 Non-forfeiture 0.216

49 97 Undue financial aid 20.170



52 101 Loss 0.432


54 105 Loss 1.798




58 110 Un authorized 8.782






*. 13 Proposed Draft Paras (PDPs) have been resolved / settled after

compliance / discussion.

189


3. IRRIGATION & POWER DEPARTMENT

S. No. DP No. Subject Amount Rs in

million

1. 1 Doubtful payment 2.5

2. 3 Unauthorized payment 0.872




6. 9 Non recovery / adjustment 0.686









15. 26 Unadjusted expenditure 6.748

16. 29 Less recovery 0.853







23. 41 Non crediting 0.697


25. 44 Excess payment 1.4







32. 54 Non crediting of contractor 3.793

33. 56 Unauthentic payment 0.113





38. 74 Non clearance 3.2

39. 75 Undue benefit 3.372

190


41. 80 Extra expenditure 0.388

42. 81 Extra expenditure 1.262




46. 88 Non clearance of suspense 0.880


48. 90 Blockage of Govt. money 2.633

49. 93 Non adjustment 0.509


51. 97 Blockage of Govt. money 12.5


53. 99 Unjustified retention 5.786



56. 103 Unjustified retention 61.408




60. 115 Undue financial benefit 2.128



63. 124 Loss 2.939



66. 131 Unauthorized 1.227

67. 132 Non adjustment 0.742

68. 133 Irregular purchase 0.772



71. 141 Non clearance 0.367



74. 148 Loss to Govt. 0.565

75. 150 Irregular payment 0.939



78. 154 Irregular adjustment 0.420

79. 155 Irregular adjustment 0.143





191




87. 168 Non accountal 0.145






93. 9 FAP Non recovery of liquidated

damages

4.806

94. 8 FAP Unjustified payment 4.992



192

193


4. LOCAL GOVERNMENT & COMMUNITY DEVELOPMENT

DEPARTMENT

S. No. DP No. Subject Amount Rs in

million



3 8 Non production of record 1.613

4 10 Unauthorized expenditure 0.901

5 12 Non production of record 2.596

6 14 Loss 0.168


8 22 Unauthentic payment 2.14



194

195


5. PLANNING AND DEVELOPMENT DEPARTMENT

Sr.No DP.No Subject Amount Rs in

million

1 6 Un-authorized expenditure 14.1

2 5(FAP) Over payment 0.426


4 3(FAP) Short recovery 3.7

5 2(Cholistan) Excess payment 0.210

6 5(Cholistan) Over payment 0.119



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AUDIT REPORT ON THE ACCOUNTS OF GOVERNMENT …agp.gov.pk/downloads/audit_reports/PUNJAB WORKS PROVINCIAL... · process of selection of roads, calculation of EIRR and estimation was