Ten years, RM1b more: Audit lays bare Pan Borneo Sabah highway problems

A years into the Pan Borneo Highway task in Sabah, and RM1 billion over its initial agreement expense, the National Audit Department has actually laid bare a brochure of preparation, execution and tracking weak points that added to hold-ups in the enormous job.

According to the 2026 Series 2 Auditor-General’s Report launched on the Parliament site today, just 4 of the job’s 35 work bundles, or 11.4 percent, had actually been finished since March 31, while the staying 31 bundles, worth RM16.3 billion, were still …

A years into the Pan Borneo Highway task in Sabah, and RM1 billion over its initial agreement expense, the National Audit Department has actually laid bare a brochure of preparation, application and tracking weak points that added to hold-ups in the huge task.

According to the 2026 Series 2 Auditor-General’s Report launched on the Parliament site today, just 4 of the task’s 35 work plans, or 11.4 percent, had actually been finished since March 31, while the staying 31 plans, worth RM16.3 billion, were still under execution.

This was in spite of management of the highway building task being moved from the Project Delivery Partner (PDP) to the Works Ministry on Sept 22, 2019.

“Nine work packages are classified as sick projects, 13 work packages are behind schedule, while nine work packages are ahead of schedule.

“The goal of enhancing the connection network and offering more secure gain access to for roadway users in Sabah has yet to be completely accomplished,” the department said in its audit summary.

The Pan Borneo Highway construction began on April 11, 2016, covering a total stretch of 706km from Sindumin to Kota Kinabalu and Kudat; Ranau to Mile 32 Sandakan; and Mile 32 Sandakan to Tawau.

The project was initially scheduled for completion within 69 months, by Dec 31, 2021.

However, prolonged delays have pushed the total contract cost for Phase 1 from RM17.91 billion to RM18.96 billion – an increase of RM1.05 billion, or 5.9 percent.

The audit identified several weaknesses in project planning and implementation as contributing factors, including the failure to ensure project sites were ready before work began, weaknesses in implementation under the PDP, shortcomings by contractors and consultants, design changes and utility relocation.

The department also found that project monitoring through a Project Information System established by the PDP had been ineffective.

“Low utilisation of the system, events including information loss and weak points in developing policies governing its usage have actually rendered general tracking of the Phase 1A task through the Project Information System inadequate,” it said.

Variation orders

The audit also flagged multiple instances of non-compliance with laws, regulations and guidelines in the project.

Among them were work variation orders (WVOs) exceeding RM1 million that were approved by a committee whose authority was capped at RM1 million, instead of being referred to the Works Ministry Procurement Board or the Treasury secretary-general as required.

The audit found that 57 WVOs totalling RM513.99 million, involving 15 Phase 1A work packages, had been approved by a committee chaired by the Superintending Officer (SO) beyond the approval limit prescribed by the Treasury.

“Of the 57 WVOs, 11 amounting to RM14.16 million were not sent to the Works Ministry Procurement Board for approval, while 46 amounting to RM499.83 million were not sent for approval by the Treasury secretary-general,” it revealed.

Among other financial irregularities, the audit found that RM6.03 million in government funds had been paid towards CIDB levies that should have been borne by contractors.

It also found irregular payments totalling RM163.64 million that exceeded the permitted limit due to delays in finalising contract documents.

Recovery measures

The audit department recommended a series of measures to the Works Ministry and Sabah Works Department to address the problems identified.

The agencies were told to ensure that measures to resolve issues involving project site preparation and compensation, utility relocation, design changes, contractor appointments and project recovery were carried out according to the prescribed timelines.

“This is to make sure that the job can be finished in accordance with the recommended healing strategy,” the department stated.

On the WVO concern, it got in touch with the ministry and state company to make sure that all WVOs are sent to and authorized by the proper authorizing authority in accordance with Treasury standards.

They were likewise advised to evaluate agreements that are still in force and take suitable action to align their approval limitations with Treasury requirements through legitimate agreement modifications, based on the arrangement of the celebrations included and legal evaluation.

The department likewise required task tracking through the Project Information System to be optimised if an extension of the system’s service is authorized.

This, it stated, was needed to guarantee that the job’s goals are attained which the federal government gets the very best worth for cash.