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Old August 16th, 2012, 01:23 PM   #8781
metacatfry
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I have been following the development of the Polish road network some years now, through Skyscrapercity (although I have only recently signed up for an account). In my opinion the process has been done quite well, and according to good praxis.
Public tenders have many advantages, but for the process to function you need the procurer to set achievable specifications and for the bider to be able to price his own abilities appropriately. These years it seems like the process failed in that GDDKIA as procurer set somewhat ambitious timeframes, perhaps politically pressured due to the EUROs, and bidders, for some reason, did not decline to participate in contracts even when their margins on contracts became very slim. Then costs of raw materials greatly increased and contractors margins disappeared.
This is not a failure of the public tender process. The outcome is that road building companies who did not do sufficient due diligence now are being financially punished and culled from the market, and those companies who were more careful are still around to continue the good financial praxis. Hopefully it is also a learning experience for the GDDKIA, who maybe should take greater care in not responding to political pressure.
I do not know that this is what happened, but with the amount of contracts that were due for the EUROs, and which now seem to never have had a CHANCE of being completed, coupled with the otherwise relatively good performance of the GDDKIA in general, smells like political pressure to me.
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Old August 16th, 2012, 01:44 PM   #8782
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actually I did not understand what Oracle1207 had on his/her mind.

anyway metacatfry, I share most of your findings.
I do want to be called a GDDKIA advocate. this is a government insitution with all its consequences (political pressure, worktime 8-16, etc). but the gddkia guys can only play the game ruled by public tender regulations. if the rule is not 100% right/correct you cannot do much about it. definately there are some wise guys at GDDKIA for whom delivery dates before euro2012 were just a modern version of "the Arabian Nights with Sindbad".
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Old August 16th, 2012, 02:16 PM   #8783
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I agree that finish for Euro 2012 was ambitious if not impossible. But delays of year or more? Possible even two? That is a bit too much.
OK, it is 200km but most contractors have standard stretches of 20-30km to work on, like everywhere else. What's difficult about it?
Terrain is not hugely challenging. OK, there are few rivers to cross and some soils were tricky but it is nothing comparing with some other countries.

I'm so glad I don't live in that part of Poland. I would be furious.
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Old August 16th, 2012, 02:41 PM   #8784
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Quote:
Originally Posted by geogregor View Post
...But delays of year or more? Possible even two? That is a bit too much.
just normal.
complex projects cannot be predefined so precisely that you are always on time


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Originally Posted by geogregor View Post
OK, it is 200km but most contractors have standard stretches of 20-30km to work on, like everywhere else. What's difficult about it?
Terrain is not hugely challenging. OK, there are few rivers to cross and some soils were tricky but it is nothing comparing with some other countries.
public tender regulations are not perfect. the cheapest offer wins. does not metter if the terrain is flat or mountainous. the cheapest the best. the cheapest vendor sometimes is not interested in milestones delivery. collecting money is the priority. the second one is delivery. this is the answer




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I'm so glad I don't live in that part of Poland. I would be furious.
what about guys over 50 ? what are thay suppose to say ? 10 years ago there were almost no motorways. one day you wil see a quite decent motorway network in Poland. most of them will not.
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Old August 16th, 2012, 03:08 PM   #8785
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I don't think projects in Poland are more difficult than elsewhere. My personal guess is the very low prices for contracts signed in 2010 and 2011 tenders have driven many general contractors to try to skimp and save on what they can, for example using cheap but unproven subcontractors with little experience in managing larger projects.
I am not sure, but aren't the only projects where delays exceed 12 months those where companies involved have gone bankrupt? That was my impression was the case with the stretch of A4 east of Tarnów.
I think GDDKIA have conditions in place for large tenders that the companies have to have demonstrated prior experience with at least one large road constructed satisfactorily, or something like that, so there is a vetting process in place during tender.
I just don't really understand why quite large and experienced builders like PBG choose to bid for projects at prices so low that they couldn't afford it.
Perhaps they were desperate for the cashflow and counted on renegotiations of the contracts later?

Last edited by metacatfry; August 16th, 2012 at 03:10 PM. Reason: spelling
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Old August 16th, 2012, 03:14 PM   #8786
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Oh yes, and the infamous bridge on the southern A1 is also extremely delayed, what is the latest?
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Old August 16th, 2012, 04:18 PM   #8787
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This is rightly done so by the GDDKIA. Thats how market works. Baby cries should go out of the business. I hope that the contracts are bulletproof and GDDKIA did not pay a penny more for it than what was already built, actually I hope that GDDKIA did pay less (the difference being the penalty triggered by delay).

The only cost on the side of GDDKIA is the delay and some transaction cost, if contractor goes bankrupt there will be many more waiting to pick the contract and finish the job. The penalty should cover for the additional price increase anyway, so in fact the GDDKIA could be getting the whole project for cheaper buck in the end. Big international contractors perhaps prefer not to go bankrupt and will rather subsidize the thing.

I doubt that the economic costs of the delay are that huge for the governmet to reason taking all the risks. Its much better to keep the risk on the contractors, the moral hazard that would be caused by gov. taking the risks being also an argument.

This is how the public institutions should work. The same way as market institutions. Funny to hear market complaining.
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Old August 16th, 2012, 06:24 PM   #8788
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Thanks Kamilost!
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Old August 16th, 2012, 06:40 PM   #8789
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Originally Posted by Surel View Post
This is rightly done so by the GDDKIA. Thats how market works. Baby cries should go out of the business. I hope that the contracts are bulletproof and GDDKIA did not pay a penny more for it than what was already built, actually I hope that GDDKIA did pay less (the difference being the penalty triggered by delay).

The only cost on the side of GDDKIA is the delay and some transaction cost, if contractor goes bankrupt there will be many more waiting to pick the contract and finish the job. The penalty should cover for the additional price increase anyway, so in fact the GDDKIA could be getting the whole project for cheaper buck in the end. Big international contractors perhaps prefer not to go bankrupt and will rather subsidize the thing.

I doubt that the economic costs of the delay are that huge for the governmet to reason taking all the risks. Its much better to keep the risk on the contractors, the moral hazard that would be caused by gov. taking the risks being also an argument.

This is how the public institutions should work. The same way as market institutions. Funny to hear market complaining.
I don't understand all the peans about GDDKiA, how great they are. If that was the case this road would be open to traffic as we speak.
Correct me if I'm wrong, but are we not one of the few countries where major infrastructural contracts are not indexated to raisng costs of oil, steel and other major components? If that's the case such situations will keep happening.
Also, there are plenty of problems on GDDKiA side. Some of the plots of land are passed to contractors with huge delays, approvals of necessary design changes take sometimes even months, even if they are minor, geological checks before the construction were often completely wrong which causes redesigns etc.
At least that's what people write on Polish forum. I don't work in construction but some of my family members do and I know that most of the institutions responsible for all the necessary paperwork are just a joke. Short working hours, lack of responsibility, everyone passes the ball to someone else, no one wants to make decision. For the officials no decision is better than bad decision. I can't see how GDDKiA would be different.
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Old August 16th, 2012, 07:47 PM   #8790
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Correct me if I'm wrong, but are we not one of the few countries where major infrastructural contracts are not indexated to raisng costs of oil, steel and other major components? If that's the case such situations will keep happening.
I think you are right that it is in the interest of Poland that road building companies do not go bust because of fluctuating costs. This could be achieved by more widespread use of hedging by the companies, or by writing indexations into contracts as you say. I do not know whether Poland stands out by this omission but would be interested in an answer if anyone knows.

I think our only real disagreement comes from a differing perspective and expectations. The last couple of years a very large amount of tenders have been posted by GDDKIA, with much design work involved. An even larger number of Environmental Impact Studies have been done, with relatively few missteps, Rospuda Valley being the only notable one to my knowledge. I think it could have been much worse, and no major corruption or nepotism cases have surfaced. When I look at the situation in many other places in the world I think that that is very positive. So I choose to look at the positives, and they are certainly there, and I give credit to GDDKIA for at least not being a burden and an obstructionist organization for the rest of Poland.
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Old August 16th, 2012, 08:22 PM   #8791
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I don't understand all the peans about GDDKiA, how great they are. If that was the case this road would be open to traffic as we speak.
Correct me if I'm wrong, but are we not one of the few countries where major infrastructural contracts are not indexated to raisng costs of oil, steel and other major components? If that's the case such situations will keep happening.
Also, there are plenty of problems on GDDKiA side. Some of the plots of land are passed to contractors with huge delays, approvals of necessary design changes take sometimes even months, even if they are minor, geological checks before the construction were often completely wrong which causes redesigns etc.
This is not problem of the GDDKIA with respect to construction companies going bust. This is the problem of the construction companies unexperience and inability to do the right contracting and risk hedging. No one forces them to go into the tenders and contracts... Do they want the public money? Well they have to earn it and work efficiently, hard and be smart.

The delays would be worth overpricing and less strict GDDKIA contracting only if the costs of the delays would be substantial. I dont see that the delays cause such a substantial costs in polish economy...
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Old August 16th, 2012, 08:43 PM   #8792
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Surel, metacatfry I agree with you guys
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Old August 17th, 2012, 03:18 AM   #8793
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Quote:
Originally Posted by Surel View Post
This is not problem of the GDDKIA with respect to construction companies going bust. This is the problem of the construction companies unexperience and inability to do the right contracting and risk hedging. No one forces them to go into the tenders and contracts... Do they want the public money? Well they have to earn it and work efficiently, hard and be smart.
So we should be happy than most of the large Polish construction companies are either already bust or facing bankruptcy? Their problems? Hmmm...

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The delays would be worth overpricing and less strict GDDKIA contracting only if the costs of the delays would be substantial. I dont see that the delays cause such a substantial costs in polish economy...
Depends how we define costs. There are obvious costs like cost of all the bureaucracy of cataloging what was already done, cost of preparing new tender, all this with risk of much higher new bids. But there are also lost benefits to the economy. All the time and money lost by companies and individuals who can't use road which should be finished, let say, 2 years ago and waste time driving through villages. It is cost to the economy (but not to the state purse) There are also costs of accidents and deaths which could be avoided if motorway was open.
It is not that simple as it looks.
And I'm not advocaiting GDDKiA being less strict, on a contrary I want them to be strict and precise. They should give access to all the building sites from day one of contract (which is never really the case). I want them to have good geology research done before construction phase. I want them to prepare correct designs (not like this unfortunate bridge in Mszana on A1). I want them to respond quickly when contractors are asking for sometimes necessary changes etc.
Of course ther are countries which have more problems with road building. But it doesn't mean we shouldn't ask for improvements in Poland.
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Old August 17th, 2012, 07:57 AM   #8794
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Hi, what would you suggest is the best route from Warsaw Modlin airport to get onto to the S17 towards Lublin? I am travelling this Friday evening through there so want to try and avoid as much traffic and stress as I can.
Might be a little too late for this now but just keep in mind S17 is onlyu a 12 km stretch of Garwolin bypass, everything else is in the DK standard.
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Old August 17th, 2012, 10:46 AM   #8795
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DK17 is mostly dead straight. It looks like one of those Napoleonic straight roads you can find in France or Belgium.
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Old August 17th, 2012, 12:45 PM   #8796
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So we should be happy than most of the large Polish construction companies are either already bust or facing bankruptcy? Their problems? Hmmm..
So you prefer government subsidizing private sector for its incompetence and for the incompetence of the public employees as well? This creates huge moral hazard.


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Depends how we define costs. There are obvious costs like cost of all the bureaucracy of cataloging what was already done, cost of preparing new tender, all this with risk of much higher new bids. But there are also lost benefits to the economy. All the time and money lost by companies and individuals who can't use road which should be finished, let say, 2 years ago and waste time driving through villages. It is cost to the economy (but not to the state purse) There are also costs of accidents and deaths which could be avoided if motorway was open.
It is not that simple as it looks.
I know that. Depends on what you prefer. I reckon that the companies that are not able to deliver now, would play the same way if they would receive twice as much....

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And I'm not advocaiting GDDKiA being less strict, on a contrary I want them to be strict and precise. They should give access to all the building sites from day one of contract (which is never really the case). I want them to have good geology research done before construction phase. I want them to prepare correct designs (not like this unfortunate bridge in Mszana on A1). I want them to respond quickly when contractors are asking for sometimes necessary changes etc.
No one wants them to create obstacles to the contractors and everyone wants state agencies to be precise. However, there is market approach. If the contractors are unable to reflect on this (state in the contracts the conditions under which they are not responsible for the delay etc.) then its mostly their problem.

If this is the case (and the delays are due to GDDKIA) than surely GDDKIA would have to pay for it. In your place I would be happy about that it is not so, and that the GDDKIA doesnt have to pay and that the construction companies go bankrupt. The alternative being, budget doubling while having the same delays, poor quality of the work, this all then on the account of the GDDKIA and its employes with no real accountability.


Surely, in the ideal state is GDDKIA delivering perfect designs with perfect timing etc. The GDDKIA employes being accountable inside the organisation for their work. Plus the contracts being as strict as possible and competition being as fierce as possible.

I don't think that the solution here is making the contracts more soft and less competition. That would just mess it all. I would be glad that at least something on the gov. side of the thing works and would be pushing on improving the inside of GDDKIA.

Last edited by Surel; August 17th, 2012 at 02:17 PM. Reason: some spelling
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Old August 17th, 2012, 01:28 PM   #8797
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I'm not saying that contractors are perfect and GDDKiA is screwing everything up. But sometimes reading statements from contractors and GDDKiA you can have a feeling that they are two sides of war rather than partners in delivering projects.
It seems like both sides employ more lawyers than engineers.
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Old August 17th, 2012, 01:50 PM   #8798
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DK17 is mostly dead straight. It looks like one of those Napoleonic straight roads you can find in France or Belgium.
Indeed, it was built in 1830s - at the time of Królestwo Polskie - a "state" napoleonic in origin, but governed by tzar's Russia:

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To akurat inwestycja Królestwa Polskiego, wykonana w latach 30-tych. Można do dziś zobaczyć dwa pomniki z nią zwiazane: w lesie koło Łopiennika, po południowje stronie drogi, na ziemnym kopcu stoi pomnik z zegarem słonecznym, postawiony w połowie drogi z Lublina do Zamoscia,

http://www.panoramio.com/photo_explo...rder=date_desc
translation

So there may be both influences - russian roads are also damn straight...
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Old August 17th, 2012, 02:19 PM   #8799
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I'm not saying that contractors are perfect and GDDKiA is screwing everything up. But sometimes reading statements from contractors and GDDKiA you can have a feeling that they are two sides of war rather than partners in delivering projects.
It seems like both sides employ more lawyers than engineers.
1) They should not be really partners. Someone is ordering and someone is delivering. Its not an even position. There is a market relation in between.

2) What would you expect with so much money? I reckon too friendly relations are not in the public interests.
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Old August 17th, 2012, 05:13 PM   #8800
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1) They should not be really partners. Someone is ordering and someone is delivering. Its not an even position. There is a market relation in between.
They are partners. Once the bidding process is over in the best interest for both sides should be good cooperation rather than constant fighting and haggling.
Building road is not like buying TV set. It is process which requires communication and cooperation. There are changing conditions, unexpected findings underground, GDDKiA is constantly monitoring the sites and has to approve every milestone etc.

Quote:
2) What would you expect with so much money? I reckon too friendly relations are not in the public interests.

Such statement is typical for countries with little trust in business, officials and every day life. I guess it is part of our culture of cutting corners and cheating. So sometimes we overcompensate.
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