The Commission of Audit has conducted a series of Performance Audit on the sports venues and facilities constructed for the hosting of the 4th East Asian Games. The main purpose of this audit is to determine whether there are instances of poor planning or insufficient supervision during the construction processes. The Commission of Audit has altogether bulletined six reports, which are “Construction Project of Nam Van Lake Aquatic Sports Center”, “Construction Project of Macao Olympic Aquatic Center”, “Construction Projects of Macao East Asian Games Dome”, “Construction Project of Macao University of Science and Technology Stadium”, “Construction Project of Macao International Shooting Center”, and “Expansion and Renovation Project of Macao Forum and the Media and Information Center” respectively. The summaries of these reports are as follows:

Audit results and opinions

1. Unable to specify the division of labour, powers and responsibilities of the involved entities

A) The Directorate of Land & Public Works & Transport (Land & Public Works & Transport Bureau) and the Macao Sports Development Board have failed to specify the division of labor and the rights and responsibilities of the various departments involved in the preparation and construction of Macao Aquatic Center. They could not assume due responsibilities and have only participated in the process as designing, assisting and consulting entities. There was not sufficient cooperation and communication between the departments and so caused the lack of proper supervision of the design process.

B) While the 4th East Asian Games Organizing Committee, Limited (the Organizing Committee hereinafter, which also includes its former status as the Coordinating Office of 2005 Macao East Asian Games) and the Infrastructure Development Office were preparing for the construction of the Macao East Asian Games Dome, the main entities involved have failed to take their responsibilities and establish an effective mechanism for collaboration. The entities had only designed, provided assistance or participated as advisory bodies. Since there was no appropriate principal body to do the planning, the rights and the responsibilities of each of the entities could not be defined. The departments only work within their respective scopes and thus failed to effectively oversee the design, the additional works, and the purchase of equipment.

In the process of the preparation of the expansion and modification of Macao Forum, the Organizing Committee and the Macao Sports Development Board failed to specify the division of labor and the powers and responsibilities for the various involved entities, but simply took part in the positions of designing, formulating the tender invitation regulation and approval procedures for the construction, temporarily managing and taking charge of the property. They have not adopted an appropriate mechanism to exercise a proper supervision for the design and requirements.

The Macao Sports Development Board and the Organizing Committee have failed to collaborate in managing the division of labour and supervision. During the construction, the contractor has only reported the progress and the possibility of delay of the project to the Organizing Committee. The Macao Sports Development Board, as the owner, requested the contractor to give reasons for the delay. The Organizing Committee only explained the situation to the Board when it was told that the delay would be fined. The Organizing Committee used ‘being occupied’ as the excuse to refuse to take part in the collaboration and handed over the renovation projects of the surroundings of the Macao Forum and the VIP Area to the Macao Sports Development Board. For these reasons, the completion of the renovation projects was delayed. In the opinion of the Commission of Audit, the Macao Sports Development Board and the Organizing Committee should make clear of their own responsibilities and working scopes. They should keep communicating with each other throughout the projects so as to make sure that the constructions can be completed on time.

C) In the process of the construction of the Shooting Center, the Organizing Committee and the Land & Public Works & Transport Bureau failed to specify the division of labor and the power and responsibilities of the various involved departments. As a result, the entities involved had not taken their own responsibilities. They had only taken part in the positions of designing, formulating regulations for construction, holding public tender invitation, taking over, and managing the Center. The work was not supervised appropriately and consequently there are problems with the designs and a number of additional works are required.

In order to reduce the number of additional works and ensure the construction can be finished on time, the Commission of Audit suggests that the involved departments should assume their duties together. They should establish an effective mechanism for communication and cooperation, and work responsibly in their positions.

2. Separately contracting design and construction makes the construction contractors not liable for design responsibility.

All of the six projects of constructions have employed separate contractors for the works of design and construction. The contractors of the design and the construction did not have to be responsible for each other’s mistakes. The departments involved have not noticed the problems before inviting the tenders. This has caused a number of additional works.

The Commission of Auditsuggests that the process of design should be cautiously supervised. The entities involved should make concrete plans for all parts of the project, evaluate and modify them duly. They should ensure that the plan meets the practical need and can bring benefits to the economy. This can help to reduce the possibility of remedial measures and additional works, thus bring the cost under control.

3. Lacking of thoughtful plan and good coordination, which caused the rise in the expenditure budget

A) Construction of Macao Olympic Swimming Hall

1. As a result of conducting detailed design of Macao Olympic Aquatic Center without making an effective evaluation on relevant requirements and obtaining appropriate technical data, revisions had to be made to the design plan to meet the changes in the requirements, thus causing a rise in the expenditure budget.

2. Before the public tendering, the Directorate of Land & Public Works & Transport and Macao Sports Development Board failed to jointly conduct a detailed review on the final design and thus had to carry out a number of additional works during the construction period. The Commission of Audit suggests that various departments involved should jointly strengthen the supervision of the final design to ensure that it is feasible for construction, meets the actual requirements and can bring economic benefits. At the same time, in the event of significant changes or problems, the departments involved in the construction should also carry out comprehensive reviews on the construction plan and then make appropriate revision to effectively reduce additional construction works.

3. After the completion of the main part of the project, swimming competitions were held and advices from the relevant international sports organizations were given. There were a number of imperfections of the design found and so a two-phase renovation project had to be carried out after five months the Macao Olympic Aquatic Center was opened. In the opinion of the Commission of Audit, the entities involved in construction should learn from experiences of hosting sports events and listen to the opinions of the international sports organizations as early as possible so that they can evaluate and revise the construction plan and the design of the Center.

4. The users (including the Coordinating Office and Macao Sports Development Board) changed the requirements for equipments during the construction period and this resulted in a remarkable increase in the expenditure. In order to meet the international standard, changes had to be made to the score display board and the television screen wall. The original plan of spending an additional expenditure of MOP 1,857,600.00 was sufficient to meet the requirements for hosting international swimming competitions. But the subsequent upgrade to the large screen full-color display board resulted in an additional expenditure of MOP 19,651,391.28. In the opinion of the Commission of Audit, spending a huge amount for merely a better visual effect does not meet the principle of proper application of public funds. In order to avoid any inconsistency in construction, the additional works are generally assigned to the original contractors. This has deprived the owners of their bargaining capacities. Therefore, a thoughtful plan should be made to reduce additional works.

B) Construction of Macao Gymnasium for East Asia Games

1. While preparing the construction of Macao East Asian Games Dome, the Organizing Committee and the Infrastructure Development Office failed to carry out sufficient and effective cooperation with the Working Group on Coordinating the Planning, Design and Construction of Sports Facilities for 2005 East Asian Games to set up a main body responsible for the overall planning of the entire construction plan. As a result, the team failed to conduct an effective supervision over the implementation of various construction projects.

2. The site of Macao East Asian Games Dome had been changed twice, and that involved changes in the city planning. As regard to this issue, the Organizing Committee and the Infrastructure Development Office did not have sufficient consultation and analysis of different opinions and thus failed to work together to conduct an effective and satisfactory planning on site selection. This not only affected the progress of the construction of the Dome but also wasted the administrative resources.

3. In order to have Macao East Asian Games Dome ready for use before the 4th East Asian Games, the tender invitation for its construction was conducted in a circumstance without a complete plan, concrete program and design. As a result, extra phases II-IV constructions and a number of additional construction works had to be carried out. The details of the work in different phases as well as that of the overall plan are not shown in any of the proposals. Nothing was mentioned in the proposal of the design, nor in the proposal of the project contracting and public tender invitation or in that of the phase II-IV projects. Besides, the Organizing Committee and the Infrastructure Development Office failed to take care of the plan of landscape development and region-afforestation. They added the cost of the relevant services into the budget and applied for it as an urgent order fourteen months after the preliminary plan was made. In the opinion of the Commission of Audit, efforts should be made to increase the efficiency of the planning when time is pressing. The units involved should carefully establish the working procedures, contents and timetables for various stages of work and accomplish each stage of work on time.

4. The Organizing Committee had not taken the requirement of the construction into consideration during the phase of design, and the Infrastructure Development Office failed to join hands with the Organizing Committee to ensure that the stadium facilities and sports equipments meet the actual requirements at the time of public tender invitation. During the construction period, the Organizing Committee changed many of their demand on the sports venues, including the suggestions of adding indoor lanes for track and field, ice-skating lanes, multiple sports equipments, large screen display boards and large sculptures. Apart from resulting in additional expenditure, this may also affect the constructions that have been completed.

C) Construction of Macao University of Science and Technology’s Stadium

1. The Organizing Committee failed to take the local geological conditions into account and had made a relatively low estimation of the expenditure of various construction projects.

2. The Organizing Committee failed to carry out an effective cooperation and communication with the Infrastructure Development Office in the early planning stage. Apart from the failure in introducing the opinions from the Infrastructure Development Office as early as possible and in having made a comparatively low estimation of the construction project’s expenditure, the Infrastructure Development Office had employed a consulting company to help coordinate between the design company and the constructor during the construction period to speed up the construction process.

3. Time was short for the decision-making and preparation for the project and not sufficient enough for the construction, yet the Organizing Committee still failed to improve their working efficiency. They had not set up an applicable working timetable and cannot carry out the projects on schedule. Their time management was not satisfying and thus affected the working efficiency. The construction of the stadium had to be finished within less than one month’s time before the East Asian Games was held. This has brought difficulties in putting the sports venue on trial.

4. Due to the limited time, the Organizing Committee and the Infrastructure Development Office gave the designs of building works to the project implementation department and entrusted it to conduct public tender invitation without verifying whether the building works and the contents of the bill of quantities conformed to international standards and requirements. As a result, during the construction period, additional works had to be carried out to remedy the omissions in the bill of quantities. Some equipment, which did not conform to the standard of quality certification, had to be replaced. The entire plan was carried out in a situation where there was a lack of flexibility in time management. There was not enough time and room for the relevant parties to manage the emergencies that might happen during the construction process. The Commission of Audit suggests that the departments should set up a working timetable and strictly supervise the progress of each working stage to make sure that every phase can be completed on time. They should also set up measures for handling emergency.

5. The Organizing Committee has required replacing the office furniture during the construction period. This has not brought any apparent increase in the value of the resources but has raised the expenses 4 times the original amount stated in the tender documents. In the opinion of the Commission of Audit, the Organizing Committee should consider the cost benefit of the projects whenever the Committee makes a change in the standard or brands of the articles stated in the original tender documents. It is only when the change can bring relevant benefits to the projects should the Committee make the changes.

D) Construction of Macao International Shooting Centre

1. The Organizing Committee did not fully understand the requirements of the facilities and the related international standards in the early stage of planning. They have changed the site of construction and enlarged the scale of the Shooting Centre when they revised the design of the building. As a result, the amount of the first budget authorized for the construction is 3.14 times the budget estimation of the original plan. In the opinion of the Commission of Audit, a research needs to be done to collect the related specialized information for constructing the Center. The Organizing Committee should understand the requirements of its operation, the procedures of competitions, and the influences that would bring to the surroundings in the early design stage, and include all these information in the tender invitation plan of the design, so as to reduce the discrepancy between the budgeted and the actual expenditure.

2. The Organizing Committee, in making the design, has neither established appropriate and specific requirements for the Center’s facilities, nor set up a mechanism with the Land & Public Works & Transport Bureau to timely and carefully examine the feasibility of the design and whether it meets the requirement, and consequently a number of additional works had to be done due to the defective design and the requests of the users.

3. The Organizing Committee has not properly arranged the purchase of the professional equipment and articles like target drones, target sheets, furniture, etc, and has contracted the original contractor to do the purchase during the process of the additional construction without setting up another tender invitation for this purpose. This resulted in the lack of price competitiveness for purchase of such articles. The Commission of Audit believes that purchasing professional equipments or articles from specialized suppliers through public tender invitation may ensure favorable service conditions and price competitiveness.

E) Expansion and Improvement of Macao Forum, Media and Information Centre

1. There were a number of significant changes made during the processes of the design and construction of the Macao Forum and the Media and Information Center. The sports departments (the Organizing Committee and Macao Sports Development Board) failed to determine the scale of the expansion and improvement of Macao Forum, and the standards of the facilities during the preliminary stage of the plan as well as the stage of the design. Before the completion of the design of building works, two floors were added to meet the needs that had not been projected in the early stage. This has raised the construction budget by 16.53%.

2. The final design for the public tender invitation could not fully reflect the overall planning and the requirements of the project. The International Broadcasting Center has to be completed through advancement works and that has caused an extra expenditure of MOP 6,899,400.00 (i.e. 18.58% of the original contract amount). In the opinion of the Commission of Audit, since international broadcasting center is a professional facility and is basically a temporary facility, the sports department should take the detailed requisite of the facilities, their coordination with the television broadcasting plans and their future use into consideration in the course of the project design. In this way, the entire plan can fully reflect the working procedures, contents, timetables and budgets of the different stages.

3. The sports department has not obtained thorough understanding of the detailed geographic conditions and the surrounding facilities of the construction site. Problems were discovered when the construction has begun. Additional constructions had to be carried to remedy and that has caused an extra expenditure of MOP 3,295,969.50 (i.e. 8.88% of the original amount) and has prolonged the construction period. The Commission of Audit believes that the sports department should ask for the public works department’s professional advice and helps so as to ascertain the surrounding facilities. They should also communicate with the design company so that the construction plan can be put into practice effectively.

4. The Organizing Committee could not accurately estimate the resources needed for the improvement project. The amount of money contracted is 97.13% higher than the Committee’s estimation and there was no flexibility in time to deal with the emergencies. In the opinion of the Commission of Audit , the master plan should reserve enough time and set up measures to deal with the emergencies during the construction.

F) Construction of Macao Nam Van Lake Aquactic Sports Centre

1. During the preliminary research stage of the construction of Nam Van Lake Aquatic Sports Center, the Organizing Committee has not collected sufficient information to set up a timetable that can be applicable for carrying out the project. As a result, the completion of the construction has been delayed and its total cost has increased from MOP 77,048,000.00 to MOP 99,503,717.70 (including the costs for the preliminary research, revision of the plan of building works and the expenses due to the stoppage), which is 29.1% of the first authorized budget.

2. During the preliminary research stage, the Organizing Committee has not communicated effectively with the public work department that is responsible for the large-scale infrastructure construction projects. They have to examine the feasibility of the plan of the building works again and so caused a delay of the construction.

3. Since there was not sufficient consultation done during the process in designing of the construction of Nam Van Lake Aquatic Sports Center, the construction has affected the units (the Legislative Assembly Building and the Building for the Office of the Chief Judge of the Court of Last Instance) nearby. The construction has to be suspended after one month it has started. A series of changes had to be made to the design of building works and additional works had to be done. The revision of the design of building works has cost MOP 993,000.00 and the additional works MOP 21,232,717.70, which include the expenses of overtime work and corresponding measures for catching up the construction progress.

G) No proper scheme for financial affairs

There was not a proper financial plan for the constructions and expansions of the six sports venues. There was no financial arrangement for the expenses that could have been predicted. The expenditure of a number of construction entries has not been registered in the “Investment and Development Expenditure Plan of the Administrative Authorities”. As a result, much expenditure has to be covered by allotting the budgets of the other projects and the reserve funds. 47.57% of the expenditure for the construction project of Macao East Asian Games Dome (including the phases II – IV construction projects) has not been registered in the “Investment and Development Expenditure Plan of the Administrative Authorities” of the corresponding year. As a result, part of expenditure has to be covered by allotting the budgets and appropriation from other projects.

16% of the expenditure for the construction project of Macao University of Science and Technology Stadium has not been registered in the “Investment and Development Expenditure Plan of the Administrative Authorities” of the corresponding year. As a result, part of expenditure has to be covered by allotting the budgets and appropriation from other projects. 54% of the expenditure for the construction project of Shooting Center has not been registered in the “Investment and Development Expenditure Plan of the Administrative Authorities” of the corresponding year. As a result, part of expenditure has to be covered by allotting the budgets and appropriation from other projects.

35.68% of the expenditure for the additional constructions in the expansion and improvement projects of Macao Forum and the Media and Information Center has not been registered in the “Investment and Development Expenditure Plan of the Administrative Authorities” of the corresponding year. As a result, part of expenditure has to be covered by allotting the budgets and appropriation from other projects.

In the opinion of the Commission of Audit, according to the principle of prudent and good public financial management, the total expenditure should be wholly estimated during the stages of planning and design. This can avoid allotting the budgets of the other projects and affecting the development plan of that year.

H) Insufficient transparency of the financial affairs The Organizing Committee has not coordinated with the other entities involved to timely and cautiously present to the public the updated information of the budget and expenditure.

Since the society nowadays pays close attention to the building cost of large-scale public works and the use of the huge sum of the public funds, the Commission of Audit suggests the Committee to improve the transparency of the constructions of public works. They should timely update the information about the expenditure and the budget plans of different sports venues. This is an appropriate example of satisfying public management, which can as well help the public to exercise its monitor function.

I) Applying different legal frames and handling methods The public works and the sports departments have applied different legal frames and handling methods during the construction of Macao East Asian Games Dome. As a result, different names like ‘additional works, ‘improvement project’, ‘supplementary building works’ and ‘the second phase project’ were used to mean any extra works of construction. Also, the principle for classifying additional works was not clear. The implementing departments worked according to their own ways to manage the projects and make announcement. In the opinion of the Commission of Audit, the department in charge should standardize the guidelines for the related administrative activities so that the supervising units and the public can understand the construction progress by specific means.

Suggestions from the Commission of Audit

Followings are the suggestions from the Commission of Audit after the above audit results:

1. The involved entities should set up a task force for overall planning, constructions and financial management. A management officer should be designated to control the overall plan, coordinate the distribution of resources, and supervise the progress and the use of the budget. A department, with responsibilities and powers, should take care of the entire project, establish appropriate and proactive plans, and draw up reasonable and feasible budgets.

2. Specify the organizational structure when launching a plan. Define the responsibilities, the communication and organizational relationships among the involved entities. Establish regulations, written guidelines or cooperation agreements when necessary. Bulletin the structures and the duties of the management and implementing entities.

3. Review work progress and cooperation on a regular basis to ensure effective communications and smooth cooperation. Make the construction and management information known to various supervisory entities and the public on a timely basis according to the scale of construction.

4. Invite representatives of the city planning departments to join the relevant task force for planning a public work, which touches upon the land acquisition and city planning issues. Or hold regular meetings to understand the actual progress in site selection and related works (e.g. earth filling), and formulate effective emergency measures for the work relevant to site selection.

5. The overall planning department should carry out feasibility study together with the user, the construction implementation department and the relevant sports associations. Draw the opinions of other relevant departments (e.g. the city planning department) into the study when necessary. Collect different related technical information including (1) evaluating the influences that the site selection and the construction bring to the surroundings and residents; (2) communicating with the related departments responsible for the project to make sure that there is no similar construction in progress or in preparation; (3) learning the standards that the facilities of venues must meet from the related sports organizations. Gaining comment from the public about the land planning, the use of land and the changes of land purposes through inquiries and bulletins (e.g. questionnaires, demonstrations, seminars, forums, workshops, etc).

6. A system of professional assessment should be introduced depending on the investment amount and the complexity of the project. This can assure that the design of the plan, including its detailed contents, can meet the professional standards. The uses of the sport venues should be decided as early as possible and the sports activities that would be held in the venues should be planned ahead. Factors like the standards of the arenas and equipments requested by the international sports organizations, the competition procedures, the cost benefit, and the influences to the environment should be clearly explained to the designer so as to ascertain the scale of the project and the facilities of need.

7. The construction implementing departments should set up a mechanism to cautiously evaluate the design plan to see if it fits in with the actual requirements of the users. They should timely check to see if there is any change in the requirements and the standards of the venues and facilities, and revise accordingly the design plan, the expenditure budget and the duration of the project.

8. If there is a time problem and the work of design has to be continued after the construction has begun, the objectives and works of each stage should be clearly worked out. In this way, the master plan and the budget can be framed. This can reduce the use of urgent request in the administration. Use standardized documents to report and give suggestions to the higher authorities. The contents of the report should include the overall plan and preparation. A timetable should be set up to regularly bulletin the construction plan and progress so as to improve the transparency of the public works.

9. Whenever there is any emergency, adjust and improve the efficiency of overall planning, shorten as much time as possible on preparatory works in order to save more time to improve flexibility of dealing with the emergency. Apply effective measures to make sure that every stage of work can be completed on time.

10. Enhance examination standards for the construction plan and the bill of quantities of public works. Make sure that the documents for tender invitation have explained in details the objectives of the entire plan, the tender conditions and evaluation criteria, and the specific architectural, structural and facility specifications and requirements. Apart from examining the design to see if it conforms to laws and regulations, examinations should also be carried out on the rationality of the design, the construction plans and the bill of quantities.

11. When a construction project is not implemented by a public works department, professional opinions should be obtained either through the task force or directly from the responsible department.

12. For a temporary facility, its future uses, operation, maintenance and repairs should be evaluated during the planning stage and then serve as factors to be taken into account during the design stage of the design of building works. This can reduce the amount of construction works needed when converting it into a permanent facility.

13. Prudently estimate the entire expenditure of a project during the planning stage, and estimate an appropriate amount of reserve funds for unforeseeable expenditure. Make financial arrangement for financial resources needed. Timely publicize execution of budget.

14. Monitor the use of the reserve fund, review the balance regularly and evaluate the need for use the reserve fund for works under construction.

15. Formulate specific guidelines according to management requirements for public works. Clearly define the legal provisions and disclosure rules for additional works.

16. The planning and management group should establish an appropriate mechanism for news release, set up a regular timetable for publicizing information about the important stages of respective construction project, formulate community communication, consultation and publicity plans and explain potential issues or problems that may significantly affect the construction expenditure and the construction time period.