Susan Gordon, Business Reporter

Residents walk by the new inner-city housing project along Little King Street, Denham Town, West Kingston. - Junior Dowie/Staff Photographer

The government's Urban Renewal Inner-City Housing Project is to cost $1.1 billion more than originally projected.

The original value of the contract, awarded in November 2003 was $2.7 billion, but according to the National Contracts Commission (NCC), the project cost had escalated to $3.8 billion.

The programme, which provides for the construction of 3,000 apartment units in the inner cities by the contractor, Ashtrom Building Systems, is now costing 40 per cent more than the original estimate provided by government, based on the NCC's calculation of the cost of overrun.

The project is financed by National Housing Trust (NHT) funds - the statutory agency established by government to provide affordable housing to working Jamaicans who are mandated to contribute three per cent of their earnings.

Underestimated cost

NHT Managing director, Earl Samuels, said the cost escalated because the Government had underestimated the cost of the project.

"The project costs which were conceptualised and made available by the Government were not a reality," he told Wednesday Business last week. "We had to purchase several private lots," he explained, adding that the land which was promised to the trust for the project had not come through.

Furthermore, Samuels said certain infrastructure which should have been put in place by other agencies had to be undertaken by the NHT, including putting in roads, sewer systems, community centres and basic schools.

It is not the first time that a government project of this nature ballooned over cost. About a year ago, the NHT had to revise up the cost of the Innercity Housing Project from $6 billion to $9 billion. The programme provides for the construction of 5,000 units.

The variance on the NCC website noted that the NHT had made changes to the original design of the apartment units to make them larger, the ceilings taller, relocate and cover sewage pipes on the outside, and to facilitate grillwork to French windows to improve safety.

Additional electrical outlets, security for units in volatile communities, installation of number plates for apartments, infrastructure works including roads, water, electrical infrastructure, soil replacement and site clearance also pushed up the cost.

Samuels said the completion date for the project also had to be extended because the land promised was not available at the prescribed time.