Geneva, March 1997
|Programme, Financial and Administrative Committee||PFA|
SECOND ITEM ON THE AGENDA
Progress report on the construction of the
ILO premises in Islamabad
1. At its 267th Session (November 1996),(1) the Governing Body was informed that the construction work was making satisfactory progress and was on schedule. It was also stated that the Office would report to the Building Subcommittee at its next meeting on all aspects of the financing of the project so as to make possible an overall assessment of the project and of the supplementary credits necessary to complete it.
2. As regards the construction work, progress with the fabric of the building now makes it possible to identify the three basic elements of the project. The two main wings of the building, which have now reached their full height, lie on either side of the entrance hall, where the concrete stringer of the main semi-circular staircase is already in place. The floors of the wing that will house the offices on three floors are now complete and have been cut to the sawtooth shape of the new glass façade. In the other wing, which will house the conference hall, the reinforced concrete flooring of the tiered seating levels can be seen. The entire vertical structure, which comprises the curved brickwork exterior of the building and concentric side walls are complete, making it possible to install the metal structures that will support the quadrant-shaped roof. The triangular metal braces are nearing completion and span the full 30 metres of the auditorium.
3. As regards the air-conditioning, the Building Subcommittee will recall that in order to keep construction costs to a minimum, installation of air-conditioning was included in the list of project elements, drawn up by the architect (lift, air-conditioning, generator, glass dividing walls, etc.) which could be purchased subsequently, possibly out of future income from the hiring of the conference hall. However, the architect drew the Office's attention to the fact that it would be more appropriate and cheaper to install it during the construction phase so as to avoid the additional cost of subsequently adapting the building. Resumption of work on the air-conditioning once the building is occupied would be much more costly and would seriously disrupt the work of the Office. In addition, in view of the high demand for the use of the auditorium, it is essential for the hall to be equipped at the outset with an air-conditioning system.
4. The Office hence issued an invitation to tender with six enterprises with the necessary experience and technical skills. An assessment of the bids has resulted in award of the contract to United Builders (PVT) Ltd., whose bid proved the most economical and closest to the technical specifications. The cost of installing the air-conditioning system, including brickwork on the housing for the equipment, is estimated at 14,182,000 rupees, that is, some 353,000 dollars.
5. At the 267th Session (November 1996) of the Governing Body, the Subcommittee was also informed of other developments regarding the financial aspects of the project. Although the cost of the construction contract in rupees initially exceeded by some 12 per cent the dollar value of the amount that had been approved for the building, successive devaluation of the rupee had reduced the dollar equivalent of the contract to the level of the approved credit.
6. Since the approval of the project in March 1995, a number of factors have affected its total cost. The cost estimates had been prepared on the assumption that the ILO would be exempted from all taxes and duties on the local purchase of building materials such as cement, steel and fittings. Although discussions have been in progress with the Government since the beginning of the project, and in spite of assurances received, no firm arrangements or procedures have been established either for the tax-free purchase of the materials or for the reimbursement of taxes that have already been paid in respect of purchases. Although the Office will continue to pursue this question, it will be necessary to finance these additional costs until such time as the reimbursement of the taxes can be obtained.
7. In accordance with local practice, the contract with the building enterprise included a clause whereby the contractor would be entitled to adjustments for certain cost increases in accordance with movements in specific cost indices. In view of the high rate of inflation in Pakistan and of the initial delay in commencing the project, such compensation has become inevitable, although negotiations are in progress to keep any increases to the minimum.
8. In order to offset as much as possible these potential additional costs, at the 264th Session of the Governing Body (November 1995) the Subcommittee took the view that interest earnings on the appropriation that had been made for the building might be used for this purpose.(2) Such an approach would be consistent with the provisions of article 22(4) of the Financial Regulations. The interest earned to date on this appropriation, after taking account of the payments that have already been made, amounts to some 115,000 dollars.
9. In order to accommodate the additional costs that would result from the purchase of the air-conditioning system, taking into account the above factors, it is estimated that it will be necessary to seek authorization for the project of an additional 325,000 dollars from the Building and Accommodation Fund, after taking into account the interest earned on the appropriation that had already been approved.
10. The Building Subcommittee may accordingly wish to propose to the Programme, Financial and Administrative Committee that it recommend to the Governing Body --
Geneva, 5 March 1997.
Point for decision: Paragraph 10.