Between 2007 and 2008, the Cabinet had to approve $2.3 million to fix houses built by the former Ministry of Housing and National Insurance in the last few years leading up to 2007, according to a special independent audit of the ministry obtained by The Nassau Guardian.
According to the audit, in some cases the cost of repairs to individual houses was almost as much as the cost of the original building, and some of the houses were so poorly built that they were uninhabitable.
"The ongoing and significant repair or remedial program provides the most obvious evidence of failings in performance and lack of value for money," said auditors in 2008. The Value for Money (VFM) audit, conducted by Crown Agents following a 2007 police investigation into allegations of corruption at the Ministry of Housing and National Insurance, was completed in 2008 but was first made public by The Nassau Guardian last week Thursday. The audit was contracted by the Office of the Auditor General.
It raises serious concerns regarding the management of the government's housing program at the time, including "inadequate planning" that led to homes being occupied without conveyances and mortgages. It also points to a political imperative that it said put the entire housing program at risk. The Progressive Liberal Party often cites the 1,300-plus homes built between 2002 and 2007 as one of its most significant achievements while in office.
Auditors cite a Department of Housing Technical Section report dated April 2008, which estimated a $1.75 million repair cost for New Providence, Grand Bahama and Exuma. The report noted that 285 houses required repairs, 156 houses were approved for repairs and 38 houses across New Providence and the Family Islands had repairs completed. The department report also noted that 55 percent of houses built required repairs across a sample of five New Providence subdivisions; and the average cost of repair in New Providence was $5,365.
While many of the repairs boiled down to shoddy workmanship, auditors also noted some of the remedial work could have been avoided. According to the audit, there was particular concern about the Adelaide subdivision. "Whilst the Adelaide subdivision had conditions common to lime rock islands all over the world, there is significant evidence to suggest the site of this subdivision should never have been developed," said the audit. The site, according to the audit, was characterized by cave holes, which led to the structural failure of several houses.
A minute paper from the department's technical director to the permanent secretary in the ministry noted the structural problems. "When we cleared this site we realized that building on this property would be problematic. The decision was taken to build and avoid or address the problem areas as best that we could." It was also noted that the structural integrity of an individual house may have been compromised as there were clearly visible cracks seen throughout, particularly on columns and beams.
"The director of technical services clearly stated that the ministry/department should take responsibility for the structural problems, rather than the contractors, given that ministry/department were responsible for preparing the site and were aware of the problems at the outset," auditors noted. According to the audit, the political imperative to build would certainly have pressured judgments, "and here, we believe, led directly to poor technical decision-making and to poor value for money".
In fact, auditors said that it was over-ambitious political imperative that led to crude target-driven program management, overriding proper technical and managerial decision-making.
"As a result, the technical capacity of the Department (of Housing) and the financial resources of the Bahamas Mortgage Corporation were overburdened, with serious implications for the sustainability of the program," said the audit.
Inadequate planning
The over-ambition in the housing program, together with "inadequate planning and management", led to distortions in the sequencing of activity -- initial identification of land through occupation -- during implementation, which created another set of problems, said auditors.
For example, according to a Department of Housing technical report (April 2008):
o 50 completed houses did not have conveyances (across New Providence and the Family Islands);
o 37 houses were occupied without a mortgage (across New Providence and the Family Islands);
o 71 unoccupied homes had no mortgages (across New Providence and Family Islands;
o 52 homes were completed without infrastructural development (Perpall Tract, Dignity 2 and Yellow Elder); and
o Only 59 percent of lots across New Providence subdivisions contained occupied houses (some lots sold as serviced lots).
"It is difficult to identify the underlying causes for some of these sequencing failures. However, it is apparent that within a weak control framework with no clear guidelines for optimum sequencing, the political imperative of the number of houses to be built is likely to override measures that should occur in a properly structured, milestone-driven program," said the audit.
"However, the capacity for this type of program management within the Department (of Housing) is also questionable."
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