The terminal building at Argyle International Airport. (AIDC photo)

The views expressed herein are those of the writer and do not represent the opinions or editorial position of I-Witness News. Opinion pieces can be submitted to [email protected]

INTRODUCTION

I write in response to an article entitled “A story worth telling: A review of the AIA” by Herbert A. Samuel, retrieved from your website, 9th September 2014.

My first impression is that this article is at least 6 years late! To borrow a line from a famous movie: “Late is the hour of this presentation”. At this advanced stage of the project, it is akin to someone writing an exam after the answers are revealed. But, perhaps, there is a more obscure purpose for this piece than appears prima facie.

This, notwithstanding, as the Chief Executive Officer of the International Airport Development Company, I am duty bound to respond to the virtual straw man arguments posited in this polemical piece.

After a lengthy regurgitation of points made by the Hon. Prime Minister Ralph Gonsalves in his speech on the Argyle International Airport (AIA) project presented at the Methodist Church Hall on 8th August 2005 (hereinafter referred to as the Hon. Prime Minister’s speech), the author concluded, as follows:

“……despite the prime minister’s confident exposition, the rhetorical edifice (referring here to the Prime Minister’s plans for the construction of the AIA) he had erected was fundamentally flawed and suffered from a number of gaping holes — logical, philosophical and practical.”

The author admonished:

“For a project of this scale and scope, five critical, big-picture aspects should have been considered during the preparatory stages. These are: engineering issues; environmental and social impacts; economics; finance and project management issues.”

“Let us for the moment assume that engineering aspects were adequately dealt with (I believe there are a few engineering issues that raise questions, but those will require a separate article to discuss). An environmental impact study was performed. And Dr. Gonsalves spoke eloquently on the matter of the financing of the undertaking. The critical matters of economics and project management remained — and were essentially ignored.”

As a consequence, the author eschewed the issues of engineering, environment and finance, and dedicated the remainder of his review to those areas that were, apparently to him, most troubling: Economics and Project Management.

THE ECONOMICS DEBATE

In his discourse on the economics of the AIA, Mr. Samuel boldly asserted:

“In point of fact (my underline for emphasis), there had been no economic feasibility analysis performed on the proposed project, so his (meaning Prime Minister Gonsalves) confident statement amounted to little more than speculation.”

The author went on:

“Here was the sleight-of-hand in full display. In the absence of any economic feasibility analysis whatsoever, the proponent (meaning again, Prime Minister Gonsalves) simply assured the nation of its viability.”

Reprimanding, the author continued:

“the minister responsible for the country’s economic development neatly sidestepped the absolute first requirement for a publicly-funded development project in modern times — that there must be an analysis and assessment of the costs and the offsetting benefits of the enterprise.”

And, chiding the Hon. Prime Minister, the author pointed out:

“A project involving the largest single public capital expenditure in the history of a small, relatively poor country was being pushed through without even a rudimentary economic feasibility study.”

Now, is it conceivable that the author did not read the entire Prime Minister’s speech, or was he confounded by the economics discourse, or perhaps, worse yet, was he deliberately attempting to mislead unsuspecting readers?

The fact is, the speech presented by the Hon. Prime Minister on August 8th 2005, from which the author quoted so heavily, contained two full pages of discussion on the economic and technical feasibility studies done on international airport development on mainland St. Vincent. On page 7 of the speech, the Hon. Prime Minister said:

“Before, exploring the central issues regarding the International Airport Project, it is necessary to refer, preliminarily, to a number of studies on international airport development on mainland St. Vincent, which we met when we assumed office at the end of March 2001. I believe that there is hardly any national issue that has been more frequently studied than the international airport. But there was never any follow-up action.”

“I cannot refer here to all the studies undertaken over the past thirty years. It is sufficient for me to mention two of the most recent and probably, most important ones. These are:

(1)       St. Vincent Airport Development, Pre-Investment Study, Inception Report, by Kocks Consult GMBH, 1993; and

(2)       St. Vincent Airport Development, Phase 1, Final Report by Marshall Macklin and Monaghan, 1998.”

“All of the studies generally show a recurring theme of the technical unsuitability and lack of financial and economic viability for the expansion of the E.T. Joshua Airport at Arnos Vale. Equally, the studies have opted for the preference of building a completely new airport at another location. In examining the issue over the years, Consultants have evaluated alternative locations, including Langley Park, Brighton, Diamond, Kitchen, Villa, Buccament and Argyle.”

“The Kocks study of 1993, for example, examined the feasibility of three sites: Arnos Vale, Kitchen, and Argyle. Kocks reported that Argyle was the most economically viable. In a more recent study done by Marshall Macklin and Monaghan (MMM) in 1998, several options were evaluated for expanding Arnos Vale and for a new facility at Argyle. MMM did not evaluate Kitchen, since that site was shown by Kocks to be far too expensive to be economically feasible.”

Continuing on page 8 of the speech, the Hon. Prime Minister explained:

“The Report of the international consultants, Marshall Macklin Monaghan (MMM), addressed the issue of the lack of justification in economic and financial terms of an expansion of the E.T. Joshua Airport as follows:

“On a financial and economic basis, airport expansion is not justified other than an investment in operational improvements at E.T. Joshua Airport. However, should it be decided to expand facilities to allow direct jet access from the southern United States ——- -the high cost runway expansion at E.T. Joshua indicates that a new facility at Argyle is a better alternative.”

The road to the terminal building being developed. (AIDC photo)
The road to the terminal building being developed. (AIDC photo)

This discussion on the economics of developing an international airport on mainland St Vincent, presented on pages 7 and 8 of the Hon. Prime Minister’s speech, was also informed by an updated report prepared in 2005 by Marshall Macklin and Monaghan (MMM), the Canadian consulting firm referred to earlier. They were again retained in 2005 by the government to update the cost, and other matters, contained in their 1998 report entitled “St. Vincent Airport Development, Phase 1, Final Report”. For public information, the Hon. Prime Minister’s speech is made available on IADC’s website.

If, for whatever reason, the author chose to ignore the economic discussion in the same speech from which he quoted so heavily, in researching for his lengthy paper, surely, he could have inquired into the extant studies to which the speech referred. Can anyone be considered a serious professional ignoring publicly available information and making reckless and bold assertions that contradict factual information in the public sphere?

What the author could not be faulted for knowing is that, since the AIA project was launched in August 2005, the Cuban authorities have been assisting the Government of St Vincent and the Grenadines with a number of technical studies on the AIA. Indeed, there are numerous studies already done by IADC, on a wide range of topics relating to the construction and operation of the AIA. These include studies on runway alignment and design, geotechnical, pavement designs, hydrology, wind, environmental conservation and wild life management, to mention a few. All of these studies are part of a large and growing library kept onsite at IADC.

What the author probably also does not know is that in February 2009 the Caricom Development Fund (CDF) also commissioned an economic and technical feasibility study on the AIA project, in response to our government’s request for financing of US$16.7 million (EC$45.1 million) towards the Runway, Apron and Taxiway component of the AIA. Though I am not at liberty to make this study publicly available on our website, the existence of the study can be confirmed by the CDF.

As I indicated earlier, there were several earlier economic and technical studies on airport development on mainland, St. Vincent. However, as a responsible funding agency, the CDF contracted a consulting firm, Antigua Profiles Inc., to undertake its own economic and technical evaluation of the AIA, in consideration of our government’s request for financial support. The CDF’s terms of reference to the consultants were, among other things, to identify and quantify, to the extent possible, the main externalities that would arise from the implementation and operation of the AIA project. This evaluation/review was completed and presented to the CDF in May 2010.

In their report, the Antigua Profiles Inc.consultants made several recommendations to the CDF. Two of the most important are presented below:

“Recommendation # 15: The AIA project is deserving of financial support from the CARICOM Development Fund. It is recommended that the structure of funding by CDF should consider a split in funds in a grant/loan proportion of 50/50 or 75/25. The presentation of an updated Financial Plan should be one of the conditions precedent to the disbursement of CDF funds.”

“Recommendation # 16: Since under present guidelines CDF is unlikely to fully fund the Runway, Apron, and Taxiway component of the project, the CDF may wish, subject to its mandate and operating guidelines and the concurrence of Government of SVG (Gov. SVG), provide moral and technical support to Gov. SVG by assisting it in identifying other funding sources that provide concessional financing for infrastructural projects.”

The CDF Board of Directors accepted the Consultant’s report and recommendations and at their Board of Directors meeting held in September 2010, they approved a grant and loan of US$ 4.2 million to the government of St. Vincent and the Grenadines (Gov. SVG) for the AIA project. These funds were earmarked to procure a stone crusher, base laying equipment, and airfield lighting equipment for the AIA.

More recently, in December 2012, in consideration of a second request for financial support, the CDF Board of Directors approved another loan to the Gov. SVG in the amount of US$3.262 million for the AIA project. These funds were approved for the purchase of supporting equipment for the asphalt and concrete pavement works, which were to be done in-house as a cost saving measure for the project.

Mr. Samuel’s writings on this AIA subject cannot stand objective and informed scrutiny. Serious researchers who do not have full command of extant evidence or are otherwise insufficiently informed tend to couch their writings in ways that make it difficult for critics to easily knock them down as virtual straw men. It may save Mr. Samuel future embarrassment, if he heeds this fundamental advice from Research Methods 101.

But, truly, if the author wishes for us to have a public and substantive debate on the economics of the AIA, an issue on which I have written extensively in a column in the Searchlight newspaper, I beg of him to please set up a public forum and invite me, even on the morning of the discussion. I will be sure to attend, just as I am, God willing. Or, if he prefers, we can set up a forum and give him ample time (a year or more, if he needs it) to prepare for the debate. Please let me know if you are game, Sir!

Workers involved in concrete pavement works at Argyle International Airport. (AIDC photo)
Workers involved in concrete pavement works at Argyle International Airport. (AIDC photo)

PROJECT MANAGEMENT ISSUES

The author also lectured us on the importance of Project Management of an important project such as the AIA, declaring confidently that the AIA is not a project. Tongue in cheek, I am inclined to ask, why does it matter what it is called, providing it is done cost efficiently, to international standards, and within the shortest possible time? Does every successful enterprise have to follow the staid project form with which the author is familiar? And, at this stage, is a discourse on form critically important considering the substantial actual project outcomes to date?

Much is put in store by this author on definitional matters. He argued:

“….. if you are building something big and expensive and you don’t have the money needed to build it already set aside, you cannot have an actual schedule for building it. You can have an estimate of how long it should take to build (if you had the money) — but, unfortunately, that’s not the same thing.”

My my my! So, a schedule with dates for achieving project outcomes, and an estimate with dates for project outcomes are, unfortunately, not the same thing. To what end do we delve into these minutiae, posed ostensibly for serious consideration?

But, here is what the Hon. Prime Minister Gonsalves said in his 8th August 2005 speech about completion date for the AIA.

“The government of St. Vincent and the Grenadines has the reasonable expectation that the International Airport Project will be complete by 2011, some six or so years away.”

This statement clearly reflects the Hon. Prime Minister’s view of what his government could reasonably expect, if the plans he outlined in his speech were to fall in place.

But the author continued to lament:

“From the very beginning, the undertaking to build the biggest infrastructure in the country’s history was poorly planned and inadequately organised— and did not even qualify to properly be called a project.”

And perturbed, he noted:

“what is arguably the most critical aspect of the entire undertaking is being executed by a construction team of unproven capability, comprised of in-house personnel assisted by some resources from Cuba. Think of it as the government’s public works department with some outside help. On a large, complex undertaking, the outcomes of such grossly inadequate arrangements are entirely predictable — and are such as we are witnessing now: substandard work, significant schedule delays and the corresponding cost overruns.”

Moreover, he went on:

“needless to say, the manager of any large and complex engineering project must be a credible professional, with suitable engineering and construction expertise and experience for the job at hand.”

These admonishments and apparent sound advice could lead anyone to think two things. First, a project that is as poorly planned, as the author asserted, would never get off the ground. And if it did get off the ground, it could never be done properly, and must incur significant time and cost overruns. Secondly, one could be led to think that the author is an expert project manager who could save SVG from the pitfalls to which he alluded. These are the logical extensions of his assertions. But factually, the reality in both cases is quite different. Perplexed therefore, I remain, about the timing of this article.

Comparative project management experience

Permit me to talk a little about project management expertise by reviewing two local undertakings: The Lowmans Bay Power Plant, to which the author referred in his piece, and the AIA, which he asserted, and to sum up his view, is nothing short of a poorly organised and implemented fiasco.

To build the Lowmans Bay diesel power station, Vinlec entered into a construction contract with a firm called Man Diesel Canada. A UK based firm, PB Power Ltd, was retained as Project Manager/Consulting Engineer. As an engineer at Vinlec, Mr. Herbert Samuel was Project Coordinator (or loosely called Project Manager), liaising between Vinlec and PB Power. This US$23 million lump sum contract, signed in December 2004, was fully funded by the Caribbean Development Bank (CDB) and the European Investment Bank (EIB). The project was scheduled to be delivered to Vinlec by January 2006. In fact, the project was delivered to Vinlec in February 2007.

Mr. Samuel, the Project Manager, is by training an industrial engineer. One website claims that he is the founder of a company, Green Island Inc. and a regional Consultant. Apart from winning an international award for a website and an App that he created to help households save energy, there are no other credits associated with his current and consulting work. However, the site also states that prior to establishing Green Island Inc., he was the owner’s project manager for a new US$23m brown field diesel power station complex on St. Vincent, implemented by St. Vincent Electricity Services Ltd (Vinlec); this project was completed in 2007. Mr. Samuel also referred to this project in his piece. He wrote:

“(For example, when the first phase of VINLEC’s Lowmans Bay power station project was built during 2004-2007, the project contract was documented in a set of volumes that ran to hundreds of pages.)”

Let’s see now. A comparatively small project (US$23 million), with an experienced Canadian contractor, an experienced UK project management company, and a local Project Manager, “with suitable engineering and construction expertise and experience for the job at hand” (quoting the author), and full funding, was scheduled (to use the author’s term) to be completed and handed over within 13 months. The fact is that it took 26 months to be completed and handed over, amounting to 100 percent time over run.

Talk about schedule and time over run!

Is it not interesting that the author only referred superficially to the number of pages in the Lowmans Bay project contract document, but never once commented adversely on how long that project took to complete? And, why did he not refer to his astute management of the Lowmans Bay project, as an example to us at IADC. Or was it, through force of habit, he was really speaking about the costly time over runs on the small Lowmans Bay power station project when he said:

“Clearly, this matter of an ever-retreating project completion date is problematic.”

This sounds like a statement borne out of frustration, and perhaps was rehearsed from month to month, as the Lowmans Bay Power Plant missed one deadline after another.

The author’s experience as Project Manager at Lowmans Bay does not epitomise expert project management. That is probably why his epistle avoided discussing that experience as a Project Manager. Behold, with full funding and with experienced contractor and project managers, this project incurred 100 percent time over runs. Yet, the author chalks up this stint on his website as one of his significant accomplishments. But, is this the stuff about which anyone writes home to mother?

Now, let us review comparatively and factually, IADC’s project management experience. The AIA project is divided into four main components for construction: Buildings, Earthworks, pavement works, and drains and other civil works. For construction of buildings, IADC invited competitive bidding for these construction contracts. After competitive bidding, CECI Engineering Consultants Inc. of Taiwan won the contract valued at US$3.9 million to design and supervise work on the Passenger Terminal Building and Electrical Substation. Similarly, the contract for construction of these facilities was won by another Taiwanese firm, Overseas Engineering and Construction Company (OECC), at a negotiated value of US$26.5 million. This 28 month construction contract saw work beginning on August 23rd 2011 with scheduled completion date set for 23rd December 2013. As is well known now, the terminal building was substantially completed and handed over to IADC on time and within budget on 30th December 2013.

In December 2013, IADC again entered into contracts with two private firms, after a competitive bidding process. These contracts were awarded for the construction of the control tower base and the Aircraft Rescue and Fire Fighting Station, both of which were designed by IADC’s in-house staff. These contracts have durations of 6 and 8 months, and were scheduled to be completed by 27th July and 27th September 2014, respectively. However, after considerations of adverse weather and some variations to the designs, IADC extended the dates for both contracts to 31st October 2014, by which time IADC expects both buildings to be completed and handed over.

IADC’s project management performance on these buildings, for which full funding was provided—either from IADC’s resources, or as in the case of the Terminal Building, from Taiwan—contrasts sharply with the performance of the Project Managers on the Lowmans Bay project. The terminal building was delivered on time, and although there are time extensions to the other two buildings, the additional time is not substantial.

To execute the work in-house for the other three components, IADC assembled three teams of highly trained and experienced Cuban engineers, technicians and operators, supported by their trained and experienced Vincentian counterparts. These technical teams are supported by departments responsible for administration, finance, communications, human resources, and quality control, done by our in-house Laboratory.

Table 1: IADC’s Staffing

AIA Table

But, the author took umbrage with these organisational arrangements. He argued:

“…the Argyle airport, the largest ever construction undertaking in our history, has no contractor and has no binding contract. And the runway, originally estimated to cost EC$41 million (far more than any highway project implemented in this country) and which must be constructed to far higher engineering standards than any highway, is not being constructed by an experienced contractor.”

And continued:

“…. the prime minister’s stylish eloquence was the equivalent of Camus’ sheer silk. The eczema it could no longer hide, was the fact that the entire enterprise had instead metamorphosed into two overlapping disasters: one being a massive, costly project-management bungle that was costing the country tens (if not hundreds) of millions of dollars in lost time and cost overruns — and the second; a slow-motion economic disaster in progress. Now, three years after the undertaking should (according to the original presentation) have been completed, the country is incurring enormous amounts of debt, to the tune of hundreds of millions of dollars, to plough funds into an undertaking that (a) we were told would not incur any significant long-term debt, (b) the likely economic benefits of which are unknown, to say the least, (c) has no known, credible completion schedule and (d) is now approaching the status of a 100 per cent cost overrun.” (My highlights are for emphasis)

As an aside, it is clear that this author made many capricious statements that are easily refutable. For entertainment purposes, these statements are probably appropriate. But for serious people, the statements are wholly without merit, are devoid of evidentiary support, and stand as virtual straw-men to be vanquished by the smallest shred of evidence. Wanting is greater intellectual rigour in this polemical piece!

Let me address the points highlighted in his quotation. First, unlike what the author nonchalantly asserted, the fact is, the recent resurfacing work on the Windward highway costs in excess of EC$100 million. This is public information that can be easily verified with the Ministry of Works.

Secondly, the author argued that the airport project is three years past its original proposed completion date. But, is it not the same author who argued earlier that in the absence of full funding, the AIA cannot be considered a project, and therefore cannot have an actual schedule for building it? So why the harangue now on completion dates? Is this not just sheer disputatious inconsistency?

But, let us get back to the other substantive matters.

Discharging the AIA debts

The author argued that the country was told it would not incur significant debt for the AIA. Obviously, without a good grasp of the totality of the Hon. Prime Minister’s speech, he was confounded by how the debt issue would be resolved. Here again, his comment is at variance with his own stated adoration of the Prime Minister’s creative financing plan:

“Dr. Gonsalves spoke eloquently on the matter of the financing of the undertaking.”

But let me expound on the Hon. Prime Minister’s financing plan to show how the plan intends to address the debts raised for the AIA.

As the Hon. Prime Minister said on Page 22 of his August 8th 2005 speech on the AIA:

“Part of this aggregate bundle of 831.3 acres of state-owned lands [that is, lands that were to be transferred to the IADC] are the lands, and buildings thereon, at the E. T. Joshua Airport and at the Public Works Department at Arnos Vale, which total 63.4 acres of land. These lands would not be sold, but rather would be capitalised on the books of the IADC, and used as government’s initial capital to attract other investors for the development of Arnos Vale into a commercial centre, in accordance with a Cabinet-approved Master Plan.”

The new AIA Project and the Arnos Vale Commercial Centre development are therefore two projects that are inextricably linked. The policy decision to invest in the new AIA was tied to the decision to develop Arnos Vale into a commercial centre: The airport at Argyle is a replacement of the airport at Arnos Vale. And in transferring airport operations from Arnos Vale to Argyle, the government will free up 63.4 acres of land that it intends to monetize as its initial capital stake in the Arnos Vale development.

Accept it or not, this is another brilliant aspect and an economically beneficial part of the plan to build the AIA. The Master Plan for Arnos Vale, on which a Cabinet appointed committee is now working, is likely to include hotels, residential villas, condominiums, restaurants, shopping malls and business centres, entertainment and recreational complexes and possibly, a new hospital. Given its location and the demand for commercial land in this area, the conversion of Arnos Vale is likely to become a beautiful extension of our Capital, Kingstown

The monetary gains accruing to the government and the country will be the value of the 63.4 acres of lands once airport operations are transferred. With a Cabinet Approved Master Plan, and with the construction equipment at AIA becoming available to the government, government can pursue a cost effective development of the roads and drains at the Arnos Vale Commercial Centre.

Some professionals estimate that the net market value of the developed lands at Arnos Vale could be in the vicinity of EC$500 million. Whatever is the value, part of the funds raised from government’s stake in the Arnos Vale development can be applied towards discharging debts contracted for AIA and for undertaking other socially desirable projects throughout St. Vincent and the Grenadines. The Arnos Vale development is clearly the next big thing for our blessed country!

Cost over runs or cost containment?

The control tower under construction at Argyle International Airport. (AIDC photo)
The control tower under construction at Argyle International Airport. (AIDC photo)

Finally, the author argued that the AIA is approaching 100 percent cost over runs! Now, where did the author get this kind of information? Where are his facts to support these bold, cavalier and wholly inaccurate statements?

As I wrote in an earlier article, when the Hon. Prime Minister announced his government’s plan to construct AIA, the estimated cost then was EC$480.6 million (or US$178 million). This estimate was provided in 2005 by Marshall Macklin and Monaghan (MMM), the Canadian consulting firm referred to earlier. Based on MMM’s cost analysis, the AIA was to consume about 154 hectares of land, with a paved runway 2,745 metres (9,000 feet) long and 45 metres (150 feet) wide, and the passenger terminal and other buildings with a total of 5,000 square metres (53,819 square feet) of floor space.

However, the Argyle Airport that is being constructed differs in some material ways from the airport project that the MMM Consultants assumed will be built and on which their estimates were based. Moreover, the MMM consultants used only “rough” quantities in their cost estimates and were therefore unable to give close or good estimates of the cost of the airport project. Hence, in December 2007, when IADC received from Cuba the final designs for the airfield, IADC’s engineers were in a better position to calculate more accurately the cost of constructing the airfield, although IADC still relied upon the estimates provided by MMM for the other components of the project.

Hence, in late 2008, IADC arrived at a revised total cost of EC$589 million (or US$216 million) for the completed AIA project. Since then, however, this total cost has increased to EC$700 million (or US$260 million), due mainly to the higher cost of construction of the Terminal Building and Other Landside Facilities, additional lands and the cost of acquiring those lands, additional cost for the earthworks to prepare the additional lands acquired, and general cost escalation over time.

One of the significant areas of departure between the actual cost of the airport project and the estimates made by MMM is the cost of the terminal buildings and other landside facilities. In their cost estimates, the MMM consultants assumed that all the buildings at the Argyle Airport, including the passenger terminal building, will have, in total, 5,000 square metres (53,819 square feet) of floor space, and they estimated these buildings to cost US$ 10.5 million (EC$ 28.3 million).

However, the passenger terminal building only, as constructed at Argyle, has 12,540 square metres (135,000 square feet) of floor space. This is, of course, two and a half times the size of all of the buildings contained in the MMM estimates. In fact, under contract with OECC, the passenger terminal building was built at a cost of US$28 million (EC$ 75.6 million), which again is over two and a half times the cost estimated by MMM.

To arrive at the total square footage of all the buildings at the airport and their cost, we have to include the Control Tower, Aircraft Rescue and Fire Fighting Station and the Cargo Terminal buildings. As designed, these three facilities have a total floor area of 2,591 square metres (27,890 square feet) and cost US$ 4.8 million (EC$ 13 million).

Therefore, in summary, the MMM estimated in 2005 that all the buildings will have 5,000 square metres (53,819 square feet) of floor space and will cost US$ 10.5 million (EC$ 28.3 million). In reality, however, the buildings at Argyle have, altogether, 15,131 square metres (162,890 square feet) of floor space and will cost altogether, US$ 32.8 million (EC$ 88.6 million). This is US$ 22.3 million (EC$ 60.3 million) more than that estimated by MMM, or in other words, the actual cost is more than 3 times that estimated by MMM.

For the other components of the project, there are also significant differences between what IADC is actually spending on the Argyle Airport project and the early cost estimates made by the MMM consultants.   For example, MMM estimated that IADC will incur US$ 22 million (EC$ 59 million) for the land and buildings to be acquired for the airport. In fact, the lands and buildings acquired at Argyle for the airport cost US$ 52 million (EC$ 140 million). Here again, the actual cost incurred for the acquisition of the site is nearly two and a half times the estimates provided by the MMM consultants.

While these are only two components of the cost of the airport project (i.e. the buildings and lands acquired), they, nevertheless, help us understand why the Argyle Airport project is now estimated to cost US$ 260 million, compared to the US$ 178 million previously estimated by the MMM consultants in 2005.

However, even though the estimated cost of the airport project is US$ 260 million (EC$ 700 million), given the amount of in-kind assistance the government has received over the years from friendly countries towards the airport project, the actual expenditure to complete construction works on the airport project and to retrofit it with equipment for operation, is estimated to be only US$ 204 million (EC$ 550 million). This estimated expenditure is about 78 percent of the total estimated construction cost.

At the end of June 2014, the actual amount spent on the airport project totalled US$ 146 million (EC$ 394 million). IADC expects to spend a further US$ 58 million (EC$ 156 million) to complete construction works on the project and to purchase the remaining special equipment and furniture to have the AIA operational. This will bring the total actually spent on the Argyle Airport to US$ 204 million or EC$550 million, to complete the airport and to make it operational by mid 2015.

Government has already secured funding commitments, through a combination of land sales, concessionary and commercial bank loans, in the amount of US$ 103.3 million needed to complete construction works on the airport project and to purchase the special equipment and furniture to retrofit the airport for operation. To date, government has already received US$ 57.8 million of these approved funds, and the remaining US$ 45.5 million is available to be drawn down for the airport project.

One can generously assume that the author’s motive is to educate the public. However, were we to assume the author is intelligent, obfuscation of easily verifiable facts leads one to an inquiry into the author’s motive, as both positions cannot logically coexist.

An intelligent person should not continually proffer obscure and baseless analyses.

IADC is a professional team!

A quality control technician at work at the IADC's lab. (AIDC photo)
A quality control technician at work at the IADC’s lab. (AIDC photo)

The author’s apparent concern that there is no contractor is also without merit. The author quoted earlier the Hon. Prime Minister’s statement that the cost of the airport was too big for the country to borrow. And he hailed the Prime Minister’s approach to seeking help, in cash or in-kind, from members of the coalition of the willing.

He wrote:

“Dr Gonsalves correctly concluded, financing the project by borrowing was out of the question; “creative and innovative” ways must be found.”

And the Hon. Prime Minister Gonsalves himself said:

“In all our economic and fiscal circumstances we have had to put together a package that does not require us to increase significantly our long term debt stock.   Achieving this is nothing short of remarkable.”

As the author further explained, based on Prime Minister Gonsalves’s speech:

“The creative financing plan had two components: money would be raised from the sale of state-owned lands (having an estimated value “in excess of US$100 million”) and we would get money and in-kind support from a group of friendly governments, which were termed the coalition of the willing, comprised of Cuba, Venezuela, Canada, Mexico, Taiwan, and Trinidad & Tobago.”

“Responsibilities had been allocated: Cuba would design the overall master-plan of the project and would complete the earthworks component in partnership with Venezuela. This component, which amounted to almost 40 per cent of the total capital cost, would be “substantially a grant”; Cuban manpower would perform the work and Venezuelan oil money would pay the bills. “Both Cuba and Venezuela have given their firm commitments to assisting us with the international airport” we were assured.”

In supporting the financing plan, the author clearly recognised our country’s inability to borrow to build the airport and acknowledged the need for aid from friendly countries in cash and in-kind. Does it stretch ones imagination therefore to think that the form in which we get the in-kind assistance from our friendly countries may not neatly fit into the author’s preferred staid project management approach? Is that a vexatious issue?

How did the author move from supporting the idea of in-kind assistance from friendly countries to decrying the participation of experienced Cuban engineers, technicians and operators in the construction of the airport?

I wonder if the author is prepared to say that the US$10 million worth of new equipment donated by the government of Venezuela to the Gov. SVG in 2008 is not contributing to lowering the cost of construction of the AIA? These equipment have been used by Cuban and Vincentian operators in executing the earthworks since August 2008.

And will the author reconsider the disdain poured on the 91 experienced Cuban engineers, technicians, and operators, as well as their 361 Vincentian counterparts who are all engaged in harmonious construction of the beautiful AIA?

Let us be clear. Cuban engineers have built 14 airports in their own country and have been contracted to build airports in Latin and Central American, Caribbean and African countries. And in the way IADC has arranged the work, the country has reaped significant cost savings, which allow us to get the airport at a relatively low cost.

It hurts not to give a few insights into how IADC makes decisions about whether to do construction work in-house or to hire private contractors. A good case in point is the stone crushing. When IADC was faced with the decision to acquire aggregate for pavement works, it evaluated the cost of crushing the stones itself compared to outsourcing the work to private firms. Tenders were therefore invited from two local firms to produce a certain amount and variety of aggregate. The quotations received were only marginally different and were in the vicinity of EC$10.2 million.

IADC also analysed the cost of purchasing a stone crusher and maintaining and running the crusher to produce in-house the same amount of aggregate. The analysis showed that IADC could save over EC$5 million producing the aggregate itself. Hence, that was the decision taken. Furthermore, at the end of the airport project, IADC will still own the stone crusher, which it can transfer to central government or to another designated public agency. In a similar way, concrete and asphalt pavement works are other good examples of IADC generating substantial cost savings for the country by doing the work in-house, with the help of highly skilled Cuban workers.

Are we to ignore the huge cost savings and the country’s best interest and simply hire contractors so that the AIA project can be classified by some as “a project”?

IT IS A BEAUTIFUL STORY WORTH TELLING

Perfection on this side of paradise is sought, but will never be attained. IADC, as project manager is doing all in its power to deliver to the Government and People of St. Vincent and the Grenadines an international airport at Argyle, which would be substantially complete by December 2014, and would, God’s willing, become operational by mid 2015. The AIA is being built to international standards, and at every stage, where necessary, we are advised by the Eastern Caribbean Civil Aviation Authority, the regulator for civil aviation matters for the Eastern Caribbean states.

The building of our airport is not just a dream come through; it is an infrastructure that has the potential to lead the transformation of our blessed country. It will also bestow on us all a greater sense of pride, an invaluable attribute for the development of our noble people.

In the spirit of Chatoyer-Che-Chavez, we will soldier on. And in the spirit, and in honour, of our fallen General, Jeffrey Eardley Cato, we will finish this job that we started.

For a gallant spirit, there can never be defeat!

Rudy Matthias, Chairman/CEO,  International Airport Development Co. Ltd.

16th September 2014.

The views expressed herein are those of the writer and do not necessarily represent the opinions or editorial position of iWitness News. Opinion pieces can be submitted to [email protected].

17 replies on “It’s a beautiful story worth telling – a response to Mr. Herbert A. Samuel”

  1. Vincentian there is no other way for Mr Gonsalves to build this airport.He need all the highly skilled workers help that he can get from other countrires.

    At low or no cost , to keep us from substantial dept.Stop being selfish think about others who has to stay in barbados ,Trinidad and Porto Rico for 8 to 12 long hours waiting to get to St Vincent.Had anyone from St Vincent built an international airpot before? That’s why the people who built international airport before came to help us.Vincentian please put politics a side and be impugn . Learn to be grateful for what we have or God will cast his stone upon us.Thanks

  2. This reply was not unexpected; what is surprising is how intellectually weak, ad hominem, and obfuscatory it is. I will elaborate in due course.

  3. Clement Percival says:

    Haz, see what I told you? It has started. This is a very crazy confused response by its authors. I say authors very deliberately, because three styles are evident here. Ralph Gonsalves, Cammillo Gonsavles, and Rudy Mathias. The response sets up several strawmen itself then vigorously knocks them down, shouting “victory over the imbecilic Haz!” Well! Well! As a matter of fact, this is more than knocking down strawmen. it is much more like Don Quixote tilting at windmills. Despite struggling mightily to refute the the very real observation regarding the absence of financial and economic assessment, there is no information advanced about any financial or economic analysis. What are the numbers that on which that analysis, if there one, would have been based. What ratios were used, and what were the outcomes? What are future streams of income? and so on… I could go on and on, with respect to each part of the response, but enough said. The efforts are continuing to pull wool over the eyes of Vincentians, but you know what? At the end of the day the accounts will become due in some form or other. We will see the real story then, only it might be too late. The Mountain has Struggled Mightily and has Brought Forth … a Mouse!

  4. Good info and analysis, dealt with, and most importantly took apart the bogus arguments put forward in the article by Mr. Samuel.

    1. Clement Percival says:

      Are you unable to see that all this response has done is to flail ineffectually at the edges of the points made by Mr. Samuel? Surely you cannot seriously think that this has ” taken apart” what was said by Mr. Samuel. I will use just one example. Where are the numbers associated with the financial and economic assessment? None of the studies quoted could have done that, as they simply did not have any reliable data they could have worked with at the time the studies were done. So a major, very sizable investment was undertaken that sholu show future returns, and there are no numbers to support this? That is how a serious investment policy decision is made? One that could compromise the future financial profile of the country?

      1. Mr. Matthias open the article by stating and I quote “My first impression is that this article is at least 6 years late!. To borrow a line from a famous movie: “Late is the hour of this presentation” end of quote. That sums up a lot of the ??? we see here. Additionally, he give details with regards to expenditure so far and projections based on what is remains to be completed of the project. There are those who have been and will forever be against the project…remember It went from being a phantom, to one costing a billion, to being completed in 2020 , now about financial and economic assessment. This Airport Story so far is and will go down in the history of SVG as a beautiful story, indeed, worth telling.

      2. Clement Percival says:

        Sorry. Just as Mr. Mathias did,in his purported response to Mr. Samuel, you did not address the central issue I placed before you, and trailed off into irrelevancies and, to use one of your master Ralph Gonsalves favourite words, polemics. So I again ask. Where are the appropriate numbers and analysis, that should be a part of such a massive undertaking? This has nothing to do with being for or against. It has to do with basic commonsense. There will be costs downstream. How will these be managed? Or is this of no importance? Are you saying, ” Seek ye first the Airport Kingdom, and be not bothered by how you will keep it?” I really don’t think that for something like this, hope and political faith is sufficient, although it may be so for you and others of your ilk. Sober and clear thinking is what is needed. Twist it however you want, dress it up however you can, paint whatever colors you may, the truth is that the story is simply NOT BEAUTIFUL

  5. Talk of building in 2005 but relying on studies of 1993 and 1998. “in February 2009 the Caricom Development Fund (CDF) also commissioned an economic and technical feasibility study on the AIA project, in response to our government’s request for financing of US$16.7 million (EC$45.1 million) towards the Runway, Apron and Taxiway component of the AIA”. Here is Matthias, in response/rebuttal to Haz, confirming points that Haz made, no gov’t or AIA studies and no money . Plans announced in 2005 but only quoting CDF feasibility study of 2009, 4yrs later. “as a responsible funding agency, the CDF contracted a consulting firm, Antigua Profiles Inc., to undertake its own economic and technical evaluation of the AIA, in consideration of our government’s request for financial support. The CDF’s terms of reference to the consultants were, among other things, “to identify and quantify, to the extent possible, the main externalities that would arise from the implementation and operation of the AIA project”. This evaluation/review was completed and presented to the CDF in May 2010.” Again, neither AIA or gov’t can provide a lending agency with their own economic or technical evaluations and Matthias can only quote one of 2010, 5yrs after plans were announced. “Recommendation # 16: Since under present guidelines CDF is unlikely to fully fund the Runway, Apron, and Taxiway component of the project, the CDF may wish, subject to its mandate and operating guidelines and the concurrence of Government of SVG (Gov. SVG), provide moral and technical support to Gov. SVG by assisting it in identifying other funding sources that provide concessional financing for infrastructural projects.” Here is Matthias again proving Haz was so correct. A recommendation AIA got in 2010, 5yrs after, the CDF is saying they can’t fully fund these things and the gov’t of SVG is begging CDF to help them find other source of funds.

  6. Vincy 2 de bone says:

    Come on Rudy show me something that has disproved anything that HAZ has said. Dont blame Haz if the project was started out as a national one instead of the political HOAX that it still is perhaps we might not have been responding to HAZ. Ah sorry for your party because they CANNOT tell anyone when this suck me well is going to finish and ah feel sorry for the NDP too because if they were to say the airport is boo your boss will then jump on them saying that they dont support airport. But really, support what? Can u support something where the movers keep hiding their title deed and their development plans so to speak, from us?

  7. Well said Dr MATTHIAS these people do not want anything good for our country let them talk can’t stop us now AH PROGRESS we say.

  8. My problem is that the airport is based on lies and evil. But its a nice try Ralph in authoring this for Doody Roody.

    Doody tell us about your land investment company that you started to coincide with the starting of the airport at Argyle. Tell us if that company bought land and took options on land close by the airport, to resell at big profits because the airport being there made land values jump. Tell us!

    By the way I have some documents including company registration documents that show you and your wife as directors.

    I am writing an opinion that you will all be able to read, an expose of how some 60 people, still in 2014 have never been paid for their land at Argyle, some have waited seven years. I will ask the question, is it IADC company policy, SVG government policy, or ULP party policy not to pay the people for their lands, or is it a simple command from the Prime Minister. We need to know who is robbing the people of their constitutional right to proper, fair, and prompt payment for their land, which some now say has been stolen from them.

  9. Hello CEO/AIA,

    Wanted to comment on your brilliant to Mr Herbert A. Samuel and want to declare here that I don’t know either of you. Wished I had commented at the time your response came out since there are some points that were so clear in my mind. Nonetheless, I’ll try and see if I can do justice in my comments on your piece. Got to declare that I read all of it and I can also say without prejudice I enjoyed all of what was said unlike Mr Samuel’s piece that turned me off half way through, because I picked up what seems malicious and a hidden agenda more obvious. More so, it was highly academic and intellectual. Undoubtedly, others would agree with Mr Samuel as Amory Ashley comments above.

    In addition to the enjoyment reading it, I found your piece had no abuse or set out to castigate; or making personal attacks as well as making cheap politics out of one of the biggest projects undertaken in the region. Can’t make any assertion whether the Argyle Inter/al Airport is economically feasible or not or the ins and outs of the management, but two comments I can certainly make: a) tell that to Antigua, St Kitts, St Lucia and other similar geographical size and economy. b) Some comments I’ve heard and read is why not have the tourism and hospitality infrastructure in before building an Inter/al airport, but one can argue the other way. Six of one, half a doz the other, or further so, putting the horse before the cart; and here is the major point, the private sector would not take on a major project as this nor will they build up the hospitality and tourism infrastructure to match other Caribbean islands and if they do; it would take decades to achieve, by then the AIA would cost ten times that much of current expenditure. So I see it sensible that the public sector as in the current gov’t should do so. And I’m not even arguing the positive message this sends to the SVG society and psyche. I’m sure it could and should bring long term benefits if managed properly.

    Lastly, three things I must end with 1) cost, not meeting deadline, home grown professional. 1. Building an international airport is not only a costly project. Even an extension cost hundreds of thousands. In the UK, Heathrow terminal 5 cost well over a billion pound; adding a new runway at Heathrow or Gatwick is going to cost billions; and Boris island airport was ruled out on the grounds of cost alone – and this is one of the richest country in the world. 2. I would have been pleasantly surprised if a project that size that has never been undertaken meets it’s completed date and there are countless number of projects around the globe that experience similar difficulties to the AiA, and guest what? they use so-called trained and qualified/experience professionals. 3) Nothing reviles me more than when our own people and arm chair critics/know how believe that professionals etc perse have to be outsiders since we are not capable of producing them. This is buried in our psyche implanted by colonialism. One of my past workplace who were run by older ‘West Indians’ overlook their in-house employees in favour of the outside so-called specialists. Obviously a colonial hangover

    Here I am, living in London who’d be a proud. Vincy when the first Jet touches down at the AIA. You’ve done a brilliant job like a Surgeon with a scalpel dissecting Mr Samuel diatribe. You are doing a good job, well done.

  10. I have read the complete text of Dr. Matthias’ response to Mr. Samuel. It is a well reasoned, well supported argument and meets the rigorous standards for argumentative discourse.

    With such a momentous project underway in SVG, it seems to me that anyone with a love for country, would be careful to make sure that his statements vis-a-vis the Argyle International Airport, serve one and only one purpose — that is to foster national consensus as to the merits of this effort to improve the lives of a people. It is well known that any effort large or small will find critical voices. These voices are needed and necessary to hold leaders accountable. What is not needed are those voices that serve only to discourage, criticize for its own sake, and to exhibit one’s presumed superior knowledge.

    Let us hope that the people of SVG will expend their energies in finding creative ways in which they can capitalize on the enormous economic opportunities that the completion of the Argyle International Airport will present. Otherwise, they will find themselves standing on the outside while other Caribbean people come in an reap the benefits.

    The simplest thing that could be done right now is for those with a piece of land to begin to consider what type of fruits, vegetables, and “ground provisions” they could export. Here in New York, I pay $2.99 for a pound of sweet potatoes from Malasia and Korea!!

    Come on my people. Don’t get sidetracked by trifles. Get yourself in the game.

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