Number of MOH Development Projects with Undeclared Savings Other Than That Highlighted in FY2025/2026 Auditor-General's Report

27 Mr Chua Kheng Wee Louis asked the Coordinating Minister for Social Policies and Minister for Health in light of the findings by the Auditor-General's Office (a) beyond the audited project, how many other Ministry of Health development projects have undeclared savings; (b) what is the total quantum involved; and (c) whether these undeclared savings have been used to fund items from other projects.

Mr Ong Ye Kung: To provide background for Members, the Auditor-General's Office (AGO) audited the development of the National Cancer Centre Singapore (NCCS), which was approved by the Development Planning Committee (DPC) in 2016. It was found that when major construction tenders closed, the Ministry of Health (MOH) did not declare project savings soon after, which is required under financial rules. It was a process lapse, albeit at a system level. NCCS was completed in 2022.

Savings at the point of tender award arise when the tender price is below budget, and is an early estimate of excess funds. As the project goes on, savings may be deployed for unforeseen uses, which is common for development projects. This includes variations to improve operational efficacy or user experience, adjustments for material price fluctuations post-COVID-19, compliance with new regulatory requirements, and loss and expense claims from contractors.

The adjustments will be within the approved project scope and with the necessary internal approvals. As such, not all the initial savings may be realised. Conversely, there could also be additional savings as the projects progresses, when requirements are simplified or budget set aside for contingencies are not used. What is more important is whether there are actual savings when the project is completed and, if yes, what happened to those monies. For NCCS, the eventual savings was $105 million.

Besides NCCS, there are eleven other development projects where savings were not declared after closing of major tenders. Six projects have been completed and the accounts closed. The initial savings after award of main construction tenders for these projects were $165 million. Upon project completion, actual savings increased to around $436 million due to additional savings realised in other aspects. These funds, together with NCCS' savings, were freed up for the Ministry of Finance's reallocation.

The other five are ongoing projects, with initial savings totalling about $95 million after award of their respective main construction tenders. Similarly, after savings were redeployed for other approved in-project uses, the current estimated savings is about $48 million. MOH is following up on AGO's observation and declaring them. But as I explained earlier, this will likely differ from the final actual savings, by the time the projects are completed and accounts finalised.

I wish to emphasise to Members that where savings were tapped, they were used for works that eventually benefited the public, and these were done in good faith. In the case of NCCS, savings were also used to build a pedestrian bridge to the Mass Rapid Transit station to enhance connectivity for patients and staff, and develop laboratories mainly to produce immunotherapies for cancer patients. These are not cases of funds going missing or being inappropriately channelled to other projects.