Media Release – 14 May 2013

AHPETC / WP’s RESPONSE TO COMPARISONS ON MANAGING AGENT RATES

We refer to the comparisons of Managing Agent (MA) rates cited by Minister Khaw Boon Wan in Parliament on 13 May 2013 during the debate on Town Councils, which were published in various media today.

We are not privy to how the government derived the unit rates, even for Aljunied and Aljunied-Hougang, which differ from our own documents and calculations.  We set out below the agreed MA rates for public perusal.

Comparison between Aljunied TC’s MA rates under PAP and Aljunied-Hougang TC’s MA rates under WP

For the year FY 2011, Aljunied TC was managed by PAP’s MA, CPG Facilities Mgt Pte Ltd (CPG), until August 2011 when they handed over to Aljunied-Hougang TC’s MA, FM Solutions and Services Pte Ltd (FMSS).  Due to the urgency and public interest in working on the handover after the General Election in May 2011, a tender was waived for a one-year contract to FMSS, as we note was also done in Potong Pasir TC for their MA.  The fees charged by FMSS for this one year was the total of two components: for Aljunied, the same rates contracted by CPG for 2011 were used and prorated according to the new electoral boundaries (to include Kaki Bukit Division and exclude the Division now known as Ang Mo Kio-Hougang); for Hougang, which directly hired staff without an MA, the staff costs were included.

FMSS’s Fees (August 2011 to July 2012) = CPG’s rates for ATC (2011) + Hougang SMC TC staff cost

For FY 2012, a tender was called for MA Services for 3 years, and FMSS was the only tenderer.  The MA rate for residential units was $7.01 for 2012, which was about 4% above the rate which CPG had contracted to provide to Aljunied for the same year had they continued as MA.

Table 1 – Comparison Table for MA Rate (Residential Units)

Description CPG – ATC
(FY 12)
$ per unit
FMSS – AHTC
(FY 12)
$ per unit
Percentage Difference
Residential 6.73 7.01 4.16%

In addition, we note that the Project Management Fees of FMSS compared favourably with other Managing Agents as follows:-

Table 2 – Comparison Table for Project Management Fees

Description CPG -ATC
(FY 12)
EM Services – Pasir Ris-Punggol
(FY 12)
FMSS – AHTC
(FY 12)
Project Management 3.5% flat Below $2 million – 4%
Above $2 million – 3.5%
3.5% flat

The rates charged by FMSS for AHTC also included the following which were not provided under the previous administration for Aljunied Town:

(a)    Costing for a significant increase in the number of lifts due to the Lift Upgrading Programme, which would increase the lift testing fees the MA was required to bear in accordance with industry practice.

(b)   FMSS had contracted to run 5 offices, not just the 3 managed by the former administration.  The additional 2 offices are in Hougang SMC and a new office at Kaki Bukit Division to serve residents whose profile included the elderly.  An additional collection point for service and conservancy charges was also provided at Serangoon Division.

(c)    Certain services which used to be contracted out such as IT administration and maintenance was provided by the MA, resulting in savings.

(d)   Additional technical staff to improve service delivery.

The MA rates for the 2nd and 3rd year built in reasonable increases for inflation and staff wages.

Tampines TC’s MA rate for 2012

According to the Minister, Tampines TC’s MA rate for 2012 is $4.99 per property unit.  We understand that there was a change in MA from 2011 to 2012, meaning that it was the first year in Tampines for the incumbent MA, CPG.  Coincidentally, CPG was incumbent in Aljunied TC until 2011, and its unit rate tendered in FY 2010 for Aljunied had been $6.51 (according to the government’s tables).  We do not wish to speculate why a MA would tender in 2012 at a lower rate for MA services than in 2010, given the rising costs.  However, we note that as early as at 2007, another MA, EM Services, had tendered at $5.75 per residential unit for Pasir Ris-Punggol Town.

Table 3 – Tampines TC’s MA rate

Managing Agent FY 2007 FY 2010 FY 2012
EM Services – PRPG $5.75
CPG – ATC $6.51
CPG – Tampines TC $4.99

We can only surmise that the Tampines TC’s MA rate of $4.99 in 2012 which was chosen for comparison was an outlier.

Audit of Award to FMSS

As mentioned in Parliament yesterday, AHTC had commissioned a special audit to evaluate the award of the MA contract to FMSS in 2012.  The audit covered compliance and good governance practices, and noted the steps taken in due diligence to ensure value for money for the Town Council.

SYLVIA LIM
CHAIRMAN
ALJUNIED-HOUGANG-PUNGGOL EAST TOWN COUNCIL AND THE WORKERS’ PARTY

14 May 2013