The Department of Public Works and Highways - Unified Project Management Office (DPWH-UPMO) Operations is now ready for the transition to new budgeting scheme as both houses of Congress has already ratified during the bicameral conference committee the 2019 National Budget Bill but rejected the shift to cash-based budget system for this fiscal year.
Under the leadership of DPWH Secretary Mark A. Villar and Undersecretary for UPMO Operations and Technical Services Emil K. Sadain, officials of the Department of Budget and Management (DBM) and Finance (DOF) were invited on Friday, February 8, 2019 at the DPWH Central Office for a briefing among UPMO Project Directors and Managers, Engineers and Support Staff on the proposed shift from obligation-based to cash-based budget system.
In her briefing, DBM Undersecretary Laura B. Pascua said that cash-based budget system is part of the reform program that aims to fully execute the budget by compelling implementing agency to speed up completion of projects and actually utilize their funds within the year.
The annual cash-based appropriations limits budget implementation to just one year thereby promoting fiscal discipline and better planning among agencies in spending or using their resources, added Undersecretary Pascua.
In a cash-based budget, 12-month contracts should be fully delivered by the end of the fiscal year with payments to be made during the 3-month extended payment period or within 15 months. For funds transferred between or among government agencies, only paid amount for goods delivered and services rendered will be considered as disbursements.
However, the agencies even under cash-based budget may implement Multi-Year Projects (MYP) such as those handled by DPWH-UPMO Operations provided it is covered by the annual budget under Multi-Year Contracts. Under the proposed system, the Department have to apply for a Multi-Year Contracting Authority or MYCA before commencing procurement activities for certain project which has an implementation period that goes beyond 12 months.
The MYCA should accurately show the schedule of annual cash requirement of multi-year projects that should be included in budget proposals and consequently the annual General Appropropriations Act. A Certificate of Availability of Funds or CAF should be issued annually for MYPs based on the budget for the purpose.
Undersecretary Sadain said that while the shift in budgeting system seems challenging, forward planning is important for Multi-Year Projects with Detailed Engineering Designs and Programs of Work for Foreign-Assisted Projects prepared well ahead of loan negotiations.
“The proposed shift in budgeting systems is expected to improve planning and implementation capacities with only implementation-ready projects to be included in the budget and quicken project completion as early procurement activities and majority of contracts will be awarded on the first quarter of the fiscal year”, added Undersecretary Sadain.
DPWH UPMO spearheads the implementation of most big ticket Build Build Build infrastructure projects of President Rodrigo Roa Duterte administration funded under grant-aid program and Official Development Assistance (ODA).
The DPWH UPMO Operations is composed of five (5) clusters namely Roads Management Cluster I (Bilateral) under Project Director Virgilio Castillo, Roads Management Cluster II (Multilateral) under Project Director Sharif Madsmo Hasim, Bridges Management Cluster under Project Director Gil Villanueva, Flood Control Management Cluster under Project Director Patrick Gatan, and Buildings & Special Projects Cluster under Project Director Johnson Domingo