Viadukt dd : Statement by Viadukts President of Management Board Joško Mikulić

• Delay in the construction of bridge mainland - island of Čiovo was caused by several factors.
• Owing to investor's oversight in the investigation works, Viadukt invested its own resources to adjust the building technology to the actual state on site.
• Uncommon interpretation of the payment method of the steel structure by the investor got Viadukt into a position to practically to finance and credit the construction of the bridge with its own resources.
• Viadukt puts in a great deal of effort and invests considerable funds and resources to complete the project.

We would like to address the public prompted by false and incomplete information that has been published regarding the progress of works on site of the bridge mainland - island Čiovo and the business activity of the company Viadukt. By presenting the facts we would like to explain to the public that the delay in the construction of the bridge was caused by several factors.

The contract for the construction of the bridge between mainland and the island of Čiovo was signed in February 2015 with an extremely demanding date of completion of 20 months, by the end of 2016. Having signed the contract, we mobilized workers and machines, but soon certain oversights in project documentation were noticed. Specifically, soil mechanics investigations which preceded the design of the bridge were executed at the location which had firstly been determined as the location for the bridge construction, and in the design it was planned that the bridge would be founded in the clay soil. The location was changed, but the investor did not repeat investigation works at the actual location assuming that conditions were the same as at the previous one, which proved to be a wrong assumption during the construction. We warned supervisory services and the investor and waited for their decisions, and in the meantime, at our own expense, we executed additional soil mechanics investigations at the location, performed boreholes and uncontestably proved that the soil is rocky. As a consequence, it was necessary to change the foundation technology, for which our experts made a new technological solution of bridge foundation approved by the investor, which took extra time to be made. Contract date of completion of the bridge was approaching and as late as December 2015 the investor finally admitted his mistake and approved further continuation of works in accordance with our new technological solution.

To speed up the execution of works as much as possible, in the new technological solution a more demanding building technology was planned, which comprised additional costs for Viadukt owing to a mobilization of extra number of workers, machines and equipment so we doubled our resources. However, despite everything, and primarily losing eight months for the execution of foundation works, by the end of 2016 Viadukt successfully completed its work comprised of the execution of foundations and bridge piers.

Additional difficulties were caused by the fabrication of the steel structure, which was the responsibility of the subcontractor approved by the investor, the company Iskra from Kumanovo in Greek proprietorship, which was a respectable company with outstanding references at the time of signing the contract. But, when they commenced the execution of works, Greek banks collapsed, as a result of which they remained without financial monitoring. Having realized that they would not be able to complete their part of works by the deadline, at its own expense Viadukt bought material for one third of the bridge structure and delivered it to Iskra so they could continue with their works, and despite that they were late with meeting their obligations. Therefore, Viadukt arranged the delivery of the remaining two thirds of steel structure with domestic subcontractors - companies Đuro Đaković Industrijska rješenja and ZM Vikom. In the meantime Viadukt was trying to find a way how to take over a third of the structure from Iskra and in the end in the last month Iskra started delivering partially finished elements of the steel structure which the previously mentioned domestic companies would have to additionally process before the installation. Contracted amount of steel from domestic suppliers has still not been completely delivered.

The problem with financing the production of steel structure was caused by uncommon interpretation of payment method of the steel structure by the investor. Specifically, common practice is that in case of the construction of steel structure the same is paid as all other construction work, by way of monthly payment certificates and according to the percentage of completeness. But, the investor interpreted the contract item from the bill of quantities in a way that the steel structure should be paid only when the bridge is completely finished. It is an unrealistic expectation that the contractor with advance payment of 10 per cent of value of the entire contract finances the production of the steel structure the value of which is almost 50 per cent of the contract value.

Owing to effective collaboration and partnership with the investor and subcontractors and not wanting to call in question the realization of the project, at its own expense Viadukt made a financial arrangement with the bank amounting to 26,5 million kuna to pay the subcontractors to continue with the production and delivery. As a result of all delays, it generated significant losses, caused by introducing the work in two shifts, mobilization of additional number of machines, costs of financing the payment of steel structure etc.

From everything stated it is clear that Viadukt puts in a great deal of effort and invests considerable funds and resources to complete the project.
All that was mentioned above caused a discontinuity in our company's liqudity. Additional difficulties in our business activity were caused by the fact that the investor and competent ministries did not take responsibility and make decisions.

Construction industry in Croatia has been devasted by not making timely decisions and long-lasting administrative procedures and this statement is at the same time our appeal whereby we ask from the competent authorities to make decisions, regulate market conditions, obtain funds from the EU funds more effectively and to stimulate investements.

Viadukt is the only domestic construction company which has overcome financial crisis without going bankrupt and we owe our subsistence to our diligent employees and the confidence of our numerous shareholders, the majority of which are our employees. We are still optimistic about the future, encouraged by many new concluded business deals and tenders ahead of us. We have a 70-year-long tradition of knowledge and experience and many roads and structures which we built for future generations and with which we connect them, therefore we firmly believe that we will successfully overcome current difficulties in our business activity.