Monday, July 22, 2024

Government Mulls Changes to Enhance Quality in Road Projects

The government is considering significant changes to the consultant selection process for road and highway projects, with a focus on expediting project awards and improving quality. Sources reveal potential measures such as reducing bank guarantees, introducing deemed approval facilities, and implementing stringent eligibility criteria for consultants.

Currently, a percentage of the project cost is submitted as a bank guarantee. The proposed changes include fixing a slab or adopting a pro-rata basis, aiming to alleviate the financial burden on contractors. A committee under the director general of road development has recommended alterations to the ‘request for proposal’ documents, advocating the award of contracts at market-determined prices rather than solely to the lowest bidder.

To ensure the capacity for quality detailed project reports (DPRs), the committee suggests setting thresholds for the minimum number of employees and turnover for consultants. The Ministry of Road Transport and Highways plans to discuss and finalize these proposed changes in a high-level meeting.

The intention behind these measures is to discourage contractors from quoting the lowest price just to secure contracts, which can compromise construction quality. The government aims for more realistic bid costs, proposing to move away from the current practice of awarding contracts to the lowest bidder.

Under the proposed system, projects would be awarded based on the average bid price, with 80% weightage given to the technical proposal and 20% to the financial proposal, shifting from the existing 70:30 ratio. Jagannarayan Padmanabhan, Global Head of Transport, Mobility, and Logistics at CRISIL Market Intelligence and Analytics, supports the idea of adjusting selection criteria based on project complexity to bring in expertise at a reasonable cost.

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