National Highways Authority of India (NHAI) will soon stop pre-qualifying contractors for each project. It will instead come out with an annual list of companies that will be considered qualified for bidding. The measure is expected to reduce the time taken in awarding projects, although marginally.
The government is also considering a proposal to rate contractors on the basis of their financial and technical capability to execute projects so as to prevent any cost and time overrun. According to a World Bank report of 2009, 40% of road projects suffer from cost overrun of anything between 25-50%. Among infrastructure projects awarded between 1992-2009, 82% had time overrun, as per a joint study of KPMG and Project Management Institute released in March this year.
The issues of time and cost overrun, and delay in awarding projects were flagged by road transport and highway minister Kamal Nath in a meeting with financial consultants and NHAI officials on October 8. Around a dozen financial consultants including PricewaterhouseCoopers, KPMG, Deloitte and Ernst & Young attended the meeting.
This was not the first time that such concerns were raised. The committee on National Highways Development Programme, headed by Planning Commission member BK Chaturvedi, had also made suggestions to this effect in its report last year.
?We are working on the proposals and hope that annual pre-qualification of contractors will cut at least a month from the overall time taken in awarding projects,? a senior official from NHAI told FE. The official added that a project can take as much as two years in awarding and ?difference of a month may be too little an improvement?.
According to government officials present in the meeting on October 8, Nath asked the consultants to suggest how the financial closure be achieved faster. The consultants were also directed to work in close contact with technical consultants.
The minister also instructed NHAI to ensure there was no anomaly in bid documents that caused frequent disqualification of bidders, the officials said. ?There shouldn?t be any inadvertent mistakes in the papers,? officials said quoting Nath.
The meeting was organised in the backdrop of slow project awarding by NHAI, for which the authority blames consultants. Nath has set a target to award 12,000-km highway projects in 2010-11 against the achievement of 3,358 km in 2009-10.
Looking at a meek performance last year, Planning Commission has set a slightly sober goal of bidding out 9,000-km projects in the current financial year.