NHAI selects 101 firms to directly bid for projects

In a first-of-its kind move in the road sector, the National Highways Authority of India (NHAI) has selected 101 firms, including L&T Infrastructure Development Projects, IL&FS Transportation Networks, Reliance Infrastructure, Lanco Infratech and Punj Lloyd, to straightaway submit financial bids for projects put up for bidding till December 31, 2011.

The move is intended to enable NHAI to expeditiously award contracts for construction of 7,300 km national highways during the current financial year by doing away with two-stage bidding process.

Senior NHAI officials told FE that the authority would award most of the projects for the current fiscal in the next six months in order to better its performance against last year.

In 2010-11, NHAI had awarded projects for development of 5,100 km national highways. Road transport and highways ministry and NHAI are also trying to accomplish the much-delayed 20-km a day road construction target as soon as possible.

The Financial Express had reported on October 12, 2010 that the NHAI was preparing a list of bidders that would be considered pre-qualified for projects. NHAI expects that pre-qualification of bidders would reduce the time taken in awarding the project from four months to three months, senior officials said.

The bidders have been pre-qualified for projects of particular size. ?If they want to bid for projects more than what they have already qualified for, they have to go through the normal route of submitting technical bids first and then putting in financial bids after qualification,? a senior official said.

Welcoming the move, Feedback Ventures managing director (transport) Parvesh Minocha said, ?The pre-qualification is beneficial but has to be used cautiously. The award process can become very complex if too many bidders are pre-qualified.?

The authority also thinks that incidents of time and cost overruns would come down as the technical and financial capacity of selected bidders have been properly assessed at the time pre-qualification.

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 2010.