Low bids hit construction projects

Wednesday, October 31st, 2018 | | Money

Contractors winning deals for bids as low as a half of the estimated project cost has emerged as a key reason behind the slow progress of work at the sites of three bridges and a wall along the Mid-Hill Highway in Sindhuli district.

Construction of Sokhu Khola Bridge and Khangsang Khola Bridge handled by the Pappu-Pragati JV, Bahadure Khola Bridge undertaken by the Sarwoddhar-Sagarmatha JV and wall construction at the Khurkot-Ghurmi section overseen by the Sunaulo Khimti Construction Company has been incomplete even as the deadlines passed long ago.

The Mid Hill Highway (Eastern) Project Office said it was preparing for possible termination of all these contracts awarded for low bids. Since the Public Procurement Act requires a project to be awarded to the lowest bidder, there is a growing tendency of bidding as low as possible to win contracts, according to officials.

According to the Mid Hill office, the contractors care little about completing the projects since they often don’t have adequate funds because of low bid amounts.Average physical progress in two bridge projects handled by the Pappu-Pragati JV stands at 53 percent while that is 70 percent in case of bridge projects handled by the Sarwoddhar-Sagarmatha JV and 40 percent in case of the wall being built by Sunaulo Khimti, according to the highway project office.

The Pappu-Pragati JV was awarded the two bridge projects in a Rs104.39 million deal–43.28 percent of the estimated cost. The Sarwoddhar-Sagarmatha JV bagged the contract for Rs35.11 million by quoting as low as 50.75 percent of the estimated cost. The Sunaulo Khimti had quoted Rs27.64 million–51.93 percent of the estimated cost.

“All the contractors are reluctant to complete the projects as they may not complete them with the resources available as per the contract,” said Satyaendra Shakya, project chief at the Mid-Hill Highway (Eastern). “We can’t expect them to complete the works by spending money out of their own pockets.”

In the case of Sokhu Khola and Khangsang Khola bridges, conflict between two joint venture partners also contributed to the delays, according to Shakya.A senior official at Pappu Construction said their company had to take over the works after the joint venture partner, who is chiefly responsible for completing the project, ran away. “We are committed to completing the two bridges by the end of the current fiscal year,” the official told the Post.

As per the original deadline, the Pappu-Nepal Pragati JV should have completed the two bridges by January 12, 2013. The Mid-Hill project extended the deadline until January 2014.Even then, the contractor neither took up works nor applied for an extension of the deadline, according to the project office. On October 15, the project issued a public notice threatening to terminate the contract.

The Sarwoddhar-Sagarmatha JV should have completed the Bahadure Khola Bridge by July 8, 2017 while the Sunaulo Khimti must have built the wall by May 19, 2015, as specified in the contracts.In a public notice issued in March to seek clarification for the delays, the Mid-Hill project had warned the Sarwoddhar-Sagarmatha JV and Sunaulo Khimti of blacklisting them by terminating the contract.

“We are preparing necessary documents for terminating all these contracts,” said Shakya. “We will also seek an order from the Road Department within a week for terminating the contracts.”

In its annual report, the Public Procurement Monitoring Office (PPMO) of the government states that low bidding is to be chiefly blamed for the anomalies in the construction sector.Madhu Prasad Regmi, secretary at the PPMO, told the Post that the practice of low bidding affects both timely completion of development projects and the quality of works.

“The prevailing laws do not address this issue,” he said, arguing that the amended Financial Procedure Act, which guides the government’s spending, promotes low bidding instead. “In the past, the government office had the authority to reject bids quoting less than 30 percent of the estimated cost. But this provision in the law has been removed,” said Regmi.