To evaluate and redress the issues of construction industry, the Punjab government has directed the officials concerned to constitute a committee. During a meeting with a delegation of the Constructors Association of Pakistan (CAP) here on Monday, which was led by CAP Chairman Chaudhry Habib Kanwal, Punjab Finance Minister Hashim Jawan Bakht and Punjab Communication and Works Minister Sardar Muhammad Asif Nakai issued these directives.
To create more job opportunities in Punjab for the youth, the Ministers urged the construction companies to prefer local material and manpower in their projects instead of importing from abroad.
On the occasion, the delegation appraised the problems their industry was facing, which included differential in building material and labour rates between the market and that is offered in government projects, timely issuance of funding and refunding of security and performance guarantee. In this connection, they submitted a detailed presentation to the Ministers that highlighted the problems they are facing.
They urged the provincial government to adjust the material and labour rates as per the market, as the existing rates mentioned in market rate schedule (MRS) do not reflect the prevailing market rates. The CAP also proposed that while amending the rate in MRS, the recommendation of the member of CAP may also be considered.
"Due to the fluctuation in currency rates, the cost of building material and products and its allied items have multiplied in the market," they added. In its presentation, the CAP also pointed out that as per the current contract agreement the contractors have to provide 'Performance Security' in shape of a bank guarantee for all works exceeding Rs50 million. Due to financial difficulty, the contractors are finding hard to provide a bank guarantee equal to 5 percent of contract value. Hence, they proposed that instead of a bank guarantee, the government should accept insurance bonds and the limit of Rs50 million may be increased to Rs250 million as a lowest limit for providing 'Performance Guarantee'.
They also urged the government to exempt contractors, with a contract valuing less than Rs250 million, from furnishing 'Performance Security'. In the case of contractors with contract value exceeding Rs250 million the condition of 'Performance Security' may be deferred or accept insurance bond till the amendments are made.
The CAP also observed that at the time of awarding of a contract, some percentage of contract value is released to contractors, but remaining amount is released in installments spreading over five years, although the project might have completed in two years from awarding date. "Funds received in installments place huge financial burden on the shoulder of contractors. Hence, the government should ensure timely release of funds and that too before the completion period of a project. Moreover, practices of releasing funds at the end of a financial year should be avoided," it added.
In a case of a delay in the release of funds, an extension of time limit of the contract should automatically be enhanced till the funds are fully released. The CAP also proposed that on the completion and handing over of a project, the 'Performance Security' may be refunded within 10 days.
The CAP urged the government that any variation of 5 percent or above in the price of any items define in sub clause 2 of clause 55 of the agreement should take place after the acceptance of tenders and before the completion of contract, the amount payable under the contract shall be adjustable to the extent of the actual variation in the cost of the item concern for which 3% contingency of the contract value has been reserved and after its utilization no price variation should be paid to the contractor unless Revised Administrative Approval have been accorded excess over contingency for price variation. District Administration should be asked to have strict quality control regarding size/ strength and quality from the brick kiln in their respective district and also notify rate of bricks and ensure the implementations/availability of bricks by all means.