NEW DELHI: The recent trend of increased competition among companies to bag highways projects and quoting low prices are due to the end of the era when a few big boys in the sector created cartels and had a monopoly, Union road transport minister Nitin Gadkari has said.
Dismissing the fear of poor quality construction by highway builders who are bagging projects at low rate, he said the government’s decision to tweak technical and financial conditions in the bids has brought more players to the sector.
“You have to compete and survive and survival of the fittest is the mantra. I understood the game of fixing technical and financial norms in the bids for contractors to qualify. The big players ensured the conditions barred many companies from participating. That era is over when only 5-7 companies were creating a cartel to get projects,” the minister said at an infrastructure summit.
Gadkari said now many more players are bidding for highway projects and they are giving better competition. “I want more competition, cut throat competitions. Only those will survive who bring down the cost of construction and don’t compromise with quality. I wish to see 200 contractors in road construction and another 100 specialising in construction of tunnels,” he added.
The issue of highway contracts being bid out at low price was flagged at a recent meeting of the standing committee on road transport. The NHAI has also decided for intense monitoring of projects that are being bid out below 10% of the benchmark cost.
The NHAI and other wings of the highways ministry have been getting “abnormally low bids” particularly in the fully government-funded projects, which are known as EPC contracts where construction companies exit projects after construction gets completed. They are accountable only for a few years under the “defect liability” clause.
The problem is bigger in consultancy works such as preparation of detailed project reports (DPRs) and third party monitoring.
Dismissing the fear of poor quality construction by highway builders who are bagging projects at low rate, he said the government’s decision to tweak technical and financial conditions in the bids has brought more players to the sector.
“You have to compete and survive and survival of the fittest is the mantra. I understood the game of fixing technical and financial norms in the bids for contractors to qualify. The big players ensured the conditions barred many companies from participating. That era is over when only 5-7 companies were creating a cartel to get projects,” the minister said at an infrastructure summit.
Gadkari said now many more players are bidding for highway projects and they are giving better competition. “I want more competition, cut throat competitions. Only those will survive who bring down the cost of construction and don’t compromise with quality. I wish to see 200 contractors in road construction and another 100 specialising in construction of tunnels,” he added.
The issue of highway contracts being bid out at low price was flagged at a recent meeting of the standing committee on road transport. The NHAI has also decided for intense monitoring of projects that are being bid out below 10% of the benchmark cost.
The NHAI and other wings of the highways ministry have been getting “abnormally low bids” particularly in the fully government-funded projects, which are known as EPC contracts where construction companies exit projects after construction gets completed. They are accountable only for a few years under the “defect liability” clause.
The problem is bigger in consultancy works such as preparation of detailed project reports (DPRs) and third party monitoring.
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