Constructors Association of Pakistan (CAP) Punjab Chapter’s Vice Chairman Chaudhry Sabir Hussain has urged the provincial government to ensure implementation of FIDIC (International Federation of Engineers) Contract Agreement and increase input rates of the finance department for construction in accordance with the market rates.
“Submission of performance guarantee is also another obstacle in the way of progress of construction sector and thus the government should either accept insurance guarantee in place of the bank guarantee or accept performance guarantee in form of deduction from the running payments of a contractor, as being practiced in the province in the recent past,” he said this while talking to media personnel.
He also requested that performance guarantee should be released immediately after the completion of a project. “It is also recommended that a time limit of 30 days after the issuance of letter of acceptance of tenders should be given for submission of performance guarantee,” he added.
He also said that clause of submission of performance guarantee was introduced many years ago but with the inflation increased, it also needed to be enhanced.
Sabir Hussain further said price variation and delay in release of retention money/security deposits are also other main factors causing liquidity issue for the construction and engineering companies working in Punjab.
The CAP Vice-Chairman said that the constitution of the Pakistan Engineering Council proposes to implement FIDIC contract agreement and this has been already adopted by various federal government departments, including NHA. “The same FIDIC contract agreement is being observed in different projects, such as Ring Road Lahore; thus in order to save the construction industry from complexities triggered by different contract agreements, the provincial government should implement FIDIC contract agreement in all the projects,” he added.
He complained about input rates of material and labour, which in his opinion were not as per market rates and hence these should be enhanced. He also called for giving representation to contractors in the committee that fixes the input rates.
Talking about the price variation issue, he said that the price variation is actually an additional cost of a project and this should be considered as expenditure by a contractor. “Thus, the contractor should be given 10 percent overhead charges and 10 percent contractor profit on the amount of price variation,” he proposed.
He also called for releasing of retention money to the contractor soon after the expiry of maintenance period, as specified in the contract agreement, and he also stressed the need for an increase in category limits set by the Punjab Communication and Works Department (C&W) at par with a license issued by the Pakistan Engineering Council. “This will encourage the contractors to perform better and consequently pre-qualify for works of higher values in their respective categories,” he concluded.
