Builders Say Govt Contracts Biased

The construction industry has called for balancing standard government contracts to eliminate bias against contractors and construction agencies.

If the construction industry is made to pay the penalty for delays, why shouldnt the contracting agency (government) be penalised, Construction Industry Development Council director P R Swarup said yesterday.

The domestic contract system in the construction industry is inequitable. The industry feels these are one-sided, favouring the project owners, he said.

If the bidding conditions were unreasonable, the contractor could suffer to begin with, but ultimately it would be the project owner suffering due to delay in accomplishment of the project and cost overruns, Swarup said.

Existing clauses were generally framed by the project owners, so these were made according to the owners own conditions, Swarup said.

He added that the industry required standardisation and rationalisation of contract documents for domestic construction projects.

At present, several formats for contracts are used in the country. Each central government agency and public sector unit has its own format that has been refined over the years into large volumes.

The council has recommended certain changes in various areas of the contracting system, including eligibility criteria, earnest money, security deposit, payment of running bills, payment of final bills, advance payments, secured advances, liquidated damages and disputed items and arbitration.

The existing system puts all responsibilities on the contractor. The contractor is not entitled for compensation even in the case of delay caused by government and public authorities, Swarup said.

The contractor is liable to pay liquidated and general damages for delays and any shortcomings in the execution of the contract, Swarup said, adding it was felt the government departments and public sectors have all powers and authority but shared no risks.

Since the construction industry has been given a thrust and is a part and parcel of virtually every industry and plays a crucial role in the economic development of the nation, it is high time bidding conditions were made conducive for project owners, construction companies and contractors, he said.