Works Contract System-Indian Style-1
Disclaimer: The following discussions is a general commentary and not directed to any specific work or sector which show the real picture in general. Also, the remarks regarding quality, quantity or integrity do not point to any person or any group in any point of time. The questioning does not construe to any lack of quality or quantity and do not doubt the integrity of various persons or groups involved in decision making process!
a) Not long ago about 15-20 years back whenever any project/construction was conceptualized the same was used to be proposed in the #Works program by taking the very rough abstract cost (Abstract #Estimate) and was to be sanctioned by Works sanctioning authority based on the power of sanctioning which sometimes include the Indian Parliament also.
b) After this sanction, the detailed estimate was used to be prepared on the then available rates and available designs with the #Client execution department. Sometimes these rates were adjusted to the then market rates on the basis of rates analysis.
c) After sanctioning of the detailed estimates, the tenders were used to be called as an #Open-tender, #Limited-tender or #Single-tender based on urgency and specialization of works.
d) Last 10-15 years, the country’s economy improved giving larger outlays on few projects rather than frittering the outlays on large numbers of projects and thus delaying all projects. In #IndianRailways, the Railway Budget was amalgamated with the General Budget thus getting larger financial support to Railway Projects. Also the powers of sanctioning the estimates, calling and finalization of #tenders were delegated widely to the middle hierarchy as a measure of fast decision making.
e) Surprisingly, this created another set of peculiar problems. Mostly in the name of faster decision making process, the tenders are being invited as percentage rate tender rather than item rate contract. In tender papers the rough cost of the work was mentioned as a single figure in Rupees and tenderers were expected to fill up percentage above or below this single figure.
f) This roughing up of figures resulted in to faster decision making process as #Tender acceptance on the basis of lowest tender (maximum minus percentage below) as Lowest One (#L-1) as the lowest cost but it created many other problems. The details were lost in the process of generalization. As a competition between tenderers, the lowest quotes were given just to grab the contract.
g) Now the process of #subletting starts from Awarded #Contractor to next and then next #subletting to another contractor and again subletting and so on until the last subletted contractor who shall execute the work. At each stage of subletting, the higher side contractors shall expect a minimum profit to the extent of 5% to 10% or higher.
h) In the present system there is no check whether the last subletted contractor shall be able to execute the work or not, and at what quality. Naturally at such subletted contractor shall compromise with #quantity and #quality with the help of the palm greasing of Client executives and PMC (The game of #PMC shall be discussed in detail in subsequent articles). Surprisingly all involved in this Tamasha of execution, adopt stoic silence under the power of money.
i) In all such cases, not only quality is compromised but also the life of user public is kept at stake if not immediately but after few years of service. There have been many such cases of compromised failures of #infrastructure and consequently death of palpable and unsuspecting user public.
j) Is there any check possible to stop such nuisance? Yes, that is there. Why we cannot estimate the absolute minimum cost of #contract and inserting a clause in the tender conditions few things;
- Max number of subletting only once with prier permission.
- Max % of work roughly about 20% for one time subletting only.
- All tenders below this absolute minimum cost shall be discarded.
- Stringent punishment clauses for any compromise on the quality front.
k) This method not only obviate the compromises to a larger extent but also instill in the contractor some sense of responsibility. The tamasha of series subletting must stop at any cost. Cont..