70pc contractors complete projects late

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In 2014, the government took up a project to construct modern storage facilities at an estimated cost of Tk 19.19 billion (Tk 1,919 crore). But the cost of the project has been increased twice due to price hike of equipment. The contractor has also failed to complete the task. On 1 September, the Executive Committee of the National Economic Council (ECNEC) amended the costs and approved the project worth Tk 35.68 billion with an additional expenditure of Tk 16.49 billion.

Though the project was supposed to be completed by June this year, the time of the project has been extended until October 2023. The time of the project has been extended by three years and the cost by 86 per cent.

A project was taken to upgrade the Balla land port in Chunarughat, Habiganj in January 2017. The estimated cost of the project was around Tk 490 million. The project was supposed to be completed through land acquisition and infrastructure construction in June this year. A contractor was also appointed. But the land acquisition is yet to be completed. Only 14 per cent of the project has been completed. The duration of the project has already been increased by one year. It seems the cost of this project will also be increased.

There are hundreds of projects in the Annual Development Programme (ADP) that has seen dilly dallying in appointing contractors. The contractors could not finish tasks in time and the work is substandard.

The Tk 4.57 billion project to construct a road in the border areas of Mymensingh and Netrokona was taken up in 2016 and supposed to be completed in June 2019. But it took long to employ a contractor and so the contractor could not finish the task on time. As a result, the duration of the project has been increased until December 2021. The cost of the project has also been increased by Tk 1.03 billion.

There are hundreds of projects in the Annual Development Programme (ADP) that has seen dilly dallying in appointing contractors, even the contractors could not finish tasks in time and the work are substandard.

According to a recent report of World Bank (WB), around 70 per cent of the contractors in Bangladesh cannot complete the projects on time. That’s why the project costs soar. As a result, in spite of spending more money, the stakeholders do not get the expected benefits from the projects. The World Bank further said project implementing ministries and divisions lack procurement plans. Costs soar for lack of project-based analysis. Sometimes, re-tenders become necessary because of weaknesses in the tender process.

The World Bank report ‘Assessment of Bangladesh Public Procurement System’ highlighted the weaknesses and progress in Bangladesh government’s procurement. The World Bank prepared the report with the help of the government. The report was prepared using information of 297,000 e-Government procurement (e-GP) and 12,000 tradition procurement by the government. Opinions of different stakeholders from across the country was also used. Overall, the government procurement could not achieve the expected transparency even after introducing e-GP.

After the ECNEC meeting on 1 September, planning minister MA Mannan told the newsmen that the projects need amendment due to various reasons like price hike, rate schedule change, delay in work. As a result, time and cost increase. “But, we’re very much aware of the issues and trying to reduce the tendency of project revision through raising awareness, imparting training to the concerned staff and also through technology,” he added.

More interest in visit, not in checking standard of work

Project implementing authorities are supposed to oversee the work of contractors and the work quality. The World Bank said the government officials are only interested in visiting project sites rather than supervising the quality of works. And 80 per cent contractors said project implementing officials visit project areas at least once a week to ensure progress of work including construction of roads and buildings. Quality of projects remains elusive even after such frequent visits of the officials. Only 30 per cent contractors can complete projects on time.

Also, 14 per cent contractors said the government officials visited their projects once in two weeks while 4 per cent said project officials visited sites once in a month.

Planning ministry sources said the project directors, who are the biggest stakeholders of the project, do not live in the project area. Planning minister MA Mannan has raised this allegation on several occasions. He asked the project directors to live in the project area to ensure quality controlling of the work. He even talked about monitoring project work through the close circuit camera.

Objection regarding ‘price cap’

The public procurement act has been amended in 2016. There is an estimated official cost for any government purchase and that cost must be kept confidential. According to that amendment, if the estimated official price of any product or service in an open tender process is Tk 100 and a contractor’s price varies more or less 10 per cent from that price, that contractor is considered unfit for the project. This process is called ‘price cap’. The World Bank report has strongly opposed the price cap process.

The whopping price of pillows in the Rooppur nuclear power plant construction project is a glaring example of setting an abnormally high amount of estimated official cost.

The WB report said the estimated official cost is a confidential matter. But in an open tender process, the minimum bidder can be eliminated due to price cap. Also, there are questions regarding setting an official price. The report thinks such a tender with price cap is not acceptable in case of projects funded by donor agencies such as the World Bank and ADB.

The World Bank thinks setting price caps in the open tender process is creating different problems in public purchase. Such a process decreases competition, with larger contractors getting more projects.

The whopping price of pillows in the Rooppur nuclear power plant construction project is a glaring example of setting an abnormally high amount of estimated official cost. Also medical instruments were purchased at exorbitant prices in a project regarding fighting COVID-19 pandemic. Machines were bought at a price several times higher than market price in agriculture mechanization project.

Competition decreased

Eighty per cent of government procurement is made through open tenders. But the number of competing contracts has decreased in the open tender process. An average 4.2 contractors used to compete in open tender while the number has decreased to 2 now. The participation of only one contractor in the tender has increased to 50 per cent from 20 per cent.

Heyday of big contractors

The government procurement process is being ruled by big contractors nowadays. The World Bank thinks that public procurement is now totally under control of big contractors. Biggest 5 per cent contractors’ shares have increased 21 per cent and smallest 10 per cent contractors’ shares decreased by 40 per cent. The World Bank report said, risk of corruption is increasing as the estimated official costs are secretly disclosed to the preferred contractor.

Many small contractors cannot participate in tenders due to contractors’ syndicate.
Faruk Hossain, former DG of central procurement technical unit

Former director general of the central procurement technical unit of the planning ministry Faruk Hossain recently told Prothom Alo that many small contractors cannot participate in tenders due to contractors’ syndicate. The contractor association decides who can participate in the tender process.

* *This report, originally published in prothom Alo print edition, has been rewritten in English by Shameem Reza and Galib Ashraf.

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