Home / Opinions / An insight into the construction industry of Bhutan: Part II

An insight into the construction industry of Bhutan: Part II

Unreasonable tender quotes tarnish quality of work 

The Annual Report 2018 states that in an analysis of Large and Medium Contractors, on an average, 7 bidders have participated for a single work, and of the total works, 93% of the works were awarded below the estimate at an average quotation of 20% below the estimate, reaching as low as 47% below the estimate in one instance. Such uncontrolled discrepancies only fragment and injure the attempts to achieve quality output.

The tender evaluation process is also marred by the lack of a reliable system to consider the financial security of construction firms bidding in tenders. Although, earlier credit line criterion pushed for unconditional and unused credit line, in 2014, based on the financial institutions inability to issue unconditional credit line, conditional credit line was categorized as the replacement criteria. This change allowed most bidders, irrespective of their credibility, to issue guarantee for any amount, and often without requirement for any collateral, thus defeating the process for filtering construction firms based on their financial capability and in the process, increasing the number of non-performing loans and risk of project stagnation.

Time and Cost Overrun (Percentage of executed works)
Time and Cost Overrun (Percentage of executed works)

Irreparable liabilities of time and cost overrun

The report also found that further complications in the construction process arise in the project implementation phase. In an analysis of executed projects within 2014-2018, the percentage time and cost overrun has increased significantly, recording the highest in the financial year 2016-2017, where time had elapsed in 64.53% of the works and the cost had increased from the contract price in 585 of 719 executed works. The study found improper planning, unsatisfactory site feasibility studies, design changes, incomplete specifications, non-compliance with contract conditions, disputes due to discrepancy of contract documents and weak enforcement of regulation and monitoring as drawbacks of procuring agencies and negligence including poor site management, documentation, work planning, financial mismanagement, non–deployment of  committed resources and complacency as drawbacks of construction firms, attributing to such overruns in time and cost.

 The ignored whims of safety 

In December 2017, the health ministry recorded more than 33,000 cases of work related injuries. Although, the figure can be more, the construction sector saw 26 fatalities and 9 cases of partial disability resulting from such accidents. In between 2012-2015, the large scale hydropower constructions sites reported the highest number of accidents with more than 60 percent of the accidents being fatalities.

Construction sites resorting to poor, substandard and cheap unsafe measures such as using conventional bamboo scaffolding, weak reused planks, improper and open electric wiring circuits, not using helmets and safety harness on the grounds of discomfort, and weak enforcement of safety regulations are regular observations made that impute to the injuries and loss of lives.

Moreover, the inferior housing and work site conditions for construction workers continuously expose them to dust, extreme weather conditions, smoke, lead and mercury from paints, and injuries due to poor site management and housekeeping.

Although safety is monitored regularly by the Ministry of Labour and Human Resources, major lapses in coordination among regulatory agencies, failures to penalize culpable sites even after referrals are drawbacks that contribute to the indolent nature of safety management in construction sites.

The Way of the Unethical

Since the establishment of the Anti-Corruption Commission in 2006 until 2016, the commission registered more than 500 cases relating to the construction sector. Prevalence of corruption in the form of favouritism, abuse of functions, bribery, abuse of privileged information and bid rigging are confirmed. Unethical practices such as frontloading in construction stain and obscure the construction process, exacerbating it into complications of conflict and dispute. A contractor quoting higher rates for guaranteed, primary items of initial phases of the project and then withdrawing from the contract on the grounds of incapability is a consequence of weakness in the design of the bidding process and failure to review and monitor such occurrences by the procuring agency or by collusion between procuring agencies and construction firms.

Even rating of construction firms using Performance Score in CDB e-tool system is unable to determine and significantly influence performance of construction firms as 27% of 412 works in the financial year 2017-2018 were unethically rated with wrong data by procuring agencies, thus defeating the purpose of encouraging performing construction firms. A major issue of data feed in e-tool by procuring agencies is where projects with time and cost overrun were input to be successfully complete without any delay or cost escalation.

Absence of standards and guidelines hinder monitoring and evaluation and negate accountability

Many construction processes in Bhutan function without standards and guidelines. The lack of such documents and misinterpretation of clauses of existing documents undermine accountability and hinder the process of monitoring and evaluation. Every phase of the construction sector if mandated for development and use of standard operation procedures and or guidelines will enable coordination, communication and smooth operation of the phase, thus entailing responsibility and accountability to the individual or firms. Equally important are specifications for constructions materials and components, codes and or guides for designers and other professionals and processes.

The procedure to fix accountability is negated starting from the bidding process and is limited across the construction process. Terms of references for individuals, firms and committees involved in any construction process should spell out the course of accepting responsibilities and also outline the course of investigation should there be any lapses or an unfortunate event of collapse and fatalities resulting from a failed infrastructure.

In many construction sites, failure in implementation to conduct comprehensive feasibility studies including geo-technical study inculcate changes in the design and planning, thus contributing to time and cost overrun apart from inducing the planned infrastructure to risk.

Development of guidelines by the Department of Engineering Services, MoWHS such as the “Guideline for Construction of Reinforced Cement Concrete Buildings” in 2017 and the “Guidelines for Differently-abled Friendly Construction” launched on April 19, 2017 by Her Majesty The Gyaltsuen, are encouraging examples that address the diversifying requirements in the construction industry. However, these guidelines and others remain far from complete embracement by procuring agencies and construction professional.

Social Impact

Well planned infrastructures not only represent the economic developmental status of a country, it has enormous potential in enhancing the social well being of people. Economic infrastructures such as roads and bridges enhance the connectivity and delivery of people and goods, thus increasing profitability of people and their trade. Social infrastructures improve access to the needs for the well being of people, the community and contribute significantly to the accessibility of people, especially for the 8.2% of the Bhutanese population living in poverty. Commitment of decision makers, urban planners, infrastructure designers and in turn construction firms involved in the delivery of quality infrastructure should bear the importance of social inclusion, women and children centric planning, accessibility to water and sanitation facilities, building infrastructures that are resilient to the effects of climate change and natural disasters prevalent in Bhutan, and the undesirable environmental consequences of haphazard disposal of construction waste.

The perks of including everybody

Accessibility to basic infrastructure has greatly improved with households that have access to modern sanitation facilities recorded at 74.8% of the total households in Bhutan in 2017. The same survey finds that 98.6% of the population enjoys access to reliable water sources. Most importantly, almost all gewogs are now connected by roads.

However, many public spaces and buildings are still inaccessible to people living with varied disabilities and do not serve their needs. According to the NSB Population and Housing Census Report 2017, the population demographics for the age- group of people above 80 years is at 9,071 and is expected to reach 24,910 by 2027, considering the aging of people who are 70 years and above in 2017 and the Age Specific Death Rate of 123.4 per year per 1000 people in the age group. Current and future planning, design and infrastructure delivery and operations should cater to the activities of the aging population as well as suitably address the needs of the people living with disabilities, which is at a prevalent rate of 2.1% corresponding to 15,567 people. Design firms, procuring agencies and building owners cite cost and challenges of terrain as the major rationale behind their inability to consider social inclusive design.

Meanwhile, failures by agencies, home owners and municipalities in carrying out regular maintenance of existing infrastructures are creating havoc and consequently put the public at risk.

To be continued

Contributed by CDB

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