Corporation Tenders Have No Takers

A few years ago, when the ADMK administration was in power, the public works department working overtime to lay storm water drains and roads were being laid in full swing. Usually just before the elections government machinery goes on overdrive. At almost every turn, there would be some construction activity happening, new roads being laid, new drains being built, old electricity cables being replaced, and new heavy duty lines being laid. All this frenzied activity by the government in a lame attempt to be seen to have done something in the last five years.

During this years elections, this frenzy wasn’t there, the usual tempo was missing, my street, which i hoped would be relaid, wasn’t relaid, nor was the remaining half of the storm water drain built. The reason for this was the booming real estate activity in the state and city. A booming real estate sector has pushed up the costs of raw materials, which means the governments tender prices, set in April of that current year doesn’t reflect the actual cost of the project. Sometimes the tender prices are far below the cost of the project, and therefore contractors dont even bother buying the tender application forms. Annually the prices are revised every April, but due to the elections, this year the prices haven’t been announced.

The corporation intended to complete Rs 100 million worth of storm water drain repairs and construction, but there aren’t even bidders for Rs 50 million, even after the corporation in a desperate move decided to award contracts to those who bid 5% over the stipulated amount. The biggest worry contractors have is of cost escalation, which would erode their already slim profit margins.

The government should replace the system with a flexible price adjustment mechanism, if the government doest implement such a mechanism, contractors will shun government tenders and start focussing on the private sector. I wonder why the government hasn’t yet switched to a flexible tender pricing system, in the age of liberalisation, when prices constantly fluctuate on a daily basis.

The Hindu’s article on this

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