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Bhutan Observer
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Competition in construction sector growing
Gyembo Namgyal, January 17, 2014
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Contractors quote abnormally low from the estimated rates for the construction of any government facility. This leads to inferior quality of work.

So to prevent that from happening, the dzongkhag has made it compulsory for all small contractors to deposit a deferential amount if the quoted rates abnormally low.

The differential amount is the amount that is the different from the official estimates for a particular work and the one quoted by a bidder. Smaller contractors did not have to deposit the deferential amount in the past.

The dzongkhag’s assistant engineer Ramesh Pradhan said that this can be enforced by the local tender committees to safeguard government’s interest when they foresee risks involved.

Contractors insist that for small contractors the work must be awarded based on the responsiveness of financial bid alone as prescribed in contract rules. They say that the fear of inferior quality because low bid is unfounded. The site engineers, they say, must ensure that quality of work is not compromised because of contractor’s bid.

But the engineers are often under tremendous pressure from far greater workload than they can handle comfortably. There are 16 engineers in Pemagatshel, including five in Nganglam Dungkhag. According to Ramesh Pradhan, each engineer handles at least ten different sites at a time. Some engineers handle about 20 sites.

“Quoting below the estimate means we are digging deeper into our own pockets but when the only way to win a work is by offering the lowest bid, we are forced to quote as low as we can. So some of the contractors quote as low as 50 percent below the official estimate,” said Tshewang Lhendup, a contractor.

Imposing differential amount is a way to stop unreasonable bids, said another contractor. That will stop new and inexperienced contractors with limited financial resources from getting work. Contractors with more resources can quote low, deposit the differential amount and execute the work. They will not be forced to compromise of the quality of work.

There are today about 200 contract licence holders in Pemagatshel. However, almost all belong to the small category. The number of licence holders grew in the recent times after government made it mandatory to undergo basic induction course to be eligible for the licence.

“We saw that as the last opportunity to be eligible for licence. Even if did not have immediate plan to undertake contract business, attended the course to get the licence,” said Pema, a new licence holder.


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