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Corporation to use market rates for project estimates

Kannal Achuthan

Contractors allege mismatch between market and PWD rates


Chennai: Concerned by the low number of bidders for its construction projects, the Chennai Corporation has decided to work out project estimates based on market rates for materials and labour.

At present, the Corporation makes estimates using the Public Works Department’s schedule of rates, which is well below the market rates. Tenders for several projects had to be floated three or four times for projects, as there were either no bidders or the bids received were too high.

A team of Corporation officials held a discussion with about 100 approved contractors on Wednesday. It was decided that the project estimate would be based on the market rates on the day the tenders were opened. This offer was welcomed by contractors.

Project delay

Poor response from contractors has cost the Corporation both time and money. Several projects slated for completion before the onset of the monsoon have been delayed.

Tenders for buildings and cement/concrete roads get the least bids, a Corporation official said. Hence, the civic body had to call for re-tenders several times.

On their part, the contractors said they would incur losses if they undertook construction projects at PWD rates. They said the real estate boom in the city and its suburbs had hiked the price of materials, especially cement and bricks (see box to compare PWD’s schedule of rates for 2007-08 and market rates).

Escalating costs have also delayed the construction of six bridges projects. The Corporation had to cancel tenders twice because the bidding firm quoted 40 percent and 60 percent above PWD rates. Even negotiations with the bidding firms had failed to bring down the bids.

The construction firms have urged the Central and State Governments to allow the import of cheaper foreign cement to meet the increasing demand for private and public construction projects.

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