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Govt plans Rs 5 Lakh/km Threshold for road project contracts
ROADS & HIGHWAYS

Govt plans Rs 5 Lakh/km Threshold for road project contracts

13 Feb 2024 2 Min Read CW Team
The government plans to establish an Rs 5 lakh per kilometre threshold for awarding contracts for the preparation of Detailed Project Reports (DPRs) for road projects. This marks a significant increase from the current average of Rs 1 lakh per kilometre and signifies a shift from the least-cost to a fixed-cost model, according to reports from the Economic Times.

Presently, bidders often quote the minimum price to secure contracts, leading to the production of low-quality DPRs. This, in turn, results in modifications to the scope of work, variations, time delays, and cost overruns, ultimately causing project delays. To address this issue, the government is proposing a minimum price threshold for contract awards to enhance the quality of DPRs, aligning them with international standards and aiming to prevent delays in projects.

Road Transport Minister Nitin Gadkari has expressed concerns about the substandard DPRs prepared by Indian companies, linking them to project delays and road accidents. The Ministry of Road Transport and Highways (MoRTH) is currently seeking feedback from stakeholders on these proposed changes and is expected to finalise new rules for DPRs soon.

The suggested minimum price is based on global norms related to the salaries of skilled personnel and other relevant factors. Although a final decision is pending, the government believes that setting a threshold will encourage the submission of high-quality DPRs.

Acknowledging that a fivefold increase in DPR costs may pose an additional financial burden, the government remains optimistic that the long-term benefits derived from improved DPR quality and resulting savings will outweigh these initial costs.

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The government plans to establish an Rs 5 lakh per kilometre threshold for awarding contracts for the preparation of Detailed Project Reports (DPRs) for road projects. This marks a significant increase from the current average of Rs 1 lakh per kilometre and signifies a shift from the least-cost to a fixed-cost model, according to reports from the Economic Times. Presently, bidders often quote the minimum price to secure contracts, leading to the production of low-quality DPRs. This, in turn, results in modifications to the scope of work, variations, time delays, and cost overruns, ultimately causing project delays. To address this issue, the government is proposing a minimum price threshold for contract awards to enhance the quality of DPRs, aligning them with international standards and aiming to prevent delays in projects. Road Transport Minister Nitin Gadkari has expressed concerns about the substandard DPRs prepared by Indian companies, linking them to project delays and road accidents. The Ministry of Road Transport and Highways (MoRTH) is currently seeking feedback from stakeholders on these proposed changes and is expected to finalise new rules for DPRs soon. The suggested minimum price is based on global norms related to the salaries of skilled personnel and other relevant factors. Although a final decision is pending, the government believes that setting a threshold will encourage the submission of high-quality DPRs. Acknowledging that a fivefold increase in DPR costs may pose an additional financial burden, the government remains optimistic that the long-term benefits derived from improved DPR quality and resulting savings will outweigh these initial costs.

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