The document outlines 34 requests and proposals submitted by the Construction Association of Bhutan to the Prime Minister during their 9th May 2016 annual general meeting. The requests covered a wide range of issues related to procurement processes, evaluation criteria, project timelines and budgets, contractor classifications, taxes, and development of the construction industry. The Association also proposed establishing construction development funds, training programs, and expanding the services provided by the Construction Association of Bhutan.

1. 15 Annual General
Meeting
CONSTRUCTION ASSOCIATION OF BHUTAN | 9TH MAY 2016 | BCCI
CONFERENCE HALL

2. Submission to Hon’ble
Prime Minister

3. 1. Scores for fresh engineers and VTI
graduates in Evaluation Guidelines
•In the current evaluation system, fresh
engineers and VTI graduates do not fetch
points
•Only engineers with 3 years and above
experience fetch points
•Requested for a minimum of 5-10 points for
fresh engineers and VTI graduates

4. 2. Evaluation report to be made
public
•Contractors not happy with the evaluation
report being not disclosed
•Requested for exhaustive evaluation report
•Report to be displayed in client’s notice board
and website
•Accords fairness and transparency

5. 3. Late declaration of evaluation
report
•Some clients take very long to declare the
evaluation result
•Unlike large complex project, nothing to evaluate
•EMD in the form of mortgage is tied up with client
•Delay costing opportunity
•Evaluation report to be declared as soon as possible

6. 4. Evaluation Criteria
•Financial aspect most important component of
current evaluation system
•Technical aspect is just a qualification criteria for
next stage
•To ensure quality, equal importance to be given to
both the aspects
•Proposed for 60 (financial) / 40 (technical) system

7. 5. HR/ Equipments required as per
the specification and nature of work
•Some client agencies include non-required
HR/Equipments
•Such inclusions are tailored to suit some particular
firms
•Loophole for corruptive practices
•Discourage such practices
•Deployment of machineries throughout
construction period needed amendment

8. 6. Use of labors in different sites within one
dzongkhag/labor has to exit and re-enter/labor
entry from any point
•Labor from one site cannot be transferred to
another site within a dzongkhag
•Labor has to exit and re-enter
•Labors cannot enter from any point convenient
•E.g Assam labors have to strictly enter via Gelephu
•Huge expenditure for contractors/time constraint
•Not conducive

9. 7. Realistic Project Duration
•Project durations driven by factors such as
project deadline, fiscal year closing
•Contractors land up paying huge liquidity
damages
•Technical approach needs to be adopted for
estimation of project duration

10. 8. Realistic Budget Estimate
•Budget estimate based on BSR by clients
•Bidders estimate based on actual market rates
•Mismatch leads to rejection of genuine bids
and often leads to re-tendering
•Adoption of standard approach for budget
estimate
•10% provision in estimate for unforeseen
contingencies

11. 9. Detailed drawing & specification
of Items for Small tender
•Some client do not provide detailed drawings &
specifications for Small tender
•Such practices creates room for client to change the
scope of work, site, items
•Difficult for the contractor to execute the work
•Payment problems due to deviations
•Must provide all technical specifications & drawings

12. 10.Revision in work ceiling for Small
Class
•Small Class allowed to execute 2 works within 4
million
•But its not possible to get 2 works meeting the
4 million ceiling
•Requested for 2 works with 4 million each

13. 11.Deviation clause for Small Class
•Absence of deviation clause for small class
•Deviation occurs in small tenders also
•Absence of deviation has invited many
litigations
•Deviation clause to be incorporated

14. 12.Escalation clause for Small Class
•Absence of escalation clause for small class
•Deviation occurs in small tenders also
•Absence of deviation has invited many
litigations
•Deviation clause to be incorporated

15. 13.Differential Security
•Low quoted and unbalanced bid requires differential
security
•Some agencies require differential security for bids just
5% while some require for 13%
•Not uniform during implementation
•Lower limit be defined beyond which differential
security to be applied
•-20% margin to be applied for differential security

16. 14.Re-tender
•Clients opt for re-tender if lowest bidder is
disqualified or bid price is slightly higher than
estimate
•Clients can re-tender if bid price is abnormally high
•If bid price within a tolerable range, re-tender
should not be initiated
•Upper limit to be defined beyond which re-tender
can be initiated

17. 15.Lottery system for awarding of
Limited Tenders
•Clients invite bids from only few known bidders
•Those bidders are favoured
•Award system not fair and transparent
•Section 4.2.3.1 of PRR requires clients to invite for
all contractors within that dzongkhag
•Requested for strict compliance of the above clause
and introduction of lottery system of award

18. 16.CPI instead of WPI for Price
Adjustment
•SBD mandates WPI to be used for price adjustment
•WPI is not applicable to Bhutan
•WPI do not cover transportation, tax etc
•CPI to be used for Bhutan
•Few agencies are already using CPI
•CPI not uniformly applied when only few agenices
entertain it

19. 17.Time extension for deviated
works as per approved drawings
•Deviated works require allotment of additional time
•Early warning GCC 32.1 to 32.4 mandates
contractor to notify to the Project Manager
•If failed to notify within 30 days, the time extension
is not entertained
•The clause needs to amended

20. 18.Bank Guarantee Charges
•Bank guarantee needs to be renewed every year
•Bank guarantee not as per the length of the project
•Contractors pay a huge amount in the form of bank
guarantee fees
•Bank guarantee to be issued as per the length of
the project
•Fees for the guarantee to be reduced

21. 19.Community Contract
•Work ceiling for community contract is Nu. 1.5
Million
•Most works fall within this ceiling
•Large numbers of Small Contractors (3247)
•Small Contractors are deprive of work
opportunities
•Ceiling needs to be brought down to 0.5
million

22. 20. Conflict of information in bidding data
sheet requirements and evaluation
parameters
•Requirements in bid data sheet appears to be
with lock out specifications
•Bids not meeting the requirements are treated
not responsive
•Direct abuse of evaluation parameters
•Such requirements are tailored to suit certain
bidders only

23. 21. Department execution of
works/labor contract/machineries hiring
•Departmental execution permitted only if the
work is specialized in nature
•However, DoR execute works departmentally
irrespective of work being specialized in
nature
•Government loose huge money because such
works are neither time frame nor have budget
ceiling

24. 22.CDCL
•Mandate of CDCL was to act as a lead agency
•Undertake works beyond the capacity of local
contractors
•Currently CDCL involved in works that can be
undertaken by local contractors
•Direct award of contracts to CDCL by some agencies
•Request for no direct award/have to go through
competitive bidding process

25. 23. Gov. training slots to be extended to
private sectors
•Construction industry blamed for lack of
professionalism
•Capacity development required
•Any trainings related to construction sector be given
to CAB directly

26. 24.Construction Development Fund
•SRL fund to be used as CDF
•The purpose of the CDF is therefore:
1. To finance development and promotional programs of the
Construction Industry
2. Facilitate those developmental activities that do not have budgetary
support from government or donors.
3. Make it available to the government in need for the improvement of
the construction based activities in the country.
•Requested Gov. for collection of 0.15% SRL with 2% TDS
•Source deduction of SRL by procuring agencies from first
running bill

27. 25.Tender cost despite contractors
bearing the tender cost
•Tenders are available in most of client’s website
•Contractors download and print the documents
themselves
•The cost is born by contractors
•However, contractors still have to pay for the tender
cost
•Some clients ask for tender cost while some do not
•Not consistent and uniform

28. 26.Uniform application of PRR
•Different agencies have their own way of
interpreting the provisions of PRR
•Rule accepted by one agency is not honored by
other agencies
•Confusion in the procurement system

29. 27.Auditing
•Pvt. Limited companies require hiring of CA from
India for auditing
•Causes inconvenience and incurs huge expenditure
to contractors
•Requested for making the requirement of CA from
India be made optional
•Allow local private accounting firms to carry out the
auditing

30. 28.Tax Assessment
•Tax assessment is delayed
•Often delayed for 1 to 2 years
•Contractors pay 24% penalty per annum on taxable
amount when the filing is wrong
•Huge penalties incurred
•Contractors can avoid penalties if the assessment is timely
•Also requested for inclusion of liquidated penalties under
expenditure

31. 29.Establishment of Stone quarry and
Stone aggregate crushing plant
•All structures in Bumthang are to be build using
local materials and maintain traditional
architectural design
•This requires constant and huge amount of stone
and stone aggregates
•No quarry and aggregate plants
•Requesting government to setup such plants &
quarry

32. 30.CDB renewal fees
•Substantial revision in CDB renewal fees was
unexpected
•Old fee was Nu. 400 for small class which was
revised to Nu. 8500
•Contractors request for revision
•To be brought down to 50% of current fee

33. 31.Up-gradation of CDB certificate with
work in hand
•Contractors wishing to upgrade to higher class
requires to complete work in hand
•Such rules are not favorable
•A contractor with work in hand with project
duration of 2 or 3 years have to wait till the project
is complete
•Requested for discontinuation of the notification
from CDB

34. 32.Locking of resources/Different set of HR &
Equipment required for every tender
•E-tool system requires contractors to commit new set of
resources for every new bid
•Any resources used for a bid is locked in the e-tool till the
evaluation is complete
•Large contractors can take up 5 projects at a time, so to
maintain 5 sets of HR/Equipments is not in the capacity of
any contractors
•Opportunity cost and overhead cost for contractors
•Request amendment

35. 33.Strengthening of Construction
Association of Bhutan (CAB) office
•Members not happy with services of CAB
•Following initiatives and improvements recommended
1. Establishment of Training Wing (Manpower pooling)
2. Establishment of Commercial Wing (Hiring/Spare Parts/Repair &
Maintenance)
3. Any other activities to generate income for CAB

36. 34.Establishment of CAB Service Center (18
Dzongkhags)
•Member requested for establisment of CAB Service
Centers during the dzongkhag tour
•Purpose was to reach out to every members in the far
flung dzongkhags
•And to support and provide services at dzonkhag level

37. 35. Online Registration System by
CDB
•Launching of Online Registration system on 2nd day of
Annual General Meeting
•As a result following issues where important to be
discussed with CDB during 3rd day of the meeting
1. Clearance from CAB during the renewal of CDB Certificate
2. Contractors representatives in the CDB Board
3. Submission of Tax Clearance & declaration of employee’s provident fund

38. Thank you!