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How infrastructure projects get delayed and stopped

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The ROB at Whitefield is delayed because of inability of the parties (tenderer and tenderee) to work out a commodity rise formula. As noted in the following article, because of unexpected and steep rise in steel and cement prices, the tenderee could not complete the project and had to cite force majeure clause.

This should be a lesson for planners and i hope future formulas take into cognizance commodity price increases:



silkboard's picture

Now that commodity prices are down ...

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Thats an excellent report from Subbu there. This bridge eats off 10-15 minutes on average for airport commuters from Whitefield area.

So whats a good solution there? Special insurance conver for builders/contractors? Expecting them to factor 60-70% hike in costs when making their bids? Some clause for compensation linked to rise in commodity prices beyond what gets factored in the initial bid.

As Subbu writes there:

In mid-2008, the Railways have modified their formula to allow escalation of project costs indexed to real market prices provided by SAIL. However, this only means that future tenders (i.e. contractors) will be benefited, not existing contracts.

So they have gone the compensation route. Did not understand as to why this can't be retroactively applied to active projects.

Perhaps all infra projects should be re-negotiated

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It is indeed possible to renegotiate agreements and contracts. In the above case, it is unusual for a contractor to claim that he has a "moral obligation" to completing the project. This appears fine. Now it is upto the Railway Authorities to act wisely. I hope NHAI and the Railways do not blunder with the Beniganahalli RUB. comment guidelines

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