Cost overruns on major Govt. projects…Govt. should select contractors based on evaluation of their past performance and competency – Engineers

Several engineers are opposed to recent comments made by Junior Finance Minister, Juan Edghill, who highlighted the

Junior Finance Minister, Juan Edghill

government’s concern about contractors who make claims for contract variations. This, Edghill had said, could lead to them doubling the actual contract sum.
The Junior Finance Minister at a recent symposium held at the Guyana International Conference Centre, had claimed that contractors have been deliberately submitting low bids to secure contracts and then expect to generate variations to supplement their under-priced bids.
This contention, however, fuelled several critics to deduce that the Minister does not understand the bidding or the contract process and the underlying causes for which variations/change orders are issued.
One such critic was letter writer and retired engineer, Charles Sohan. In a letter, he explained that a contractor usually submits a bid based on the tender documents – drawings, specifications and pricing on a bill of quantities.
He said that in Guyana, the policy has been to award contracts to the lowest bidders, but in many other jurisdictions, only the lowest ‘evaluated’ bidder gets the job. Once the contract is awarded and work commences, the contractor is paid for work done based on the itemized list in the BoQ after due certification by the supervising engineer and approval by the client.
In light of the fact that there can be inconsistencies in the Bill of Quantities and the work being executed based on the materials acquired, Sohan said that and in order for the contractor to proceed further with construction of the project, he requires the issuance of a change order or variation which has to be approved and paid for by the client.
“Hence, the Government of Guyana is aware of all variations generated by the contracts it awards, and therefore for Minister Edghill to claim that contractors deliberately submit low bids to secure contracts and then generate variations to get the real price for the project, is somewhat disingenuous.
“All major civil engineering projects have variations because of poor design and unforeseen circumstances and site conditions. These variations could be anywhere from about five percent to over 100 percent because of the many unknown factors during construction, including the complexity of the project and competency of the contractor,” Sohan said.
He said that all major government contracts seem to have a particular feature, that being large time and costs overruns because of poor design, bad construction management and ill-equipped and inexperienced contractors.
Head of the Guyana Association of Professional Engineers (GAPE), Joel Trotman, also said that he agrees with Sohan. He too said that the Junior Minister was terribly ill informed.

GAPE President,
Joel Trotman

“I would hate to think that, that is the Minister’s true understanding of the bidding/contract process. If so, it does not reflect anything good for the ministry in which he operates. A contractor cannot claim for variations if certain things are not satisfied. He would have to show that there is a change in the scope of work being executed thus requiring more materials. He would have to show if there was an error in the project document and as such, this would cause certain specifications to change thus influencing the initial price at which he placed his bid.
The contractor can’t just decide that he is going to make a claim for variations or cost overruns. If a contractor is making claims for variations then he would most definitely have to prove this to the contracting authority which would then examine the merit of the claim.
Additionally, a lot of the contracts that are drawn up have a lot of loopholes and as such, Government needs to ensure that when it is signing a contract, it has made provision for every eventuality,” Trotman explained.
Sohan has suggested that the government ensures that contractors hired for major projects be chosen based on an evaluation of their past performance, competency of their work force and financial viability.
“I don’t see how government can choose contractors by any other criteria.”
Sohan had recommended that all contractors be bonded in such a manner that they can be held liable for poor performance. This he said is imperative as it would provide Government with the opportunity to recover its losses.
Trotman had said that there is an urgent need for the passage of the reformed Guyana Engineering Act of 1999, so that engineers and contractors in Guyana can have a set of regulations to which they must obey.
With Engineers operating in Guyana without proper legislation to govern their practice, Trotman asserts that it will only lead to more complex problems.
While Trotman claimed Government has “fallen through on its promises” to get the Engineering Act passed, the GAPE President still made another appeal to the administration and even members of the political opposition recently to recognize the importance of the legislation and to see that it be passed.
A Partnership for National Unity’s Shadow Minister of Public Works and Telecommunications, Joseph Harmon, had vowed that he will be looking into the matter and once all is cleared; have it brought to the Parliament.
Trotman had said, too, that without an Act, “We will only leave the profession exposed to intolerable levels of malpractice and misconduct, and that already exists.”