MINISTRY
OF POWER SETS-UP COMMITTEE ON GUIDELINES FOR CONTRACT MANAGEMENT
The Minister of Power, Shri Suresh Prabhu has given high priority
for development of hydro electric projects in the country. The
execution of the hydro electric projects in past have suffered
on account of many reasons including poor contract management
resulting in huge time and cost over runs of the projects.
Shri Prabhu has constituted a Committee under the Chairmanship
of Solicitor General of India, Shri Harish Salve, to recommend
guidelines for award and management of contracts in respect of
Central Sector hydro electric projects with the object of ensuring
greater transparency, better contract management and minimizing
time and cost over runs. The Committee is examining the experience
of various hydro electric projects specifically in relation to
the desired state of preparedness of a project prior to its execution,
the system of awarding contracts, the methodology of monitoring,
legal provisions protecting the interest of the project executing
authorities vis a vis the contractors and the possible intervention
points when the contract liabilities can be reviewed.
The Committee has devised a comprehensive questionnaire to elicit
information from central sector public undertakings, State Electricity
Boards and State power utilities. The questionnaire focuses on
some of the areas which are receiving attention in the deliberations
of the Committee include fixing of the eligibility and pre-qualification
criteria for contractors, methodology of bidding, type of contract
– turnkey award or award through packages, timing and sequencing
of awards of various works during the execution of the contract.
The Committee will inter-alia examine the provisions relating
to escalation and deviation of items including the price variation
in the contract in the course of execution. Often contracts result
in disputes between executing authorities and the contractor,
which call for adjudication, dispute resolution mechanism and/or
arbitration. The Committee has invited comments and suggestions
in this regard in its questionnaire. One of the neglected areas
in contracts relates to the monitoring of the contracts as distinct
from the project monitoring. So far the emphasis of the project
executing authorities has been on completing various works as
per the time schedule. The contracts are not monitored effectively
in terms of the rights and obligations by each party. The Committee
is making in-depth analysis regarding the contract monitoring
mechanism with a view to suggesting improvements in the process.
During the course of its deliberations, the Committee will also
obtain the views of the other stake holders namely contractors,
financial institutions, project developers etc. before finalizing
its recommendations to be submitted to the Government within a
three month time period.
