New Delhi; FICCI’s National Committee on Infrastructure has welcomed the Central Vigilance Commissioner’s call for revisiting the existing tendering system in the country. He lauded CVC’s observation that the Least Cost Selection Method or L1 may not be the most appropriate and suitable method of awarding a Contract, which indeed was well founded, given the number of infrastructure and other projects facing concerns of quality and disputes, ultimately leading to time consuming arbitration and higher costs.

“Experience in India has shown that officials in procuring departments and agencies, in order to maintain utmost probity and transparency, prefer to adopt the least cost principle for the award of contracts.  This in turn has resulted in bidders seeking to win contracts by putting in extremely low bids that are eventually found unworkable, leading to huge delays, cost overruns and disputes often ending in the termination of contracts.  It is necessary, therefore, to seriously examine our present procurement procedures to ensure that we achieve our objective of quality, timely completion of works contracts, within the stipulated costs.” Said Mr K K Kapila, co-chairperson, FICCI’s National Committee on Infrastructure and former  executive member The International Federation of Consulting Engineers (FIDIC)

The International Federation of Consulting Engineers (FIDIC), as an Institution has been deeply interested in the processes used in selection of contractors for different kinds of works since the outcome and completion of contracts reflect ultimately on the design and supervision effort of the engineers. FIDIC has been advocating appropriate methodology of selection of Contractors and Consultants to ensure that the Client gets optimal value for his investment along with assured quality and timely completion of projects.  The FIDIC advocated methodology was increasingly being adopted by the MDBs world over. “Mr Kapila said .

In September 2017, FIDIC came out with the document on Proposed Alternative Mechanisms to Award Construction Works Contracts based on ‘’Lowest Workable Cost’’, rather than the ‘’Least Cost” approach.

In this work, FIDIC had recommended following three approaches, keeping in view the aspects of quality, cost and timelines.  Lowest Workable Cost Approach (this approach is to identify an appropriate bidder with reasonable cost) Cost and Quality Approach (weight age of technical and cost score applied) Selection based on Quality Approach (selection based on highest technical score)

 “Depending upon the complexity of the project and as felt suitable to the nation concerned, FIDIC recommends that the Employer can adopt any of the above approaches which is intended towards promoting innovation, quality and adherence to timelines for completion of the works.” Mr Kapila added.