Following requests from contractors, the Ministry of Finance (MoF) has approved the rescheduling of the completion dates for ongoing construction works affected by the Covid-19 pandemic.
The Construction Association of Bhutan (CAB) requested the government to consider re-scheduling the completion date for ongoing construction works.
Due to the pandemic, the import of construction materials and labourers was a challenging task, which led to delays in executing the projects.
The procuring agencies have been considering time extensions based on the contract document, however, the lack of evidentiary documents has impaired the extension of contracts beyond the contract agreement.
The executive director of CAB, Tshering Younten, said that they had requested the government to consider rescheduling the date of the ongoing projects and not to impose a penalty on the liquidated damages (LD) for those projects that were already completed during the pandemic period.
The government has considered only the ongoing projects. “This consideration will benefit the ongoing projects and the big contractors. However, small contractors are not happy since the government has not considered the removal of penalty,” said the ED.
In February this year, when they submitted the request to the government there were about 75 projects that were ongoing.
Tshering Younten said that now most of the construction must have been completed.
The ministry in its notification issued on June 21 stated that there are projects that are already behind schedule and are on the verge of failure.
Therefore, the MoF recognising these unprecedented challenges and with the objective of normalising the present situation issued guidance to the procuring agencies for re-scheduling of the intended completion date for ongoing construction works.
The ministry asked to review all ongoing projects as per the present situation and determine if the existing duration is sufficient or not to complete the project.
However, for projects that are either not affected or the agreed duration is sufficient to complete the project, the contract duration will be retained as per the existing contract.
The ministry also notified that even if a project has entered the liquidated period (LD), it will be subject to review and eligible for a time extension.
During the rescheduled period, LD will not be imposed, however, once the rescheduled period completes imposition of LD will continue.
The rescheduling will be one time for all the ongoing projects and any further time extension will be as per the contract documents.
The contractors after the time extension will ensure that there is strict compliance to ensure that contractual obligations are performed and penalties will be levied thereafter without exception as per the contract documents.
The notification was issued on June 21 and it will be effective from the date of issuance of the notification.
Tshering Younten also said that they have also requested the government for the cost escalation of the projects.
He said that the contractors are running into losses, especially those working on roads.
“During the tendering, the cost of a barrel of bitumen was Nu 6,000 and now it is Nu 11,000 to reach a site,” he said.