Bidding very low might soon backfire on civic contractors.
To put an end to the trend of contractors putting in dismal bids for tenders, the Brihanmumbai Municipal Corporation (BMC) is looking at a concept called a dynamic schedule rate (DSR), which will allow it to lower the estimates the next time it offers the same work.
While the details are being currently worked out, the civic body plans to introduce this system in Civil Works Contract (CWC) projects before the end of this financial year. Confirming this, BMC chief Sitaram Kunte said, “The concept will help curtail the low bidding that prevails in the procedure for bagging civil works. We will study the bidding trends for a while before tweaking our own scheduled rates.”
Here’s how the system will work: The BMC will closely monitor the rates contractors quote in nearly 2,000 to 5,000 tender it floats over a period of time. “Accordingly, the average rate that we get in each of these works will be taken as the new benchmark. The next batch of tenders that we float then will be scaled down by that percentage,” added Kunte.
For instance, if a project to lay a 100m footpath costs Rs. 100 according to BMC estimates, and contractors have offered to lay it at an average cost of Rs. 60, the civic body will lower its estimates to Rs. 60 in the next batch of tenders it floats.
“If we are able to cut down our estimates and at the same time ensure stricter monitoring, there will be less scope for manipulation,” said a senior civic official, requesting anonymity.
Contractors, however, were unsure of whether this would work. “A schedule rate cannot be dynamic. The BMC’s rates are lower than those offered by most other governmental agencies, which is why contractors are unable to do a good job anyway,” said a contractor who has been an active player in the CWC circuit. “Instead of encouraging the honest crop of contractors to cut corners by lowering estimates, the BMC should actually increase their rates.”