PWD issues SOPs to curb cost overruns

Earlier this year, the department removed the arbitration clause from its contracts and tenders, which means in case of any dispute between the PWD and a private contractor, the matter will be dealt with only in the courts.

The Public Works Department of the Delhi government has issued fresh arbitration guidelines under which lapses by erring officers will be identified and responsibility fixed for any projects where cost escalates, according to the standard operating procedure, officials said.

PWD issues SOPs to curb cost overruns

The order, seen by HT, issued by additional director general Pradeep Gupta dated October 31 states that “in all arbitration cases where awards of the arbitrator goes against the department, detailed reasons and lapses, if any, on the part of officials concerned should be examined in detail by the chief engineer concerned.”

It adds that the chief engineer should send his recommendations to the administrative secretary for fixing of responsibility and taking action against the erring officers, where the amount of arbitral award exceeds 10% of the works cost.

The PWD has to secure funds from the respective departments to pay arbitration awards, if any, decided against the government. Earlier this year, the department removed the arbitration clause from its contracts and tenders, which means in case of any dispute between the PWD and a private contractor, the matter will be dealt with only in the courts.

However, under the old agreements, PWD officers are still dealing with various arbitration issues where the claimant contractor has already invoked the arbitration clause. “ All officers of PWD are well aware of the fact that the action taken under Clause-25 by either party to the contract cannot be ignored, as this clause used to be an inherent part of all the past agreements entered into by PWD on or before 21.04.2025,” the order added.

It further added that under such eventuality, it is enjoined upon all officers to uniformly follow the procedure and guidelines.

The PWD has also directed officials to ensure that client departments pay for arbitration awards in old cases. If they refuse, those departments should be made parties in court proceedings. “In case the client department refuses to allocate a budget against the awarded amount, the court should be informed that PWD, being only a service department, utilises the budget allocated by the client department; therefore, it is not in a position to pay or deposit the award amount on its own,” it added.