Notes on the attitudes of some contractors in Guyana

Apr 30, 2017 Letters

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Dear Editor,
I read with great concern the perception by some contractors that low prices vs. engineer estimates need to be reviewed. It is easy to run to the press when you tender and someone tenders lower than your price. But let the government award a project to someone whose prices are above your price, you will then see how the same contractors will try to justify why the project should not be awarded to them, given that their prices are lower. Very ironic, but yet some of us are ready to cast blame on the government or the engineer sometimes.
As a contractor who has been in the business for 25 years there is some truth about the low pricing and at the same time this can realistically be proven right or wrong by some simple analysis during the evaluation process. I agree that some contractors’ prices are ridiculously low in some cases and the rule of low price tender should not apply for awarding in those cases. Understanding why engineer’s estimates will vary from the contractor prices can be a complex task. Below are some reasons:
* When an engineer does an estimate in the Government ministry he will use realistic market values to arrive at a rate or in some case past prices.
* The engineer will not use values that will reduce due to some of the factors listed below that a contractor will use. And rightfully he cannot do so since it will be wrong and can lead to serious complication, since there will be no proper basis of arriving at the unit rate.
* When a contractor tenders, his prices can vary significantly due to the following key factors.
* Does he own a quarry
* Does he import all his raw materials rather than buying from a third party locally
* Does he own all the equipment that is needed to do the project vs. renting
* Does he have experienced employees who know the work, if no then his operating cost will be higher since he will take longer to get the job done in a timely manner?
* Does he transport Raw materials using his own trucks or in bulk using his own barges
* Is the contractor’s plant yard close to the project or far from the project.
* Does he Stockpile materials or have a just in time system
* Does he sit back and wait on the rainy season or does he deploy a double shift system to capitalize on the dry weather. You can achieve more than two times the work in the dry season as compared to nothing when the rain steps in.
The above are just some main points to be considered before casting blame on the engineers at the various Ministries. The positions that these engineers occupy at the Ministries are not an easy ones and they constantly have to be mindful of how to the value projects so as to avoid being accused. I do agree that there needs to be some more training for some of the engineers in this area which I am sure is being addressed by the Government.
I am of the view however, that whenever a contractor has a price which appears to be lower than the engineer estimates a red flag should be raise. The evaluation process should then critique those tender key line items. At the end, if they are not satisfied that the contractor can actually execute the work for the price they tender, then they should be called in to make a justification on how they plan to execute before award. At the moment the current Procurement Act states clearly that contract should be awarded to the Lowest Qualified & Responsive Tender. So Government cannot easily disregard this if not there is another section of the contractor fraternity who will accuse the government of favoritism.
Low prices alone are not the problems. Contractors in Guyana need to step up to the plate and start to do the following in:
* Stop colluding with some Site Engineers and clerk of works; expose those that are bent on corruption.
* Take the appropriate amount of work that you have the capacity to handle (Human & Capital)
* Be realistic with your tender prices so you can execute as per technical specification.
* Take more pride in the work we do
* Offer more value for money spent
* Do not tender outside of your Experience and Capacity.
On the Government side they should continue to strengthen the system so contractors are held accountable for their action on projects.
* Black List poor performance
* Must be more rigid with their enforcement on project sites
* Must have the Inspectorate Board operable as soon as possible
* Board must have Trained employees
* Must have employees with high ethical standards if not they too can become corrupt and pressure contractors unnecessarily
* Must be equipped to do random checks on site to review projects.
* Must review the evaluation process with a view to make the process more independent. So if you have five evaluators on a project, independent evaluation must be done. This can only happen if they are not aware who the other members are that sit on the valuation committee since it will give each member the opportunity to do their independent evaluation without the influence of the opinion of others. Finally they will all meet to discuss and defend their evaluation results.
* Evaluation Process needs to capture some key component if not yet done.
* Contractors Past Performance
* Contractors current Work Load
* Contractor current performance on current projects
* Are current project lagging behind time
* What % of current project are executed
* How will this award affect the contractor current projects.
* Contractors current manpower and capital capacity
* Contractor’s financial capacity. You don’t want to award a contract and the contractors who will take the advance payment to clear personal commitments thus starving the project for cash.
Overall the evaluation process should be clearly documented to capture some key components about the contractors and on the tender price. This will remove all the controversy as it relates to low prices and contractors past and current performances. Engineer estimates, in my view, so as to allow the government to get a guide for budgetary purposes and what a project will actually cost. Contractors needs to tender at a price that will get the job done in keeping with the requirements and the Technical Specification
The government is doing a great job in trying to stamp out some of the issues we had in the procurement system. There are a lot more to be done but we all have a role to play in this process. We all as contractors need to take full responsibility for our action and raise the bar when it comes to our quality and timely execution of projects. The government cannot do it alone.
Komal Singh

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