Two new systems to boost construction industry

Two introductions in the construction sector – the new point based system (NPBS) evaluation for contractors and modified contractor classification system aim to generate more employment opportunities in the industry while laying the field for fairer play.

As of   February 1, there was 209% increase in employment in construction industry after implementing NPBS.

The new system of evaluation was introduced in May 2011 after the Mckinsey project commenced.

The NPBS evaluation system is used to select and award works to the contractor most suited to perform a given task, designed as it is to evaluate the contractor on a combination of technical and financial parameters.

Technical parameters comprise manpower, equipment, financial capacity and so on while financial parameters include the financial bid quoted by the contractor.

Secondly, the modified contractor classification allows more flexibility and is better suited to the needs of the construction sector in view of the increased outlays on construction in the 10th five year plan.

It provides opportunities to small and potential contractors allowing relatively easier vertical integration.

“Before, the classification system was tedious and it was difficult to climb up to class A resulting in a broad base,” said the executive director of construction development board (CDB) under works and human settlement ministry, Wangdi Gyeltshen.

However, with this new system any contractor can easily join one of the three classes – large, medium, or small, directly.

“This further encourages potential contractors to join in the construction industry which will enhance competition and provide more opportunities in the industry,” he added, “This will also generate more employment slots.”

Large and medium class contractors would be incorporating all the standards such as establishing office and recruiting permanent employees while small contractors would at least employ one site supervisor. “It could be a technical training institute (TTI) graduate or any skilled person,” said Wangdi Gyeltshen.

The benefit of NPBS is “more resources better the scores”. This will help the contractors in procuring construction works.

If a contractor has incorporated certain guidelines, he gets additional points when evaluated and is more qualified to get works and awarding works to contractors would be an incentive to TTI graduates, skilled persons, and school dropouts.

For instance, the human resource category which includes engineers, managers, accountants, site supervisors, administrative staff and operation level staff had a double-fold increase.

The former point-based system and pass/fail system to evaluate contractors had drawbacks which the new system addresses while retaining their positive aspects.

CDB reported that the primary reason for shifting from the point-based system to the pass/fail system was the fact that the former was considered to be too subjective and often unfair to the contractors while scores awarded could vary from person-to-person and were not based on any qualified logic.

However, the pass/fail system also reportedly entailed frequent re-tender and often, none of the contractors could pass all the qualification criteria.

It was also noticed that only a few contractors could qualify to take up most projects as many were young and inexperienced in the field.

According to the executive director, unlike previous years, one dedicated engineer would supervise only a single site assuring quality infrastructure.

He added that through these new strategies, CDB is actually encouraging more people to engage in the construction industry besides generating employment.

A CDB report stated that the construction outlay in the 10th five year plan had almost doubled to a whopping Nu 44 bn.

It is expected to increase by a further 60-80% in the next five year plan.

 

 

 

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