Contractor Perspective

The country’s irrigation sector continues to witness long delays in implementation of projects. Several projects have been languishing for years leading to cost and time overruns. A case in point is the Polavaram irrigation project that was first conceived decades ago in 1941. However, the project is still mired in operational issues and is yet to see the light of day.

Issues such as shortfall in land acquisition, inability to obtain statutory clearances, involvement of multiple agencies, lack of inter-state coordination, changes in design and scope, lack of funding, etc. are some of the impediments that pose difficulties for contractors implementing projects in the sector. Significant measures need to be taken by the government to ensure timely execution of projects in order to expand irrigation coverage.

Construction challenges

Land acquisition is a major hurdle that hampers the progress of irrigation projects. Currently, the majority of the irrigation projects are awarded prior to the completion of the land acquisition process. Thus, both the execution of the project and acquisition of the land are undertaken simultaneously. This results in implementation delays and high cost overruns. Contractors also face difficulties in mobilisation of resources such as labour and equipment when land is handed over in small patches and not completely. Several issues relating to rehabilitation and resettlement of the affected population including inadequate land and crop compensation prevent the timely land acquisition.

The delay in obtaining environmental clearances is another critical issue that leads to projects getting stalled for years. Further, problems in shifting of utilities such as railway lines, sewage lines, telephone cables, etc. also contribute to the sluggish pace of project execution. The contractor is often held accountable for such delays.

Further, deficiencies in the planning process not only adversely impact project implementation but also its progress. The cost estimations are often made without site surveys using a standard schedule of rates that are suitable only for “ideal” working conditions. The ground situation and actual requirements are often not taken into account. The project timeline set by the implementing agency is also usually less than what is required for project execution, leaving the contractor to struggle with unrealistic expectations.

The basic parameters such as the number and location of irrigation structures are also not mentioned clearly in the pre-bidding documents. Further, the pre-bid meetings are often conducted either too early or too late than the required time. Besides, contractors are given a very short time for the bidding process. This makes it difficult for them to conduct any site surveys to prepare their documents. Thus they have to rely on the project reports made by the government agencies. Sometimes, unreasonable tender clauses such as profitability clauses and corporate debt restructuring clauses are added, making the bidding process unfair and uncompetitive. In  the case of a joint venture (JV), a lot of unnecessary financial and technical conditions are imposed upon the JV partner. There are also instances when tenders were rejected without providing any reasons to the contractors.

Project implementation also faces challenges when there is a change in the political scenario in the state. Project scope, design and even the contractor are sometimes changed bringing a sudden halt to construction work. There have also been cases when contractors have had to deal with differences of opinion between the Central Water Commission and the state government. The process of revision of designs, getting new approvals and conducting reverse tendering take a lot of time and result in cost escalations. In case the old contractor is retained, he has to incur huge expenditure on remobilisation of resources. Companies also have to incur additional costs for renewal of their bank guarantees. Such situations cause immense financial stress for contractors.

In the case of micro-irrigation projects, the time available to contractors for the installation of the systems is limited due to seasonal cropping patterns. Delays in design approvals and issuing of work orders by the government can create a lot of problems as farmers might plan to abandon the systems if they are not installed within a particular time frame. The burden to convince the farmers in most cases then falls on the contractors.

Proposed solutions

Proactive measures need to be taken by the government to resolve lingering concerns in the irrigation sector such as land acquisition, securing environmental clearances, etc. to ensure timely implementation of projects. It is important that projects are awarded only after the land has been acquired and requisite clearances and permissions are in place. For instance, in the road sector, the National Highways Authority of India has taken a stand by awarding projects only after 90 per cent of the land has been acquired. Such practices can prove beneficial for the irrigation sector as well.

Further, undertaking a proper planning exercise and conducting site surveys before floating the tenders can help in eliminating several issues. They can aid in preparing appropriate designs, making accurate cost estimations and identifying obstructions in construction such as the presence of underground utilities. In fact, hiring of consultants responsible for finalisation of designs and obtaining of clearances can be a major step forward and help in speeding up project implementation.

Moreover, a movement towards item rate contracts can be favourable for the irrigation sector due to inherent issues in implementing engineering, construction and procurement (EPC) contracts. Under the EPC model, contractors have to face huge risks. On the other hand, under item rate contracts, any issues that arise can be solved immediately and the scope of any incorrect calculations is minimised. This leads to optimisation of costs. Additionally, there is a need to shift away from the lowest bid award system or L1 bidding. Several countries such as China, Malaysia and Italy have adopted an alternative system known as the average bid method (ABM). As per the ABM, the contract is awarded to the contractor whose price is closest to the average of all the bids submitted. This method can ensure benefits for both the contractor and the government agencies. While the contractors will have an opportunity to cover their costs, the agencies can reap the benefits of timely project completion.

Besides, the use of modern and alternative technologies needs to be promoted by the government. In areas where land acquisition and securing clearances are difficult, alternative methods such as the use of pipes for conveying water need to be adopted. The contractor also needs to be compensated for time and cost overruns caused by factors beyond his control.

For successful implementation of micro-irrigation projects, it is important to form water users’ cooperative societies during the project conceptualisation stage itself. Such initiatives can help in spreading awareness about micro-irrigation schemes and convincing farmers to deploy such systems, enabling faster execution of projects. Further, the government should also subsidise certain inputs such as water soluble fertilisers to encourage the adoption of micro-irrigation techniques.

Conclusion

Increasing the gross irrigated area is of paramount importance to improve agricultural productivity and reduce dependence on the monsoons. At present, around half of the agricultural area is rain fed. Further, as the government aims to double the average income of farmers by 2022, the development of adequate irrigation infrastructure becomes crucial. The timely completion of projects will help in developing the water utilisation capacities required for meeting future demand.

Thus, there is an urgent need to resolve legacy issues such as land acquisition and delays in securing clearances that continue to plague the irrigation sector. It is important that all stakeholders work together for timely completion of projects. Further, government agencies need to treat contractors as partners for successful project execution.

Based on a panel discussion among N. Janakiram, Senior Vice President, BGR Mining and Infra; T. Vijaya Kumar, Associate Vice President, Gayatri Projects; C. Ramanathan, General Manager, Amrutha Constructions; and G. Srinivasulu, State Head, Telangana, Jain Irrigation Systems, at a recent India Infrastructure conference

 

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