Lack of bidders for any infrastructure project, contractual failures have become the order of the day, thanks to the soaring prices of construction materials. Leave alone the steep rise in prices, the problem is the widening gap between the demand and supply.
A cursory glance of the tender process and their outcome in the last sixteen months with the Highways Department, the civic body and the Public Works Department clearly indicate that rise in prices of construction materials has slowed down the pace of development of infrastructure.
Though officials maintain that a 5 per cent upward estimation is being given as a cushion to combat the increase in prices of materials, the officials as well as the contractors admit that the market prices of commodities such as cement, steel, bitumen and brick is ruling at a 15 per cent to 30 per cent higher level than the standardised schedule of rates fixed by the Government.
According to K. Chinnasamy, president of the Tamil Nadu Quarry Crushers Association, given the laborious work involved in road works, the cost of labour has gone up manifold. Since workers find other jobs comfortable, the industry is also facing shortage of manpower. The cost of labour Rs. 150 to Rs. 200 a day has gone up to Rs. 300 to Rs. 350. Contractors are even forced to source labour from other districts and States.
The Highways Department alone on an average is executing works closer to a tune of Rs. 120 crores every year. The Government has now issued an order to provide contractors relief in the form of Revised Administrative Sanction for cost escalations faced during the execution period. The Public Works Department has nearly Rs. 25 crore worth of works due for execution this year. There are tenders for only works worth Rs. 1 crore, sources say. Given the loss a contractor would incur in completing a project, there had been cases of contractual failures wherein the contractors have chosen to abandon the work foregoing their Earnest Money Deposit.
Mr. Babu, a contractor taking up works with the Corporation and Highways, points out that rise in prices has hampered developed works.