Govt plans 5-fold increase in DPR contract threshold
ROADS & HIGHWAYS

Govt plans 5-fold increase in DPR contract threshold

A senior government official has revealed plans to establish a threshold of Rs 5 lakh per km for the allocation of detailed project report (DPR) contracts to road consultants. This marks a significant increase from the current average of Rs 1 lakh per km, signalling a shift from a least-cost to a fixed-cost model. The move aims to enhance the quality of DPRs to align them with international standards and mitigate project delays, according to an anonymous official cited by ET.

The Ministry of Road Transport and Highways has initiated consultations with stakeholders to gather feedback on the proposed changes and intends to formulate new rules for DPRs in the near future.

The official emphasised the necessity for a minimum base price to prevent the awarding of contracts to bidders quoting excessively low prices, only to deliver subpar DPRs, resulting in project delays and cost overruns. The proposed base price considers global norms regarding salaries for high-quality human resources and other relevant factors. While a final decision is pending, the government anticipates that implementing a threshold will attract better quality DPRs.

The government asserts that project execution delays stem from deficiencies and poor quality in the project preparation stage, leading to modifications in the scope of work, variations, and time and cost overruns. Despite the potential fivefold increase in DPR costs, the government believes that the benefits derived from improved DPR quality and resulting savings will outweigh the additional financial burden on the exchequer.

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A senior government official has revealed plans to establish a threshold of Rs 5 lakh per km for the allocation of detailed project report (DPR) contracts to road consultants. This marks a significant increase from the current average of Rs 1 lakh per km, signalling a shift from a least-cost to a fixed-cost model. The move aims to enhance the quality of DPRs to align them with international standards and mitigate project delays, according to an anonymous official cited by ET. The Ministry of Road Transport and Highways has initiated consultations with stakeholders to gather feedback on the proposed changes and intends to formulate new rules for DPRs in the near future. The official emphasised the necessity for a minimum base price to prevent the awarding of contracts to bidders quoting excessively low prices, only to deliver subpar DPRs, resulting in project delays and cost overruns. The proposed base price considers global norms regarding salaries for high-quality human resources and other relevant factors. While a final decision is pending, the government anticipates that implementing a threshold will attract better quality DPRs. The government asserts that project execution delays stem from deficiencies and poor quality in the project preparation stage, leading to modifications in the scope of work, variations, and time and cost overruns. Despite the potential fivefold increase in DPR costs, the government believes that the benefits derived from improved DPR quality and resulting savings will outweigh the additional financial burden on the exchequer.

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