Addressing COVID-19 related Challenges in Infrastructure Projects
Global Procurement Summit 2021 organized by All India Management Association with support of Ministry of Finance, Government of India, the World Bank and the Asian Development Bank gave platform for discussion and exchange of ideas between senior officials engaged in public procurement at central and state public entities and the key bidding communities represented by manufacturers, suppliers, contractors and consultants. The key objective of the summit was to discuss Procuremnet as Enabler for COVID 19 Emergency response and come out with recommendations for the way forward.
One of the plenary sessions of the summit on “Addressing COVID-19 related Challenges in Infrastructure Projects” was chaired by Ms. Elmas Arisoy, Practice Manager, Solution and Innovation in Procurement, World Bank. The panel of experts for this session included Mr. Kanwal Preet, Director, Public Procurement Division, Ministry of Finance, Government of India, Mr. Binaya Bhusan Mishra, VP & Head of Supply Chain, Larson & Toubro Construction and Mr. Ajay Kumar, Executive Director, Dedicated Freight Corridor Corporation of India Limited.
Ms. Arisoy initiated the proceedings for this session by emphasizing the importance of executing capacity of the Government and the contractors for achieving the goals outlined in the National Infrastructure Pipeline. She mentioned that due to COVID-19, there has been a significant increase in implementation delays and cost overruns. She further explained that these issues primarily ascended due to nation-wide lockdowns, closure of construction sites, supply- chain disruptions and were compounded by the need to divert the funds from infrastructure sector to health sector. Overall, these activities resulted in fewer business opportunities in construction industry and delayed payments for ongoing projects.
Ms. Arisoy also highlighted that the construction industry around the world witnessed an exponential increase in the use of force-majeure provision in the contract due to COVID-19 situation. This led to a substantial increase in disputes/cases due to unsettled payments and many still remain unresolved. Ms. Arisoy concluded by stating some solutions that can be implemented on existing contracts.
The next speaker for the session, Mr. Kanwal Preet discussed the initiatives taken by the Procurement Policy Division, Department of Expenditure for supporting the infrastructure projects during the COVID scenario. These initiatives included reduction of performance security in all contracts from
5-10% to just 3% for limited time and provision of bid security declaration in place of monetary bid security in the bid document. He also mentioned that the Government agency were instructed to return the performance security to the contractors in proportion to supplies.
From Top (L-R): Ms Elmas Arisoy, Practice Manager, Solution and Innovation in Procurement, World Bank, Washington DC; Mr Ajay Kumar, Executive Director, Dedicated Freight Corridor Corporation of India; Mr BB Mishra, VP & Head Supply Chain, Dedicated Freight Corridor Corporation of India Limited and Mr Kanwal Preet, Director, Public Procurement Division, Ministry of Finance, Government of India
The next speaker, Mr. B. B. Mishra, reflected on the supply chain related challenges faced by the private contractors and some key initiatives taken by them during the COVID scenario. During his presentation, Mr. B. B. Mishra mentioned that at the onset of the outbreak, the workers were petrified and wanted to return to their home. The remaining workers were under the supervision of senior management and their safety and needs were taken as the primary concern by the organization.
He mentioned that a major challenge faced by the private contractors was to inspire the workforce to re-mobilize at the construction site to resume the ongoing projects. For this, L&T formed an apex team that constituted of senior management officers who visited the sites across country to regain the trust of the labour. The organization also initiated buses from project location to various villages, introduced various initiatives like Digital Workmen connect app and even arranged flight travels due to lockdown restrictions.
Mr. Mishra also stated that only 50% of the total workforce that migrated back to their hometowns remobilized on the project sites after the restrictions were lifted. The remaining workers were offered work under various national and state employment schemes like MNREGA, etc. Hence, the balance workforce was recruited afresh from various Industrial Training Institutes, NGOs, other training institutes, etc. The new workforce was then trained through digital platforms and the trainees were provided with PPE kits, food, transport and 24x7 medical care facilities. Further, he stated that the workers were encouraged to ensure safe operations and helmets of these workers were embedded with a GPS device that alerted the senior management in case of social distancing violations.
Mr. Mishra further elaborated on various supply chain related challenges faced by the private contractors and bucketed them under four major heads of material scarcity, issues related to sourcing and procurement, no physical inspections of material and issues pertaining to transport and logistics due to nation-wide lockdown. In order to alleviate these challenges, some initiatives undertaken by L&T included conducting Remote Factory Acceptance Test, extended use of digital enablers for business continuity, stakeholder interactions and online trainings, drone-based site inspections among others.
The last speaker for the session, Mr. Ajay Kumar, highlighted some key initiatives taken by the government agencies like DFCCIL for addressing the challenges in infrastructure projects due to COVID-19. These initiatives included Food and Lodging Facilities for the stranded labors, on-site medical facilities, and circulation of guidelines issued by Ministry of Health & Family Welfare, among other. He mentioned that during these trying times, DFCCIL conducted progress review meeting through virtual platforms and submitted notice to the contractors for adoption of full safety and security protocols for ongoing projects.
He further added that the corporation was determined to train the staff and conduct various awareness drive to prevent spread of COVID. He also stated that while the field work remained closed, various other tasks related to preparation of designs and design reviews were completed at a rapid pace to ensure swift recovery after COVID times. The corporation also implemented e-office for undertaking regular office works and took special measures to ensure that the on-site workers are paid consistently during the entire period.
Mr. Ajay Kumar further elaborated on the issues that the corporation faced post April 2020 and highlighted the actions taken to ensure smooth progress of work. These measures included procurement of material based on material certificate without inspections, early release of contractual payments, drone surveys for monitoring the progress of work, release of performance security proportionate to work done, reduction of performance security, among others. Following the final presentation, the panellist responded to a few queries raised by the audience and the session concluded with a final vote of thanks from the chairperson Ms. Elmas Arisoy, Practice Manager, Solution and Innovation in Procurement, World Bank.