Agenda | May 08,2021
June 19 , 2021
By BERSABEH GEBRE ( FORTUNE STAFF WRITER )
Construction companies will not be allowed to take on more than six projects at a time unless they outperform the conditions and expectations stated on their contracts, if a new directive comes to force some time next year.
Drafted by officials at the Ministry of Urban Development & Construction, the directive dictates stringent guidelines for contractors taking public projects.
The directive was in the making since September, under the directorate for Construction Industry Law Framework. The draft has come about with the overall target of reducing delays on public projects and the additional costs associated with contractors biting off more than they can chew. Contractors win a number of bids but multiple projects fall behind schedule as a result of them being stretched thin.
"Contractors offer low bidding prices for projects that they can't handle," said Medina Ahmed, head of the directorate.
The directive in the making will compel project owners to check on a contractor undertaking projects to ascertain a completion rate higher than what is stated on the contract before awarding an additional project.
"The directive aims to give other contractors, especially beginners, a chance," Medina told Fortune.
Once approved, the directive will apply to the 23,000 contractors of all grades licensed, including foreign firms limited to seven projects at a time, and the state-owned Ethiopian Construction Works Corporation, one of the 335 grade-one contractors.
Industry leaders see the directive as a positive step.
Tewodros Shimeles, CEO of TABU Construction Plc, in business for a decade, believes the directive helps to avoid concentrations of projects in few hands and motivates contractors to complete projects within contract periods.
The directive "will do wonders" for smaller contractors excluded from big public projects, said Zeratsion Girmay, CEO of Bright Construction, in business for two decades.
"Contractors with connections get all the public projects, sometimes one would take on more than 40 at a time," he said. "This is while many weren't able to get enough work to sustain their business."
The Ethiopian Contractors Association, the industry lobby group, has a concern.
Admitting the importance of a limit for fair competition in the construction industry, which grew by 10pc last year and by 15pc during the year before, Girma Habtemariam, president of the Association, believes the proposed limit overlooks the contract amount, an important factor he says has been ignored.
"A single project may amount to as high as the cost of six projects," Girma says. "Analysing the cost and scope of the project is equally important and must be taken into account during evaluation and awarding of new contracts."
Evaluations on progress will be conducted three times during a project's lifespan by a team from the employer institution, the draft directive dictates. A contractor's eligibility for additional projects will be based on recommendations from the evaluators, according to the drafters. The directive wants to set a maximum of a quarter of the total project lifespan to contractors which fail to wrap up their work on time, after which, their contracts will be terminated.
The Construction Work Regulatory Authority is the federal agency supervising and evaluating progress on public projects.
The directive is open to amendment and the Directorate has been collecting feedback from the parties involved, holding discussions with the Ethiopian Contractors Association and the Federal Attorney-General's Office last week, Medina disclosed.
"We hope the draft will be effective next year," Medina told Fortune. "We'll give an opportunity to the stakeholders to give us feedback and incorporate it before approval."
PUBLISHED ON Jun 19,2021 [ VOL 22 , NO 1103]
Agenda | May 08,2021
Radar | May 02,2020
Radar | Nov 27,2021
Editorial | Feb 12,2022
Fortune News | Dec 19,2018
Editorial | Sep 06,2020
Fortune News | Nov 06,2021
Life Matters | May 23,2021
Fortune News | Mar 28,2020
Commentaries | Dec 19,2021
November 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
November 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
October 16 , 2021 . By HAWI DADHI
Residing in a country with no capital market, an organised marketplace for trading se...
August 28 , 2021 . By HAWI DADHI
The streets of Addis Abeba are as varied as they are many, although too many of them have yet to be named. From the narrow alleyways of the...
Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...
When the country’s most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or tw...
May 21 , 2022
There was a great deal of handshaking and patting each other on the back at the Hyatt...
May 14 , 2022
Diana Yohannes is one of those actively engaging in social media platforms with her T...
May 7 , 2022
The Ethiopian Economic Association (EEA) recently proposed the formation of a macroec...
April 30 , 2022
There is no ambiguity in the UNDP's assessment of Ethiopia’s economic performance a...
PM Abiy Ahmed (PhD) at a Gala Dinner Called for the Awarding of the Félix Houphouët-Boigny Peace Prize
May 6 , 2019
Adulteration is getting out of hand. Consumers in Ethiopia are being left to their ow...
Or see contact page