New Rules Tighten Leash for Consultants, Introduce Harsher Penalties


April 9 , 2022
By BERSABEH GEBRE ( FORTUNE STAFF WRITER )


Consultants and firms failing to hand over public projects meeting standards and upon schedule can be denied competence certificates. A new directive effective last week granted the Ministry of Urban Development & Infrastructure the authority to suspend certifications.

The rare move in attaching penalties and suspensions, which can last up to three years, comes in the wake of a study jointly commissioned by the Construction Management Institute and the Ethiopian Consulting Engineers & Architects Association. Released three months ago, the study asserted that dilettantism in the construction industry led several construction projects to cost runs and delays, putting a financial burden on the public.

Officials regulating the industry attribute construction management and contract administration malpractices to failures to fulfil requirements in contract provisions.

The industry continues to depend heavily on the traditional client-consultant-contractor relationship. Consultants are selected through competitive bidding and shortlisting. Although the other two parties involved in projects take their fair share of the blame, officials claim much of the problems arise from a lack of expertise and knowledge on the part of consultants who design and supervise projects.

The directive is the first piece of administrative tool to impose restrictions, penalties and suspensions on consultants.

It took two years and six consultative discussions with relevant parties to draft the directive, according to Tewodros Tegegne, head of the Construction Industry Reform Office under the Ministry. The directive's authors used international standards as a benchmark, said Tewodros.


The 23-page directive asserts that it was necessary to hold consultants responsible for misconduct and wasting public resources. Industry players say most clients do not have experience in construction. While contractors are responsible for executing projects, consultants play a vital role in supervision. They have legal and ethical responsibilities to ensure construction activities meet industry standards, says the directive.

Signed by Chaltu Sani, minister of Urban Development & Infrastructure, the directive looks to establish accountability procedures for regulating consultants involved in projects financed by the federal government. Public-financed projects implemented by private organisations that use loans from the state-owned Commercial Bank of Ethiopia (CBE) and the Development Bank of Ethiopia (DBE) are also subject to the directive.

There are close to 648 consulting firms with grades ranging from five to one, according to data obtained from the Association. Projects worth more than 50 million Br must be designed and supervised by a grade-one consultant.

With over three decades of experience in the construction industry, Eshetu Temesgen presides over the 140-member Consulting Engineers & Architects Association. He welcomed the directive as "a right move the Association was waiting for."


Incorporated 10 years ago with five million Birr capital, Aspire Aecom Architectural & Engineering Plc is in design and supervision works. The company handles four public projects, including a housing and office complex designated for the Ministry of Foreign Affairs. Its General Manager, Samuel Alew, applauds the move to hold consultants responsible for misconduct. However, some of the provisions in the directive are prudish and do not consider the reality on the ground.

“Consultants are paid less," said Samuel. "But they are expected to perform high.”


The construction industry, which contributes nearly a fifth of the country's gross domestic product (GDP), has been at the centre of the public investment-led development strategy Ethiopia has pursued for the past two decades. It has been growing by an annual average of 11pc. It is a source of employment for five percent of the national workforce of over 41 million, data from the Ethiopian Statistics Service shows.

Fueled by public-led investments, the country has spent huge amounts of money on mega-projects. A university capacity building programme was one that saw the number of public universities shoot up to 47 from eight two decades ago. The low-cost housing programme, responsible for constructing more than 350,000 housing units; and the more than 100,000Km asphalt road under the four phases of the Road Sector Development Program are some of the public infrastructure projects.

Of the 800 public projects implemented in the last 25 years, almost 90pc with an aggregate project cost of 92 billion Br was run by 41 public universities.

Numerous construction projects under these programmes suffer from cost and time overruns.

Cost overruns in Ethiopian public projects range between 60pc and 160pc, according to a study published by the International Research Journal of Engineering & Technology. The study reveals that some projects had cost overruns as high as 400pc.

Experts emphasise that a lack of accountability from those in charge of the projects is the primary reason for the delays. However, they disagree with some of the penalties in the directive. It holds consultants responsible for damages for up to 10 years following project completion. It also does not rule out the application of criminal proceedings and civil suits.


It is unjustifiable, says Abebe Dinku, professor of construction management at Addis Abeba University.

“It's unfair to hold them accountable without paying them a reasonable amount," he said.

Consultants can file an administrative appeal within two weeks after receiving suspension notice.

Abebe urges the authorities to consider other regulatory mechanisms before imposing such penalties. Registration and licensing are the only regulatory methods employed by the government. An assessment commissioned by the Construction Management Institute to determine the competence level of construction professionals categorised under 13 groups discovered registration and licensing procedures are insufficient to address the prevailing incompetence observed in the industry.

Construction professionals receive certification from the Construction Works Regulatory Authority based on a regulation issued this year. They are required to submit educational, training, and work experience credentials before they receive a certificate of competency and registration. However, the process is outdated, where the only credentials required are documents that show previous experiences and projects delivered.



PUBLISHED ON Apr 09,2022 [ VOL 23 , NO 1145]


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