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BMC tells contractors to cut concrete road work rates by 8%

Under fire for cost escalation in its mega cement concrete (CC) road works worth Rs 6,080 crore, the BMC has told the winning contractors to reduce their rates quoted by at least 6% to 8% and agree to work "on par" with the BMC's estimates.

Under fire for cost escalation in its mega cement concrete (CC) road works worth Rs 6,080 crore, the BMC has told the winning contractors to reduce their rates quoted by at least 6% to 8% and agree to work “on par” with the BMC’s estimates.

With the BMC’s mega road contracts under the scanner over cost escalation and Shiv Sena (UBT) leader Aaditya Thackeray alleging there was a price hike of around 48%, the BMC is hard bargaining with the winning contractors.

BMC has said it is insisting contractors work on par with the BMC’s estimates since the schedule of rates was revised only recently and there is no need to quote rates higher than the estimated rates. However, so far, the five winning contractors are refusing to budge and reduce their rates.

“We have sent two letters to the winning bidders asking them to reduce their rates and agree to work on par with the BMC’s estimates but they have not replied. Four out of the five bidders also didn’t turn up for a negotiation meeting on Monday. So we will call them for another round of meetings and then decide. We will ask them to work on par with the estimates,” said a senior civic official.

In the biggest-ever civic contract to concretise 400km of road for Rs 6,080 crore, the BMC has finalised five big construction firms experienced in national highway construction to execute the work.

All the five companies have bid around 6% to 8% above the BMC’s estimate. The two-year road concreting mega-contract is expected to be awarded to Nagarjuna Construction Company, Eagle Infra India, Roadways Solutions India, Megha Engineers & Infrastructure and Dineshchandra Agrawal Infracon.

Last week, Aaditya had said in previous CC road contracts, contractors had always bid around 20% below estimate. “In November 2022 since there was no response to the Rs 5,000 crore CC road tenders, it was decided to draw new tenders, with a revised schedule of rates (SOR).

The BMC escalated the SOR by 20%, thereby cladding the unnatural over-escalation by contractors to below 10% at first glance. This gives a 40% hike in tender prices to be won by contractors who emerge as the lowest bidder.

Effectively, this means works that used to be completed at 80% of the estimated price by the BMC (which is higher than other cities), will now be done at 120%, thanks to the hike in SOR, by 20%. This helps sugarcoat the unnatural over-escalated bidding by contractors, almost by 40%,” Aaditya alleged. “Despite the rapid hike of almost 40% in the bid estimate price, the lowest bidder in each of the 5 packages has quoted an average of 8% higher than the estimated price. This takes the over-escalated bids higher from 2021 by almost 48% on an average,” Aaditya had said.

When contacted, P Velrasu, additional municipal commissioner (projects), said the BMC was negotiating with bidders and scrutiny was on.

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