ISLAMABAD: The government is considering two new institutions for the construction industry, a regulatory authority and a marketing entity, along with a three-year defect liability period for major projects.
The proposals were discussed at an exploratory meeting chaired by Economic Affairs Minister Ahad Cheema on reforms aimed at improving project delivery and addressing industry concerns. Minister of State for Finance Bilal Azhar Kayani, Housing Secretary Muhammad Mahmood (retd) and other senior officials attended.
Participants reviewed the proposed Construction Industry Development Authority (CIDA) Bill. Mr Cheema said it required detailed consideration, including whether one body should handle the sector or two separate entities should be created, one to regulate and the other to promote the industry.
Private sector representatives and the government differed on the project size at which defect liability should apply. The industry sought a minimum threshold of Rs20 billion, while the government pushed for lower amounts.
The Constructors Association of Pakistan (CAP) similarly proposed applying the Dispute Avoidance and Adjudication Board (DAAB) mechanism to government projects worth Rs20 billion and above. After further consultation, Mr Cheema asked for a lower limit.
The meeting also considered placing contractors’ retention money in return-earning accounts, with the principal and interest repaid after the defect liability period ends.
The proposed framework will draw on standards set by the International Federation of Consulting Engineers (FIDIC). The Pakistan Public Procurement Regulatory Authority was directed to begin work on a defect liability period of three years or more for major projects, with the measure to be extended to smaller projects in phases.
Participants agreed to continue talks with stakeholders, including agencies led by Mr Kayani and CAP representatives.
In August, the government had been reported to be considering a wider package for the sector, including a Construction Industry Development Board, a possible Construction Development Bank, revised trade policies and targeted tax reforms.
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