Islamabad (Commerce Desk): The government is preparing wide-ranging reforms to promote Pakistan’s construction industry and improve the implementation of development projects. Proposals are also under consideration to establish one or two separate institutions to oversee and support the sector’s growth.
A meeting chaired by Federal Minister for Economic Affairs Ahad Cheema reviewed the proposed reforms. The Housing Secretary briefed participants on the proposals, after which the minister directed that further consultations be held.
According to Ahad Cheema, one institution could be assigned regulatory responsibilities, while another could focus on promoting the construction industry. He said consultations with the Constructors Association of Pakistan (CAP) regarding the proposed new institution would be completed soon.
The meeting proposed placing contractors’ security deposits in profit-bearing accounts during the Defects Liability Period. Once the stipulated period ends, the original amount, along with the profit earned, would be returned to contractors. The proposal aims to establish an effective mechanism for managing the financial aspects of construction projects.
Participants also stressed the need to strictly implement the Dispute Avoidance/Adjudication Board (DAB) mechanism to monitor projects and prevent disputes. CAP officials proposed applying the mechanism to projects costing Rs20 billion or more. However, Ahad Cheema directed that the same procedure should also be adopted for projects costing less than Rs20 billion.
The federal minister said further consultations would be held to determine project costs. He added that the new framework for the construction sector was being developed with guidance from the rules and standards of the International Federation of Consulting Engineers (FIDIC).
He also said the Public Procurement Regulatory Authority (PPRA) would begin work on setting a Defects Liability Period of three years or longer for major projects. According to the minister, extending this period would encourage contractors to deliver higher-quality work, while the three-year requirement would gradually be extended to smaller projects as well.
The meeting was attended by Minister of State Bilal Azhar Kiyani, Housing Secretary Captain (retd.) Muhammad Mahmood, the managing director of PPRA, and officials from the Planning Commission and the Constructors Association of Pakistan.