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Hindustan Times
15-05-2025
- Business
- Hindustan Times
MoRTH's stricter bidding rules to ease competition in road projects: ICRA
The decision by the union ministry of road transport and highways (MoRTH) to introduce a new additional performance security (APS) regime last month for all central government road projects (such as national highways) is expected to result in better road quality. APS is a financial guarantee required to be paid by private contractors for quoting significantly below the estimated base price and acts as a safeguard for the government. This is over and above the standard performance securities, which are forfeited in instances of default. A higher APS ensures that only serious and financially stable contractors participate in bidding, ensuring better quality and timeliness. On April 30, MoRTH, in a circular, had said that this APS regime is being introduced to deter abnormally low bids in the national highway projects. Under this new circular, now APS will be triggered if bids are lower than 10% of the estimated project costs and it will be set at 0,1% for every percentage of bid price below 10% and 0.2% plus an additional 1% of the bid price in instances when the bid price is 20% or lower than the projected cost. This new circular, which is effective immediately, will remove the 3% cap (of the projected cost) on APS and remove the threshold of a 20% discount to be triggered, which was the case previously. The National Highway for Electric Vehicles (NHEV), a central government-promoted pilot for building electric highways' national project director Abhijeet Sinha said the previous cap of 3% was unrealistic to impose strict adherence to quality and timelines. He said, 'While it may increase upfront financial commitments for bidders, it serves a larger strategic purpose of preventing post-award costs inflation through change requests and claims. ' Ashish Modani, group head, corporate ratings at ICRA, said this move by the government will deter speculative bidding and promote realistic pricing. 'But in the near term, it is expected to put strain on the credit profiles of small and mid-sized contractors, particularly those with limited-sized bank guarantee limits. The requirement for cash margins to secure additional bank guarantees will increase working capital needs, potentially impacting bidding capacity, revenue growth, and coverage metrics due to higher finance costs.' But he said in the medium term, the policy will eventually result in better quality of road construction. Echoing Modani's comments, Prabhakar Kumar, government consulting head at REPL, a listed infra consultant company, said this move by the government sends a clear signal that only serious and financially sound players should participate in national-level tenders and cost-cutting at the expense of quality will no longer be rewarded. But he added, 'At the same time, the government should ensure timely payments to contractors for quality and timely work completed. A statement from ICRA said that most construction projects were awarded at significant discounts, at a median of around 25% between January 2024 and March 2025. Analysis by the ratings agency showed that the effective performance security will differ by 1% of the project cost at the 20% discount scenario to 2% at a 40% discount scenario due to the policy change. Currently, the government is facing challenges both in the of quality and timeliness of highway projects, with MoRTH lowering highway construction targets in recent years, and concentrate on quality. In January, the Parliament was told that since March 2024, nearly 44% of all national highway projects worth ₹150 crore and above, across 32 states and union territories, were facing delays. In a separate revelation, the government had said there were at least 59 cases of major deficiencies, including cave-ins during the previous five financial years ending FY 24, including provisional data for FY 25.
Yahoo
04-02-2025
- Business
- Yahoo
Offer for your house too good to be true?
(WKBN) — You receive an offer on your house, but is it legitimate? The Ohio Department of Commerce's Division of Real Estate and Professional Licensing (REPL) issued a warning Tuesday letting homeowners know about unsolicited offers for real estate in the state. If you aren't careful, these offers could lead homeowners to sell their property for significantly less than it's worth or agree to a lease arrangement that could have unintended consequences. The agency reported that some people have received offers that include a disclosure form developed by REPL. While the form is authentic, the accompanied offer could give the appearance that the person or entity making the offer is registered with the Division. REPL wants homeowners to know that the inclusion of the disclosure form does not affirm the validity or legality of the offer. With such low inventory of homes in the housing market, homeowners getting unsolicited offers for their houses has increased. REPL Superintendent Daphne Hawk encourages all consumers who receive these offers to exercise caution and do plenty of research before making a decision. Consumers can verify the status of a real estate license on the Division's website through eLicense Online. The Federal Trade Commission (FTC) also offers advice on limiting unsolicited offers received by various means. For more information, visit: How To Stop Junk Mail How to Stop Unwanted Calls Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
