Three-year defect liability ordered

PPRA directed to phase in rule for smaller projects, CIDA Bill structure goes back to consultation

ISLAMABAD:

The Pakistan Public Procurement Regulatory Authority (PPRA) has been directed to introduce a defect liability period of at least three-year or more for major projects, with the measure to be extended to smaller projects in phases.

Federal Minister for Economic Affairs and Establishment Division Senator Ahad Cheema issued the direction at a meeting held to discuss reforms aimed at strengthening the construction sector, improving project delivery and addressing key issues faced by the industry. The meeting discussed the proposed Construction Industry Development Authority (CIDA) Bill, with the minister emphasising that it required detailed consideration, including whether to establish a single body for the construction sector or two separate entities, one to regulate the sector and another to promote the construction industry and handle related matters.

He asked the relevant officials, Minister of State for Finance Bilal Azhar Kayani and representatives of the Constructors Association of Pakistan (CAP) to consult further on the proposed institutional structure.

The retention money deposited by contractors during the defect liability period was also discussed, and the meeting considered a proposal to place these funds in accounts that earn a return, with the principal amount and interest paid back to contractors after the stipulated period. The minister called for further consultation to develop a workable mechanism.

It also considered applying the existing Dispute Avoidance/Adjudication Board (DAAB) mechanism to government projects, under which the board would monitor project implementation and help prevent or resolve disputes as they arise. CAP proposed applying it to projects valued at Rs20 billion and above, while the minister called for the threshold to be lowered and for further consultation among stakeholders to determine an appropriate limit.

The forthcoming framework for the construction sector will also draw on the rules and standards of the International Federation of Consulting Engineers (FIDIC), which the minister underscored as a key reference.

The meeting was attended by Minister of State for Finance Bilal Azhar Kayani, Housing Secretary Captain (retd) Muhammad Mahmood, a member of the Planning Commission, the PPRA managing director, representatives of CAP and other senior officials.