Govt plans three-year minimum defect liability for major projects
The government plans a defect liability period of at least three years for major public construction projects. The rule is to be extended to smaller projects in phases.
- Defect liability of at least three years planned for major public projects
- PPRA directed to extend the rule to smaller projects in phases
- CIDA Bill structure sent back for further consultation
- DAAB threshold of Rs20 billion proposed by contractors; minister wants it lowered
The government plans to introduce a minimum defect liability period of three years for major public-sector construction projects, which would keep contractors responsible for defects for longer. The measure is to be extended to smaller projects in phases, Business Recorder reported.
The direction was issued by Federal Minister for Economic Affairs and Establishment Division Senator Ahad Cheema at a meeting on reforms for the construction sector, according to The Express Tribune. He directed the Public Procurement Regulatory Authority (PPRA) to bring in a defect liability period of three years or more for major projects.
The meeting also discussed the proposed CIDA Bill. The minister said the bill needed detailed consideration, including whether to set up a single body for the construction sector or two separate entities. Minister of State for Finance Bilal Azhar Kayani and representatives of the Constructors Association of Pakistan (CAP) were asked to consult further on the proposed institutional structure.
Participants considered placing retention money, which contractors deposit during the defect liability period, in interest-earning accounts. The principal and interest would be repaid to contractors after the stipulated period. The minister called for more consultation to develop a workable retention money mechanism.
The meeting also considered applying the DAAB mechanism to government projects. CAP proposed using it for projects valued at Rs20 billion and above. The minister called for the threshold to be lowered and for further consultation with stakeholders to settle on an appropriate limit.
The minister said the forthcoming construction sector framework will draw on FIDIC rules and standards, which he described as a key reference.
The meeting was attended by Bilal Azhar Kayani, Housing Secretary Captain (retd) Muhammad Mahmood, a Planning Commission member, the PPRA managing director, CAP representatives and other senior officials.
Why it matters
Taxpayer-funded projects would keep contractors responsible for defects for longer, and the planned rules would affect contractors working on public works.
