Dix­ie-Ann Dick­son

While con­trac­tors have been giv­en the as­sur­ance by Fi­nance Min­is­ter Lar­ry Howai that out­stand­ing bills would be paid in a time­ly man­ner, Con­trac­tors As­so­ci­a­tion pres­i­dent Mervyn Chin says it would still take some time for the in­dus­try to bounce back. Last Sat­ur­day, at the cel­e­bra­tion of the 44th an­niver­sary of the T&T Con­trac­tors As­so­ci­a­tion (TTCA), Howai said the Gov­ern­ment had set up a bond to pay con­trac­tors in the con­struc­tion in­dus­try, ac­cord­ing to Chin.

"The gov­ern­ment float­ed a bond for $2.5 bil­lion at the end of Sep­tem­ber this year, part which is for set­tling con­trac­tors' pay­ment," Chin said. The con­trac­tor said he was un­cer­tain of the ex­act fig­ure the gov­ern­ment owed to date, since his col­leagues have been re­ceiv­ing their mon­ey on a grad­ual ba­sis.

"Ear­li­er this year, Ude­cott's chair­man said it was ow­ing con­trac­tors $300 mil­lion, while Ed­u­ca­tion Fa­cil­i­ties Com­pa­ny Litd(EF­CL) was ow­ing ap­prox­i­mate­ly $250 mil­lion. Since then pay­ments have trick­led in, but giv­en the length of time, the in­ter­est would have gob­bled up what­ev­er prof­its the con­trac­tors would have made."

Chin said for those con­trac­tors who have fold­ed up, their pay­ments would go to their cred­i­tors. He said the TTCA has hope in Howai as there are ef­forts on his part to bring this is­sue to a close. "He did symp­tathise with the con­trac­tors re­gard­ing the tardy pay­ments and we ap­pre­ci­ate that."

P3 mod­el a chal­lenge

Mean­while, Chin said the in­dus­try would need the big­ger projects to kick start the en­tire in­dus­try. "It still might be awhile be­fore Gov­ern­ment rolls out its big projects that would re­quire the Pub­lic/Pri­vate Part­ner­ship (P3 Mod­el) agree­ment."

He said projects that re­quire tra­di­tion­al de­signs like the Hous­ing De­vel­op­ment Cor­po­ra­tion (HDC) would come on stream soon, but those re­quir­ing the P3 mod­el, would not start un­til the mid­dle of 2013. For ex­am­ple, he said: "EF­CL is cur­rent­ly ten­der­ing for de­sign and con­struc­tion. If they just put out these ten­ders, then it would have to go through the ap­proval process and that would have a nat­ur­al ges­ta­tion pe­ri­od in it­self. So it would take awhile."

He said: "The 2012- 2013 Na­tion­al Bud­get of last Oc­to­ber list­ed a few de­vel­op­men­tal projects un­der the PSIP (pub­lic sec­tor in­vest­ment pro­gramme) which gov­ern­ment in­tends to un­der­take us­ing the P3 Mod­el. While this mod­el has had suc­cess in some coun­tries, so too, it has al­so had fail­ures that have been large­ly in­flu­enced by the vari­a­tion of the mod­el adopt­ed and the suit­abil­i­ty of the type of de­vel­op­ment."

He ex­plained that while the P3 pro­cure­ment mod­el adds a sub­stan­tial fi­nan­cial com­po­nent to the con­tract, the mod­el is best suit­ed to projects that have a clear rev­enue stream (ie hos­pi­tals, car parks, toll roads etc) but im­prac­ti­cal for court hous­es, po­lice sta­tions and the like that are more ef­fec­tive­ly fund­ed by gov­ern­ment as it has ac­cess to much cheap­er fi­nanc­ing than pri­vate busi­ness.

Chin rec­om­mend­ed that there should be a mix of pro­cure­ment mod­els in con­struc­tion in­dus­try. The con­trac­tor not­ed that the Gov­ern­ment had not yet out­lined the im­ple­men­ta­tion strat­e­gy to be adopt­ed for pro­cure­ment and he pre­dict­ed that there would be lit­tle ac­tiv­i­ty in the sec­tor un­til those risks were clar­i­fied.

"One of the most im­por­tant in­gre­di­ents for a suc­cess­ful P3 pro­pos­al is ac­cess to low cost fund­ing and this puts prospec­tive lo­cal de­vel­op­ers at a dis­ad­van­tage," said Chin. He said both gov­ern­ment and for­eign con­trac­tors can ac­cess fi­nanc­ing much cheap­er than what ob­tains on the do­mes­tic T &T mar­ket.

"If Gov­ern­ment is to con­tin­ue with this pro­cure­ment mod­el in keep­ing with Pro­fes­sor Uff's Com­mis­sion of En­quiry Rec­om­men­da­tion #43 which states 'Lo­cal con­trac­tors and con­sul­tants who com­pete with for­eign com­pa­nies should be pro­vid­ed with the same or equiv­a­lent ben­e­fits as en­joyed by those for­eign com­pa­nies and should be pro­tect­ed from un­fair com­pe­ti­tion through mat­ters such as soft loans,' Gov­ern­ment must pro­vide ac­cess to com­pet­i­tive fund­ing to equalise this dis­ad­van­tage," he said.