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Bonus clause accelerates work on road project

Anil Sasi

The bonus clause incorporated by the National Highways Authority of India to spur completion of the National Highways Development Project contracts has started bearing results with two contractors earning incentives.

While Oriental Structural Engineering Company received Rs 29.9 million for completing the Nagpur-Adilabad section five months ahead of the schedule, PNC Construction Company earned a bonus of Rs 3.6 million for early completion of four-laning of a portion of the Agra-Gwalior section.

"With construction activity picking up on the first phase of the Rs 580-billion National Highways Development Project, we are expecting many more players to come forward to claim bonus," an official said.

The authority incorporated the bonus clause in the contracts to encourage contractors to complete projects ahead of the schedule.

Under the scheme, contractors will be paid a bonus ranging from 1 to 6 per cent of the total contract value for completing projects ahead of the schedule. The bonus will depend on the time by which the project completion has been expedited vis-à-vis the targeted schedule.

"For every month of early completion, contractors will get 1 per cent of the contract cost from the government up to a maximum limit of Rs 180 million," an official said.

The ministry of roads is hinging on the bonus clause to act as the key incentive for early completion of contracts under the project.

For encouraging faster execution of projects, the authority is also releasing payments to contractors on time.

A possible delay in completion of the first phase of the project is likely on account of 7-8 contracts, on the World Bank-funded national highway No 2, falling behind the schedule.

The ministry is trying to convince the World Bank to agree to include the bonus clause in some of the sections.

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