Government of India along with the Construction Industry has set up the Construction Industry Development Council (CIDC) to shape up the Indian Construction Industry. The Council started functioning in full swing from August 1996 and has taken up several important projects related to the vital issues of the Construction Industry.
A Notable few are discussed below.
- Standardizing the Contract Conditions for Domestic Bidding Documents.
- Computation and publication of Construction Cost Indices.
- Human Resource Development.
- Setting up the first Arbitration & Dispute Resolution Centre for Construction Contracts.
- Development and application of systems for Construction Financing, Banking and Taxation.
- Development & Implementation of Grading System.
- Networking with National and International construction bodies.
- Establishing a Construction Equipment Bank.
- Development of Insurance cover/ Investments for construction sector Projects.
- Development of RBI approved Harmonized Eligibility Criteria for Lending to Construction Entities.
1. Standardizing the Contract Conditions for Domestic Bidding Documents.
- The work of the CIDC Committee, headed by Shri Harish Chandra (as of 2000) on Unified set of Contract Conditions, adopted by the Ministry of Statistics & Programme Implementation, have now been approved by the Government as guidelines for preparing proper contract documents. Shri Jagmohan, Minister of Programme Implementation, has released the approved documents on 4th October 2001. Further, for wider adoption, these have been circulated to various PSUs, Central/ State governments departments.
- In order to spread the awareness and enhance adoption, CIDC is organizing Workshop/ Seminars for the senior officials of the client organizations. So far two Workshops have already been organized with EIL and ICTC.
2. Computation and publication of Construction Cost Indices.
- The Construction Industry represents different sectors of operations and geographical regions. Each of the sectors and regions are unique in it and therefore a need for comprehensive price indices encompassing the diversities was strongly felt for a long time. CIDC, therefore, commissioned a study by National Institute of Construction Management and Research (NICMAR) and formed a Committee of experts to deliberate on the report. Finally a methodology for computation of CCI was devised. The CCI represents variation in cost of construction. CCI are computed from the cost of various inputs that go into construction works and since the weight age of these inputs such as cost of cement, steel, sand, wood etc, wages & salaries and cost of equipment vary for various sectors of the economy where construction plays a major role.
- To develop various economic pointers to measure & monitor the health of Construction Industry. CIDCs Construction Cost Indices are now being published in leading Economic dailies & journals regularly.
3. Human Resource Development.
- Training of Workers, Supervisors and Managers.
With the workers training and certification programme, now offered through 19 centers, in collaboration with IGNOU, Dr. B.R. Ambedkar Open University, Hyderabad, TIET, Patiala, CIDCs HRD endeavor has fructified in a short time. Consequent to this CIDC initiative through a network of Constituent Institutions, and based on CIDCs requests made to Honble Finance Minister, the Government has announced 100% tax rebate on the expenses made by corporates on vocational training, in the current union budget.
- Diploma Programmes in Civil, Electrical, and Mechanical Engineering for Army Jawans.
Consequent to the signing of the Agreement between CIDC & IGNOU on 18th July, 2003, Diploma Programs in Civil / Electrical & Mechanical Engineering are being offered for Indian Army personal on full time basis, of two and a half year duration (5 semesters). As a start up, the programmes are offered to Indian Army but would subsequently be extended to the civil sector also.
- Vocational & Job oriented training for the secondary level students.
This programme has been launched to educate students on some basics about Construction and to generate interest, so that they can opt for construction as a career in their future. This programme will also improve the general awareness of school students on construction activities and enable them to become self-sufficient to understand the importance and requirements in day to- day maintenance work at home.
- CIDC has launched the following training programmes leading to Certification by CIDC under the auspices of Ministry of Labour, Govt. of India. Kendriya Vidyalya and also the Government of NCT of Delhi have accepted the courses and programme. The first batch of students shall commence their training program on 15th October 2004 at Govt. Girls Senior Secondary School, Lado Sarai, (Near Qutab Minar).
- CIDC and Gujarat Mahila Housing SEWA Trust entered into a Memorandum of Understanding on March 30, 2004, for initiating, developing and implementing programmes of training of construction workers under the CIDC-IGNOU scheme through an all Woman Training School to be set up by SEWA. Gujarat Mahila Housing SEWA Trust is now the Constituent Institution (C.I.) for Western region.
- Govt. of Indonesia, through National Small Scale Industry Corporation has entrusted CIDC to develop course materials, depute trainers, Conduct Training, testing & Certification of Indonesian Construction Workers. The training is to be imparted in six trades and shall include facilitation in setting up a training center at Jakarta, Indonesia.
Income Tax Rebate for CIDC Construction Workers Training Programme.
CIDCs Construction Workers Training & Certification programme has been made exempted under Section 35AC of Income Tax Act 1961 for the assessment year 2004-05, 2005-06, 2006-07. A copy of the circular may be obtained from the CIDC secretariat.
4.Setting up the first Arbitration and Dispute resolution Centre for Construction Contracts.
- CIDC has constituted a Committee for Arbitration and Dispute Resolution in construction contracts under the Chairmanship of Shri O. P. Goel, former Director General, CPWD to look into this vital issue and to establish an enabling mechanism. A two-prong work strategy has been adopted.
- To draft the constitution of a proposed CIDC Arbitration & Dispute resolution center. This has since been accomplished and comments are being obtained.
- To network with capable International Organizations for seeking their support to set up the proposed center.
- It is necessary to have an effective institutional mechanism of international standards. To meet this objective CIDC has entered into an agreement with Singapore International Arbitration Centre (SIAC), to set up the CIDC-SIAC Arbitration Centre in India. The project is on schedule and the center should commence operations by end of 2005.
- The primary focus of the center would be on developing and maintaining the eligibility Criteria and code of Ethics of Arbitrators, especially in highly specialized Arbitration required in fields like Construction Industry. The Singapore Model (adapted to Indian laws) is being adapted for the Centre.
- An important aspect of SIACs rules is time bound completion of the Arbitration process. Since the Arbitrators would be accountable to the Centre on that aspect, a great degree of discipline of time is expected to be observed, as is usual in international practice.
- In line with the needs of the project, the process of empanelment of Arbitrators has commenced. The first group of Arbitrators to be empanelled would be from among the "Grandfather" group, whose minimum qualifications have been defined as follows:
- "Professionals having eminent position in the field of Construction, Public Administration, legal framework and having a tertiary educational qualification (University Degree), more than 35 years of age, and professional work experience of over 15 years are eligible to be considered for this category."
- The first interactive workshop was conducted at Singapore in February 2005 and the second one at India during June 13th - 15th, 2005 at Hotel Radisson, New Delhi for interaction with SIAC on the systems to be followed in the new center. The third one is proposed during August 25th-27th, 2005 at Chennai.
6. Development and Implementation of Grading System.
- CIDC, with Investment & Credit Rating Agency Ltd. (ICRA Ltd.) has developed a comprehensive and reliable system for assessing performance potentials of all entities involved in a project, viz., the contractor, the owner, the consultant and the project itself. It minimizes the quantum of uncertainties, which will help owner, contractor, consultant and anyone else, who has a stake in successful completion of a project. It also helps a financial agency in quantifying its lending risks and therefore generates greater confidence in advancing money at more acceptable rates.
7. Networking with National and International Construction Bodies.
- Networking and co-operation with parallel foreign organizations has been initiated and fruitful relationships have been developed with Ministries of Japan, Singapore, Malaysia and other Ministerial Organizations of South East Asia.
- The WTO regime is presenting new opportunities and challenges. Acceptability & employability of Indian technical Professionals hinges upon harmonized contents - both in Training & in Practice. CIDCs efforts to help establish Engineering Council of India, under the auspices of Planning Commission, Ministries of HRD & Commerce together with Industry and Academic bodies, is a firm step towards accomplishing this objective.
8. Establishing of a Construction Equipment Bank.
- A major chunk of construction equipment owned by companies remains unutilized for large parts of the year. The idle equipment requires maintenance. Depreciation adds further to the unproductive costs of the company. With total equipment stock of over Rs. 75,000 crores in the country & with additional requirements of Rs 9000 crores every year, efficient utilization of construction equipment will result in huge savings for a capital starved economy.
- CIDCs concept of Construction Equipment Bank is close to reality now. CIDC has prepared general guidelines for the establishment of Construction Equipment Bank(s). This draft clarifies the purpose of establishing CEB, classification of CEBs etc. The first such Bank has already started taking shape in the name of Indian Infrastructure Equipment Trust Ltd.
9. Development of Insurance Cover / Instruments for Construction Sector Projects.
- CIDC and the Actuarial Society of India signed a Memorandum of Understanding to develop Insurance products for use in Construction Projects. This is expected to facilitate easy credit to the risk-prone Construction Projects.
- Business risks in construction are somewhat greater than in most other business ventures. The insurance sector in India has not yet recognized the scope of operating in this sector for mutual benefit. Only three policies are available (Plant and Machinery Policy, All risk Policy and Workmens Compensation Act Policy). However, the methodology of risk estimation and management in the construction sector is yet to be placed on a scientific footing.
The new Grading System is a major instrument for risk assessment by insurance companies venturing into this area. The premier for various risk coverage can now be pegged down from speculative levels to rationally computable levels and thus become equitable and attractive to construction agencies. The types of risks for which Insurance products have been developed by CIDC are:
- Bidding Indemnity Policy (BIP).
- Delay in meeting obligation by client policy (DIMO Policy).
- Settlement of Claims Policy (SOC Policy).
- Loss of Profit Policy (LOP Policy).
- Transit Insurance Policy (TI Policy).
- Loss of Performance of Construction Equipment (LOPCE Policy).
- Force Majeure Loss Policy (FNL Policy).
- Casual Workman Compensation Policy (CWC Policy).
- Financial Risk coverage Policy (FRC Policy).
- Life of Building Policy.
Safeguards for Insurance: To avoid misuse by the purchaser, following support systems have also been designed by CIDC.
a. Grading of Construction Entities for a more comprehensive and objective assessment of construction entities and a more reliable assessment of risks.
b. Lender s Engineer to oversee the faithfulness of the operations.
10. Development of RBI approved Harmonized Eligibility Criteria for Lending to Construction Entities.
- CIDC has constituted a Financing Committee, comprising of HUDCO, IDBI, IBA, State Bank of India and the representatives of Construction Industry to work out a harmonized eligibility criteria for lending to construction entities. These criteria have been laid down and recommended for implementation. Several banks have announced implementation of these criteria for enhancement of lending to construction. Further detailing in terms of the following issues is being discussed as a follow up measure:
- Bank Guarantee Costs.
- Fund based support systems to construction organizations.
- Working capital.
- Soft lending for modernization of construction.
- In April 2002, RBI issued guidelines for removal of cap on lending to Construction Industry with the provision of following the lending norms.
- Thus begins a new phase in which the acceptability of Construction Sector as borrowers has improved substantially.
Role of CIDC
India has been enjoying rapid economic growth in recent years, having the second fastest growing GDP in the world since 1980. Further economic reforms and trade liberalization are expected to sustain this high economic growth in the coming years. Against this backdrop, the challenge of the construction industry in India is to provide the quality and quantum of infrastructures that will meet the economys needs.
Indias Construction Industry Development Council, or CIDC, is well positioned to take on this challenge. With the participation of key stakeholders from both the public and private sectors, CIDC can lead in reshaping the Indian construction industry and charting its strategic directions.