Simple law of Engineering Construction Contract in Nepal – MAKE NO MISTAKE !

Whenever, the government has to invest in an infrastructure like schools, hospitals, roads or others, they do it with the tax payer’s money. In Nepal, there is an budget implementing office like Ministry’s or local municipalities.

This office issues a tender notice and does a construction contract with a contractor through competitive bidding. The contract agreement includes bill of quantity, design drawings and specifications.

Now, the contractor starts doing the work. But as no work is problem free or defect free. The contractor corrects their mistake themselves or with the order of the client engineers. Then, comes the part of the client mistake or the design change.

First, let’s think of a design change. The laws related these types of contracts (PPA & PPR), allows the design change. The design can be changed, approved and the contract can be revised.

But there may be an incidence, where the client engineer realizes the design mistake or the design needs to be changed for improvement. The change is also often ordered by higher authorities like mayors or with public interest. However, complications can emerge when the work is in progress or has been completed.  There is not possibility of going back and additional work has to be done.

This type of scenario can be countless. But, consider a simple scenario where the original design places a window in the south direction wall of a school. The contractor installs the window, but the client engineers realize themselves or instructed by higher authorities, or though public request that this window should be in the north direction wall.

The correction involves additional costs as the contractor must create a new opening, dismantle the existing window, re-fill the opening and incur related expenses. The contractor claims the additional payment for the works.

In such cases, client engineers face a dilemma.

• Ignore the change: This might seem safest, but the project may not meet new requirements, raising future issues.
• Issue a bill with additional costs: This trigger potential audits or CIAA investigation for “Beruju” (unjustified expenditure). Additionally, the engineer may be held personally liable for reimbursement.
• Request the contractor to absorb the cost within their profit margins: This is unlikely to be accepted, considering their legitimate claim for additional work.

However, issuing a bill with additional costs can lead to scrutiny by auditors and anti-corruption authorities like CIAA. Such actions are viewed as irregularities (Beruju) and can be considered fraudulent, inviting penalties.

The audit report will impose the reimbursement of this amount but the implementation of the audit report is often not done piling up for years without clearing it, which makes the case discussed to look like a no issue at surface.

Here comes the important QUESTION: Are Engineer always liable for Mistakes ?

If there is time, the mistakes in design can be corrected before implementation. But, sometimes, it might be too late to correct and the problem may already have been implemented in project. There is a need to differentiate between genuine mistakes and deliberate wrongdoing. Punishing individual engineers for errors, particularly when they are just a salaried employee, seems unfair.

In a private company, the client is the private company itself. If a change of work has to be done, then the company inspects and orders it with an additional cost. This is the loss of the private company itself, not of some salaried employee, if it is not the employee fault.

In government, however, there is no provision for incurring a loss. The loss should always be incurred by some employee, which I think is not correct. There should be a provision within the government office to incur the loss by the office itself and not by an individual employee.

However, the government operates on one simple law: MAKE NO MISTAKE. Nevertheless, a universal rule is that “NO ONE IS PERFECT.”

I think, just like a private company should be able to take the loss, the government should also be able to take the loss, not the individual person if it isn’t their fault. I think that for a municipality, the municipal board should inspect if there is a fault or the case is genuine for loss and should accept the loss. This cost is an extra cost, that could have been prevented and is a loss for the municipality itself and not for an engineer or group of employee.

Recognizing that no individual or institution is perfect, there should be a mechanism to consider the varying capacities of different entities in terms of experience, manpower, and resources. Converting the logic of “Make No Mistake” with the understanding that “No One Is Perfect” by the government needs to be addressed in government engineering projects.

It will bring confidence to the implementing agency and the engineers. This will make the infrastructure of better quality and completes the project in time. The lack of quality and incompletion of project is a major issue in the government project of Nepal.

The hard-working public taxpayer’s money is not to be taken for granted, and utmost sincerity should be taken while spending it. But every individual and institution has a different working capacity due to many reasons such as experience, manpower, resources, or others.

There should always be a room for improvement and incurred additional costs after wrong implementation should be justified to who is liable and there should also be a provision of institutional liability rather than only making engineer or individual employee liable.