Publications

Regional Seminar Proceedings 1992

SESSION 4: CONTRACTORS

Summary

In Ghana the Department of Feeder Roads with the technical assistance of the ILO has commenced on a programme financed by the World Bank and UNDP to train small scale contractors to rehabilitate the feeder road network using light equipment and labour-based methods. Since the start in 1986, 41 contractors have been trained and approximately 650 km of roads have been rehabilitated at an average cost of 10 000 US$/km and an average input of 2650 workdays/km.

Based on the experience in Ghana it is clear that a successful involvement of the private sector has more to do with institutional issues such as appropriate tender regulations and documents, payment procedures and credit facilities rather than the labour-based technology.

Osi-Bonsu and Peter Bentall reviews the Ghana programme and elaborates on the key issues which has ensured a successful programme.

1. The Use of Private Contractors - by Kwaku Dua Osei-Bonsu.
2. Aspects and Background for Labour-based Contracting - by Peter Bentall

I. LABOUR-BASED ROADS REHABILITATION THE USE OF PRIVATE CONTRACTORS

Presented by Kwaku Dua Osei-Bonsu National Coordinator Labour-based Works Department of Feeder Roads, Accra, Ghana.

This paper reviews the use of the private sector in feeder roads rehabilitation by labour-based technology in Ghana. It also highlights on the arganisational, administrative and managerial procedures adopted during the implementation of the World Bank/ UNDP/ ILO/ Ghana Government pilot project and the current practice.

1.0 Introduction

Ghana by tradition is known to have a developed local contracting capacity both in the Roads and Building sectors. The current classification system by the Ministry of Roads and Highways, the Road and Bridges Contractors indicates that there are over 131 contructors who are capable of executing roadworks to the tone of $0.4 million, whilst 256 have been identified for the construction of Drianage Structures including Bridges (Appendix 1).

The country's economy in the early 80's deteriorated to the extent that inflationary rates were extremely high and the lack of foreign exchange resources to import spare parts for the broken down heavy machines, resulted in most of the roads being neglected (3). It was against this background that the Departemnt of Feeder Roads (DFR), which has the responsibility of providing continuous access to villages, decided to adopt the labour-based approach with emphasis on the use of private sector.

2.0 Project Objectives

The development objectives of the 3 year pilot which was started in late 1986 was to build up the capacity of small locally based private contractors to efficiently apply cost effective labour-based techniques in road rehabilitatin and maintenance. It also aimed at developing the capacity of DFR in the planning and implementation of feeder roads rehabilitation and maintenance. The objective was to be achieved by the intorduction of improved engineering, organisational, administrative and managerial techniques as well as modifying the Institutional framwork within which these techniques had to be applied.

3.0 Contractor Selection

DFR focused its attention on small scale contractors which in this context meant that the owner of the firm performed the duties of both the Managing Director as well as being the Site Manager. This therefore implied a simple organisational structure with very little overheads.

DFR in conjunction with ILO officials held a series of seminars to educate both the public and the contractors in the efficient use of the labour-based technology for foad rehabilitation and maintenance. The seminars helped to erase the scepticism initially expressed by many on the cost effectiveness of the technology.

Questionnaire forms which requested information on the firms' experience, manpower, financial, plant and equipment resources and the ability of the firm to sponsor four of its staff for training were given to interested firms to fill.

The project document stipulated the selection of 8 contractors for training of which the best 4 amongst them were to be equipped. This was due to the fact that only 4 sets of standard equipment had been procured for training and eventual possession of the 4 selected contractors under the pilot project.

4.0 Contractor Development

Having identified some of the key problems confronting the construction industry in Ghana to be the local contractors' lack of management capabilities in the efficient use fo financial, equipment, material and personnel resources and the cumbersome procedures in the processing and honouring of payment certificates, DFR with the assistance of the ILO technical team addressed the issues pertaining to the contractors by drawing up a training package which consisted of three main phases namely (a) Class Room Training, (b) Field Training Stage and (c) Trial Contract Pase. This package was designed to ensure that each progressing phase experienced more difficult and complex tasks.

4.1 Class Room Training

This phase involved seven weeks of intensive training using ILO training manuals. Topics treated included mathematics related to roadworks, the basic principles of road construction and maintenance , equipment and man management as well as the financial managment of firms which was covered by lecturers from a local bank. Trainees for this phasse comprised of foremen and supervisors designated by the 8 contractors and staff from DFR.

4.2 Field Training Stage

The objectives of this phase was to help the trainees develop and acquire the practical skills in the effective use of labour-based techniques.

The 16 week programme involved the construction of a 10 km model/demostration road under the DFR Project Management Team (PMT). The trainees were made to work for a short period as workers in various activities before being made gang leaders and finally as foremen surevising each of the many activities as weekly rotational basis.

The trainees participated in weekly site management and peformance evaluation meetings which were considered part of the training. Both the PMT and the trainees had the opportunity at these meetings to exchange ideas and clarifications were given on issue which were not fully grasped during the classroom training. At the end of this phase, the World Bank agreed to buy additional sets of equipment as a result of the proven capabilities of all the contractors.

4.3 Trial Contract Phase

The first and second stages of the contractor development phase actually developed the individual's capacity to effectively apply the labour-based techniques. Hence, the objective of the Trial Contract Phase aimed at assisting the contractor to develop the capacity of the firm to effectively manage a lbaour-based road construction of the 4 contractors was awarded 5 km of roads to rehabilitate within a period of 4 months inclusive of mobilization. The contractor was fully responsible for the progress and quality of works whilst the Project Office provided some services which allowed the contractor to concerntrate on managing works at the site.

Prior to the start of the roadworks, each contractor with the assistance of the PMT prepared a work programme in the form of a Time Location Chart which served as a control tool in the execution of works.

4.3.1 Contract Conditions

Trial contracts were considered to be non-standard in the sense that special conditions had been designed to achieve objectives under non-standard conditions. To facilitate the smooth administration of the trial contracts, DFR incorporated special conditions and additional clauses which were read in conjunction with the Articles of Agreement and Conditions of Contract (Form B) ICE.

Some of the special conditions adopted were as follows:

• The engineer's authority under the contract was delegated to the supervising officer namely the Project Engineer for the administration and payment of contracts. However, this did not include the granting of approval for variation orders and extension of time.
• It was mandatory for the contractor to employ between 100 - 150 skilled, semi-skilled and unskilled workers on daily task work basis to ensure that the 5 km stretch was completed within the contract period of 4 months. The contractor was expected to keep records of labour and also to agree on task level and payment system with the supervisory officer.
• The contractor was to submit labour returns on the 26th of each month for vetting by the supervisory officer. 15 % was added to the amount to cater for the contractors overheads and a cheque was issued by the project ofice to enable the contractor effect payment unconditionally to the worker on the 3rd working day after the close of the month.
• The project office made available to contractors basic materials such as handtools, cement and fuel upon request. Departmental charges were then added and debited to the contractor.
• At the end of each month, works executed by the contractor were measured and the DFR established unit rates applied. Deductions in respect of labour advance, materials supplied and cost of equipment were effected from the Interim Payment Certificate (IPC) and the balance paid to the contractors after the IPC's had been endorsed by the District and Regional Administration.
• Copies of IPC were forwarded to DFR Head Office for post checking and any amendment by the Engineer was made the following month.
• Final certificate payment had to be made at DFR Head Office.
• The project also provided mechanical back-up services and the training of operators since the contractors had neither of these.
• Weekly evaluation sessions were held by the PMT with the contractors to discuss the progress of each contractor, problems encountered and the planned programme for the coming week. These sessions were considered as very important training tools since solutions to problems were jointly sought by all.

4.3.2 Unit Rates

Unit rates applied on the trial contract were derived from work studies carried out on the model/demonstration road. The cost of equipment input was computed using the amount payable by DFR to the Bank for Housing and Construction for renting the standard set of equipment (2).

4.3.3 Contract Supervision

Although the contractor was solely responsible for the day to day management of the site, the PMT attached a trained DFR foreman to each of the firms whilst a resident engineer was responsible for monitoring the overall management performance of the 4 contractors.

5.0 Standard Contractors

Following the success at the trial contract phase, the contractor was awarded 25 km of road to be improved for a year. The administration of contract in this phase followed the normal trend for road projects.

Logistic support such as the supply of cement and fuel which were provided under the trial contract phase ceased. Funds were only made available for the payment of labourers for the first four months of the contract and any further labour advance was at the discretion of the supervising officer since overdraft facilities had been granted to the contractors by the bank for the purchase of materials and also to pay their workers whenever there was a delay in releasing money by the project office.

5.1 Contract Supervision

A DFR trained foreman was attached to each Contractor's site and six of such sites were placed under the supervision of the Porject Engineer. Thus an engineer, a quantity surveyou and four foremen were all the staff required to manage a project site comprising four trained contractors.

5.2 Man Management

Before the advent of this pilot project, DFR operated the direct labour system i.e. workers were paid a fixed sum of money for 8 hours attendance with no account taken of output. Absenteeism was high, moral low, and supervision was almost absent and therefore output was low> It was the culmination of these factors which led to the adoption of contractors instead of using direct labour operations.

Inspite of DFR being a civil service organisation, the project design had an inbuilt flexibility which enabled the PMT to experiment, test and develop cost effective systems. One of such systems developed was a payment scheme whose structure was based on fixing a daily wage comparable to the market rate and paying additional incentives in the form of extra mandays. Thus, if a worker was continuously present for the 6 working days of the week and accomplished his tasks, he was paid 8 days wages. Similarly, if he was present continuously for 4 weeks he earned an extra 6 days wages. Thus a worker who accomplished his task on all working days of the month could attain a maximum bonus of 45 % of the monthly wage. This measure was adopted to ensure consistency of the labour force to achieve set targets on the demonstration road. The system which was found to be workable was adopted by the contractors at their sites.

6.0 Current Practice

In view of the competitive bidding recently introduced by the Ministry of Roads and Highways (MRH) and also the fact that over 200 classified and unclassified contractors have expressed their interest to participate in the programme, DFR has modified the selection criteria for contractors as follows:

(i) The contractor considers labour feeder roads improvement to be his main business for at least the next three years (1).

(ii) The contractor himself intends to manage the road works at the site.

(iii) The contractor agrees to sponsor four of his staff whose minimum qualification should be GCE"O" level or a technical certificate for the training. Any contractor who agrees to participate fully in the training programme would be selected in the first instance.

(iv) The contractor is expected to have resources to sustain the four staff during the training programme and in addition, to have a working capital to prefinance the company's operation until payment is received for the works executed.

(v) The contractor meets the banks requirements in respect of the loan for equipment.

6.1 The duration of the classroom and the field training stage has now been reduced from 23 weeks to 20 weeks in view of the educational background of the new trainees.

The major factor which formed the framework for the administration of the trial contracts under the pilot project phase has been modified following the spread of the technology to the various regions and the fact that the equipment is now leased directly to the contractor by the bank. Payment for work done is now effected from the head office an cheques are issued in the joint names of the contractor and the bank. This arrangment is to enable the bank to make monthly deductions in respect of the leased equipment to the contractors.

Although the initial system has been modified, it is still seen as the 'ideal' way of administering projects and should be adopted, if possible, when new projects are being implemented.

6.2 Contractors on the standard contracts now do receive an Advanced Mobilisation Loan which is the equivalent of 15 % of the contract value less contingencies and general items. Although funds are made available up front, yet 80 % of the contractors interviewed expressed the desire to have the former system of advancing money for the payment of workers restored. This has been due to the fact that the loan does not meet their obligations, since the cost of labour is about 40 % of the total input.

Inspite of the contractors' preference for the monthly labour payment, it needs to be mentioned that this system also places a lot of strain on the supervising officer, since it becomes his responsibility to ensure that adequate funds are transferred in this respect.

6.3 Competitive Bidding under standard Contracts 19 of the 24 trained and equipped contractors who have gone through the third phase of the programme have undertaken the tendering of project through the competitive bidding procedures. The analyses of the bids show that the bid prices range from 6 % - 15 % above the engineer's estimate. It must be admitted that the bidding procedure was not as keenly competitive as one would have expected, since 19 projects were advertised to be bidded by the 19 contractors (each tenderer was requested to bid for a minimum of two lots with the understanding that only one lot will be awarded).

For the administration of contract under the competitive bidding, DFR uses FIDIC (1977) conditions whilst CESMM (2nd edition) is used for the preparation of Bill of Quantities.

7.0 ACHIEVEMENTS

TRAINING: A total of 374 engineers, supervisors and foremen have been trained in the application of labour-based technology to feeder roads construction, rehabilitation and maintenance. The break down of the personnel trained is as follows:

Contractors Supervisors - 183 from 41 firms
DFR Engineers - 55
DFR Foremen - 136

OUTPUTS: Since the inception of the pilot project, 646 km of feeder roads have been rehabilitated to year round accessibility standards by the 19 equipped contractors and some 1593 box culverts of the project design have been constructed. The average production achieved on the standard contract is 1.67 km/month per contractor instead of the project target of 2.2 km/month. The shortfalls in production on both trial and standard contracts have been due to the excessive downtime in the performance of the pedestrian vibrating rollers.

CONCLUSION: The success of the programme has largely been attributed to the effectiveness of the training during the contractor development stage, supervision and special assistance given to the contractors by DFR. The cost effectiveness of this technology has been demonstrated by the 19 trained and equipped contractors through the rehabilitation of over 650 km of badly detriorated roads to good quality and durable standards. It is envisaged that by the end of 1992, 48 trained contractors would have been equipped with the assistance of DANIDA and USAID to rehabilitate over 900 km of feeder roads annually.

References

1. S. Matusiak Discussion Paper on the Prequalification of Small Scale Contractors, February 1990.
2. K.D. Osei-Bonsu Establishment of Unit Rates for Contractors' Trial section. Paper presented to the Ghana Institution of Engineers, October 1987.
3. Project Document Ghana Govt.\UNDP\ILO Document, September 1985.

Further Reading

P.H. Bentall Final Report. Ghana Feeder Roads Rehabilitation and Maintenance CTP 116.