Publications

Regional Seminar Proceedings 1992

APPENDIX 1

MINISTRY OF ROADS AND HIGHWAYS REGISTER OF CLASSIFIED ROAD & BRIDGE CONTRACTORS TOTAL NO. OF CLASSIFIED CONTRACTORS = 311

NUMBER OF CONTRACTORS BY CLASS A1 A2 A3 A4 B1 B2 B3 B4 C

4 11 35 40 4 11 90 151 41

CATEGORY A - ROADS, AIRPORTS & RELATED MINOR STRUCTURES

CATEGORY B - BRIDGES, CULVERTS & OTHER STRUCTURES

CATEGORY C- LABOUR-BASED ROADS WORKS

APPENDIX 2

II. ASPECTS AND BACKGROUND OR LABOUR-BASED CONTRACTING - THE GHANA EXPERIENCE

Presented by Peter Bentall COWI Consult, Harare, Zimbabwe

1. Warning - Danger of making a blanket policy (e.g.) Change force account to private sector without studying all the local implications.
2. Ghana Project Environment

(i) New, separate feeder Roads Department
(ii) Crisis situation 20 000 plus km of roads - all poor.
(iii) Cocoa a key export crop - urgent action needed.
(iv) Expensive and poorly performing equipment-based private sector - inappropriate for rural, low-volume roads. Contractors were dictating.
(v) Almost total absence of middle management i.e. contractor supervision inadequate. 2 senior engineers only in DFR head office.
(vi) No other donor/aided project for distraction
(vii) Total/unqualified commitment/enthusiasm/energy of the Director and calibre/continuity of counterparts.
(viii) Existence of large number of small/locally based contractors.

3. Planning/Preparation

(i) Component of World Bank 4th Highway. Economic Study.
(ii) Comprehensive (to understate) project document - 242 individual activities!!
(iii) Prior appointment of counterparts.
(iv) Pre-project study tours.
(v) Preparatory road inventory work undertaken.
(vi) Pre-project contractor seminars.
(vii) Equal emphasis on SIAM (maintenance component).

4. Practical Arrangement/Problems

(i) Procurement of equipment - ICB procedure
(ii) Involvement of BHC.
(iii) Civil service procedures.

a) bank accounts
b) payments/casual employment
c) tasks/incentives/bonus

PRIVATE SECTOR INVOLVEMENT - SOME ASPECTS (General)

1. Involve those not engaged in major equipment-based project, e.g. benefit from funded inputs.
2. Small local organisations has no other distractions.
3. Offer a long-term vision to encourage active participation.
4. Assume that all those selected/trained will perform. Avoid discouragement and discontinuity.
5. Emphasize organisation and management at site level - supervisors are the key.
6. Competitive bidding is not an immediate objective - workload will be significantly in excess oc contraction capacity for several years.
7. Ensure rates and contract conditions result in a healthy profit and also that financial costs are comparable with equipment-based works.
8. Communicate with and advise the contractors themselves - it is in the interest of all parties to get a satisfactory result.
9. Experience indicates that even some of the least likely looking small contractors can be most successful, but some engineering expertise is extremely useful.
10. New and appropriate equipment and tools should be available. Do not allow the contractor to start off at a disadvantage.
11. Get involved in the contractors' financial arrangement e.g. bank loans. Small people do not have the experience to stand up to the devious ways of the banking world.
12. Do not underestimate the length of training period involved both for contractors' staff and, equally important, the client's supervision and contract administration staff.
13. Simplified contract documentation is needed since generally small contractors have little or no experience of contract administration.
14. Prompt payment is essential since a large part of this will be direclty due to the labour force without whom his operation will collapse.
15. Include essential mechanical backup as a service/training element. Work is inevitably in remote areas.

DISCUSSION

Choice of Technology

The labour-based small scale contractors programme in Ghan has proven to be highly successful. Roads constructed using labour-based methods are less costly than roads constructed to the same standards using equipment-intensive technology. The Government of Ghana has therefore decided to continue the training of additional small scale contractors and to expand the programme to cover all regions of Ghana.

The percentage of road works carried out using labour-based methods is growing. In the short to medium term labour-based contractors should be able to compete with equipment-based firms for larger scale feeder road projects. In the long term the objective would be that all contracots are able to choose and apply the most appropriate technology according to the circumstances.

Donor Funding

The future of the programme is carefully taken itnot consideration when planning the training programme for new small scale contractors. It is essential that funds are secured for road works so that the trained contractors can be provided with a sufficient and steady supply of work. This is the more necessary because most small firms have had to conclude loans with local banks to acquire sets of light equipment. So far, this has been well planned in Ghana. However, there is a tendency of donors to sponsor the foreign exchange requirement components of development projects. On labour-based projects this component is small and therefore such projects may be less attractive to governments aiming to maximize the donor contributions. It is important that funding agencies adjust their policies to take account of this problem.

In the futer the Ghana programme will be gradually redirected from rehabilitation works to focus more on the maintenance demands of the road network.

Training of Contractors

When selecting contracotrs for training, preference is given to companies where the owner performs the duties of bot the managing director and the site manager, in other works, companies with very little overheads and motivated owners. Among this group, candidates with relevant technical qualifications will be ranked highest.

Each contractor sponsors four members of his staff for training. It is expected that the contractor will sustain his staff during the training period. Training of additional foremen are to be paid for by the contractor.

The training courses are arranged for both contractors and the DFR staff. DFR has lost some of its supervisors who preferred to work for the contractors.

Payment Procedures

The estimates are prepared by the resident engineer. Initially, interim certificates were awarded on a monthly basis and paymentes made based on measurement of executed works and established unit rates. After labour advances, materials supplied and cost of equipment had been deducted, the balance was paid to contractors after the Interim Payment Certificate had been endorsed by District and Regional Administrations.

Although 80 % of the contractors preferred this system, it places a significant burden on the project management. Today the contractors are advanced 15 % of the contract value at the beginning of the contract to cover labour and materials inputs, thus the contractor becoming more independent.

The streamlining of administrational procedures and ensuring prompt payment has contributed significantly to the success of the programme. It is evident that a small contractor cannot advance larte sums for labour-wages which represent his largest payment obligation closely followed by the monthly repayments of the equipment loans. To ensure that the contractor can meet these obligations on time it is crucial that the payment procedures are on time and as decentralised as possible.

Currently the payment procedures in Ghana are centralised. However, this is expected to be changed when sufficient management and administrative staff have been posted in the regions.

Banking

The light equipment issued to the contractors is procured by the Bank of Housing and Construction (BHC) with the bank providing a loan to the contractor which is to be repaid over a 4 year period. The loans are evaluated in US dollar terms at a fixed interest rate of 20 %. Monthly repayments are made in local currency at the prevailing exchange rate.

These conditions are very advantageous to the bank but place a heavy burden on the contractors. DFR is examining the possibility of financing the equipment component on this tupe of programmes through facilities provided by the African Development Bank. For the newly trained firms (22), DFR will also explor the feasibility of obtaining more favourable terms by inviting other local banks to bid for the services to be provided.

Payment of Labour

The payment of the casual labour is based on a task work system. Although task work may not be optimal in the long term for contracting, (piece work is likely to be more appropriate), it greatly facilitates the planning and monitoring of the works for the contractors. At later stage the contractors will be at liberty to chose and apply their own incentive scheme since they will be paid on the basis of the unit rates.

The bonus system rewarding regular attendance through additional payments was introduced in an early stage as an incentive to avoid abseteeism. In case of absenteeism of a worker due to illness, ceremonial duties, etc., the worker may organize his replacement so as not to lose his bonus. Attendance is checked by DFR. A experienced workforce with regualr attendance tends to perform better than a workforce whose labourers are being changed frequently. To implement the bonus system a civil service regulation had to be waved.

In Kenya the bonus system was not considered to be necessary since there is a very high surplus of labour directly available to replace absent labourers.

Equipment

Even on labour-based projects with a relatively small amount of equipment the mechanical maintenance support is critical to the progress of work. A training programme for the contractors mechanics is provided to ensure that the contractor is capable of performing preventive and routine mechanical maintenance on his equipment. During the first trial contract the DFR also provides mechanical back-up services to the contractors. The costs of these services are paid by the contractors but in the agreement it is clearly stated that the DFR is not responsible for the machines. The risk of construction delays due to serious breakdowns, however, is assumed by the project. In case of service delays the contractor can claim a price reduction.

Some contractors may in the future increase the type and number of the equipment. Rollers will become heavier. The light pedestrian roller which has been used so far has had too many breakdowns and the DFR requirement for compaction is 98 %. One contractor has already procured a heavier 1.2 ton roller.

Since the hauling distance for gravel has so far seldomly exceeded 4 km, the contractors are likely to continue using the tractor/trailer combinations.

Drainage Structures

The labour-based programme in Ghana is located in high rainfall areas with usually only two dry months during the year. Rivers and streams in this region have a relatively constant flow of water throughout the year. Due to this, the locally designed concrete box culvert is the most commonly used drainage structure. However, when the programme is expanded to other regions such as northern Ghana where flushes are more common, drifts will be introduced.