Quality Check: Roads ministry tightens stricter bid rules for highway projects
NEW DELHI: The roads ministry has tightened the eligibility criteria for bidding for road projects under the hybrid annuity model (HAM) and engineering, construction and procurement (EPC) mode, a move aimed at ensuring good quality construction for highways and expressways and timely completion of projects to avoid time and cost overruns.The modifications include raising the minimum financial requirement for bidders, for both standard highway projects as well as standalone specialised projects such as tunnels, etc., introducing greater checks on sub-contracting experience and modification of the highways and core sector definitions, said a circular issued by the ministry of road transport and highways.ET has seen the circulars outlining changes in the eligibility criteria for HAM and EPC projects.The changes come at a time when the government is planning to award some 124 road projects in 2025-26 at an estimated cost of Rs 3.5 lakh crore, with more than 80 projects under HAM.Under the revised criteria for HAM projects, the threshold financial capacity for the bidder has been raised to 20% of the estimated project cost from 15%, while the net worth requirement for each member bidding through a consortium has been raised to 10% of the estimated project cost from 7.5%.
"This will ensure large companies with deep pockets bid for projects and deliver quality construction within the set timelines," an industry executive said, requesting not to be named.For EPC projects, the minimum net worth of a bidder required for bidding has been raised to 10% from 5%, while the average annual turnover requirement has been increased to 20% from 15% of the estimated project cost.Further, the revised definition of highways now does not include railways, metro rail and ports, which have been moved to the core sector for HAM and EPC projects.In the past, the government had reduced the financial threshold requirement for companies in the highway and core construction sector to allow even smaller players to take up projects.But over the years, there have been high rates of project delays in the roads sector, resulting in time and cost overruns, primarily due to financial paucity and lack of requisite clearances, prompting the government to relook at the eligibility criteria.Data by CareEdge Ratings shows 55% of the 374 HAM projects awarded between 2015 and 2024 have been delayed beyond six months.In December 2024, Union road transport minister Nitin Gadkari had said in Parliament that 44% or 419 out of 952 road projects under construction in March 2024 have been delayed because of various reasons.
"This will ensure large companies with deep pockets bid for projects and deliver quality construction within the set timelines," an industry executive said, requesting not to be named.For EPC projects, the minimum net worth of a bidder required for bidding has been raised to 10% from 5%, while the average annual turnover requirement has been increased to 20% from 15% of the estimated project cost.Further, the revised definition of highways now does not include railways, metro rail and ports, which have been moved to the core sector for HAM and EPC projects.In the past, the government had reduced the financial threshold requirement for companies in the highway and core construction sector to allow even smaller players to take up projects.But over the years, there have been high rates of project delays in the roads sector, resulting in time and cost overruns, primarily due to financial paucity and lack of requisite clearances, prompting the government to relook at the eligibility criteria.Data by CareEdge Ratings shows 55% of the 374 HAM projects awarded between 2015 and 2024 have been delayed beyond six months.In December 2024, Union road transport minister Nitin Gadkari had said in Parliament that 44% or 419 out of 952 road projects under construction in March 2024 have been delayed because of various reasons.
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