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India moves to lump sums for highway work

17 Aug 12 The Indian government has decided that future highways contracts will be built to lump sum contracts rather than using itemised rates.

The cabinet committee on infrastructure has approved a new model engineering, procurement and construction (EPC) agreement document for construction of two-lane national highways. The EPC document is aimed at minimising time overruns and cost overruns as well as optimising design and construction quality. All national highways works that are not public-private partnerships will be done primarily through the EPC route.

At present, such work is carried out under traditional item-rate contracts. Experience shows that the contracts are generally prone to time and cost overruns, said the Indian government. Adopting the EPC approach will assign the responsibility for investigation, design and construction to the contractor for a lump sum price under a fixed time frame determined through competitive bidding.

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