LOCAL STAKEHOLDERS’ PERCEPTION SURVEY October 2007

South Asia Sustainable Development Unit (SASSD)

Report No. 43186 Pakistan Infrastructure Implementation Capacity Assessment (PIICA) Discussion Paper Series: Technical Note 2

LOCAL STAKEHOLDERS’ PERCEPTION SURVEY

November 2007

Dr. Ijaz Gilani, Aized H. Mir, Ermeena Malik

South Asia Sustainable Development Unit (SASSD) Document of the World Bank

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LOCAL STAKEHOLDERS’ PERCEPTION SURVEY

November 2007

South Asia Sustainable Development Unit (SASSD)

Document of the World Bank

Cover art credit: Mr. Kamal Hayat, CEO, PPAF

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The discussion paper series were prepared as a part of the Pakistan Infrastructure Implementation Capacity Assessment (PIICA) study and comprise of the following technical notes. Technical Note 1: Development of Construction Industry –A Literature Review

Technical Note 2: Local Stakeholders’ Perception Survey

Technical Note 3: Foreign Stakeholders’ Perception Survey

Technical Note 4: Business Environment and Cost of Doing Business

Technical Note 5: Purchase Price Review in the Infrastructure Industry

Technical Note 6: A Review of Allocations and Expenditures in the Public Sector

Technical Note 7: Demand – Supply Gap Analysis

Technical Note 8: International Case Studies – UAE, China and Malaysia

Technical Note 9: Local Case Studies

Technical Note 10: Response to International and Local Bids

Technical Note 11: Focus Group Discussions

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Discussion Papers are published to communicate the results of the World Bank’s work to the development community with the least possible delay. The typescript manuscript of this paper therefore has not been prepared in accordance with the procedures appropriate to formally edited texts. Some sources cited in the paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of the International Bank for Reconstruction and Development / The World Bank and its affiliated organizations, or those of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

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ACKNOWLEDGEMENTS

Acknowledgements are due to the World Bank core team comprising Amer Zafar Durrani (Task Team Leader), Aized H. Mir (Co Task Team Leader), Hasan Afzal Zaidi, Dr. Zafar Raja, Uzma Sadaf, Hiam Abbas, Huma Waheed, Ermeena Malik, Abid Abrar Hussain, Mehreen Tanvir, Nazifa Sheikh and Shaukat Javed. The WB Consultants: M/s Engineering Associates [Sohail Abidi, Ahsan Siddiqi, S. M. Zakir (Economist), Abdul Majeed (Economist), Mr. Z. M. Malik, Mr. S. Bukhari, Mr. O. Mansoor (Coordinator)] for their valuable inputs, Dr. Ijaz Gilani, Fatima Idrees, Shmyalla Jawad and other team members of M/s Gallup Pakistan for conducting the Perceptions Survey and above all, the Stakeholders for providing their invaluable feedback. Asif Faiz, Cesar Augusto Querio, Fabio Galli, Giovanni Casartelli, Fang Xu, John Carter Scales, Richard Scurfield, Shahzad Sharjeel, Usman Qamar and Uzma Sadaf, are thanked for their extensive review of the PIICA report which is based on the technical notes. Mazhar Malik’s extensive inputs on tackling Human Resource issues along with a detailed review of the report are greatly appreciated. Unjela Siddiqi (M/s Media Solutions) and Huma Ajam for providing editorial support.

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GOVERNMENT FISCAL YEAR July 1 – June 30

CURRENCY EQUIVALENTS Currency Unit = Pakistan Rupee (PKR) US$ 1 = PKR60.70 (February 6, 2007)

ABBREVIATIONS AND ACRONYMS

AASHTO American Association of State Highway

and Transportation Officials GIKU Ghulam Ishaq Khan University of Science

& Technology ACI Airports Council International GoP Government of Pakistan ADB Asian Development Bank GoS Government of Sindh ADP Annual Development Program GoB Government of Balochistan AIT Asian Institute of Technology (Bangkok,

Thailand) HR Human Resource

APCCA All Pakistan Construction & Contractors Association

HRDF Human Resources Development Fund

BCA Building and Construction Authority ICB International Competitive Bidding CAA Civil Aviation Authority ICT Information and Communications

Technology CAK Contractors Association in Korea IFC International Finance Corporation CAPECO The Peruvian Chamber of Construction ILO International Labor Organization CBR Central Board of Revenue IPC Interim Payment Certificate CDA Capital Development Authority JXB Jebel Ali International Airport CICA Confederation of International Contractors’

Association KPT Karachi Port Trust

CIDB Construction Industry Development Board KWSB Karachi Water and Sewerage Board CIJC Construction Industry Joint Committee L/C Letter of Credit CITC Construction Industry Training Center LCB Local Competitive Bidding CITI Construction Industry Training Institute LUMS Lahore University of Management Sciences COTI Construction Official Training Institute MBA Master of Business Administration CRS Contractors’ Registry System MCA Monopoly Control Authority CWTC Construction Workers Training Center MIT Massachusetts Institute of Technology DBS Development Bank of Singapore MOC Ministry of Construction (Korea) DELFT Delft University of Technology, Holland MTDF Medium Term Development Framework DEWA Dubai Electricity and Water Authority NAB National Accountability Bureau DFCs Development Finance Companies NEPRA National Electric Power Regulatory

Authority DIB Dubai Islamic Bank NESPAK National Engineering Services Pakistan

(Pvt.) Ltd. DIFC Dubai International Financial Center NHA National Highway Authority DLC Dubai Logistics City NIT Notice Inviting Tender DURL Dubai Rail Link NLC National Logistic Cell EDR Engineering Development Board NPRP National Procurement Reforms Program ENR Engineering News Record NWFP North-West Frontier Province FBR Federal Board of Revenue OGRA Oil & Gas Regulatory Authority FBS Federal Bureau of Statistics P&D Planning and Development FIA Federal Investigation Agency PC-1 Planning Commission’s Performa 1 FIDIC International Federation of Consulting

Engineers PEC Pakistan Engineering Council

FWO Frontier Works Organization PERT/CPM Project Evaluation Review Technique/Critical Path Method

PIDs Provincial Irrigation Departments SOP Security of Payment

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PKR Pakistan Rupee SPO Special Purpose Organization PPP Purchase Power Parity SSGC Sui Southern Gas Company PPRA Public Procurement Regulatory Authority TEVTA Technical Education and Vocational

Training Authority PSDP Public Sector Development Program ToR Terms of Reference PTA Pakistan Telecommunication Authority UAE United Arab Emirates RFP Request for Proposal USAID United States Agency for International

Development RTA Road & Transport Authority (Dubai) WAPDA Water and Power Development Authority SECP Security and Exchange Commission of

Pakistan WB World Bank

SNGPL Sui Northern Gas Pipelines Limited

Vice President: Country Director: Sector Director: Sector Manager: Task Team Leader:

Praful C. Patel Yusupha B. Crookes Constance A. Bernard Guang Z. Chen Amer Z. Durrani

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Technical Note 2 LOCAL STAKEHOLDERS’ PERCEPTION SURVEY

Table of Contents OBJECTIVE................................................................................................................................................. 1 METHODOLOGY....................................................................................................................................... 1 SUMMARY FINDINGS .............................................................................................................................. 2

OVERALL PERCEPTION IN THE INDUSTRY ................................................................................................... 2 Views on Equipment Constraints ............................................................................................................ 2 Views on Material Constraints ................................................................................................................ 2 Views on Human Resource Constraints .................................................................................................. 2 Views on Business Environment Constraints.......................................................................................... 3

Regulatory Framework ................................................................................................................................ 4 Financial Constraints ................................................................................................................................... 5 Required Reforms ........................................................................................................................................ 6

LOCAL STAKEHOLDERS PERCEPTIONS........................................................................................................ 8 Capacity................................................................................................................................................... 8 Business Environment and Regulatory Framework .............................................................................. 10

Procurement............................................................................................................................................... 10 Budgeting, Financing, Payment Procedures and Cost................................................................................ 11 Administrative Issues and Other Weaknesses............................................................................................ 13 Regulatory Framework .............................................................................................................................. 14 Country Perceptions................................................................................................................................... 15 Comparative Costs and Related Issues ...................................................................................................... 16

Human Resources.................................................................................................................................. 17 Lack of Trained Personnel & Need for HR Development ......................................................................... 17 Employee Turnover and Quality................................................................................................................ 18 Quality, Maintenance and Operation of Equipment................................................................................... 20

Materials Supply ................................................................................................................................... 21

ANNEXURE A: DETAILED FINDINGS OF THE SURVEY............................................................... 23 SECTION 1 VOLUME AND NATURE OF WORK ..................................................................................... 23 SECTION 2 CAPACITY, QUALITY AND OTHERS ................................................................................... 25 SECTION 4 HUMAN RESOURCES ......................................................................................................... 80 SECTION 5 CONSTRUCTION EQUIPMENT............................................................................................. 98 SECTION 6 MATERIAL SUPPLY (CEMENT, STEEL, BITUMEN, FUEL) ................................................... 112 SECTION 7 GENERAL INFORMATION................................................................................................. 119

ANNEXURE B: SURVEY QUESTIONNAIRE .................................................................................... 120

FIGURES Figure 1 : Views on Capacity ......................................................................................................................... 8 Figure 2: Views on Procurement .................................................................................................................. 10 Figure 3: Views on Regulatory Framework ................................................................................................. 11 Figure 4: Views on Budgeting and Financing .............................................................................................. 12 Figure 5: Views on Payment Procedure and Cost of Doing Business in Pakistan ....................................... 12 Figure 6: Views on Administrative Issues.................................................................................................... 13

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Figure 7: Views on Planning and Resources ................................................................................................ 13 Figure 8: Views on Regulatory Framework ................................................................................................. 14 Figure 9: Views on Country Perception ....................................................................................................... 15 Figure 10: Views on Comparative Costs ...................................................................................................... 16 Figure 11: Views on Existing HR Services .................................................................................................. 17 Figure 12: Views on Training Needs............................................................................................................ 17 Figure 13: Views on Brain-Drain and Quality.............................................................................................. 18 Figure 14: Views on Construction Equipment ............................................................................................. 19 Figure 15: Views on Equipment Purchase and Credit Facilities .................................................................. 19 Figure 16: Views on Equipment Maintenance and Purchase ....................................................................... 20 Figure 17: Views on Materials Supply ......................................................................................................... 21 Figure 18: Views on Price Escalation and the Government’s Role.............................................................. 22

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OBJECTIVE

To identify issues in implementing large infrastructure projects in Pakistan, input from key stakeholders of the construction industry (consultants, clients and contractors) was required to gauge their perceptions about the existing problems in the industry and their suggested solutions. This was necessary to compare what the stakeholders considered were hurdles in their growth with what this study identified as the main problems within the construction industry.

Therefore, perceptions of stakeholders were deemed essential to identify priority issues within the construction industry so that proposed solutions to improve the implementation capacity of the industry are directed towards these areas. The survey was intended to consolidate solutions as suggested by the industry players and experts. METHODOLOGY

Gallup Pakistan was recruited to conduct a survey of key stakeholders of the industry with the objective of assessing current capacity for delivering large infrastructure projects and providing pragmatic recommendations to be undertaken by stakeholders. The industry wide survey had a sample size of 104 participants, 11 percent (11) of whom were clients, 35 percent (36) consultants and 55 percent (57) contractors.

At the initial stage, a focus group comprising representatives from all three stakeholders was consulted to design the questionnaire for the survey. A copy of the questionnaire is attached in Annexure B to this note. The second stage involved selecting the sample. A quota purposive sampling method, widely used to represent subgroups, was used to select the sample. A comprehensive list of consultants and contractors provided by Pakistan Engineering Council (PEC) was used to select the sample from. The list was first screened to select contractors and consultants working with infrastructure related projects such as water, power, irrigation and roads.

Out of the 174 short listed consulting firms, 36 firms (21 percent) were selected at random. Out of the six categories of contractors (C1 – C6),1 it was agreed upon to include only those contractors who had significantly large sized operations (C1-C3). The final selection of contractors was made randomly from this subgroup with 12 percent (24) representation of C1, 7 percent (12) of C2 and 5 percent (21) of C3 level firms. Certain dominant firms in the industry which were missed due to the random selection procedure employed were included in the sample so that their input would be reflected in the survey results. The clients selected for interviews were decision makers belonging to executing agencies and ministries which are responsible for delivering large infrastructure projects in road, water, power, railways, Civil Aviation Authority (CAA) and port sectors.

Face to face interviews were conducted and after the compilation of results of the survey, the preliminary results were shared with stakeholders in a second focus group meeting to decide what further steps are needed to be taken. Two more focus groups were arranged as a result of this meeting, one with consultants to gather feedback and one with contractors to solicit their recommendations.

1 Constructor categories (value of project and required average 3 years turnover) are as follows: C1 can undertake projects with no limit, average turnover past 3 years of Rs20 million; C2 up to Rs100 million, turnover Rs15 million; C3 up to Rs50 million, turnover Rs5 million; C4 up to Rs20 million, turnover Rs2 million; C5 up to Rs10 million, turnover Rs1.4; C6 up to Rs5 million, average turnover of Rs0.5 million.

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SUMMARY FINDINGS

Overall Perception in the Industry

While the overall perception among contractors and consultants was one of disillusionment with clients and government procedures, they were modestly upbeat about future business prospects. They recognized that economic activity was rising in Pakistan and that there were prospects for them both here and abroad. They referred to the period since the 1990s as a period of lost opportunity, during which they faced a serious slump, but were now modestly hopeful and keen on moving ahead. While they put some of the blame on the clients, they were generally pragmatic and mindful of their own shortcomings2.

The survey findings and deliberations in the focus group discussions showed a similarity of views on key issues pertaining to the four thematic areas, namely, Business Environment, Human Resources, Supply of Materials and Equipment. Percentage of responses might vary between different groups (and for certain type of analysis those differences must be looked into), yet all stakeholders seemed to agree on the basic issues concerning each category.

Views on Equipment Constraints It is widely recognized that contractors engaged used equipment which limits their

capacity to deliver quality work on time. They either do not have the means or lack interest in investing in this area because financing is not facilitated3 and business prospects are uncertain.4 The exceptions to this, it was believed are only a few, such as some international companies and Frontier Works Organization (FWO). (The national private sector is mildly resentful that this segment of the business denies them of their rightful share in a competitive business). The large majority of national contractors are faced with the limitation of equipment. 5 However, all stakeholders, including the contractors, believe that this problem can be addressed through their proposals (summarized later in the note) which address the problem of shortage of funds and deficient facilities at its root-cause.

Views on Material Constraints There is a strong view that the costs of energy as well as material are very high in

Pakistan. The costs, many felt, are rising unfairly because the monopoly control mechanisms for checking unfair practices in the pricing of items, for example cement, are absent. The rapidly rising expenses lead to complications of "price escalation." In the absence of fair and balanced contracts, coupled with a lack of suitable "dispute resolution mechanisms," rising costs cause serious disputes on price escalation. This paralyzes on-going projects and destroys the prospects of further business partnerships.

Views on Human Resource Constraints There is a general agreement that the quality of Human Resource (HR) available to

2 This is widely substantiated by survey findings, see Annexure A: Detailed Findings of the Survey 3 95 percent of the contractors, 72 percent of the consultant and 64 percent of the clients are of the view that lack of financial facilities is restricting the growth of the industry. (Q6) 4 77 percent of contractors, 82 percent of consultants and 54 percent of clients agreed that uncertainty of demand discourages from increasing capacity. 5 79 percent of contractors, 61 percent of consultants and 100 percent of clients think that lack of new equipment decreases productivity ( Q170)

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Pakistani contractors, consultants, and clients is poor. This is partly due to deficient training arrangements 6 at various levels and partly because of inadequate and un-competitive compensation.7 The problem gets compounded when low wages and inhospitable professional environment lead to overseas migration8 of qualified personnel. Contractors and Consultants feel strongly that poor contract management practices, especially the lowest price bid practice, coupled with high costs of materials, drain them out of resources which they could otherwise invest in Human Resource Development (HRD). They argue that they have no surpluses left to invest in HRD or to offer compensation packages which are high enough to make overseas migration unattractive. There is a feeling that the government should take the lead in investing in training facilities, but the industry will also be keen in coming forward to share, once its business conditions become healthier.

There is fairly high support among consultants and contractors for inviting foreign companies to participate in the construction activity in Pakistan. In particular they support joint ventures which will provide them exposure to professional management techniques and new technology. The clients are relatively less supportive of bringing in foreign participation. At the same time many contractors expressed skepticism about the technical abilities and business ethics of certain foreign contractors.

Views on Business Environment Constraints The inadequacies of business environment including "contract management" issues on

the one hand and "financing facilities" on the other attract the most impassioned attention of contractors and consultants.

The contractors and consultants attributed most of the problems to a lack of regulatory reforms, inadequate government policy intervention and weak client9 agencies.

The consultants were particularly irked because they believed that they had been stripped of their professional role as independent advisers to the client and a bridge between the client and the contractor. Their present role is seen as being unduly subservient to the client, which in their view hurts their performance and discourages the induction of local and foreign talent, including expatriate Pakistanis.

The contractors and consultants were of the view that barring a few exceptions, most client agencies are plagued by outdated, defective and non transparent procurement rules and regulations. They also said that non competitive salary structures are deterring the induction and retention of qualified professionals in the client agencies.

In general, the stakeholders were of the view that a long list of factors constraining a high quality construction industry in the country is caused by a few broad regulatory, financial and institutional bottlenecks. And according to them, the construction industry can stage a take-off if those problems could be fixed.

6 91percent of the contractors, 89 percent of consultants and 100 percent of the clients agreed that there is a need to institutionalize development of skill/vocational training of manpower. (Q135) 7 77 percent of the respondents agreed that the lowest bid is the reason for inadequate salaries. (Q145) 8 60 percent of the contractors, 67of the consultants and 45 percent of the clients said that inadequate salary structure is the most important cause of brain-drain in the industry. (Q144) 9 70 percent of contractors, 61of consultants and 64 percent of clients think that the weakness of client agencies is strong problem. (Q 78)

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Following is the summary of the views of stakeholders on business environment and their proposals to address key bottlenecks in the industry. Regulatory Framework

The survey and focus group discussions registered a fairly high acceptability of and confidence in the FIDIC form of Contracts (particularly in the contractors and consultants segment). It is widely believed that implementation of these documents in both "letter and spirit," will effectively check the unilateral discretionary powers of the client agencies, which opens the door for unfair practices amongst all stakeholders. Along with reforms initiated in procurement by PPRA, it will pave the way forward, they believe, by successfully addressing many of the core issues of business environment such as:

1- A lack of transparency in procurement process and contract administration.10 2- Multiple and non transparent enlistment procedures.11 3- Complex and lengthy prequalification procedures.12 4- Almost non existent practice of black listing and eradication of poor performing

contractors/consultants.13 5- A lack of Implementation of FIDIC guidelines and contracts.14 6- Incorporation of imbalances in the contracts through “Special Conditions of Contracts”,

which opens the door for collusion amongst stakeholders (for unfair practices). 7- Insufficient escalation clauses damaging cash flow capabilities. 8- Inadequate monitoring of contractors and consultants.15 9- Delayed payment procedure for contractors and consultants.16 10- Corruption and a lack of accountability. 11- Negative impacts of “acceptance of the lowest bid” method, which results in;

(i)insufficient rates; (ii)inadequate salaries;17 (iii)insufficient cash flows; (iv)delayed payment to subcontractors;18 (v)delays in project completion dates and (vi)low participation of international contractors & consultants19

10 71 percent of contractors, 69 percent of consultant and only 36 percent of clients agreed that lack of transparency in procurement and contract administration is an issue (Q117). 11 83 percent contractors, 92 percent consultants and 73 percent clients agreed (Q29). 12 55 percent of the respondents agreed (Q28). 13 67 percent of contractors, 48 percent of consultants and 55 percent of clients agreed that client agencies do not blacklist poor performance due to shortage of quality, contractors/consultants (Q34). 14 60 percent respondents agreed. 72 percent of the consultants are inclined towards the adoption of FIDIC contracts by clients (Q31). 15 69 percent of contractors, 58 percent of consultants and 36 percent of clients agreed that performance of contractors is not adequately monitored (Q54). 16 73 percent overall, contractor 84 percent, consultants 66 percent and clients 36 percent said that payment procedures are time consuming (Q63). 17 77 percent of the respondents agreed that the lowest bid is the reason for inadequate salaries. (Q145) 18 76 percent of contractors, 97 percent consultants and 91% of clients agreed that contractors don’t pay subcontractors on time. (Q70) 19 72 percent of the respondents think that low bid by contractors/consultants and the clients practice to award contract based on price, discourages foreign contractors from coming in. (Q115).

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Box 1: Procurement Reforms in Pakistan – A long way to go! One of the first things recognized by stakeholders in Pakistan was an urgent need for procurement reforms. The Pakistan Procurement and Contract Management study for Sindh was one of the first initiatives in this regard. The WB commissioned this study in July 1991, to analyze procurement practices in Sindh, with a view towards strengthening these procedures. The objectives were to a) assist the Government of Sindh and its local government units to handle public sector procurement in a timely and cost effective manner, b) assist the entities involved in implementing the Sindh Special Development Project to carry out their project related procurement responsibilities and c) assist in the development of organizations and competent HR for carrying out procurement functions. A high level conference was convened in Bhurban in November 1992, under the joint auspices of the WB and the MoF to discuss the findings and recommendations contained in the commissioned report. As an outcome of the Bhurban conference, the National Procurement Reforms Program (NPRP) was initiated in 1995. A key recommendation was to set up a Public Procurement Regulatory Authority (PPRA) and prescribe uniform procurement rules. The PPRA Ordinance was promulgated in 2002, and by 2004, the Public Procurement Rules were notified through PPRA. These rules are applicable to all procurements made by all procuring agencies of the Federal Government. Since 2004, significant progress has been made in creating awareness of PPRA rules in the procuring agencies. Procurement rules of most of the major government departments/agencies have been reviewed and amendments suggested for making the procedures conform to PPRA rules. PPRA has posted the WB and PEC's standard bidding documents (amended to conform to PPRA rules) and requests for proposals on their web site. Although PPRA does not require the procuring agencies to use any specific documents, compliance with the PPRA rules are mandatory. PPRA now intends to focus on enforcement of the rules through procurement audits. These rules include making public the bid evaluation criteria, the evaluation report, opportunity to lodge a complaint before and after the award of a contract and some other measures. All of these are time bound activities. The PPRA rules provide for protection of bidders through a multi-stage grievance redressing mechanism. However, the implementation of this procedure would be difficult as no contractor would risk being” black listed” for future projects! It remains to be seen how effective PPRA will be in reforming the procurement culture in Pakistan and reducing the level of discontent.

Financial Constraints

The stakeholders believe that the absence of specialized financial facilities 20 for the construction industry leads to overall shortage of funds for operational and developmental purposes, especially a lack of new leasing facilities21 which encourages the use of old and obsolete machinery, causing:

20 95 percent of the contractors, 72 percent of the consultants and 64 percent of the clients are of the view that lack of financial facilities is restricting the growth of the county (Q61). 21 74 percent of contractors, 50 percent of consultants and 54 percent of clients think there is an absence of leasing facilities (Q169).

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Rapid breakdowns22 Repair and maintenance issues and unavailability of spare parts23

Low productivity24 Delays in project completion

The stakeholders also believe that the exclusive use of bank guarantees without the option of insurance guarantee as a substitute for collateral, leads to perennial cash flow problems as a sizeable part of the equity is tied up in bank guarantees for long durations. Based on these views, the contractors and consultants suggested for initiating comprehensive reforms in banking, leasing and insurance regulations.

On the whole, the contractors and consultants generally favored the following reforms in the institutional structure affecting the construction industry. Required Reforms

The majority was of the view that reforms are needed in the industry to increase growth. They suggested the following interventions: Establishment of a Construction Industry Development Board

Keeping in view the role that Engineering Development Board has played for enhancement of engineering activities in Pakistan, a Construction Industry Development Bank (CIDB) on the pattern of CIDB-Malaysia and Singapore is suggested to address issues, such as planning,25 and forecasting of demand.26 Establishment of a Technical Cadre of Auditors

Confidence in the current audit regime is low as is evident from 76 percent of the construction industry who believed that the role of traditional audit has had a negative impact on the industry. Instead a new generation of auditors who have a specialized understanding of construction sector should be organized. They believed this could address some of the fundamental problems plaguing the industry such as delays in audits which leads to corruption. Most of the respondents (82 percent) believed that delays in audits are a major source of corruption. The technical cadre should define and monitor audit procedures in accordance with the peculiarities of the construction industry. This group can also provide the necessary training to all auditors who might lack the technical know how of the construction industry.27 This will also help in addressing issues such as: a- Delays in audits28 b- Corruption29 Establishment of an Independent and Effective Ombudsmen Organization

22 76 percent of respondents believe that frequent breakdown of equipment is a serious problem (Q172). 23 64 percent of the respondents think non-availability of spare parts is a serious problem (Q178). 24 79 percent of contractors, 61 percent of consultants and 100 percent of clients said that lack of new equipment decreases productivity (Q170). 25 80 percent of contractors, 86 percent of consultants, 91 percent of clients said that the capacity of the industry is not growing due to weak planning.(no master plan available) (Q85). 26 76 percent of the respondents said that uncertainty of demand discourages increase in capacity (Q118). 27 85 percent of the respondents agreed that auditors lack technical knowledge and 86 percent think they lack engineering background also (Q101, 102). 28 83 percent of the respondents said that audits are not current and considered it a serious problem (Q98). 29 82 percent of the respondents said that delayed audits lead to corruption. (Q99)

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This proposed organization can adjudicate and watch over issues related to procurement and administrative malfunctioning which could in turn save considerable time spent on dispute resolution. The majority of stakeholders said that procurement processes will improve tremendously with the implementation of an independent contractor/consultant rating system similar to the ENR rating system. Establishment of One-Window Operation for Enlistment

Enlistment procedures should be uniform across all client agencies. An overwhelming majority of stakeholders (83 percent of clients, 92 percent of consultants and 73 percent of contractors) were of the view that enlistment procedures and criteria should be uniform. Establishment of an Effective Monopoly Control Institution

The existing Monopoly Control Authority (MCA) is believed to have lost its relevance. Most of the respondents (68 percent) were of the view that the government-controlled price regulating agency is not performing effectively and is not in a position to check cartels and monopolies. The majority of stakeholders endorsed reforms in the MCA or suggested its replacement with a more capable and efficient institution Establishment of a Price Review Committee

An overwhelming majority of stakeholders were of the view that escalation clauses should be included in contract documents. Similarly, rapid escalations in the price of materials were rated as a key issue by majority of the contractors and consultants. The current practice of determining escalations based on the bulletins of the Bureau of Statistics is considered inappropriate. They believed that the current escalation clauses do not adequately compensate for fluctuations in prices. In order to effectively address the issue of compensation, a price review committee comprising P&D, NESPAK and APCA should be formed. The committee’s responsibilities would include determination of the current market prices and also the escalation criterion. This institutional arrangement is expected to address the following issues: a- Resistance to escalation by the client agencies 30 b- Insufficient escalations31 c- Reluctance to take bold decisions by client agencies due to the fear of unnecessary

complications with audit/NAB/FIA. 32

Creation of a Special Bank for the Construction Industry 82 percent of all stakeholders recommended creation of a CIDB that would cater to the

specific needs of the construction industry. The majority of clients agreed that it could play an important role in the growth of the construction industry. Technical and Vocational Training Requirements

In order to solve the issues identified with HR within the industry, a greater part of stakeholders identified training as the most effective tool. Increase in salaries and pay structures was the second most popular recommendation. APCA along with the WB and the GoP should make use of the already established technical and vocational institutes, like TEVTA, to train the work force.33 30 72 percent of contractors and 63 percent of consultants said that clients resist offering benefits of escalation to contractors (Q190) 31 67 percent of contractors and 36 percent of consultants said that escalation benefits are insufficient. (Q191) 32 54 percent of clients think that over monitoring creates lack of confidence (Q108) 33 75 percent of the respondents think that HR availability is an issue. (Q128)

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Local Stakeholders Perceptions

This section, gives a review of those issues which were rated by most respondents as being important/very important (weighted average of rating scales >3.5. (For a more detailed analysis, response of individual categories of stakeholders may be consulted in Annexure A).

Capacity The respondents said that poor industry rates, use of public sector companies, uncertainty

of demand for construction and consulting services, migration and a lack of skilled personnel (HR) as well as inadequate government policies regarding equipment (machinery) are restricting their capacity. Similarly, a non-conducive overall business environment, a weak regulatory framework for the industry and the use of Force Account work34 were some of the major areas which strongly affected the capacity of stakeholders to deliver infrastructure (see Figure 1).

Figure 1 : Views on Capacity … Continued on next page

34 The concept of Force Account was not understood by most respondents and had to be explained, results need to be interpreted accordingly.

3.94

3.77

3.70

4.12

3.13

3.06

2.78

3.22

3.12

1 2 3 4 5

Q18 Uncertainty of demand forconstruction/consulting services discourages the

private sector from increasing capacity.

Q17 Use of public sector companiesdiscourages private sector contractors/consultants from increasing capacity.

Q16 Use of force-account discourages privatesector contractors/consultants from increasing

capacity.

Q15 Local contractors/consultants can doubletheir capacity if the current rates are significantly

increased.

Q14 In order to deliver twice the current volume ofwork, foreign Consultants will have to come in.

Q13 In order to deliver twice the current volume ofwork, foreign contractors will have to come in.

Q12 Local contractors give poor (substandard)quality.

Q11 Local contractors have too much work.

Q10 Local contractors lack capacity to expand.

Strongly Agree

9

3.43

3.60

3.62

4.00

3.49

3.71

3.74

1 2 3 4 5

Q22d Material is an issue w ith respect to the capacityfor implementing of large infrastructure projects in

Pakistan?

Q22c Machinery is an issue w ith respect to thecapacity for implementing of large infrastructure

projects in Pakistan?

Q22b Human resources is an issue w ith respect tothe capacity for implementing of large infrastructure

projects in Pakistan?

Q22a Business Environment and RegulatoryFramew ork is an issue w ith respect to the capacityfor implementing of large infrastructure projects in

Pakistan?

Q21 Current government policies create problems inthe provision of materials for the construction

industry.

Q20 Current government policies create problems inthe provision of appropriate equipment (machinery)

for the construction and consulting industry.

Q19 While the country actively seeks employment forits skilled and unskilled labor overseas, considerable

shortage of manpow er exists at all levels in thecountry?

Figure 1 - Continued from previous page

Strongly Agree

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Business Environment and Regulatory Framework The respondents highlighted the following various factors that are affecting the overall

business environment and emphasized on the need to have an effective regulatory framework. Procurement

The respondents identified the following factors within procurement which impact the

industry adversely. This includes time taken for procurements and delays caused in related approvals, conflicting government and donor/lender rules, multiple enlistment criteria and procedures, a lack of effective price escalation clauses, slow release of allocations made for projects, practice of accepting the lowest bids which is a cause for poor quality of inputs and outputs. Most said that the absence of objective selection criteria often results in same inefficient consultants and contractors being awarded work despite lacking in capacity (see Figure 2).

Figure 2: Views on Procurement

4.26

3.67

2.90

4.02

3.38

3.53

3.78

3.86

3.52

1 2 3 4 5

Q32 Some people believe that the contracts shouldinclude escalation clauses.

Q31 Some people believe that the FIDIC Contractsshould be adopted by all clients.

Q30 Some people believe that the post qualif icationshould be the preferred method of procurement.

Q29 The enlistment procedure & criteria should beunif ied for all executing agencies (one w indow

operation).

Q28 The pre-qualif ication procedures are complexand time consuming.

Q27 Procurement process for contractors (from NIT to mobilization) takes too long.

Q26 Government rules are in conflict w ith donorrules.

Q25 Procurement procedures prescribed by donorslead to delays

Q24 Appointment of consultants takes too long

Another important issue identified by respondents was the preferential use of public sector firms which increases costs in addition to discouraging the private sector from participation in the bidding process. Force account procurement was highlighted as a factor which causes inefficiencies. Similarly, a lack of a special construction development bank to support the industry, incorrect project cost estimates, complex and time consuming dispute resolution mechanisms, and a lack of an independent consultant/contractor rating system were the other most common issues highlighted by the respondents (see Figure 3).

Strongly Agree

11

Figure 3: Views on Regulatory Framework

3.75

3.71

3.41

4.15

3.98

3.26

3.20

3.35

3.01

4.05

4.12

1 2 3 4 5

Q56 Contractors keep on getting work despite lack ofcapacity

Q55 Inefficient consultants & contractors keep on gettingwork due to lack of objective evaluation

Q54 Performance of Contractors is not adequatelymonitored

Q53 A special bank to support the construction industryshould be created

Q52 Procurement processes will tremendously improvefrom the availability of an independent contractor/consultant

rating system similar to the ENR rating.

Q51 Past performance of a contractor is not considered inthe award of new contracts

Q50 Local contractors/consultants are not provided fairopportunity to participate in the procurement process (right

to invite)

Q48 Recent invitation to tenders have solicited a poorresponse from International contractors/ consultants

Q47 Recent invitation to tenders have solicited a poorresponse from local contractors/consultants

Q46 Dispute resolution mechanisms are complex andlengthy.

Q44 Practice of accepting lowest bids has led todeterioration in quality of inputs and output.

Budgeting, Financing, Payment Procedures and Cost

Respondents were of the view that incorrect project cost estimates caused problems in the

adequate release of funds. Similarly, delayed decision making, a lack of financial facilities for the industry, slow release of funds from the finance department, PSDP/ADP rollovers and throw forwards impeded growth of the industry. They said that the projects in the PSDP/ADP were not fully funded for the planned completion time and suggested that the disbursements of PSDP/ADP allocations should be streamlined and automated. In the respondents’ views poor planning was the major cause of PSDP/ADP’s rollovers/throw forwards and contractors should be penalized for causing delays in payments to subcontractors (see Figure 4).

Strongly Agree

12

Figure 4: Views on Budgeting and Financing

3.34

4.24

4.18

3.81

3.68

4.06

4.01

4.47

3.91

1 2 3 4 5

Q67 Disbursement procedures prescribed by donorscause delays

Q66 A project in the PSDP/ADP should be fully fundedfor the planned completion time

Q65 Inadequate release of funds is a cause of delayin project implementation

Q64 Slow PSDP/ADP roll over and large throwforw ards impede grow th of the construction and

Q63 Payment procedures for contractors are timeconsuming and hamper progress

Q62 Projects are delayed due to slow release offunds from Finance

Q61 Lack of f inancial facilities are restricting thegrow th of the construction industry

Q60 Delayed decisions lead to increased projectcosts

Q59 Project costs are not estimated correctly causingproblems in adequate release of funds

The respondents complained that payment procedures were lengthy and time consuming causing cash flow problems for contractors and consultants. They suggested that in-time payments are essential for on-time implementation of projects and asked for legal action against clients who caused delays in payments to subcontractors. The majority of respondents thought that operational costs of doing business in Pakistan were high (see Figure 5).

Figure 5: Views on Payment Procedure and Cost of Doing Business in Pakistan

4.03

3.57

4.17

4.38

3.72

3.45

3.13

3.35

1 2 3 4 5

Q75 Poor planning is major cause of PSDP/ADP's roll-over/ throw-forwards

Q74 Operational costs of conducting business inPakistan are high

Q73 Disbursement of PSDP/ADP allocations should bestreamlined and automated

Q72 Timely payments are essential for on-time projectimplementation

Q71 Contractors who delay payments to subcontractorsshould be penalized by the client

Q70 Contractors don't pay sub contractors on time

Q69 Advances given to contractors are not used for thecorrect purpose

Q68 Payment procedures for consultants are timeconsuming and constrain capacity

Very Strong Problem

Strongly Agree

13

Administrative Issues and Other Weaknesses The respondents also highlighted the administrative issues which plague the industry

such as inefficient contract administration (clients) and a lack of professional management in construction companies. Similarly, they complained of a lack of professional planning, execution and implementation skills in client agencies. The respondents said that government departments lack competent management; contractors lack competent people and client agencies are slow in decision making (see Figure 6).

Figure 6: Views on Administrative Issues

3.13

4.21

4.01

4.04

3.29

3.56

3.78

3.62

3.83

3.40

3.52

3.73

1 2 3 4 5

Q87 Local consulting firms are not properly managed

Q86 Government offices and ministries lack coordination

Q85 Capacity of the industry is not growing due to weakplanning (No master plan)

Q84 Client agencies are slow in decision making

Q83 There is a lack of competent people with consultants

Q82 There is a lack of competent people with contractors

Q81 Client Agencies and other Govt. Departments lackcompetent management

Q80 Client agencies lack proper execution andimplementation skills

Q79 Client agencies lack professional planning

Q78 Client agencies are weak

Q77 Local construction companies are not professionallymanaged

Q76 Contract administration is inefficient (delayedpayment and decisions)

Figure 7, shows that most respondents strongly agreed that construction and consulting firms should be supported by the client agencies and their resources. They stressed that the capacity of industry is not growing due to weak planning (lack of a master plan) and a lack of coordination among government offices and the related ministries. Figure 7: Views on Planning and Resources

3.86

4.04

1 2 3 4 5

Q92 Consulting companiesshould be supported by client

agencies and their supportmachinery.

Q91 Construction companiesshould be supported and

guided by client agencies andtheir client's resources.

Very Strong Problem

Strongly Agree

14

Regulatory Framework Figure 8, shows that most respondents agreed that, government trade policies do not

support or facilitate the industry and that there are too many procedures for conducting business in Pakistan. The majority also feels that audit plays a negative role as delayed audits create opportunities for corruption. They lament that auditors are neither held responsible for causing delays nor do they have technical knowledge of the industry. In their view, PEC can play a more effective role, however by granting industry status to the construction business will not have any impact, as supporting policies and reforms are most needed. They also complained that trade (development) policies are always changing, are inconsistent and cause a lack of confidence among the investors.

Figure 8: Views on Regulatory Framework

3.10

4.20

3.99

3.89

3.69

3.81

4.27

4.19

4.05

3.99

4.02

3.91

3.90

3.37

2.88

3.73

1 2 3 4 5

Q108 (For Clients/Govt Agencies only) Over control andmonitoring by NAB/FIA/Audit creates lack of confidence.

Q107 Lack of continuity in policies is the cause for lowconfidence in the industry

Q106 Ever changing trade policy constrains growth

Q105 Declaration as an industry, without correspondingfinancial/lending facilities and reforms in trade policies,

will not yield results

Q104 Government's decision to provide industry-statusto construction business did not have impact

Q103 Pakistan Engineering Council is not playing aneffective role in facilitating the industry

Q102 Auditors do not have an engineering background

Q101 Auditors do not have technical knowledge of theconstruction and consulting industry

Q100 Auditors are not held responsible for delays

Q99 Delayed audits create opportunities for corruption

Q98 Audits are not concurrent

Q97 Role of audit is negative

Q96 There are too many procedures involved inconducting business in Pakistan

Q95 The cost of doing business in Pakistan is high dueto government regulations

Q94 The regulatory framework discourages internationalcontractors and consultants from seeking work in

Pakistan

Q93 The Government's trade policy does not support orfacilitate the construction and consulting industry

Very Strong Problem

15

Country Perceptions The majority of stakeholders had strong views on perceptions about business in Pakistan.

In their view, political interference limits growth of the industry and is the major factor in restricting quality local and international contractors and consultants from entering into the Pakistani market. The survey revealed that the size of available contracts does not appeal to big foreign contractors and consultants. Similarly, widespread corruption, a lack of transparency in procurement and contract administration, security risks combined with deteriorating law and order situation and political instability make Pakistan a high risk country. An overwhelming majority said that client agencies lack management capacity and the clients’ practice to award contracts based on price discourages foreign consultants and contractors from bidding in Pakistan (see Figure 9).

Figure 9: Views on Country Perception

4.16

3.85

3.73

3.59

3.87

3.85

3.65

3.91

3.76

4.08

3.99

1 2 3 4 5

Q119 Corruption is endemic in the system.

Q118 Client agencies in Pakistan lack adequatemanagement capacity.

Q117 Lack of transparency in procurement and contractadministration is an issue.

Q116 Average size/value of contracts in Pakistan doesnot appeal to foreign contractors & consultants

Q115 Low bids by local contractors and consultants andthe clients' practice to award contract based on pricediscourages foreign contractors & consultants from

bidding in Pakistan.

Q114 Law and order situation and political instabilitycauses Pakistan to be a high risk country.

Q113 Political interference discourages efforts of localstake-holders to invite international joint venture

partners.

Q112 Politically motivated interference is restricting theentry of quality local and international contractors and

consultants.

Q111 security risks are restricting growth of the industry.

Q110 Widespread corruption is restricting growth of theindustry.

Q109 Political interference is restricting growth of theindustry.

Very Strongly Agree

16

Comparative Costs and Related Issues Figure 10, reflects that the views on the cost of transportation and logistics support as

being highly irrational were found to be common among respondents. However, they showed satisfaction over the cost of infrastructure construction and of engineering consultancy services available in Pakistan which they thought compared well with the costs in other regional countries.

Figure 10: Views on Comparative Costs

3.24

3.40

3.65

3.05

3.35

1 2 3 4 5

Q125 Cost of Engineeringconsultancy services in

Pakistan compares well withcost in regional countries

Q124 Cost of infrastructureconstruction in Pakistan

compares well with cost in regional countries

Q123 Cost of transportationand logistics support is highly

irrational

Q122 Availability oftransportation and logistics

support is an issue

Q121 Affordability oftransportation and logistics

support is an issue

Very Strongly Agree

17

Human Resources Lack of Trained Personnel & Need for HR Development

An overwhelming majority of stakeholders stated that HR availability is an issue to some

extent. However, they rated the need to institutionalize development of skill/vocational training of manpower as a very important issue and emphasized that database of skilled manpower should be maintained (see Figure 11).

Figure 11: Views on Existing HR Services

3.28

3.36

3.47

1 2 3 4

Q137 In house training at construction firms and clientagencies is highly insufficient

Q136 A database of skilled manpower would be useful

Q135 There is a need to institutionalize development ofskill/vocational training of manpower

In Figure 12, the respondents said that in-house training at construction firms and client agencies is highly insufficient and suggested that provision of training opportunities should form part of evaluation and assessment criteria for contractor/consultant by clients. Some respondents said that client agencies should help contractors/consultants to enhance their manpower capacity to overcome shortages of adequately skilled HR at all levels, which was rated as the number 1 constraint (Q140).

Figure 12: Views on Training Needs

3.70

3.88

3.79

1 2 3 4 5

Q140 Shortage of qualified and skilled humanresources at all levels is a number 1 constraint

Q139 Client agencies should help thecontractors/consultants to build their manpow er

capacity

Q138 Provision of training opportunities should form apart of criteria for evaluation and assessment of

contractor/ consultant by the client agency

Very Important

Very Strongly Agree

18

Employee Turnover and Quality

The majority of respondents were not very happy with the quality of available HR and

rated it from average to below average. They identified the lowest price bids as a reason why contractors give non-competitive salaries to their employees thus causing brain-drain. They were of the view that high turnover discourages employers from investing in employee training (40 percent staff turnover within 5 years is reported). The majority was of the view that engineers and professionals should pass professional exams before being allowed to practice and advancement in careers of engineers and professionals should be based on additional training and examinations (see Figure 13).

Figure 13: Views on Brain-Drain and Quality

3.56

3.88

3.42

3.55

3.89

1 2 3 4 5

Q153 Some people argue that there should notbe any advancement in career of engineers and

other professionals without any additional

Q152 Some people argue that the engineersand other professionals should only be allowed

to work if they have passed a professional

Q151 Some people believe that for the samesalaries and work environment, qualified

professionals prefer jobs in other industries as

Q146 High turnover discourages employersfrom investing in employee training

Q145 Some people consider that the lowestprice bids is the reason why contractors givenon competitive salaries to their employees

Very Strongly Agree

19

Construction Equipment The constraints identified by most respondents’ vis-à-vis construction equipment are

related to affordability, and the capacity to increase equipment resources due to a lack of facilitation from government agencies and financial institutions. The respondents believed that a lack of financial facilities for acquisition/purchase of machinery, discriminatory policies favoring import of equipment by foreign contractors, a lack of government support/intervention for enabling better credit facilities, and the absence of reasonable leasing facilities are all factors hampering growth of the industry (see Figure 14).

Figure 15 shows that an overwhelming majority of stakeholders strongly agreeing that there is a lack of support from the government for better credit facilities. Furthermore they strongly agreed that saving on investment in equipment is not preferable and quality of equipment is more important than money saved. Figure 14: Views on Construction Equipment

3.91

3.84

2.71

1 2 3 4 5

Q167 Up to what extent is there lack of financial facilitiesfor acquisition/purchase of machinery

Q166 Up to what extent, capacity to increase equipmentresources, is restricted due to lack of facilitation from

government agencies and financial institutions

Q163 Up to what extent the import policies regardingconstructions equipment need to be liberalized

Figure 15: Views on Equipment Purchase and Credit Facilities

4.03

3.82

4.09

3.82

1 2 3 4 5

Q180 Contractors should not save money on equipment asthe quality of the equipment is more important than the

money.

Q169 There is an absence of reasonable leasing facilities.

Q168 There is a lack of government support/interventionfor enabling better credit facilities.

Q164 Construction equipments import regulationsdiscriminate in favour of foreign contractors and against

the local contractors.

Very Large Extent

Very Strongly Agree

20

Quality, Maintenance and Operation of Equipment The majority of respondents cited that a lack of new equipment restricted productivity,

and the practice of importing used faulty machinery as very serious issues. They agreed that maintenance of old equipment is a problem requiring frequent repairs and there is a serious issue with a shortage of trained operators, technicians and availability of spare parts for equipment maintenance.

Figure 16: Views on Equipment Maintenance and Purchase

3.51

3.30

3.07

2.94

3.02

3.70

3.96

3.67

3.89

1 2 3 4 5

Q178 Availability of spare parts is a serious/non-seriousissue

Q177 Cost of maintenance is a serious/non-serious issue

Q176 Availability of after sales service is a serious/non-serious issue

Q175 Availability of maintenance staff is a serious/ non-serious issue

Q174 Availability of trained operators is a serious/ non-serious issue

Q173 Repair and maintenance issues arise with oldequipment

Q172 Frequent break downs of old equipment is a problem

Q171 Most of the machinery used is imported secondhand

Q170 Lack of new equipment restricts increase inproductivity (Use of old machinery by contractors causes

low productivity)

Very Serious

21

Materials Supply

Problems related to material supply were rated as very serious. These include a lack of data on material production and rapid escalation in price of materials. The majority agreed that inconsistent escalation in prices severely affects the management of cash flow (see Figure 17).

Figure 17: Views on Materials Supply

4.32

4.35

3.70

2.31

2.25

2.85

2.63

2.77

1 2 3 4 5

Q189 How serious is the problem of instability ofmarket prices in managing the cash flow.

Q188 How serious is the issue of rapid escalation inprice of materials

Q187 How seriously lack of data on materialsproduction requirements (locally produced and

imported) impacts project planning and execution

Q183e Furnace oil

Q183d HSD

Q183c Bitumen

Q183b . Steel

Q183a a. Cement

Q183 How serious do you think is the shortage ofthese construction materials in Pakistan:

Figure 18 shows that the majority of stakeholders agreed that multiple regulations, inconsistent quarry regulations and taxes result in delays and cost over-runs. There was strong agreement over the fact that clients resisted honoring the escalation clauses, though escalation clauses do not adequately compensate increase in prices. The majority agreed strongly that the government price controlling agencies were incapable of controlling cartels and monopolies and similarly were ineffective in regulating the supply of bitumen, cement and steel.

Very Serious

22

Figure 18: Views on Price Escalation and the Government’s Role

4.31

4.22

3.96

4.20

3.82

3.50

1 2 3 4 5

Q193 Government price controlling agencies are notperforming effectively.

Q192 Government controlling agencies are not in aposition to control Cartels and Monopolies.

Q191 Escalation clauses do not adequately compensateincrease in prices.

Q190 Clients resist giving the benefit of escalation to thecontractors.

Q186 Multiple regulations and taxes are a serious causeof delays & cost overruns.

Q185 Some people argue that the quarry regulationsshould be uniform across the country

Very Strongly Agree

23

ANNEXURE A: DETAILED FINDINGS OF THE SURVEY

Issues identified through the survey and the importance granted to them by industry stakeholders are portrayed in the following sections. Both the overall perceptions about the industry and thematic topics (Business Environment, Human Resources, Machinery & Equipment and Material Supplies) were explored through the survey to gather broad-based information from stakeholders. Section 1 Volume and Nature of Work Qs 1: Volume of Work

Table 1, shows that on average the contractors had completed 1-10 projects in various sectors during the last 5 years and had about half a dozen projects in hand during the survey period. Table 1: Work Load and Value of Work

Roads & Bridges Irrigation Power Railways Ports Others

Overall Average

Average of Contractor's sample Work Load (number of projects completed in past five years)

10 8 3 2 1 9 9

Value of works completed in past five years (Rs in Mil)

601 311 1,361 1 160 872 670

Work Load (number of projects in hand) 6 3 1 1 2 5 8

Value of works in hand (Rs in Mil) 755 1,112 672 86 235 1,189 920

Qs 5(a): Private Sector vs Public Sector – a constraint on resources for delivering PSDP

The results showed that 45 percent of the work carried out by contractors (at present and during the previous 5 years) had been for the private sector and 55 percent for the public sector. Consultants reported 53 percent work as being done for private sector clients (Table 1). Qs 5(b and c): Sub-Contracting

For the smaller contractors (Category C2 and C3) over 50 percent of the business is generated through sub-contracts from others while for the larger contractors (C1) it is reported to be around 25 percent. C1 contractors reported giving 24 percent of their works to sub-contractors, while C2 and C3 contractors reported sub-contracting 45 percent of their works to smaller contractors. Consultants reported getting 34 percent of their work on a sub-contract basis and letting out 28 percent work to other consultants (Table 1). Qs 5-6: Timely Completion and Within Estimated Cost

Contractors reported that 19 percent of the works were delayed, and 24 percent were not completed within the bid cost. However, 27 percent reported delays ranging from 6 months to over two years as an average extent of delay in projects completed during the past 5 years. Almost 44 percent consultants reported 25 percent delays in their projects averaging from 6

24

2%

30%

16%23%

2%

3%

8%

4%

7%5% Consultants cause delays/defective design

Delay in funds and payment, cash flows

Delay by contractors

Delay by employer/decisions, regulatoryframeworkVariations

Price escalation

Right of way

Materials shortage

Human resources, general environment,political situation - OthersNo delays/Miscoding

Dis-agree42%

Neutral6%

Agree53%

months to over two years and about 30 percent excess in initial costs of projects. 54 percent of clients reported delays, ranging from 6 months to over a year, in projects (Table 1). Q 7: Most common reasons of delays in project completion (n=132)

Around 30 percent respondents reported delay in funds and payments and related cash flow problems to be the most frequent cause for delays in project completion. 32 percent said that Delays caused due to untimely decisions while 23 percent thought that regulatory framework involved in projects is the main cause for delays. Figure 1: Common Reasons for Delays in Projects

Only 16 percent thought that management and planning flaws by contractors were a cause for delays. Interestingly, only 8 percent blamed a lack of availability of right of way and 7 percent thought that HR, general business environment and political situation are a cause for delays. Surprisingly, only 4 percent blamed material shortages to be a cause for delays (Figure 1). Qs8-9: Claims Filed and Received

The Pie-chart shows that overall 53 percent agreed. 44 percent of the contractors reported filing claims however, a significant number (63 percent) of the large C1 contractors reported filing claims on projects as compared to C3 contractors (29 percent).

Those respondents who did not file claims said that that it was useless to file claims as laws and procedures were too complex, and the government did not compensate. 45 percent of the clients reported having received one or more claims.

25

43

42

42

42

67

63

8

4

4

8

9

57

50

55

55

25

27

C3

C2

C1

ALLCONTRACTOR

CONSULTANTS

CLIENTS AGREE/STRONGLYAGREE

NEITHER AGREE ORDISAGREE

DISAGREE/STRONGLYDISAGREE

NO RESPONSE

Section 2 Capacity, Quality and Others Qs 10: Do the local contractors lack capacity to expand?

Respondents were divided over the issue of capacity of local contractors to expand. The majority at 53 percent believed that the industry did not have the capacity to expand while 42 percent disagreed with this statement. Within stakeholders, the consultants and clients were relatively less optimistic (67 percent and 63 percent, respectively) on the industry’s ability to expand while only 42 percent of the contractors thought the industry could not expand at all (Figure 2).

Figure 2: Local Contractors Lack Capacity to Expand

32 percent of the respondents said that contractor’s corporate/organizational weakness and management structure were the primary reasons for a lack of capacity to expand, followed by 22 percent who cited financial constraints and limited resources as reasons restricting capacity expansion. Among other reasons, 16 percent thought a lack of qualified human resources, 10 percent assigned equipment shortage, while only 8 percent said that business environment was a constraint for expansion in capacity (Figure 3). Figure 3: Reasons for Lacking in Capacity to Expand

2%

22%

32%

8%

2%

10%2% 6%

16%Subcontracting is practiced

Lack qualified human resources

Lack financial constraints/resources

Corporate organization w eakness/managementstructureBusiness Env ironment

Low prices

Lack Equipment & technology

Due to corruption

mis code

26

7%7%

2%

25%

10%

30%

10%

2%7%

Can expand if clients trust them

Provide funding support

Provide equipment support

Procurement - can expand if work given takesinto account capacity to do itProcurement issues - proper rates needed

Business Environment does not support

Govt Policies

Parastatal contractors

Others - They don't lack capacity, there is a lackof qualified staff

Figure 4 shows those who disagreed with the statement that “contractors lack the capacity

to expand.” 41 comments were of the opinion that it is not the contractors but rather the business environment (30 percent), the procurement process, practice of least cost, poor government policies (10 percent) and a lack of trust in the contractors (7 percent) were factors that were responsible for a lack of capacity expansion. 10 percent said that proper rates should be in place and 7 percent were of the view that they can expand if they are provided funding support. Figure 4: Contractors have the Capacity to Expand Qs 11: Do local contractors have too much work?

Overall, 54 percent of respondents agreed that local contractors have too much work while 38 percent disagreed. While, from amongst the clients, 63 percent agreed that local contractors have too much work and only 18 percent disagreed.

Table 2: Local Contractors have Too Much Work

Table 2 shows that the majority of consultants (58 percent) and C1 contractors (59 percent) agreed with the statement. Overall, from amongst the contractors, 49 percent agreed that they had too much work while 42 percent disagreed.

The following comments were made from the majority who agreed with the question.

• Numerous projects were on-going and planned (35 percent) • Contractors are already occupied and have no spare capacity - difficulty in deploying

resources on remote project sites (30 percent) • There is a lot of work because investment has increased (10 percent) • There is too much work and not enough HR (4 percent) • Not enough contractors available (4 percent) • Large contractors give sub-contracting work and everyone is busy (4 percent).

Local contractors have too much work

Agreed (%)

Disagreed (%)

All Respondents 54 38 Clients 63 18

Contractors - overall 49 42 Contractors C1 59 33

Consultants 58 37

27

57%

16%

8%

11%

8% Too many contractors - all do nothave work, not enough work

Most work done by FWO/NLCParastatal/foreign contractors

Contractors can do much morework

Work sites are under-developed,construction not an industry, Others

Not relevant response

Figure 5 illustrates why respondents disagreed that local contractors have too much work. The following comments will elaborate the point further.

Figure 5: Respondents Disagree that Local Contractors have Too Much Work

• There are too many contractors (57 percent), all do not have work because there is not enough work

• 16 percent said that most of the work is given to FWO/NLC, parastatal companies and foreign contractors

• 11 percent said work sites are under-developed, construction not organized as an industry and

• 8 percent said contractors can do much more work. Qs 12: Do local contractors give poor/sub standard quality?

Table 3: Quality of Local Contractors’ Work

Overall, the respondents tended to disagree with the statement. The majority of clients were relatively inclined to be neutral (Table 3).

Of those respondents who agreed (35) with the statement, the majority stated that it was because of a lack of contractor’s management, professional and technical skills and the availability of quality HR (37 percent). Others, said that it was due to poor procurement practices, acceptance of the lowest bid, low rates and outdated CSR (17 percent), a lack of check and balances and proper supervision (17 percent), in addition 14 percent said it was due to corruption and political interference, while 9 percent said it was due to the practice of subcontracting of the major parts of works (Figure 6).

Local contractors give poor, sub

standard quality

Agreed (%)

Neither Agreed/

Disagreed (%)

Disagreed (%)

All Respondents 31 21 46 Clients 9 45 36 Contractors-overall 32 14 52 Contractors C1 29 21 50 Consultants 36 25 39

28

17%

3%

9%

17%

14%

37%

3% Lack of check and balances/superv ision

Variations in work

Practice of Sub contracting of major parts of works

Poor procurement practice/acceptance of lowestbid/out dated CSR/low ratesCorruption/political interference of contractors

Lack of Contractor Management, professionalismand technical skills, human resourcesOthers

68%

16%

11%5% Depends on contractor, varies

from contractor to contractorcannot generalize

Depends on the rates - ispriority good quality work or lowrates/lowest bid?

Depends on level of supervision

Corruption and others

Figure 6: Local Contractors Give Poor Quality

However, there were 45 comments disagreeing with the statement. 34 percent said that quality is good, while only few contractors agreed otherwise. 29 percent were of the opinion that if rates are good then quality will be good, quality is bad due to poor estimates of project costs and because price escalation considerations are not provided. 24 percent stated that quality depends on level of monitoring and adequate supervision while, 13 percent said corruption is the main cause for poor quality. In their opinion corruption is not due to the contractor, it is largely dependent on the client’s policy.

Figure 7: Neither Agreed or Disagreed

Figure 7, shows that several respondents (19) neither agreed nor disagreed with the

statement. Majority (68 percent) of such respondents said that quality varied from contractor to contractor. 16 percent said it depended on rates or whether priority is for good quality work or the lowest bid rates. 11 percent thought quality depends on level of supervision; while 5 percent felt it depended on level of corruption.

29

38

33

51

42

64

45

8

4

4

6

9

62

50

46

53

28

45

8

2

3

C3

C2

C1

ALLCONTRACTOR

CONSULTANTS

CLIENTSAGREE/STRONGLYAGREE

NEITHER AGREE ORDISAGREE

DISAGREE/STRONGLYDISAGREE

NO RESPONSE

30%

14%

56%

Locals don’t have resources -professional, managerial, technical, theylack financing/lack of investment, lackcapacity, cannot expand

Foreign contractors have moreresources/management and knowledge -but should be western, they bring in newtechnology, give good work and progress

For mega projects only/not enoughcontractors for such projects (Dams,power, multi story bldngs)

Qs 13: To deliver twice the volume of work – will foreign contractors have to come in? Qs 14: To deliver twice the volume of work – will foreign consultants have to come in?

Around 50 percent of the respondents believed that in order to double the current volume of work foreign consultants and contractors would have to come in. Figure 8 shows that 64 percent of the consultants and 61 percent of the C1 contractors agreed that foreign contractors would be needed to deliver twice the present volume of work, while amongst the smaller C3 contactors a strong majority (62 percent) disagreed with the need for foreign contractors.

Figure 8: Foreign Contractors have to come in to Deliver Twice the Volume of Work

While giving reasons for the need to have foreign contractors, respondents (44

comments) said that the local contractors did not have the professional, managerial and technical resources, lacked financing, investment and capacity, due to the which foreign contractors will be needed (55 percent) to deliver the expected increase in the volume of work. Others agreeing with the need for foreign contractors stated that international contractors (especially from western countries) bring in resources, management skills and knowledge and such contractors would be needed (30 percent), while 14 percent said foreign contractors would be needed only for mega projects (Figure 9).

Figure 9: Reasons Why Foreign Contractors are Needed

30

8%

70%

4%

4%

14%Will cause unemployment for local contractors - wherewill locals go?

Foreign contractors are not needed, locals should begiven chance and supported: government should haveright facilitation policy, give good rates, provide training- does the govt have its own capacity?Break up work in to smaller packages (contracts) -even for mega projects

Ample HR available - unemployment

Only on selected projects- with transfer of technology &training, if they bring investment - Others

22%

20%

30%

24%

2% 2% Foreign consultants have latest technology& information, management systems

Lack of capacity in consultancy services

Consultants lack experience/latesttechnology and managementFor mega projects only - specializedservices

Foreign exchange will go out - others

Miscode

Figure 10 shows those disagreeing (51 comments) with the need for foreign contractors. The majority (70 percent) stated that locals should be given a chance as this will lead to increase in unemployment. They suggested that the government should have the right facilitation policy, ensure good rates and provide training (but does the government have capacity?). Others (14 percent) said that foreign contractors should come in only for specialized skills and complex projects, whereas, 8 percent gave other reasons. Figure 10: Reasons Why Foreign Contractors are Not Needed

Figure 11 shows that while overall 49 percent of respondents agreed in the case of need for foreign consultants, 36 percent disagreed with the statement, however, the consultants (55 percent) and larger C1 contractors were more inclined to agree (58 percent). Figure 11: Foreign Consultants are Needed to Deliver Twice the Volume of Work

Of those agreeing with a need for foreign consultants (49 comments), the majority stated that local consultants lacked the required experience and technological, professional and management skills, whereas, foreign consultants had an edge in these areas. They stressed that foreign consultants will have to come in but only for large mega projects and specialized services and that there is a lack of capacity in local firms.

31

12%

6%

29%

53%

Adequate/sufficient number of localconsultants/services

If consultants are paid right, givenfinancial support and timelypayments then they can expand

For selected skills and specializedprojects only

No need for foreign consultants,locals should be developed, only ifforeign bring technology

Figure 12: Why Foreign Consultants are Not Needed

Those who disagreed (34 comments) stated that there is adequate number of consultants available in the country (53 percent). They argued that foreign consultants should not be approached instead local firms should be developed. They believed that foreign firms should be allowed only if they bring in technology (29 percent). Some (12 percent) also said that consultants should be paid promptly and given financial support (Figure 12). Qs 15: Can local contractors/consultants double their capacity if current rates are significantly enhanced?

An interesting aspect was the industry’s confidence in doubling its capacity by simply increasing current rates. 85 percent believed that the industry could do so if current rates were significantly increased (see pie-chart). The majority stated that awarding work at rates relevant during 1996 in 2006, is the main culprit behind choking the industry’s growth in capacity (Figure 13). Interestingly however, when asked to compare with international trends, 62 percent believed that local project estimates were comparable with regional estimates (Refer Qs 43).

Figure 14 shows that those who agreed with the

statement (73 comments) said that increase in rates for consultants and contractor and their timely payments will allow cash flow, resources and capacity increase (48 percent). Low rates and price escalation are limiting capacity adding that contracts made during 2006 have 1996 rates (37 percent). 11 percent said that increase in rates will help but its impact will take time.

Neutral5%

NR1%

Disagree10%

Agree85%

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NEITHER AGREE ORDISAGREE

DISAGREE/STRONGLY DISAGREE

NO RESPONSE

Figure 13: Poor Rates Restrict Capacity Increase

Figure 14: Local Capacity can be doubled if Rates are Significantly Enhanced

While those disagreeing (17 comments) stated that rates and capacity are not directly

inter-related, if rates are not good contractors should not take up work. 35 percent said that rates are not the only factor. They said that a lack of professional capacity, HR and management attitude are main reasons and need facilitation and cooperation to expand. 29 percent said that increased rates alone is not the solution, however, 24 percent stated that rates should be in line with the market and 12 percent said that the industry is working to its maximum resources and capacity (Figure 15).

37%

4%48%

11% low rates and escalation are limiting capacity,contracts in 2006 have rates of 1996,government/clients should give proper ratesLow rates and corruption are a constraint

Yes, increase in rates/timely payments willallow more cash flow, resources & capacityincreaseIncreasing capacity will take time, - Others

33

Figure 15: Local Capacity cannot be doubled by Enhancing Rates

Qs 16: Does use of force-account discourage private sector contractors/consultants from increasing capacity?

Most of the respondents were not familiar with the force-account work. Table 4 shows that once the concept was explained, overall, 57 percent agreed that the practice of using force-account discourages growth. The majority of contractors (53 percent) and consultants (61 percent) were more in agreement than the clients who were relatively less decisive with 45 percent agreeing and 36 percent disagreeing.

Table 4: Views on Force-Account

Qs 17: Some people believe that use of public sector companies discourages private sector contractors/ consultants from increasing capacity. Do you agree/disagree?

An overwhelming majority of all stakeholders (68

percent) agreed (see pie-chart) that use of public sector companies was discouraging private sector contractors and consulting firms from increasing capacity. However, 18 percent disagreed with the statement and 8 percent remained neutral. Whereas, no response was received from 6 percent of the respondents

Amongst the sub-groups shown in Figure 16, 75

Use of force account discourages growth

Agreed (%)

Neither Agreed/ Disagreed (%)

Disagreed (%)

All Respondents 57 11 14

Clients 45 0 36

Contractors - overall

53 18 7

Contractors C1 50 17 13 Consultants 61 3 20

35%

29%

12%

24%

Rates and capacity are not inter-related, if rates are notgood they should not take up works, rates are not theonly factor

Lack of professional capacity /HR/management attitudeare lacking, need facilitatoin and cooperation to expand

Industry working to their limits of resources/capacity

Rates should be in line with the market, others

Agree68%

Dis-agree18%

Neutral8%NR

6%

34

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NO RESPONSE

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NO RESPONSE

percent of the consultants, 67 percent contractors and 54 percent of clients agreed with the statement. The C2 contractors were almost unanimous in agreeing. Figure 16: Public Sector Companies Discourage Private Sector from Increasing Capacity

Qs 18: Uncertainty of demand due to weak planning (lack of a master plan) is restricting capacity growth of the industry, agree/disagree?

A lack of information on future development plans reduces confidence and discourages the private sector from making the required investments to increase capacity. Overall 76 percent of the respondents agreed with this as being a correct statement. (See pie-chart)

Figure 17 reflects strong agreement by consultants (81 percent) and contractors, (77 percent) while clients (54 percent) were relatively less in agreement. The difference of opinion between the private sector and the clients is indicative of a need to address the concerns of the industry and provide long term planning and stability in policies to encourage private sector growth. Figure 17: Uncertainty of Demand due to Weak Planning is Restricting Capacity Growth

Dis-agree10%

Neutral9%NR

6%

Agree76%

35

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MINORPROBLEM

NO PROBLEM

NO RESPONSE

Qs 19: Some people believe that while the country actively seeks employment for its skilled and unskilled labor overseas, considerable shortage of manpower exists at all levels in the country, agree/disagree?

An overwhelming majority (70 percent) of the respondents agreed with the above statement. Consultants at 84 percent and clients at 73 percent were the most concerned about the dichotomy between government policies and local industry needs (Figure 18). There is a huge demand for skilled personnel and the restricted HR available is being further stressed due to numerous ongoing projects. The planned quantum of development projects which aggravate the shortages. The development of the HR sector will have to be addressed through immediate and long term measures. HR training and government support to the industry for developing professional skills was a significant factor identified by the respondents (refer Qs. 135-140).

While recognizing the overseas employment is a major source of foreign exchange

earnings, the HR gaps in the country need to be addressed on priority. Figure 18: Promoting Employment Overseas is Creating Problems when Shortages Exists

Qs 20: Some people believe that current government policies create problems in the provision of appropriate equipment (machinery) for the construction and consulting industry. Do you agree/ disagree?

Table 5, shows that overall, 62 percent agreed with the statement. As would be expected the majority of smaller contractors agreed most strongly (75 percent C2 and 77 percent C3), indicating their negative perceptions about government policies regarding acquisition of machinery and equipment. Similarly, 58 percent consultants also expressed discontent with government policies.

36

Table 5: Government Policies Create Problems in Provision of Machinery

Interestingly, in contrast to the above opinion of the industry, only 18% of the clients agreed with the statement, clearly indicating the need for review of policies from the government. Qs 21: Some people believe that current government policies create problems in the provision of materials for the construction industry. Do you agree/disagree?

A majority (56 percent) of the respondents agreed with the statement. Surprisingly, 64 percent of the clients agreed with the contractors (63 percent). Clearly indicating the need to revisit policies related to construction materials. However, only 41 percent of the consultants agreed with the statement perhaps because they are not directly affected with the availability of construction materials (Table 6).

Table 6: Government Policies hinder availability of construction materials Qs 22: To what extent do you agree or disagree that following (business environment and regulatory framework, human resources, machinery and materials) are issues with respect to the capacity for implementing of large infrastructure projects in Pakistan?

Table 7 shows that overall, the respondents agreed overwhelmingly (82 percent) that

business environment and regulatory framework is an issue with respect to implementation capacity of large infrastructure projects.

Current government policies create problems

in the provision of appropriate equipment

(machinery)

Agreed (%)

Neither Agreed/ Disagreed (%)

Disagreed (%)

All Respondents 62 13 17 Clients 18 36 27

Contractors - overall 72 11 10 Contractors C1 50 17 13 Contractors C2 75 8 8 Contractors C3 77 10 10

Consultants 58 11 25

Current government policies create problems in the provision of materials

Agreed (%)

Neither Agreed / Disagreed (%)

Disagreed (%)

All Respondents 56 13 26 Clients 64 0 36

Contractors - overall 63 12 20 Contractors C1 55 21 21 Contractors C2 83 0 8 Contractors C3 62 10 24 Consultants 41 17 33

37

Table 7: Issues Restricting Growth of the Local Industry

Statement Strongly Agree/

Agree (%)

Neither Agree nor

Disagree (%)

Strongly Disagree/ Disagree

(%)

Don’t Know/ No Response

(%)

A Business Environment and Regulatory Framework 82 7 10 2

B Human resources 67 9 23 1 C Machinery 64 13 21 1 D Material 58 10 31 1

In the case of HR, although overall 67 percent of the respondents agreed it was an issue,

however, the consultants (77 percent) and clients (73 percent) both agreed more strongly than the contractors (60 percent). Amongst the contractors, 67 percent of the larger contractors agreed while about 55 percent of the C2 and C3 contractors considered HR as being an issue.

Machinery as an issue impacting capacity to deliver infrastructure was agreed with by 64 percent of the respondents. No appreciable difference between the responses of contractors, consultants and clients were observed.

Overall, 58 percent of the respondents agreed that materials were an issue impacting capacity. However, strong differences were observed among the contractors and consultants. The majority (74 percent) of contractors agreed as compared to the consultants (39 percent) and clients (45 percent) who had a divided opinion with almost equal numbers disagreeing that, materials was an issue. Qs 23: Please rank the following in terms of its importance as a capacity constraint (1 means highly important and 4 means least important). Please assign a unique rank to each- no two issues should have the same rank.

Figure 19 reflects the stakeholders’ opinion about the major capacity constraints facing the industry. ‘Business environment and regulatory framework’ were rated as the most significant constraints followed by HR, machinery and physical materials. Consultants and clients however ranked HR as being equally important to business environment. Figure 19: Stakeholders Ranking of the Capacity Constraints

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0

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ges

Business Environment Human Resources Machinery Physical Materials

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OVERALL Agree/StronglyAgree

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Disagree/StronglyDisagree

No Response

Section 3 Business Environment & Regulatory Framework

The following specific areas in business environment were explored. Procurement Qs 24: People believe that appointment of consultants takes too long. Do you agree/disagree?

Figure 20 shows that the majority (63 percent) of respondents agreed and 21 percent disagreed with the statement. However, both clients (73 percent) and consultants (69 percent) evoked a strong agreement pointing to the need for streamlining the procurement processes for engaging consultants.

Figure 20: Appointment of Consultants Takes too Long Qs 25: Procurement procedures prescribed by donors lead to delays. Do you agree/disagree?

Overall 76 percent of respondents agreed that procurement procedures prescribed by donors are lengthy and lead to delays. An overwhelming majority of 91 percent of all clients who responded agreed with the statement (Figure 21).

Figure 21: Procurement Procedures Prescribed by Donors Lead to Delays

39

Dis-agree12%

Neutral12%

NR12%

Agree65%

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Disagree/StronglyDisagree

No Response

Qs 26: Government rules are in conflict with lender rules?

Government procurement rules were perceived to be in conflict with lender rules indicating a need for harmonization of rules. Overall, 65 percent respondents agreed that conflicts existed. The breakup within stakeholder groups shows a general agreement amongst all (Figure 22). Figure 22: Government Rules are in Conflict with Lender Rules

Qs 27: The procurement process for contractors from Notice Inviting Tender (NIT) to mobilization takes too long. Do you agree/disagree?

The pie-chart shows that the majority agree with the above statement. Discontentment with the process time consumed from NIT to mobilization was expressed by C1 (67 percent), C2 (75 percent) contractors and clients (64 percent). Overall, 61 percent of the respondents agreed with the statement and only 19 percent disagreed, again indicating a need to review the procurement process (Figure 23).

Figure 23: Procurement Process from NIT to Mobilization Takes Too Long

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NEITHER AGREE ORDISAGREE

DISAGREE/ STRONGLYDISAGREE

NO RESPONSE

40

52

75

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68

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45

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81

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NO RESPONSE

Qs 28: Pre-qualification procedures are complex and time consuming. Do you agree/disagree?

Overall, 55 percent of the respondents agreed while 29 percent disagreed with the statement. However, the majority of contractors (68 percent) expressed discontent with current practices. Amongst the larger contractors, 79 percent of the C1, 75 percent of the C2 and 57 percent of the C3 contractors were discontented with the prequalification procedures. In contrast, the clients and consultants were clearly split in their assessment (Figure 24).

It is apparent from the feedback that pre-qualification procedures are an area in which the policy makers need to address the concerns of the contractors. Figure 24: Pre-qualification Procedures are Complex and Time Consuming Qs 29: Enlistment procedure & criteria should be unified for all executing agencies (one window operation). Do you agree/disagree?

Figure 25 shows that this statement received strong endorsement (85 percent) from stake holders, especially consultants (92 percent) and contractors (C1 79 percent, C2 92 percent, and C3 81 percent). This is another area identified where policy reviews are called for. Figure 25: Enlistment procedures and criteria should be unified

41

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Agree/StronglyAgree

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No Response

57

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DISAGREE/STRONGLYDISAGREE

NO RESPONSE

Qs 30: Post qualification should be the preferred method of procurement

Overall opinion here was divided, 45 percent of the respondents agreed whereas, 47 percent disagreed. However, the C3 (71 percent agreed, 29 percent disagreed) and C2 (50 percent agreed, 25 percent disagreed) contractors, who perhaps face the most disadvantage in short listing and prequalification were quite supportive of the statement. The majority of consultants (61 percent) and clients (55 percent) did not support post qualification procedures for procurement (Figure 26).

Figure 26: Post-qualification Procedures for Procurement are not Preferred Qs 31: FIDIC Contracts should be adopted by all clients. Do you agree/disagree?

Overall, the majority (60 percent) of respondents agreed while 18 percent disagreed. Most of the consultants (72 percent) supported using the FIDIC form of contract. Although a fairly large number of contractors did not provide a response to the question, 54 percent of contractors supported use of FIDIC form of contracts (Figure 27). Figure 27: FIDIC Contracts should be Adopted

Qs 32: Contracts should include escalation clauses. Do you agree/disagree?

Figure 28 shows that provision of escalation clauses in standard contracts was strongly

42

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NO RESPONSE

endorsed (90 percent) by all respondents, this is indicative of the common unfair practice of allowing no escalation on projects carried out by mainly the provincial departments. Although, lender rules generally allow incorporation of escalation clauses, in the case of projects ADB, escalation on “cost plus fee” contracts is not allowed. Thus, considerable risks have to be borne by the consultants in countries like Pakistan where inflation rates are often touching double digits and market conditions are subject to rapid change while, contractors are provided compensation for escalation of costs. Figure 28: Escalation Clauses are Essential in Contracts

Qs 33: Contracts are balanced and provide equal protection to both contractors and client agencies. Do you agree/disagree?

Overall, opinion was divided as 47 percent agreed and 38 percent disagreed. Clients were more inclined to agree (55 percent) rather than disagree (18 percent). Contractors were of the opinion that contracts may be balanced but in practice when it came to implementation, the clients did not honor most of the provisions (Figure 29). Figure 29: Contracts provide Equal Protection to both Contractors and Clients Qs 34: Client agencies do not blacklist poor performance due to shortage of quality, contractors/consultants. To what extent do you agree/disagree with the statement?

Figure 30 shows that overall, 59 percent of the respondents agreed while 30 percent

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No Response

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No Response

disagreed with the statement. However, the larger contractors (C1, 75 percent and C2 83 percent) strongly endorsed the statement. C3 contractors were divided on the issue as were the consultants. More important was the finding that majority of clients supported this contention (55 percent) and only 27 percent disagreed. Figure 30: Client Agencies do not Black-list Poor Performers

Qs 35: Procurement process for contractors of major infrastructure projects (from NIT to mobilization) takes: less than 6 months, 6 to 9 months, 9 to 12 months, more than 12 months?

Overall, 64 percent were of the view that the process takes less than 6 months with 25 percent estimating the time to be between 6~9 months and 9 percent were of the opinion that it takes over 9 months. Generally, 75 percent of contractors, and clients estimated the process took less than 6 months. Consultants differed, with 44 percent saying procurement of contractors takes less than 6 months, 28 percent said 6~9 months and 25 percent as taking over 9 months. Qs 36: Appointment of consultants for major infrastructure projects takes: less than 6 months, 6 to 9 months, 9 to 12 months, more than 12 months?

For appointment of consultants, overall 59 percent said it takes less than 6 months, 29 percent said 6~9 months whereas, 12 percent thought it takes more than a year. However, only 33 percent consultants stated it took less than six months with majority (42 percent) saying the process takes 6~9 months and for 25 percent the process took over 9 months. Qs 37: Procurement of work is delayed by slow release of allocations. Do you agree/disagree?

Figure 31 shows that 82 percent agreed with the statement. This shows that portfolio management, financial allocations and release processes need to be critically reviewed. Figure 31: Release of Allocated Funds for Projects is Slow

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Qs 38: Approvals related to procurement are not provided in a timely manner, agree/disagree?

Figure 32 indicates that while a large majority (71 percent) of contractors and consultants agreed with the statement, the clients had a divided opinion (45 percent agreed, 36 percent disagreed). Delays in approvals indicate institutional procurement capacity constraints. Figure 32: Approvals Related to Procurement are Delayed

Qs 39: Preferential use of public sector companies lead to higher cost of work.

The majority of the consultants (67 percent) and contractors (77 percent) agreed that use of public sector firms leads to higher costs, while in the case of clients, only 9 percent agreed. It is suggested that policies providing preferential treatment for use of public sector companies need to be reviewed (Figure 33). Figure 33: Use of Public Sector Companies has a Price Tag

Qs 40: Preferential use of public sector companies discourages private companies.

There was an almost identical response received for the previous question. Overall, 68 percent agreed, with consultants (83 percent) and contractors (70 percent) showing strong concurrence while the clients were diametrically opposed with only 9 percent agreeing to the statement. This finding reinforces the conclusion that policies for use of state and parastatal companies discourage the private sector (Figure 34, also refer to the response to Qs 17).

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Neutral

8%NR

1%

Disagree

6%

Agree

86%

Figure 34: Use of Public Sector Companies Discourages the Private Sector Qs 41: Force account procurement causes inefficiency.

Overall, 56 percent of the stakeholders agreed and 11 percent disagreed. However, a fairly large number of respondents did not seem to be familiar with force account procurement and the concept had to be explained. A fairly large proportion did not give a response (25 percent). See Figure 35.

Figure 35: Force Account Procurement Causes Inefficiency

Qs 42: Incorrect project estimates cause problems in procurement. Do you agree/disagree?

The pie-chart shows that 86 percent respondents agreed with the statement. There was no difference of opinion between various stakeholders on this issue. Dealing with unrealistic incorrect project cost estimates seems to be a challenge for all.

Qs 43: Project estimates should be comparable to similar projects in Regional countries. Do you agree/disagree?

Figure 36 shows that overall more than half of the respondents (62 percent) agreed that

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NEITHER AGREEOR DISAGREE

DISAGREE/STRONGLYDISAGREE

NO RESPONSE

estimated project costs should be comparable to similar projects in regional countries. Surprisingly, an overwhelming majority of clients (82 percent) were more in agreement than other stakeholders (also refer to Qs 15).

Figure 36: Project Cost Estimates should be Comparable to Regional Countries Qs 44: Practice of accepting the lowest bids has led to deterioration in quality of inputs and output. Do you agree/disagree?

The majority of respondents (82 percent) agreed with the statement. Not surprisingly, the clients were slightly less inclined to agree (63 percent). The results support the procurement procedures which are based on accepting the lowest evaluated bids and not just the lowest price (Figure 37).

Figure 37: Accepting the Lowest Bids leads to Deterioration in Quality

Qs 45: What dispute resolution mechanisms have you used or experienced? Select all applicable: (Amicable Settlement, Dispute Resolution Board, Arbitration, Court, None of the above, Not Experienced, Don’t Know)

Figure 38 shows that predominantly, the respondents have used amicable settlement (55 percent) and arbitration procedures as a preferred mechanism to settle disputes (14 percent). The trend is inclined more towards out-of-court settlements.

47

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Overall

Contractors

Consultants

Client

Amicable settlement Dispute resolution board

Arbitration Court

None of the above Not experienced

Don't know Amicable settlement and Arbitration

Amicable settlement, DRB and Arbitration Amicable settlement, Arbitration and Court

81

58

96

82

80

73

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CLIENTSAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

Figure 38: Preferred Disputes Resolution Mechanisms Qs 46: Some people believe that the dispute resolution mechanisms are complex and lengthy. Do you agree/disagree?

Overall, 80 percent of the respondents agreed that the dispute resolution mechanisms are complex and lengthy. Figure 39 shows that the C1 contractors who were mostly engaged in very large and complex infrastructure works were more (96 percent) in agreement than any of the other groups. As compared to the private sector, the agreement expressed by the clients was relatively less vigorous (73 percent agreed, 27 percent disagreed). A sound, fair and efficient dispute resolution procedure is essential if large foreign contractors are expected to show interest in working in Pakistan. The industry must have confidence in the procedures and be provided timely resolution of disputes.

Figure 39: Dispute Resolution Mechanisms are Complex Qs 46 (b). Please explain your reply briefly: Dispute resolution mechanisms are complex and time consuming –

A total of 73 comments were received explaining why they agreed with the statement and 9 explaining why they did not (Figure 40). Of those agreeing:

• 31 percent stated that procedures should be simplified as they are lengthy and tedious

• 27 percent stated they are lengthy because nobody wants to take the blame, bureaucracy and clients cause delays

48

38

58

63

53

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27

10

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CLIENTSAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

31%

27%

18%

15%

4% 5% Should be simplified, procedures are lengthy and tiring,(arbitration, amicable settlement, courts) lengthy process

Lengthy because nobody w ants to take blame,bureacracy and clients cause delay

Bad and obsolete law s, Courts take too long

Priv ate sector is speedier, should be an independentboard for construction disputes, independent disputeresolution boardFIDIC is not follow ed, imbalanced contracts to start w ith

Dispute resolution - corruption

• 18 percent thought that the country has obsolete laws and the courts system takes too long

• 15 percent were of the view that the private sector is more efficient and an independent board for construction disputes should be set up and

• (9 percent) said that dispute resolution is complex and lengthy because of corruption and because FIDIC is not followed and the contracts are imbalanced to start with.

Figure 40: Dispute Resolution Mechanisms are Complex and Time Consuming

Only 9 comments were in disagreement, saying that all dispute procedures are lengthy (4), amicable solutions are preferred (3), and 3 respondents did not agree at all with the question asked. Qs 47: Recent invitations to tenders have solicited a poor response from local contractors/consultants. Do you agree/disagree?

Overall, the respondents were equally divided on the issue (44 percent agreed, 44 percent disagreed). However, strong differences between the stake holders were observed. While clients and consultants had a similar response (27 percent and 36 percent agreeing) the larger contractors (C1 and C2) were strongly in agreement with the statement (63 percent and 58 percent). See Figure 41.

Figure 41: Response to Tenders has been Poor

49

Qs 47 (b): Please elaborate and provide possible reason

Figure 42 shows why respondents had agreed with the statement. Of those agreeing; • 38 percent said there are capacity constraints. There is too much work available and

contractors/consultants now have a choice

• 36 percent said CSR rates are very low, difference between the market and CSR rates combined with the lowest bid process is keeping quality contractors away

• 15 percent said it was due to the procurement process, a lack of financing and political interference in award of contract

• 14 percent thought that a lack of machinery and other resources to be the cause for poor response

Figure 42: Why Response has been Poor to Recent Tenders

36%

15%

11%38%

Capacity constraint/lots of work lesscontractors, too much work, people arechoosy

CSR rates are very low - and marketdifferences/low rates, lowest bid process,good contractors are shying away

Procurement process, poor policies, lackof financing, work given on political basis

Others - lack of machinery , locals cannottake up mega projects

However, thirty three respondents said that response to tenders had not been poor, of which, 76 percent simply disagreed with the statement. 24 percent were of the vew that a performance rating system for contractors/consultants should be in place as same contractors repeatedly get work despite lacking in capacity, competence, and resources. Qs 48: The recent invitations to tenders have solicited a poor response from International contractors/ consultants. Do you agree/disagree?

Figure 43 shows that 47 percent of the respondents agreed, while 21 percent, did not know/had no response. Difference in opinion existed between the C1 contractors (71% agreed) and clients (45 percent disagreed).

50

29

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71

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14

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38

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C3

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ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Agree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know /Noresponse

Figure 43: Response to International Tenders has been Poor Qs 48b: Please give possible reasons

Invitation to tenders received poor response from international consultants/contractors (Figure 44). 42 percent of the responses in agreement with the statement related to the prevailing country security conditions, political risk and instability. 22 percent were of the opinion that foreign firms are unable to adjust to the country conditions, business environment and the violation of contract conditions. However, 18 percent said it is because of the fiscal and financial policies, investment risk, procurement procedures, local low rates, size and scope of the contracts being unattractive. Figure 44: Reasons for Poor International Response

22%

42%

18%

18% They are unable to adjust to countryconditions, business env ironment, v iolation ofcontract conditions

Because of country security conditions,political risk, instability

Fiscal and financial policies, security ofinv estment (risk), procurement procedures,low local rates, size and scope of contract isnot attractiv eVery little response, not upto the mark -Others

Figure 45 shows the number of those disagreeing with the above statement. 52 percent

said a good response is received, 30 percent said package contracts are too small - response depends on contract packaging, size and location.

51

10

0

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21

14

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18

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OVERALLTo a largeextent

To someextent

Not at all

Don'tKnow /NoResponse

Figure 45: International Response has Not been Poor

12%

18%

18%

52%

A good response is received,procedures are followed, all have equalopportunities

Packages/contracts are too small,response depends on value (size) andlocation of project

Depends on value and location ofproject, size of works

Foreign contractors/consultants shouldbe given foreign exchange, don’t know-Others

Qs 49: To what extent do the foreign contractors/consultants receive preferential treatment?

Overall, 37 percent of the respondents were of the opinion that foreign consultants and contractors get preferential treatment to some extent and 30 percent said they did not (Figure 46). It seems local consultants and contractors are not being provided a level playing field. This opinion was supported by 63 percent of the clients.

Figure 46: Foreign Contractors/Consultants Receive Preferential Treatment Q 49 (b): Please explain your answer

Figure 47 shows that 51 respondents supported the opinion that foreign consultants/contractors get “some” or “to a great extent” preferential treatment and only 11 comments were given explaining why they thought no preferential treatment was given:

• 22 percent thought they get preferential treatment because they are supported by foreign governments and donor/lenders

• 20 percent said that they are preferred for mega projects, special inputs and expertise • 20 percent said that they are provided better facilitation by the government • 15 percent thought that they get better rate and timely payments and • 23 percent said that foreign/consultants/contractors have better qualified and experienced

professionals.

52

67

75

46

60

39

27

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10

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OVERALL

Agree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

Figure 47: Foreign Contractors /Consultants are given Preferential Treatment

23%

22%

20%

15%

20%

They are more qualified,experienced and professional

Due to donor preference andstipulations, /foreign govt pressure

For mega projects, special inputs andexpertise

Provided Better facilitation by govt, have Int'l support and are treatedbetterThey get better rates, timelypayments

Eleven comments were received stating that foreign firms did not get any preferential treatment. In fact, 75 percent advantage in evaluation is given to local firms and that as the bid process is least cost effective they do not get any preferential treatment. Qs 50: Local contractor/consultants are not provided fair opportunity to participate in the procurement process (right to invite)

Figure 48 shows that the overall opinion was split. The clients and consultants strongly disagreed (55 percent). More than half (60 percent) of contractors agreed, however, a significant number of the smaller contractors (C2 75 percent & C3 67 percent), voiced concern about a lack of fair opportunities for participation.

Figure 48: Contractors Voice Concern about Fair Opportunities to Participate Qs 51: Past performance of a contractor is not considered in the award of new contracts

Overall, 55 percent agreed and 34 percent disagreed with the statement. While consultants were split on the issue, the contractors mostly agreed (66 percent) that past performance was not considered by the clients in awarding new contracts. The smaller contractors were most supportive (76 percent agreed), see Figure 49.

53

76

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58

65

44

36

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0

33

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12

8

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11

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23

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34

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OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know /Noresponse

86

83

92

88

78

64

82

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OVERALL Agree/StronglyAgree

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Disagree/StronglyDisagree

Don't Know /Noresponse

Neutral10%

NR8%

Disagree4%Agree

79%

The opinion of contractors was divergent to the views held by clients (45 percent disagreed with the statement). A need to review the pre-qualification procedures and selection of consultants and contractors is indicated.

Figure 49: Past Performance is Not Considered in Award of Contracts Qs 52: Procurement processes will tremendously improve from the availability of an independent contractor/consultant rating system similar to the ENR rating

As a follow up to the previous question, a suggestion for an independent contractor/consultant rating system was evaluated and was strongly endorsed (79 percent agreeing, see pie-chart) by stakeholders. Qs 53: A special bank to support the construction industry should be created.

Strong (82 percent) endorsements of this suggestion were received from all stakeholders. The need stems from the constraints being faced by the industry due to a lack of leasing, credit and financing facilities which restricts capital investment and capacity growth (also refer Qs 157, 166-169), see Figure 50. Figure 50: Need Support through Financing Facilities

54

71

67

67

68

58

36

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0

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OVERALL

Agree/StronglyAgree

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62

75

75

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64

68

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Qs 54: Performance of Contractors is not adequately monitored. Figure 51 shows that overall, 62 percent of respondents agreed, however clients differed

(36 percent) and were also divided on the issue. Contractors, regardless of size, were of the opinion that monitoring is inadequate.

Figure 51: Performance Monitoring is Lacking Qs 55: Inefficient consultants & contractors keep on getting work due to a lack of objective evaluation?

Overall the response was in agreement (68 percent), which indicates the need to review the pre-qualification, short listing processes in procurement (Figure 52). Figure 52: Inefficient Consultants and Contractors keep on Getting Work

Qs 56: Contractors keep on getting work despite a lack of capacity

This is a key question in the assessment of contractors’ perception regarding existing capacity and the procurement process. Overall, 75 percent of respondents agreed with the statement. The larger construction firms evoked the strongest response with 88 percent agreeing (Figure 53).

55

71

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88

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Agree/StronglyAgree

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Disagree/Strongly Disagree

Don't Know/Noresponse

7%

8%

12%

14%

10%3%

14%

32%

Criteria/guideline for selection not standardized/lack ofconsistencyPrequalification/enlisment/ multiple registration

Tender and bidding Process, least cost basis competition

Need to check capacity/past record, financial ability

Contract Mobilization

Tender and Contract conditions are imbalanced

Favoritism/non-transparency / corruption, politicalinterferenceTenders called without funding

Figure 53: Contractors get Work Despite a Lack of Capacity

Qs 57: What are the main weaknesses in the procurement process (for example: registration, prequalification, tender, contract, mobilization)

191 comments were received. The key areas of weakness in the procurement process were identified as being:

• The requirement for multiple registrations, enlistment, and the pre-qualification process

(32 percent) • The practice of the lowest bid cost (14 percent) • Conditions/contract procedures were not balanced (14 percent)

Others included: • Terms for mobilization advance (12 percent), • Corruption (10 percent), • Need to check past performance, capacity and resources (8 percent) and • A lack of consistency in standards used for evaluation and selection (7 percent).

See Figure 54.

Figure 54: Main Weaknesses in the Procurement Process

56

18%20% 19%

24%

4% 2% 2%

11%

0%

5%

10%

15%

20%

25%

30%

Streamline, minimize, simplify enlistment and pre-qualification procedures & requirements

Balanced, fair and clear contract conditions needed, FIDIC must be applied in contracts, pay ment procedures should be simple

pre-qualify on merit -Check past record, check capacity , project management structure, financials, should hav e certified accounts

Eliminate corruption, ensure transparency in ev aluation process, should hav e independent committee for ev aluation w ith representation ofpriv ate sector, no interference from gov ernment side, use priv ate sector, timely ev aluation and quick decisionsBanks should prov ide guarantees/mob adv ance w ith minimum requirements

Post qualification should be adopted

Estimates should be correct, least cost should be done aw ay w ith, quality based selection is needed

Others - eliminate monopolies, shortage of supplies - cement, bitumen, smuggling, facilitate machinery , reduce w itholding tax

Qs 58: What solutions would you recommend for resolving procurement related weaknesses?

Almost 130 comments were received. The top four areas identified were: • Elimination of corruption and ensuring transparency (24 percent); • Adopt balanced, fair and clear contract conditions, FIDC should be adopted (20 percent), • Pre-qualify on merit, check past record, capacity, project management structure,

financials (certified accounts) (19 percent) • Streamline by minimizing enlistment and pre-qualification procedures and requirements

(18 percent).

It is interesting to note that although corruption did not figure highly in the list of issues identified (Qs 57); eliminating corruption was the number one, “fix it” issue, on the list of recommendations to resolve procurement related weaknesses (Figure 55). Figure 55: Solutions for Procurement Related Issues:

57

38

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9

33

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OVERALL Very strongproblem

Strong problem

M inor problem

No problem

Don't Know/ Noresponse

Budgeting, Allocations, Financing, Payment Procedures and Cost

The following is list of obstacles related to the budgeting, financing and cost, how strongly do you consider them to be a problem. Rate them on a scale of 1-4 (Where 4 means very strong problem and 1 means no problem at all).

The following results were received and are shown in Table 8: Table 8: Obstacles Related to Budgeting, Financing and Cost

The issues explored were all rated as strong/very strong problems. Specifically, the following stand out:

• 78 percent said that there are incorrect project cost estimates which implies design capacity limitations and/or rates used are not as per the market rates

• 93 percent considered delayed decisions to be a cause for increase in project costs. This indicates institutional weaknesses and implementation capacity limitations/bottlenecks

Figure 56: Lack of Financing Facilities Limits Growth

Qs Statements Very

Strong Problem

Strong Problem

Minor Problem

No Problem

Don’t Know/No Response

59 Project costs are not estimated correctly causing problems in adequate release of funds

36 42 11 8 4

60 Delayed decisions lead to increased project costs 49 44 2 0 5

61 A lack of financial facilities are restricting the growth of the construction industry 33 52 6 7 3

62 Projects are delayed due to slow release of funds from Finance 38 47 9 5 2

63

Payment procedures for contractors are time consuming and hamper progress 31 42 13 13 2

64 Slow PSDP/ADP roll over and large throw forwards impede growth of the construction and consulting industry

21 50 9 7 13

65 Inadequate release of funds is a cause of delay in project implementation 36 52 5 3 5

66 A project in the PSDP/ADP should be fully funded for the planned completion time 40 39 4 4 13

67 Disbursement procedures prescribed by donors cause delays 18 41 16 15 9

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No problem

Don't Know /No response

• 85 percent said that there is a lack of financial facilities (Figure 56) for the

construction/consulting industry. It implies a lack of incentives through appropriate policies and incentives/banking rules and regulations. Contractors were almost unanimous (97 percent) in their opinion and considered this a serious constraint for growth. Clients were however less appreciative with only 64 percent considering it to be a strong/very strong problem.

• A large majority (85 percent) considered slow release of funds from finance to be the cause for delays in project completion– which implies a disconnect between actual project implementation needs, planning and finance – poor project planning, and portfolio management. 81 percent of the consultants and 92 percent of the contractors considered this to be a serious problem, however only 63 percent of clients thought that project delays were being caused by slow release of funds.

• 73 percent said that Payment procedures for contractors are time consuming and hamper progress (Figure 58). It implies that there is need to strengthen institutional capacities to ensure payments are made well within the contractual time frame. Once again, a significant difference of opinion between the clients (36 percent), contractors (84 percent) and consultants (66 percent) was seen who considered it a serious/very serious problem. The critical aspect for on time execution of projects is timely cash flow.

Figure 57: Payment Procedures are Time Consuming and Hamper Progress

• 71 percent considered slow PSDP/ADP rollover and large throw forwards as a barrier

towards the growth of the construction and consulting industry. Hence these indicate over stretched portfolios and inadequate allocation/release of funds. All stakeholder groups provided similar responses on this issue.

• 88 percent considered inadequate release of funds to be a cause for delays in project implementation. Delays in release of funds affect the progress of work and cause additional costs to the contractors and clients.

• 79 percent said that projects in the PSDP/ADP should be fully funded for the planned completion time.

59

33

33

13

25

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33

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OVERALLVery strongproblemStrongproblemMinor problem

No problem

Don't Know /No response

Figure 58: Disbursement Procedures Prescribed by Lenders cause Delays

• 59 percent said that disbursement procedures prescribed by lenders are a major cause of delays. 73 percent of the clients were not happy with the disbursement procedures and considered them to be a cause of delays. This could be either, due to a lack of institutional understanding and capacity to fulfill the requirements in a timely manner or, the prescribed procedures are indeed cumbersome (Figure 58).

Qs 68: Payment procedures for Consultants are time consuming and constrain capacity.

This question was given only to consultants and clients. Figure 59 illustrates that overall,

55 percent of the respondents agreed while 32 percent disagreed with the statement. However, a strong majority (67 percent) of consultants were of the opinion that payment procedures take too much time and cause capacity constraints. In contrast, 73 percent of clients disagreed with the statement. A review of the responses given by contractors and consultants, shows that delayed payments are a serious constraint, whereas clients differ on this account. A need to streamline the processes involved is clearly indicated. Figure 59: Consultants are not being Paid on Time

Qs 69: Advances given to contractors are not used for the correct purpose

Overall, mixed response was received from respondents. While, clients were split (45

percent agreed, and 36 percent disagreed) in their opinion, the consultants were more (61

67

18

55

6

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4

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32

8

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CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know /Noresponse

60

33

25

25

28

61

45

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0

8

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Disagree/StronglyDisagree

Don't Know/Noresponse

33

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69

45

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OVERALL Agree/StronglyAgree

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Disagree/StronglyDisagree

Don't Know/Noresponse

percent) inclined to agree that advances given were not used for the intended purpose. However, majority of contractors did not agree (46 percent), and 21 percent declined to answer (Figure 60). Figure 60: Advances not used for Correct Purposes . Qs 70: Contractors don’t pay sub-contractors on-time.

Overall, 47 percent agreed and 12 percent disagreed. The majority of consultants had a stronger opinion with 69 percent agreeing with the statement and only 8 percent disagreeing. Amongst the contractors, 1 out of 3 (33 percent) contractors agreed with the statement while 16 percent disagreed (Figure 61).

Conclusions could be drawn that contract provisions for timely payments to sub-contractors need to be strengthened. This is important, as the response to Qs 5, regarding extent of sub-contracting of work (over 50 percent of work for C2 & C3 is sub-contracted), and that the rates for sub-contractors are even lower than those offered to prime contractors. Restricted cash flows to sub-contractors can therefore, be expected to have a significant negative impact on the overall execution of a project.

Figure 61: Sub-contractors are not Paid on-time

Qs 71: Contractors who delay payments to subcontractors should be penalized by client.

Overall, 67 percent of the respondents agreed with the suggestion. An overwhelming majority of consultants (87 percent) gave the strongest support (Figure 62).

61

86

58

75

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97

91

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OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

Figure 62: Clients should Penalize Contractors who Delay Payments

Qs 72: Timely payments are essential for on-time project implementation.

Overall, 85 percent agreed whereas, 13 percent disagreed. The majority of clients (91 percent) and consultants (97 percent) were both unanimous in their views while contactors (75 percent) thought that besides payments other factors were also essential for timely implementation. Comparing the response with the earlier question on procedures causing delays in payments, it can be concluded that while all stakeholders agree that timely payments are important, contractors’ perception is that procedures take too long while the clients do not agree with this. The findings identify the need to streamline procedures for payments and that the clients should address the concerns of other stakeholders in the industry (Figure 63).

Figure 63: On-time Payments are Essential for Project Implementation

Qs 73: Disbursement of PSDP/ADP allocations should be streamlined and automated.

The suggestion received strong support (78 percent) from all stakeholders (Figure 64). It also reinforced the finding that, bottlenecks existed at the stage of actual release of funds for on-going projects. A separate Technical Note 6, Public Expenditure Review, analyzing past public sector development expenditures may also be referred to which shows the mismatch between project implementation planning, programming, allocations, actual disbursements and utilization.

62

50

67

61

81

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OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

62

76

58

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72

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CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

43

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47

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Disagree/StronglyDisagree

Don't Know/Noresponse

Figure 64: PSPD/ADP Allocations should be Streamlined and Automated Qs 74: Operational costs of conducting business in Pakistan are high.

Figure 65, shows that nearly half of the respondents (47 percent) agreed while 18 percent disagreed. The clients’ response stood out from amongst all stakeholders as 64 percent considered that operational costs of conducting business were high. There was a relatively higher than expected percentage of don’t know/no response (23 percent) from the contractors. Figure 65: Operational Costs of Conducting Business are High

Qs 75: Poor planning is the major cause of PSDP/ADP's roll-over/ throw-forwards.

Overall, the majority (69 percent) of respondents considered that poor planning is the major cause for throw forwards/rollovers of PSDP/ADPs. Although only 55 percent of clients agreed, none disagreed with the statement. However, 86 percent of consultants were critical of the planning process (Figure 66).

63

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OVERALL

Agree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

Figure 66: Poor Planning the Major Cause of PSDP/ADP’s Roll-over/Throw-forwards

Administrative and other Systematic Weaknesses

A series of statements related to administrative and other systematic weaknesses were given to the respondents who were then asked to rate how strongly they considered these to be a problem on a scale of 1-4 (Where 4 meant very strong problem and 1 no problem at all). The results are shown in Table 9 and represent the percentage of respondents who rated the issues presented as being a very strong/strong problem.

Table 9: Administrative and Other Systematic Weaknesses

Statements All

Contractors Consultants Clients Overall

76 Contract administration is inefficient (delayed payment and decisions) 77 81 36 74

77 Local construction companies are not professionally managed 58 83 73 68

78 Client agencies are weak 70 67 64 68

79 Client agencies lack professional planning 82 81 45 78

80 Client agencies lack proper execution and implementation skills 77 72 36 71

81 Client Agencies and other Govt. Departments lack competent management 84 67 64 76

82 There is a lack of competent people with contractors 58 81 91 69

83 There is a lack of competent people with consultants 54 58 91 60

84 Client agencies are slow in decision making 86 78 64 81

85 Capacity of the industry is not growing due to weak planning (No master plan) 81 86 91 84

86 Government offices and ministries lack coordination 88 81 64 83

87 Local consulting firms are not properly managed 51 56 73 55

Note: Differing View amongst stakeholder groups is highlighted

64

From the above responses, it can be concluded that while institutional weaknesses, professional incompetence, project administration & management skills are considered more serious issues with client agencies, the contractors and consultants also have similar problems with respect to a lack of professional management and competent staff. These can be further summarized in the following categories. Perceptions about Clients

• Contract administration was considered weak by most stakeholders (74 percent), while 64 percent of clients rated it as a minor or no problem at all.

• There was uniformity of opinion across the board that client agencies are institutionally weak (68 percent)

• Consultants (81 percent) and contractors (82 percent) rated a lack of professional planning in the client agencies as being a very serious/serious problem. Almost half of the clients (45 percent) also agreed with this assessment while 27 percent said it was a minor problem and 27 percent said it was not a problem.

• Client agencies lack proper execution and implementation skills was endorsed as a very strong/strong problem by contractors (77 percent) and consultants (72 percent), however only 36 percent of clients recognized this as a serious issue, while 36 percent considered it a minor problem.

• A lack of competent management in clients and government agencies was recognized as a serious issue by all stakeholders (76 percent).

• Clients are slow in decision making was rated as a very serious problem by majority (81 percent) of stakeholders (Contractors 86 percent, consultants 78 percent and clients 64 percent), clearly identifying implementation capacity limitations vis-à-vis clients institutional capacity.

• Absence of master planning/weak planning was considered a reason for a lack of growth of industry by most (84 percent) of the respondents; even clients (91 percent) rated this as a very serious problem.

• A lack of coordination amongst Government offices and ministries was rated a serious problem by respondents (83 percent).

Perceptions about Contractors • 68 percent of the respondents thought that local construction companies were not

professionally managed. The majority (58 percent) of contractors agreed that this was a very strong/strong problem, 25 percent considered it a minor problem and only 16 percent thought that management is not a problem at all.

Perceptions about Consultants • A lack of competent personnel in contractors and consultants was considered a serious

issue by the clients (91 percent). However, the issue was rated marginally higher as a serious problem with the contractors than with consultants (overall, 69 percent vs 60 percent).

• Local consultants are not properly managed was rated as a very serious/serious problem by 55 percent of the respondents. 73 percent of clients were unhappy with the management of consulting firms.

65

23%

38%

10%

8%

21%Delay ed decisions, red tape, bureaucratic hurdles - no supportat all, there is a lack of guidelines and pow er is not delegated toex ecuting agencies

Lack administrativ e support, prov ide low support, lackcommunication, coordination and technical skills at ministrylev els, funding is not prov ided as needed

Ministries are too busy to support

Lack of confidence, accountability - nobody can speak the truth

Others - ex ecuting agencies are supported by parent ministries

Qs 88 & 89: How many contractors has your organization blacklisted during the past 5 years? How many consultants has your organization blacklisted during the past 5 years? (For Clients/Government agencies only)

The sample of client agencies did not provide a response to these questions. Need for support to Executing agencies, Contractors and Consultants Qs 90: To what extent are the executing agencies supported by the parent ministry?

Almost 50 percent of consultants and contractors said that support was provided to some

extent (10 percent, not at all) to executing agencies by parent ministries; 55 percent of clients said they were supported to a large extent and 36 percent to some extent. The responses indicate that perhaps better cooperation is needed between parent ministries and executing agencies. Qs 90 b: Please explain your answer briefly.

62 percent respondents who stated that the support was lacking gave the following reasons (Figure 67):

• Delayed decisions, bureaucratic hurdles, a lack of guidance and delegation of power (23 percent)

• A lack of administrative support, communication, coordination, technical skills and funding (38 percent);

• 10 percent said ministries were too busy to provide support and that there was a lack of confidence and accountability (8 percent).

• 21 percent of the respondents stated that ministries support the executing agencies.

Figure 67: Support to Executing Agencies could be Better

Qs 91: Construction companies should be supported and guided by client agencies and their client’s resources.

66

Overall, 79 percent of respondents agreed with the need for support to the construction companies by the client agencies. 89 percent of contractors and 91 percent of clients supported the idea while consultants (58 percent) however did not agree. Respondents who gave comments in favor of support (Figure 68) said it was needed for:

• Obtaining advance for machinery on soft terms & acceptance of insurance bonds (15 percent);

• Proactive support to build up C3 contractors and for a positive team approach (22 percent);

• Clients should provide technical support and knowledge (24 percent); and • Assistance in planning, technical knowledge, cash flow and payments is needed (28

percent)

Figure 68: Construction Firms should be Supported

15%

24%

28%

11%

22%

Adv ance for machinery should be prov ided, machinery should beprov ided by client, adv ance should be giv en on soft terms, replacebid bond and bank guarantees w ith insurance bondsC3 contractors should be specially supported, team w ork attitude isneeded, coordination is essential, cannot w ork w ithout them

Clients should prov ide technical support and know ledge

Help in planning, technical know ledge, cash flow and pay ment, localcontractors don’t get support, need support to build capacity

Others - Disagree - this is job of consultants, contractors shouldstand on their ow n tw o feet

Qs 92: Consulting companies should be supported and guided by client agencies and their resources.

Overall, 72 percent of the respondents agreed. While, contractors and clients showed strong support (79 percent and 82 percent, respectively) for the statement, consultants were less decisive with 58 percent agreeing while 33 percent disagreeing. Around 60 comments were offered in support (Figure 69). They were:

• Team work is needed, common goals and timely client decisions are needed for progress

(31 percent) • Capacity building is needed for mega projects, new technology, training (17 percent) • Consultants assume financial responsibility, support if quality is needed – clients should

not take commissions (22 percent) • Consultants must be provided appropriate site facilities (housing, vehicles), given timely

payments, proper time should be given for design and budgets (18 percent) • Support is given but coordination is needed to deliver (12 percent)

67

17%22%

12%

18%

31%All have to w ork together to improve shortcomings- consultants are decision makers, timely clientdecisions are needed for progressForeign support needed - capacity buildingespecially for mega projects, training, technology,seminarsYes because of f inancial responsibility, quality isneeded, client should not take commissions

By providing appropriate site facilities, housing,vehicles, support for progress, timely payment,give proper time for design and budgetSupport is provided - but strong coordinationbetw een consultant and client is needed w ithoutw hich they cannot deliver - others

Figure 69: Consultants should be Supported

Only 8 negative comments were given. These comments stated that consultants should

not be guided by clients instead they should stand on their own and guide clients and contractors. Regulatory Framework

A number of statements (Qs 93 thru 108) related to the regulatory framework (regulations, policies, procedures, audit, PEC) were given to the respondents who were asked to rate how strongly they considered them to be a problem on a scale of 1-4 (where 4 meant very strong problem and 1 no problem at all). The results are shown in Table 10. The percentage of responses on issues rated overall as being a strong/very strong problem along with significant responses from various groups of respondents are highlighted in Figure 70.

The specific issues which stand out as being perceived as strong/very strong problems are: Policies & Regulations

• A lack of effective government policies related to facilitation of construction and consulting industry was rated to be a strong problem by 69 percent of the respondents (74 percent contractors, 67 percent consultants, 55 percent client). Although, the majority of clients did recognize this as being a strong problem, the discontent with facilitation is an area that shoulOverall 63 percent respondents said the cost of doing business in Pakistan was high “due to government regulations.” This was rated to be a very severe problem by 79 percent of contractors and 55 percent of clients. The majority of consultants (56 percent) however, thought this was a minor or no problem at all.

• Multiple procedures were considered a serious problem by 76 percent of the

respondents. Perceptions differed between the stakeholders as contractors (84 percent) and consultants (69 percent) considered procedures to be too many while only 55 percent thought this was true.

68

4032

814

6

0

10

20

30

40

50

Very StrongProblem

StrongProblem

MinorProblem

No Problem No Reponse

67

67

71

69

81

64

8

13

7

6

18

29

17

13

19

8

9

5

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C3

C2

C1

ALLCONTRACTOR

CONSULTANTS

CLIENTS STRONG/ VERYSTRONG

M INORPROBLEM

NO PROBLEM

NO RESPONSE

Figure 70: PEC could play an Effective Role in Facilitating the Industry

• The PEC is ineffective in facilitating the industry was considered a problem by 72 percent of respondents. Consultants were most vocal with 81 percent looking towards PEC to play a more effective role in the industry. The group-wise response is shown through bar-chart in Figure 70

• 81 percent considered a lack of continuity in policies was a cause for low levels of

confidence prevailing in the industry and 76 percent said that an ever changing trade policy was a constraint to growth

• 70 percent said that declaring construction business as an industry will have no impact

and 74 percent said that without corresponding financial/lending facilities and reforms in trade policies no results is possible

69

Table 10: Views on Issues Related to Regulatory Framework

Audits & Monitoring Agencies

Although respondents were divided in their opinion on the role of Audit (49 percent

considered it a serious problem) the fact that audits are not concurrent, are delayed and become a source for corruption, that auditors were not held accountable for delays, they do not have technical knowledge of the industry and that auditors have no engineering background were all rated as serious/very serious problems by over 80 percent of the respondents. These findings clearly indicate that the perceptions amongst all stakeholders, is that audit capabilities and technical standards are very poor and audit is a source of corruption. The following figures clearly state the point further.

Qs Statements All Contractors Consultants Clients Overall

93 The Government’s trade policy does not support or facilitate the construction and consulting industry

74 67 55 69

94 The regulatory framework discourages international contractors and consultants from seeking work in Pakistan

47 42 45 45

95 The cost of doing business in Pakistan is high due to government regulations

79 39 55 63

96 There are too many procedures involved in conducting business in Pakistan

84 69 55 76

97 Role of audit is negative 49 47 55 49 98 Audits are not concurrent 84 78 91 83

99 Delayed audits create opportunities for corruption

86 78 73 82

100 Auditors are not held responsible for delays 86 78 64 81

101 Auditors do not have technical knowledge of the construction and consulting industry

91 78 82 86

102 Auditors do not have an engineering background

89 81 91 87

103 The PEC is not playing an effective role in facilitating the industry

68 81 64 72

104 The Government’s decision to provide industry-status to the construction business did not have the desired impact

75 69 45 70

105 Declaration as an industry, without corresponding financial/lending facilities and reforms in trade policies, will not yield results

79 69 64 74

106 An ever changing trade policy is a constraint to growth

81 75 55 76

107 A lack of continuity in policies is the cause for low confidence in the industry

81 86 64 81

108 (For Clients/Govt Agencies only)Over control and monitoring by NAB/FIA/Audit creates a lack of confidence.

55

70

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91

92

84

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A LLC ON T R A C T OR

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NO RESPONSE

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NO RESPONSE

Figure 71: Serious Problems Occur because Audits are not Concurrent

Figure 72: Delayed Audits Create Opportunities for Corruption

Figure 73: A lack of Auditors’ Technical Knowledge Creates Problems

Country Perceptions; Corruption and Security Issues Qs 109: Some people believe that the political interference is restricting growth of the industry.

An overall strong agreement (73 percent) indicates that political interference is restricting growth of the industry. However, only 55 percent clients and 67 percent consultants agreed as compared to 81 percent of contractors (Figure 74).

71

81

83

79

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67

55

73

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Agree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

85

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Neither Agree orDisagree

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Don't Know/Noresponse

Neutral14%

NR5%

Disagree17%

Agree65%

Figure 74: Political Interference Restricts the Growth of the Industry Qs 110: Some people believe widespread corruption is restricting growth of the industry Figure 75 shows that an overwhelmingly positive response was received to this statement from consultants (78 percent) and contractors (86 percent), however only 27 percent of clients agreed and 45 percent disagreed. Negative effects of corruption on the growth of industry are apparent and corruption issues need to be addressed by clients.

Figure 75: Widespread Corruption Restricting Growth Qs 111: Some people believe that the security risks are restricting growth of the industry

Overall, 65 percent expressed their concerns regarding the security risks and its impact on the industry (see pie-chart). A significant majority of clients (81 percent) agreed that security risks were restricting growth (Figure 76).

72

52

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76

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Don't Know/Noresponse

Neutral9%

NR8%

Disagree23%

Agree61%

Figure 76: Security Risks Constrain Growth Qs 112: Politically motivated interference is restricting the entry of quality local and international contractors and consultants. Do you agree/disagree?

Figure 77 shows that overall 72 percent agreed with the statement. The majority of contractors (79 percent), clients (73 percent) and consultants (61 percent) were of the view that political interference restricts entry of quality local and international contractors and consultants. The issue which needs to be addressed is transparency and procurement procedures.

Figure 77: Politically Motivated Interference Restricts Entry of Quality Contractors and Consultants

Qs 113: Political interference discourages efforts of local stake-holders to invite international joint venture partners. Do you agree/disagree?

The pie-chart shows that the overall majority of respondents agreed while 23 percent disagreed that political interference discourages international contractors from entering into joint ventures. Figure 78 demonstrates that an overwhelming majority of all contractors supported this statement. However, only 47 percent of consultants and 36 percent of clients agreed.

73

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62

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Don't Know/Noresponse

Figure 78: Political Interference Discourages International Joint Venture Partners Qs 114: Law and order situation and political instability make Pakistan a high risk country. Do you agree/disagree?

The majority (64 percent) of respondents agreed that the law and order situation and political instability make Pakistan a high risk country for doing business. 70 percent contractors supported this contention the most with only 11 percent disagreeing (Figure 79). Figure 79: Law and Order, Politically Instability make Pakistan a High Risk Country Qs 115: Low bids by local contractors & consultants and clients’ practice to award contract based on price discourages foreign contractors & consultants from bidding in Pakistan.

The majority of respondents at 72 percent agreed with the statement. A further breakdown (Figure 80) shows that 73 percent clients too recognized this as a problem. The results indicate a need to have PPRA rules implemented in letter and spirit.

74

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48

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Don't Know/Noresponse

Figure 80: Contracts based on the Lowest Bids discourage Foreign Contractors and Consultants

Qs 116: Average size/value of contracts in Pakistan does not appeal to foreign contractors and consultants.

Although only 58 percent agreed with the statement, 67 percent consultants and the larger C1 contractors (63 percent) indicated that this may be a problem in some instances. In order to attract reputable international contractors and consultants large contract packaging may be required (Figure 81).

Figure 81: Contract Size/Value does not Appeal to Foreign Contractors and Consultants

Qs 117: A lack of transparency in procurement and contract administration is an issue.

An overwhelming response was received as shown in Figure 82, demonstrating that consultants and contractors (70 percent) consider procurement procedures to be non-transparent. Contrary to this, the response received from clients was mixed, leaning towards disagreement. Procurement and contract administration is an issue in the industry and efforts have to be made to address the problems.

75

62

92

67

70

69

36

66

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71

58

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67

55

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CLIENTS

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Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

Neutral13%

NR4%

Disagree4%

Agree80%

Figure 82: Procurement and Contract Administration Lacks Transparency Qs 118: Client agencies in Pakistan lack adequate management capacity.

Overall, 72 percent of respondents expressed concern about the management capacity of client agencies. Larger contractors were the most discontented at 96 percent. Consultants (67 percent) had a similar opinion whereas only 56 percent of clients had doubts about their own management capacity (Figure 83).

Figure 83: Clients do not have Adequate Management Capacity

Qs 119: Corruption is endemic in the system – agree/disagree?

The pie-chart shows that the majority (80 percent) agreed with the statement regarding corruption being endemic in the system and only 4 percent disagreed. Contrary to the response from consultants and contractors, only 55 percent of the clients agreed with the statement (Figure 85).

76

Table 11: Estimated Cost of Corruption

during MTDF (US$ 1.6 Billion)

% Cost Response

Less than 1% 14%

1 to 5% 17%

5 to 10% 24%

10 to 15% 16%

More than 15% 25%

Don’t know 4%

86

75

79

81

86

55

80

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17

17

14

6

27

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4

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C2

C1

ALL CONTRACTOR

CONSULTANTS

CLIENTS

OVERALL

Agree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

10

0

17

11

19

14

19

25

17

19

14

17

10

25

29

21

28

24

19

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16

17

16

43

42

21

33

11

25

0

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C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

OVERALL

Less than 1%

1 to 5%

5 to 10%

10% to 15%

M ore than 15%

Don't know

Figure 84: Corruption is endemic in Pakistan Qs 120: What is the approximate corruption cost endured through the entire life of a project (as a percentage of the contract: Less than 1 percent, 1 to 5 percent 5 to 10 percent, 10 to 15 percent, more than 15 percent? (For Contractors and Consultants only)

Response to this follow up question (Qs 120) which was addressed only to contractors and consultants provides the basis for estimating the overall cost of endemic corruption. For the MTDF infrastructure related portfolio alone (US$16.55 billion), corruption would cause a loss of approximately US$1.61 billion over the duration of the MTDF (Table 11).

Analysis shows that C2 and C3 (smaller contracts) reported incurring higher corruption costs as compared to the larger C1 contracts.

The response to these direct questions on the extent and cost of corruption and the response to whether corruption is restricting growth of the industry (Qs 110) clearly identify that corruption and transparency issues are the major challenges the government has to address in order to develop capacity and enhance the country’s image (Figure 85). Figure 85: Estimated Cost of Corruption

77

67

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71

68

56

55

63

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Other Issues Related to Business Environment and Regulatory Framework Qs 121 & 122: Affordability and Availability of transportation and logistics support

Overall, 56 percent agreed that affordability was an issue. With respect to availability,

overall the opinion was divided (38 percent agreeing, 39 percent disagreeing, with no appreciable differences between the various groups of stakeholders). From the results it can be inferred that affordability of transportation and logistics support may need to be improved. This conclusion is further supported by the response to Question 123. Qs 123: Cost of transportation and logistics support is highly irrational

Figure 86 shows that a sizable majority (63 percent) of respondents agreed while 17 percent disagreed with the statement. Of more relevance is that 68 percent of contractors being more sensitive to transportation related costs agreed with the statement. The response to this question and to that of Qs 121 above, indicate that transport related policies could be improved to address the concerns of the stakeholders. Figure 86: Cost of Transportation and Logistics Support is Irrational Qs 124: Cost of Infrastructure Construction in Pakistan compares well with regional costs

Overall, opinion was divided with 44 percent agreeing and 37 percent disagreeing. However, the majority of clients (55 percent agree, 27 percent disagree) and consultants (53 percent agree, 31 percent disagree) tended to agree that construction costs in Pakistan are comparable with regional costs. Qs 125: Cost of Engineering Consultancy Services in Pakistan compares well with regional costs

The overall opinion was found to be divided on the statement (40 percent agreed, 15 percent neither, 24 percent disagreed, 20 percent don’t know/no response). From amongst the consultants, 39 percent agreed and 44 percent disagreed.

78

11%

17%

5%

17%6%

16%

4%

21%

3%Security , risk factors

Poor env ironment, administrativ e & sy stematic w eaknessesdiscourages priv ate sector, contract stipulations not follow edBudgeting delay ed releases of project funds

Corruption, transparency

Procurement, inconsistency

Regulatory framew ork, unclear and inconsistent policies

Slow and delay ed pay ments, delay ed decisions/approv als,incorrect decisionsLack of Financing and Cost, rates, tax es

Other - lack of decent job opportunities, material supplies

Business Environment Issues and Suggested Interventions Qs 126: In your opinion what are the main issues related to the business environment? - For example: procurement; budgeting, financing and cost; administrative and other systematic weaknesses; regulatory framework, corruption/security issues)

The following five areas of concern were identified (Figure 87): • 17 percent think that there are administrative and systematic weaknesses, system does not

work as per contract stipulations • 17 percent said there are corruption and transparency issues • 16 percent said there are issues with the regulatory framework and policies are unclear

and inconsistent • 21 percent said that there is a lack of financing, low rates, high cost and taxes and • 11 percent shown concern with security and risk factors

Figure 87: Main Issues in Business Environment

Qs 127: What recommendations/suggestions would you make to resolve these issues – (135 comments were provided)

The respondents identified five areas which should be improved (Figure 88). They are:

• 25 percent suggestions pertained to elimination of corruption and non-transparency • 24 percent to facilitating financing, timely payments, and reduction in taxes • 15 percent for making realistic budgets, long term planning, correct cost estimates and

availability of funding • 12 percent related to following PEC guidelines, adopting FIDIC guidelines and having

balanced contracts, and • 13 percent identified a need to improve administrative competence and procedures.

79

12%

15%

25%

24%

13%

6%5% PEC guidelines should be follow ed, consultants function independently ,

implement FIDIC contract in letter and spirit, strengthen PEC to play positiv erole, contracts should be balancedBudgets should be realistic, long term planning needed, estimates ofconstruction costs and consultancy costs should be realisitc, need tocontrol rates and pricesEliminate corruption at all stages, hav e transparency , freedom ofinformation and documents, pay gov ernment employ ees w ell to reducecorruptionFinancing be made av ailable, change regulations, facilitate business andpurchase of machinery , gov ernment should import and giv e on subsidizedrates, timely pay ments needed, reduce tax esSimplify regulations, improv e administrativ e efficiency , procedures arecomplex

Need timely approv als and decisions

Others - Control law and order

Figure 88: Recommendations for Improving Business Environment

80

24

17

29

25

56

27

36

38

58

33

40

31

64

39

38

17

33

32

14

9

23

0

8

4

4

0

0

2

C3

C2

C1

ALL CONTRACTOR

CONSULTANTS

CLIENTS

OVERALL

To a large extent

To some extent

Not at all

Don't Know/Noresponse

Section 4 Human Resources Lack of Adequately Trained Personnel Qs 128: Up to what extent is the human resource availability an issue/constraint?

Overall, 75 percent of respondents said HR availability was an issue to some extent or to a large extent. Most notably, 87 percent of consultants and 91 percent of clients considered it an issue. The response may be indicative of shortage of adequate and appropriately skilled personnel (Figure 89). Figure 89: Human Resources Availability is a Constraint

Qs 129: Total number of full-time employees in your company: Contractors

The average size of full time employees was 335 per contractor for the sample of 57 contractors surveyed. The numbers range from a maximum of 8,000 employees to a minimum of 4 employees in a company. The largest employer is the state organization. If we remove the largest values [>2,500 are outliers], the average number of full time employees is 193 (Table 12). Table 12: Full Time Employees in Construction Firms

Contractors

C1

(n=24 C2

(n=12) C3

(n=21)

All Contractors

(n=57) Maximum 8,000 140 200 8,000 Minimum 10 5 4 4

Mean 759 45 37 335 Mode 20 50 8 15

Full-Time Employees In Your Company

Sum 17,455 543 781 18,779 Consultants

The average number of employees in the 36 companies sampled is 183. The size of the firm varies from a maximum of 2,123 employees to a minimum of 6 employees. The largest employer in the case of consulting firms was a para-statal firm. If we correct the data by

81

removing the outliers [firms of size > 2,000], the average size of consulting firm is 123 employees. Qs 130: Experience of Staff35 Contractors:

The sample of contractors reported employment and experience of professional

engineers (registered with the PEC), qualified project manages and diploma engineers as shown in Table 13. The majority of professional engineers and diploma holders were employed by C1 contractors.

Table 13: Work Experience of Staff Employed by Contractors

Statement Total No.

Less than 5 years

experience

5-10 years experience

More than 10 years

experience

No Response

Professional Engineers 1,306 19% 27% 52% 2% Qualified Project Managers 239 0% 12% 67% 21% Diploma Holding Engineers 1,634 25% 29% 41% 5%

Consultants:

The sample of 36 consulting firms reported employment and experience of employees as shown in Table 14. The majority of professional engineers employed were reported by the para-statal firm. The average number of professional engineers drops to 58 if the outlier is removed. Table 14: Work Experience of Staff Employed by Consulting Firms

Statement Total No.

Less than 5 years

experience

5-10 years experience

More than 10 years

experience

No Response

Professional Engineers 2,614 16% 32% 48% 4% Qualified Project Managers 276 3% 8% 80% 9% Diploma Holding Engineers 740 17% 27% 56% 0%

Qs 131: Number of Equipment/Machinery Operators (Contractors & Clients)

The total number of equipment/machinery operators reported was 5,054 by the group of contractors and client agencies surveyed [57 contractors (4,038) and 11 client agencies (1,016)]. Most (1,200) of the machinery operators were reported by the largest state owned contractor. The average number per construction firm is 90, with the mode being 15 machinery operators (Table 15).

35 The information obtained in response to Qs 129 thru 133 reflects the situation of the sample comprising 57 contractors and 36 consultants. While this sample is a cross section, it does not reflect various sizes of contractors and consultants in the industry according to the exact proportions. Thus, although the information is indicative, it should not be projected for the entire industry without reference to this qualification.

82

Table 15: Number of Machinery/Equipment Operators

Contractors

Total C1 C2 C3

All Contractors

Clients

Maximum 1,200 1,200 20 150 1,200 500 Minimum 2 4 2 2 2 6

Mean 103 171 12 23 90 254 Mode 15 15 12 2 15 500

Median 15 55 12 10 15 255

No. of equipment/ machinery operators

Sum 5,054 3,593 105 340 4,038 1,016 Qs 132: No. of Skilled labor (Contractors & Clients/Government Agencies only).

There are 15,036 skilled labor employed by 57 contractors, and 1,795 by client agencies (Table 16). Total skilled labor was reported to be 16,831. The largest employee was a state owned contractor of C1 category.

Table 16: Number of Skilled Labor Employed

Contractors Total C1 C2 C3

All Contractors Clients

Maximum 4,000 4,000 200 350 4,000 1,000Minimum 10 15 15 10 10 20Mean 374 665 79 100 386 299Mode 25 25 15 10 25 20

No. of Skilled labor

Sum 16,831 13,301 632 1,103 15,036 1,795 Qs 133: How much do the following categories of staff get paid? The average minimum and maximum salary of staff commonly employed by construction and consulting firms was reported as shown in Table 17. The data (in Tables 18 and 19, respectively) also revealed that pay increases across categories of staff with the increase in size of the firm (C1 contractors pay higher wages than C3 contractors). Contractors Table 17: Average Minimum and Maximum Salary of Staff

Designation Years of Experience

Minimum Mean Salary

Maximum Mean Salary

1 Project manager 10+ 27,755 52,204 2 Senior design manager 10+ 28,600 54,000 3 Planning engineer Less than 5 22,413 31,500 4 Design engineer Less than 5 18,000 28,688 5 Resident Engineer 10+ 26,105 34,263 6 Site Engineers/Supervisors Less than 10 16,872 26,404 7 Materials Engineers 10+ 20,846 31,308 8 Surveyor 3-5 10,520 16,730 9 Inspector 3-5 9,935 15,913

10 Equipment Operator 5 + 8,408 14,643

83

Table 18: Maximum Staff Salaries – Contractors by Category Contractors

Staff C1 C2 C3 All

Contractors Maximum 150,000 200,000 100,000 200,000 Minimum 10,000 15,000 15,000 10,000

Project manager ( 10+ ) Maximum

Mean 62,870 46,818 39,800 52,204 Maximum 300,000 20,000 50,000 300,000 Minimum 25,000 10,000 18,000 10,000

Senior design manager ( 10+ ) Maximum

Mean 84,286 15,000 31,667 54,000 Maximum 60,000 12,000 50,000 60,000 Minimum 10,000 10,000 7,500 7,500

Planning engineer ( Less than 5 years) Maximum

Mean 39,231 11,000 24,063 31,500 Maximum 80,000 25,000 50,000 80,000 Minimum 9,000 7,000 7,000 7,000

Design engineer ( Less than 5 years) Maximum

Mean 36,750 15,667 23,600 28,688 Maximum 80,000 20,000 70,000 80,000 Minimum 9,000 8,000 17,000 8,000

Resident Engineer ( 10+ ) Maximum

Mean 41,375 12,667 35,250 34,263 Maximum 80,000 60,000 50,000 80,000 Minimum 8,000 8,000 8,000 8,000

Site Engineers/Supervisors ( Less than 10 years) Maximum

Mean 31,409 20,000 23,125 26,404 Maximum 80,000 60,000 80,000 80,000 Minimum 9,000 8,000 8,000 8,000

Materials Engineers ( 10+ ) Maximum

Mean 36,952 22,714 26,000 31,308 Maximum 50,000 15,000 40,000 50,000 Minimum 6,000 6,000 6,500 6,000

Surveyor ( 5-year ) Maximum

Mean 20,913 9,636 15,594 16,730 Maximum 30,000 15,000 40,000 40,000 Minimum 8,000 5,000 5,000 5,000

Inspector ( 5-Year ) Maximum

Mean 18,083 8,800 17,500 15,913 Maximum 30,000 15,000 30,000 30,000 Minimum 6,000 5,000 7,000 5,000

Equipment Operator ( 5 + ) Maximum

Mean 16,864 8,850 15,176 14,643

84

Table 19: Minimum Staff Salaries – Contractors by Category Contractors

Staff C1 C2 C3 All

Contractors Maximum 90,000 35,000 50,000 90,000 Minimum 8,000 10,000 8,000 8,000

Project manager ( 10+) Minimum

Mean 36,522 18,273 21,267 27,755 Maximum 100,000 18,000 30,000 100,000 Minimum 20,000 8,000 8,000 8,000

Senior design manager ( 10+) Minimum

Mean 44,714 13,000 15,000 28,600 Maximum 50,000 8,000 40,000 50,000 Minimum 8,000 7,000 3,500 3,500

Planning engineer ( Less than 5) Minimum

Mean 27,538 7,500 17,813 22,413 Maximum 50,000 15,000 30,000 50,000 Minimum 8,000 4,000 4,000 4,000

Design engineer ( Less than 5) Minimum

Mean 22,750 9,000 15,800 18,000 Maximum 70,000 15,000 50,000 70,000 Minimum 9,000 6,000 10,000 6,000

Resident Engineer ( 10+ ) Minimum

Mean 34,875 9,667 23,500 26,105 Maximum 50,000 40,000 40,000 50,000 Minimum 5,000 6,000 5,000 5,000

Materials Engineers ( 10+ ) Minimum

Mean 25,333 15,714 15,545 20,846 Maximum 30,000 10,000 20,000 30,000 Minimum 5,000 4,000 5,000 4,000

Surveyor ( 5-Year) Minimum

Mean 13,130 6,727 9,375 10,520 Maximum 20,000 10,000 20,000 20,000 Minimum 4,000 4,000 4,000 4,000

Inspector ( 5-Year) Minimum

Mean 11,333 6,400 10,083 9,935 Maximum 20,000 8,000 20,000 20,000 Minimum 4,000 4,000 4,000 4,000

Equipment Operator ( 5 + ) Minimum

Mean 9,341 5,600 8,853 8,408 Maximum 50,000 25,000 39,000 50,000 Minimum 6,000 6,000 5,000 5,000

Site Engineers/Supervisors (Less than 10) Minimum

Mean 19,909 12,444 15,188 16,872 Consultants

In general, consulting firms appear to be paying higher wages than construction firms. For example, senior engineering staff (Table 20) with (10+) years experience is paid, on average, much higher by consultants than the contractors. Similarly, the minimum average pays for consulting firms is higher for all categories of staff.

85

Table 20: Salaries of Engineering Staff

Designation

Years of Experience

Minimum Mean Salary

Maximum Mean Salary

1 Project manager 10+ 46,529 86,022 2 Senior design manager 10+ 41,786 67,881 3 Planning engineer Less than 5 28,523 42,335 4 Design engineer Less than 5 22,482 35,155 5 Resident Engineer 10+ 71,877 73,869 6 Site Engineers/Supervisors Less than 10 37,657 51,794 7 Materials Engineers 10+ 35,453 50,805 8 Surveyor 3-5 16,658 25,478 9 Inspector 3-5 15,918 24,218 10 Equipment Operator 5 + 12,200 21,800

Qs 134: Please grade the following statements regarding the availability of trained personnel on a scale of 1-5; where 1 means very easily available and 5 means very hard to find.

None of the staff was rated as being easy/very easy to find by the majority of respondents (Figure 90). Although for all categories of technical staff a mixed response was received, this in itself is indicative of the stakeholders being cautious in their assessment of technical staff availability and may be considered that currently the supply demand situation is just balanced with data pointing towards a slight shortage.

a. Project Managers Overall, respondents gave a divided opinion (41 percent easily available, 18 percent

neither easy nor hard, and 38 percent hard/very hard). However, C1 contractors (46 percent) and Clients (55 percent) rated availability as being hard/very hard.

b. Senior Design Engineer The respondents were divided in their opinion (39 percent easily available, 16 percent

neither easy nor hard, and 42 percent hard/very hard). The Majority (55 percent) of consultants rated availability of trained senior design engineers as hard to find while 39 percent said that it was easily available.

c. Planning Engineer A mixed response was received. 37percent said it was easily available, 22 percent

considered it neither easy nor hard, and 39 percent thought it was hard/very hard). Majority of C1 Contractors (50 percent), Clients (55 percent) and Consultants (44 percent) rated availability as difficult.

d. Design Engineer Availability of trained design engineers was rated as being easily available (40 percent

easy, neither 25 percent, 33 percent hard). Only C1 contractors (42 percent) rated availability to be difficult.

86

38

25

17

26

50

55

38

33

17

25

26

33

0

26

29

58

58

47

17

36

36

0

0

0

0

0

9

1

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLVeryeasy/easy

Neither easyor hard

Veryhard/hard

NoResponse

e. Resident Engineer Overall, respondents were divided in their opinion (41 percent easy, neither 28 percent,

hard 30 percent) on this issue. Only the C1 contractors stand out with 50 percent saying the resident engineers are difficult to find while 25 percent disagreeing.

f. Site Engineers/Supervisors From amongst all the stakeholders, the majority of contractors (47 percent overall, C1 &

C2 58 percent) stated that trained site engineers and supervisors were hard to find, whereas consultants and clients thought otherwise. Overall, the response from the sample remained mixed. Figure 90: Availability of Trained Site Engineers and Supervisors

g. Materials Engineers Overall the majority of respondents rated trained material engineers to be easily available

(46 percent easy, 20 percent neither, 33 percent hard to find). Clients (36 percent easy, 36 percent hard) and C1 Contractors (38 percent easy, 38 percent hard) were almost evenly divided.

h. Surveyors A near majority of contractors (44 percent) thought that trained surveyors were hard to

find [C1 46 percent, C2 58 percent]. Consultants (44 percent said easy to find) and clients (55 percent easy to find) on the other hand, did not see too much of a problem in the availability of surveyors.

i. Inspectors Overall 40 percent of the respondents stated trained inspectors were easy to find

whereas, 32 percent agreed otherwise. Clients (45 percent easy) and consultants (53 percent) were more inclined to rate availability as being easy as compared to contractors (40 percent difficult, 32 percent easy).

j. Equipment Operators Equipment operators were rated as being easily available by 50 percent of the

respondents whereas only 25 percent considered them hard to find.

How important are the following factors on a scale of 1 to 4, (where 4 means very important and 1 means not important at all)?

87

Develop Database of Skilled Manpower

Very Important/ Important

91%

Not Important

2%Somew hat Important

4%

Don't know / No response

3%

Don't know / No response

2%Somew hat Important

9%

Not Important

2%

Very Important/ Important

87%

Institutionalize Development of Skill/Vocational Training of

Manpower

Strongly agreed/very important

80%

Disagree4%

Somew hat agreed

8%

Don t know / No

response8%

Qs 135: There is a need to institutionalize development of skill/vocational training of manpower Qs 136: A database of skilled manpower would be useful

The pie-charts below show that both the above suggestions received strong support from the respondents. An overwhelming majority of clients rated these as being very important and useful suggestions.

Please rate the following statements on a scale of 1 to 5 (where 5 means strongly agreed and 1 means strongly disagreed). Qs 137: In-house training at construction firms and client agencies is highly insufficient

The pie-chart shows that the survey respondents agreed strongly with the statement that training and skill development is lacking in institutions.

88

67

75

63

67

89

82

76

14

17

8

12

0

0

7

10

0

29

16

11

9

13

10

8

0

5

0

9

4

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

76

83

79

79

75

64

76

10

8

8

9

8

18

10

10

0

4

5

17

9

10

5

8

8

7

0

9

5

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

Qs 138: Provision of training opportunities should form a part of the criteria for evaluation and assessment of contractor/consultant by the client agency.

Figure 91 shows that the respondents were in strong agreement (76 percent) with this suggestion. The two groups, clients (82 percent) and consultants (89 percent) showed the most support, with contractors being relatively less supportive (67 percent agreed, 16 percent disagreed). Inferences from the results can be drawn that stakeholders would like to see training programs for skills development as a part of the evaluation criteria for construction and consulting firms used by clients. Figure 91: Provision of Training Opportunities should be Part of Evaluation Criteria

Qs 139: Client agencies should help the contractors/consultants to build their manpower capacity.

Overall this statement received support from 76 percent of the respondents (Figure 92). The sample of contractors (79 percent agree, 5 percent disagree) and Consultants (75 percent agree, 17 percent disagree) were more in support as compared with clients (64 percent agree and 9 percent disagree). The results show that the industry is looking towards policy makers to take capacity building initiatives. It may be worthwhile to evaluate innovative and successful programs such as the Malaysian “Pembangunan Sumber Manusia Berhad – Human Resources Development Fund”.

Figure 92: Clients should help the Industry to Build their Manpower Capacity

89

52

67

50

54

72

82

63

38

17

13

23

3

9

14

10

8

29

18

22

0

17

0

8

8

5

3

9

5

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

24

17

38

28

11

45

24

38

67

25

39

42

0

36

38

17

38

33

42

55

38

0

0

0

0

6

0

2

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLVery high/high

M edium

Low/very low

Don'tKnow/Noresponse

Qs 140: Shortage of qualified and skilled HR at all levels is a number 1 constraint.

This question received strong response (63 percent agreeing, 17 percent disagreeing) from the sample of respondents (Figure 93). A significant majority of clients and consultants agreed that shortage of qualified and skilled HR at all levels is a number one constraint. The majority (54 percent) of all contractors also agreed while 18 percent disagreed. In Conclusion it can be said that shortage of HR is one of the issues which needs to be tackled on a priority if plans to scale up large infrastructure development are to succeed.

Figure 93: Shortage of Qualified and Skilled HR at all Levels is a Major Constraint

Employee Turnover and Caliber Qs 141: In your company the employee turnover (for all level of employees) is …..Please grade the following statements regarding Employee Turnover on a scale of 1-5 (where 5 means very high and 1 means very low)

Employee turnover was rated as being very high or high by only 24 percent of the respondents. The majority of consultants rated the turnover to be average/low very low (84 percent), while 28 percent of contractors rated it as being high. It is interesting to see that the clients rated the turnover to be higher (45 percent) as compared to the other stakeholders (Figure 94). Figure 94: Employee Turnover is reported as being Generally Low.

90

4%8%

8%

20%

3%

57%

Less than 1 year

1-2 years

2-3 years

3-5 years

More than 5yearsNo Response

24

8

17

18

33

9

22

67

75

71

70

44

55

60

10

8

13

11

17

36

15

0

8

0

2

6

0

3

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very high/high

Average

Low/very low

Don't Know/Noresponse

Salary Structure

67%

Lack of Career Growth

33%

Qs 142: Average employee retention period in your company is: Less than 1 year; 1-2 years; 2-3 years; 3-5 years or more than 5 years?

The response to this question is important in context with Qs 141, as it allows gaining a sense of scale for the response given earlier.

The total employee turnover rate for 5 years and less (staff retention of less than five years) is very high at 40 percent. Pie-chart results indicate that as soon as staff gains significant experience at a firm, almost half of them seek employment elsewhere for better prospects. Qs 143: What is the caliber of the available manpower?

Figure 95 shows that overall, only 22 percent of the respondents rated available manpower as being of high caliber (75 percent rated as being of average to low quality). Only 9 percent of clients and 85 percent of contractors rated available manpower as being of high caliber as compared to 33 percent of consultants. The need to upgrade skills through training is indicated. Figure 95: Caliber of Staff is not very high

Qs 144: What is the most important cause of brain-drain in your industry? A lack of career growth; inadequate salary structure; any other (please specify)?

Overall, 67 percent of respondents (pie-chart) said that the main cause for brain-drain was an inadequate salary structure followed by a lack of career growth. The results complement the findings in the study on regional costs for construction and technical staff, which is presented separately as Technical Note 5, Purchase Price Review.

91

Disagree11%

Neutral11%

NR2%

Agree77%

Qs 145: Some people consider that the lowest price bids are the reason why contractors give non competitive salaries to their employees’ thus causing brain-drain. Do you agree/disagree? The pie-chart shows that the majority of respondents (77 percent) agreed that the lowest price bids are the main reason why better salaries cannot be paid, which, in turn is a cause for brain-drain in the country. Qs 146: High turnover discourages employers from investing in employee training.

Figure 96 shows that a significant majority (64 percent) of the respondents agreed that high staff turnover is a reason for low investment in employee training. This response, if read together with that of Qs 141 and 142, indicates that a dearth of trained HR does exist. Figure 96: Low Investment in Training due to High Staff Turnover

Qs 147: Poor quality of work can be caused by several factors. Rank the following possible factors in order of their impact on the quality of work. (1 means the highest impact and 3 means the lowest impact). Please assign a unique rank to each- no two issues should have the same rank.

All three factors as a source of poor quality were ranked very closely, however a lack of professionalism at the contractor’s level was ranked overall as the number one cause for poor quality of work, followed by general shortage of quality HR in the industry (Table 21).

71

58

54

61

69

64

64

14

25

8

14

8

27

13

14

0

38

21

17

9

18

0

17

0

4

6

0

4

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL

Agree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

92

24

17

25

23

33

27

27

67

50

29

47

50

45

48

10

33

46

30

17

27

25

0

0

0

0

0

0

0

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very high/high

Average

Low/very low

Don'tKnow/Noresponse

Table 21: Factors for Poor Quality of Work

Ranking (percentage of respondents giving the highest rank)

Issues

Contractors Consultants Clients Overall A Inadequate quality of

manpower at client level 35% 25% 18% 30%

B A lack of professionalism at the contractors level 30% 39% 73% 38%

C Shortage of quality HR in the industry in general 35% 36% 9% 33%

The results indicate that all three areas (quality of HR, professional management and

number of skilled professionals) need to be addressed to build up the capacity to deliver quality infrastructure. Please grade the following statements regarding weak HR management at the contractor, consultant and client level. Qs 148: How do you rate the quality of HR at the consultant’s level?

A significant number of respondents (73 percent) rated quality of HR as being average to low/very low and only (27 percent) rated it as being very high/high. The results in Figure 97 show that industry stakeholders, contrary to the common official perception, believe that significant gaps in the quality of HR exist in the country.

Figure 97: Quality of HR with Consultants is Not Very High Qs 149: How do you rate the quality of HR at the contractor’s level?

Overall, the quality of HR at the contractor’s level was rated slightly worse (only 18 percent as very high/high, 82 percent average/poor) than the consultants (Figure 98).

93

14

8

21

16

17

27

17

62

58

33

49

42

36

45

24

33

46

35

42

18

36

0

0

0

0

0

18

2

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL

Very high/high

Average

Low/very low

Don't Know/Noresponse

Figure 98: Quality of HR with Contractors is Poor Qs 150: How do you rate the quality of HR at the client’s level?

Figure 99 shows the same trend that was evident overall. The quality of HR at the client’s level was rated equally worse (only 17 percent rated it as very high/high, 81 percent average/poor) as compared to the contractors. The results indicate that quality HR is lacking amongst all stakeholders and intensive training is the need of all industry players and stakeholders. Figure 99: Quality of HR with Clients is Poor Qs 151: Some people believe that for the same salaries and (better) work environment, qualified professionals prefer jobs in other industries as compared to the construction industry. Do you agree/disagree?

Figure 100 shows that the majority (61 percent) of the respondents agreed that for the same wages and (better) work environment qualified professionals prefer jobs in other industries. Results indicate that not only salaries need to be reviewed but quality of work environment also needs improvement. The response adds another dimension to Question 147b (a lack of professionalism).

24

8

13

16

17

36

18

57

42

42

47

39

45

44

19

50

46

37

44

18

38

0

0

0

0

0

0

0

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL

Very high/high

Average

Low/very low

Don't Know/Noresponse

94

62

67

58

61

61

55

61

14

0

4

7

22

9

13

19

25

38

28

14

36

24

5

8

0

4

3

0

3

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

81

67

71

74

67

82

72

0

17

13

9

11

9

10

10

8

17

12

19

0

13

10

8

0

5

3

9

5

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

Figure 100: Better Work Environment elsewhere is driving professionals to other industries

Qs 152: Some people argue that the engineers and other professionals should only be allowed to work if they have passed a professional examination. Do you agree/disagree?

Figure 101 shows that overall strong (72 percent) agreement was witnessed with this statement. Clients (82 percent), contractors (74 percent) and consultants (67 percent), all were in favor of introducing professional exams at the point of entry in the job market. Figure 101: Professional Exams Requirement for Engineers to Practice

Qs 153: Some people argue that there should not be any advancement in career of engineers and other professionals without any additional training and examination. Do you agree/disagree?

Overall, the majority (63 percent) of stakeholders supported the statement that career advancement should be contingent with additional training and examinations. Clients (45 percent) gave the lowest support while majority of contractors (71 percent) and consultants (61 percent) agreed. The stakeholders agreed that conducting educational programs for engineers was the need of the day (Figure 102).

95

52

83

71

67

61

45

63

19

0

13

12

6

0

9

10

8

17

12

31

27

20

19

8

0

9

3

27

9

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

Figure 102: Career advancement should be through additional training and examinations

Qs 154: Who should bear the responsibility to carry out formal training in the industry as a whole? (Rank the following in terms of responsibility, (where 1 means the highest responsibility and 4 means the lowest responsibility). Please assign a unique rank to each- no two issues should have the same rank.

Table 22 shows that overall, formal training was perceived as being the responsibility of the client agencies. The stakeholders seem to be looking towards the government agencies for providing incentives and facilitation for training. Table 22: Responsibility for Conducting Training

Ranking (% respondent giving the highest rank) Formal Training is: Contractors Consultants Client Overall

a Contractors responsibility 11 22 18 15

b Consultants responsibility 18 19 27 19

c Client Agencies responsibility 61 33 18 47 d Others (please specify): 9 17 36 14

Reasons Preventing Development of HR Qs 155: In your opinion what are the main reasons which prevent development of HR in Pakistan? (Report those which are different from the ones mentioned above)

At least 234 comments were received from the stakeholders on this issue (Figure 103). Five main areas of concern highlighted were:

• Low pays, poor salary structures, poor facilities and working environment, high turnover due to brain-drain (24 percent)

• A lack of in-house training and career development, quality of training (20 percent) • A lack of quality institutions, basic education, and mismatch of education with required

skill sets (18 percent) • Corruption, no merit system and bureaucracy (13 percent), and • A lack of career opportunities, HR management and planning (12 percent)

96

23%

18%

8%13%

8%

11%

7%

12% Focused training for each discipline, external, in-house trainingprogrammes, small short courses, seminars should be arranged byGovernmentImprove charge rates, construction rates, have good pays/wagesstructure and increase salaries of government employees

Enhance education facilities, subsidize higher education, trainmanagement

Develop HR planning, career planning, data base of trained personsshould be available, long term planning needed

Eliminate nepotism culture, corruption, bribery, employment onmerit

Provide good working environment in offices and sites, providegood site residences, medical facilities, client agencies should treatcontractors and consultants as "human beings"Provide training through foreign visits of mega pro jects forcontractors, consultants and government agencies, clients need tobe trainedOthers - focus on team work, import o f human resources fromoverseas, no short term solutions, apply quota system

18%

6%

5%

12%

24%

20%

13%2%

Lack of quality institutions, basic education, mis match ofeducation w ith required skillsGov ernment is not carry ing out its social responsibility

Procurement - low est price basis, low returns

Lack of carrer opportunities, carreer planning, carreerdev elopment, human resources management and planningLow pay s, poor salary structures, poor facilities and w orkingenv ironment, high turnov er - brain drainLack of in house training and dev elopment, trainingopportunities, poor trainersCorruption, no merit sy stem, bureacracy

Others

Figure 103: Issues Identified in HR Qs 156: What recommendations/suggestions would you give for resolving these issues? HR – Short-term Solutions

The key recommendations (Figure 104) from 119 comments received from respondents include:

• 23 percent said that focused training is required both from external and internal sources in addition to conducting short courses and seminars

• 18 percent said that improvement is needed in charge rates, good pay structure and an increase in salary of government servants

• 11 percent said that development is required in HR planning, data base of trained persons – long term planning needed; provide good working environment in offices and sites, provision for accommodation and medical facilities - client agencies should “treat contractors and consultants as human beings”

• Focus on team work, import of HR from overseas – no short term solutions (12 percent); • 8 percent asked for enhancement in education facilities • 8 percent emphasized on elimination of nepotism, corruption, bribery and • 7 percent asked for provision of training for mega projects. They also asked for training

of the clients.

Figure 104: Short-term Solutions Suggested by Stakeholders

97

7%

14%

26%

18%

21%

10%4% Vocational training should be a priority

Improve fee/rates and wages-salary structures ofindustryImprove quality of education, institutes, universities,relevance of training/educationContinous training effort, seminars, scholarships for allsectors, training v isits within country and abroadHR and career planning, long term planning, job security

Encourage development of corporate structure,professional management, merit systemGood work env ironment - residences, food, medical,transport

HR – Long-term solutions Long term solutions (Figure 105) based on 124 comments received were:

• 26 percent were for enhancement of quality education and relevance of curriculum • 21 percent emphasized on long term HR and career planning • 18 percent were for carrying out continuous training, seminars and offer scholarships in

both public and private sectors • 14 percent asked for an improvement in fee rates and salary structures in the industry • 10 percent were for an improvement in corporate structure and professional management

in the industry and • 7 percent said focus on vocational training to upgrade skills is required

Figure 105: Long-term Solutions

98

43

42

50

46

25

27

37

24

42

33

32

42

27

35

10

0

8

7

11

36

12

24

8

8

14

17

0

13

0

8

0

2

6

9

4

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very Important

Important

Some whatimportant

Not important atall

Don't Know/NoResponse

Section 5 Construction Equipment Plant, Machinery and Construction Equipment: Ownership and Age Please grade the following issues regarding construction equipment in order of importance (where 4 means very important and 1 means not important at all). Qs 157: Some people believe that the affordability of machinery, plant and equipment is an issue. How important do you think this issue is?

Overall, 72 percent of the respondents said that affordability of machinery, plant and equipment was an important/very important issue (Figure 106). It is suggested that policies regarding import of machinery, incentives, and duties should be tailored to address the concerns of the stakeholders. Figure 106: Machinery, Plant and Equipment is not Affordable

Qs 158: Some people believe that the availability of machinery, plant and equipment is an issue. Do you agree/disagree?

The majority (60 percent) of respondents agreed that availability of machinery was an important/very important issue for the industry (Figure 107). Surprisingly, contractors (55 percent) did not rate availability to be as important an issue as did the clients (72 percent) and consultants (64 percent). Figure 107: Availability of Machinery, Plant and Equipment is an Issue

33

8

25

25

14

36

22

24

33

33

30

50

36

38

14

8

17

14

11

18

13

29

42

25

30

17

0

22

0

8

0

2

8

9

5

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very Important

Important

Some whatimportant

Not important atall

Don't Know/NoResponse

99

Qs 159: Please provide the following information about equipment and machinery owned by your company/organization.36

Information was sought on the availability of a range of construction equipment.

Equipment and machinery owned by 57 contractors, included in the sample, vary between averages of 4 to 15 in number for different types of equipment. These numbers are with the exception of dumpers which on an average is 39. This higher average is due to a large number of dumpers being reported by a state-owned contractor (Table 23). Table 23: Equipment Ownership by Contractors

Contractors Equipment C1 C2 C3

All Contractors

Maximum 113 2 6 113 Minimum 2 1 1 1

Bulldozers (Total Number )

Mean 19 2 3 10 Maximum 150 3 3 150 Minimum 1 1 1 1

Graders (Total Number )

Mean 18 1 5 10 Maximum 150 1 2 150 Minimum 1 1 1 1

Back-hoe (Total Number )

Mean 22 1 2 15 Maximum 41 5 5 41 Minimum 1 2 1 1

Tandem Roller (Total Number )

Mean 11 4 2 7 Maximum 30 6 8 30 Minimum 1 1 1 1

Steel Roller (Total Number )

Mean 7 3 3 5 Maximum 82 12 10 82 Minimum 2 2 1 1

Concrete Mixers (Total Number )

Mean 15 5 4 9 Maximum 21 1 3 21 Minimum 1 1 1 1

Pavers (Total Number )

Mean 5 1 2 4 Maximum 80 2 6 80 Minimum 1 1 1 1

Excavators (Total Number )

Mean 12 1 2 8 Maximum 35 8 6 35 Minimum 1 1 1 1

Transit Mixers (Total Number )

Mean 12 4 3 8 Maximum 500 9 12 500 Minimum 4 1 2 1

Dumpers (Total Number )

Mean 72 5 5 39 Wheel Loaders (Total Number Maximum 150 10 10 150

36 Data for equipment ownership is as reported by 57 contractors, and should not be used for industry wise projections as the sample does not represent actual documented ownership and sample size is not proportional to actual number of contractors in each category.

100

Contractors Equipment C1 C2 C3

All Contractors

Minimum 1 1 1 1 Mean 23 3 4 15 Maximum 15 1 2 15 Minimum 1 1 1 1

Batching Plants (Total Number )

Mean 6 1 1 4 Maximum 13 0 1 13 Minimum 1 0 1 1

Asphalt Plants (Total Number )

Mean 5 0 1 4 Maximum 100 1 2 100 Minimum 1 1 1 1

Cranes (Total Number )

Mean 12 1 2 9 Maximum 20 3 10 20 Minimum 1 1 1 1

Crusher Plants (Total Number )

Mean 5 2 4 4 ….. Table 23 Continued Equipment Age Information was also sought on the average age of the construction equipment reported to be owned. Average age of various equipments varies between 10 to 19 years. The ageing fleet of construction equipment results in higher maintenance cost; the production cost in terms of output units/hr for any given machinery would be high, while the productivity in terms of output units/hr itself would be lower (Table 24). Table 24: Age of Equipment Owned by Contractors

Contractors Equipment Age C1 C2 C3

All Contractors

Maximum 25 20 20 25 Minimum 2 4 10 2

Bulldozers

Mean 13 14 16 14 Maximum 20 25 20 25 Minimum 7 10 10 7

Graders

Mean 12 17 13 13 Maximum 15 2 15 15 Minimum 4 2 12 2

Back-hoe

Mean 11 2 14 11 Maximum 20 18 20 20 Minimum 5 10 4 4

Tandem Roller

Mean 11 14 14 13 Maximum 17 25 20 25 Minimum 5 10 9 5

Steel Roller

Mean 10 15 15 12 Maximum 17 30 14 30 Minimum 1 5 1 1

Concrete Mixers

Mean 8 15 6 9 Maximum 15 20 15 20 Minimum 5 17 8 5

Pavers

Mean 10 19 11 11

101

4%9%

11%

24%

48%2%2%

Cash

Finance

Lease

Rented

No Response/Don'tKnowCash and Lease

Cash, Lease andRented

Contractors Equipment Age C1 C2 C3

All Contractors

Maximum 19 8 15 19 Minimum 2 1 1 1

Excavators

Mean 10 4 10 9 Maximum 15 18 15 18 Minimum 3 6 5 3

Transit Mixers

Mean 8 12 12 10 Maximum 20 25 15 25 Minimum 2 2 10 2

Dumpers

Mean 10 14 12 11 Maximum 16 25 16 25 Minimum 3 4 8 3

Wheel Loaders

Mean 10 14 13 11 Maximum 16 13 20 20 Minimum 2 13 7 2

Batching Plants

Mean 10 13 12 11 Maximum 20 0 15 20 Minimum 10 0 12 10

Asphalt Plants

Mean 14 0 14 14 Maximum 16 18 15 18 Minimum 7 10 10 7

Cranes

Mean 12 14 12 12 Maximum 20 20 12 20 Minimum 3 11 2 2

Crusher Plants

Mean 10 15 9 11 ….. Table 24, Continued Qs 160: How have you obtained the machinery and equipment being used in your projects? Select all applicable: Purchased with Cash; Finance; Lease; Other; or Rented

Figure 108 shows that the equipment was obtained on cash purchase basis by the majority (48 percent) of the contractors. A small number (11 percent) reported to have rented the equipment while a fairly large sample (24 percent) did not give a response at all. Figure 108: Ownership of the Machinery/Equipment Used

102

Qs 161: What percentage of machinery and equipment used in your current projects is: owned or rented?

The contractors on average reported 62 percent of the equipment on their projects to be owned and 40 percent to be rented.

Qs 162: What percentage of machinery and equipment used in your current projects is New (purchased new) 0r Old (purchased used/second hand)?

Overall, 27 percent of the equipment was reported to be purchased as new and 73 percent as old (second hand/used). Import Policies for Construction Equipment Qs 163: Up to what extent import policies regarding constructions equipment need to be liberalized? Please grade the following statements regarding import policies for construction equipment on a scale of 1-5. (5 means strongly agree and 1 means strongly disagree)

Figure 109 shows that overall, the opinion was divided with 45 percent of respondents saying import policies needed to be liberalized to some/large extent while 42 percent said that there was no need to be liberalize the policies at all. The greatest (63 percent) support surprisingly came from the client agencies. Figure 109: Import Policies for Equipment Need to be Liberalized Qs 164: Some people argue that in import regulations for construction equipment, there is discrimination in favor of foreign contractors and against the local contractor?

Overall, the majority (60 percent agreed) of respondents thought that they did not have a level playing field whereas only a minority (13 percent) disagreed. 68 percent of the contractors agreed with the statement. The results indicate that most respondents would like equipment import policies to be uniform for all stakeholders and a level playing ground should be provided (Figure 110).

43

17

42

37

17

36

30

10

17

0

7

25

27

15

38

58

54

49

33

36

42

10

8

4

7

25

0

13

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL To a largeextent

To someextent

Not at all

Don’ tKnow/NoResponse

103

6%

18%

13%

63%

Machinery and equipment import for contractors, consultantsshould be duty and tax free, local manufacturing started,import should be tied to contracts in hand

Spare parts - free of duty and tax es, repair facilities should bepresent, open import of spares

Simplify procedures, streamline import, rental policy -equipment pools, leasing facilities prov ided

Others - Equal priv eleges for foreign and localconsultants/contractors regarding equipment, machinery ,instruments, softw are

Figure 110: Import Regulations Discriminate in Favor of Foreign Contractors

Qs 165: What changes would you suggest to the import policy?

The following recommendations, based on 84 comments, can be grouped into the following main areas:

• 63 percent of the suggestions were related to duty and tax free import of equipment and machinery for contractors and consultants. The majority also favored local manufacturing and that imports should be tied to contracts in hand (Figure 111)

• 18 percent stated that procedures needed to be simplified for imports, rental and leasing policies should be developed and equipment pools should be set up

• 13 percent asked for equal privileges for foreign and local consultants/contractors regarding equipment, machinery, instruments and software and

• 6 percent said spare parts should be duty and tax free, repair facilities should be present and open import of spares should be allowed.

Figure 111: Suggestions for the Import Policy

76

67

63

68

47

55

60

10

0

17

11

6

9

9

5

25

13

12

14

18

13

10

8

8

9

33

18

18

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

104

62

50

58

58

31

45

47

24

42

29

30

39

45

35

5

8

4

5

8

9

7

10

0

8

7

22

0

12

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL To a largeextent

To someextent

Not at all

Don'tKnow/NoResponse

71

50

46

56

42

45

50

19

33

46

33

17

27

27

5

8

4

5

19

27

13

5

8

4

5

22

0

11

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL To a largeextent

To someextent

Not at all

Don'tKnow/NoResponse

Financing Facilities for Equipment Qs 166: Up to what extent is capacity to increase equipment resources restricted due to a lack of facilitation from government agencies and financial institutions: (Please grade the following statements regarding financing facilities for equipment purchase on a scale of 1-3)

Figure 112 shows that a substantial majority (82 percent) of the respondents said that capacity to increase equipment resources is restricted due to a lack of facilitation from government and financial institutions (90 percent of clients, 68 percent consultants and 88 percent of contractors). The results indicate a need to develop polices related to facilitation and financing of tools, plants, machinery and equipment which meet the needs of the stakeholders.

Figure 112: Lack of Facilitation from Government restricts increasing equipment resources

Qs 167: Up to what extent is there a lack of financing facilities for acquisition/purchase of machinery?

Overall, 77 percent of the respondents said there was a (large/some) lack of financing facilities for acquiring/purchasing machinery and only 13 percent agreed otherwise. 83 percent contractors, 59 percent consultants and 72 percent clients expressed concern about a lack of financing facilities (Figure 113). Figure 113: Lack of Financing Facilities for Acquiring Equipment

105

86

83

79

82

64

55

73

5

8

0

4

6

27

7

0

0

8

4

11

18

8

10

8

13

11

19

0

13

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

76

75

71

74

50

55

63

5

17

13

11

3

9

8

10

0

8

7

25

18

14

10

8

8

9

22

18

14

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

Qs 168: Some people argue that there is a lack of government support/intervention for enabling better credit facilities. Do you agree/disagree?

Figure 114 shows that around 73 percent of respondents agreed with the statement. Similarly, 86 percent of contractors who are most effected by credit options agreed with the statement too. It is suggested that the government and the banking sector need to review their policies for credit facilities offered to the construction industry in order to facilitate capacity development.

Figure 114: Lack of Government Support for Enabling Better Credit Facilities

Qs 169: Some people argue that there is an absence of reasonable leasing facilities. Do you agree/disagree?

Overall, 63 percent agreed that reasonable leasing facilities are missing with contractors agreeing the most at 74 percent (Figure 115). Figure 115: Absence of Reasonable Leasing Facilities

Quality and Operation of Equipment How serious are the following issues regarding the quality and equipment? Please grade on a scale of 1-4. (4 means very serious 1 means not serious at all) Qs 170: A lack of new equipment restricts increase in productivity (Use of old machinery by contractors causes low productivity)

106

52

33

42

44

28

36

38

29

25

46

35

33

64

38

10

25

4

11

19

0

13

5

17

4

7

11

0

8

5

0

4

4

8

0

5

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very serious

Serious

Some whatserious Not serious atall

Don't Know/NoResponse

43

17

29

32

17

18

25

38

50

54

47

47

18

44

10

17

8

11

11

36

13

5

17

4

7

11

18

10

5

0

4

4

14

9

8

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very serious

Serious

Some whatserious

Not serious atall

Don't Know/NoResponse

Figure 116 shows that overall the majority (76 percent) agreed that productivity is

restricted to a very serious/serious extent due to a lack of new equipment. 89 percent of contractors also agreed that it is a very serious/serious issue whereas; only 4 percent disagreed saying that it is not an issue.

Figure 116: Lack of New Equipment Restricts Increase in Productivity Qs 171: Most of the machinery used is imported second hand.

Overall, 69 percent of the respondents (79 percent of contractors, 83 percent of C1 contractors, 64 percent of consultants) said this was a very serious/serious issue. In contrast to this only 36 percent of clients considered having used equipment to be a serious issue (Figure 117).

The results clearly show that there are major differences between the perceptions of the client agencies and the other stakeholders and a dialogue is necessary to address the needs of the industry.

Figure 117: Most of the Machinery Pool Consists of Second Hand Machinery

Qs 172: Frequent break downs of old equipment is a problem.

Figure 118 shows that he majority (76 percent) of respondents (64 percent of clients, 91 percent of contractors and 61 percent of consultants) reported that frequent breakdown of equipment is a very serious/serious issue.

The stakeholders need to devise means to address the problem of importing old and used

107

48

17

58

46

22

64

39

33

50

29

35

39

36

37

10

25

4

11

17

0

12

5

8

4

5

11

0

7

5

0

4

4

11

0

6

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very serious

Serious

Some whatserious

Not serious atall

Don't Know/NoResponse

29

17

42

32

11

27

24

43

42

29

37

64

55

48

19

25

21

21

8

18

16

5

17

4

7

8

0

7

5

0

4

4

8

0

5

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very serious

Serious

Some whatserious Not serious atall

Don't Know/NoResponse

equipment and the backup facilities available for its maintenance. Clearly, direction is needed to facilitate import of new equipment for the industry. Frequent breakdowns lead to inefficiencies, increased costs of production and higher bid costs. Figure 118: Frequent Breakdown of Equipment is a Constraint Qs 173: Repair and maintenance issues arise with old equipment.

72 percent of respondents reported repair and maintenance issues arising from using old equipment as being a very serious/serious issue (82 percent clients, 75 percent consultants and 69 percent contractors). However, only 7 percent said this was not an issue (Figure 119).

Results indicate that there is a need to increase the capacity in the private sector for providing adequate repair and maintenance facilities in order to reduce the downtime which will improve productivity and efficiency of the construction sector. Figure 119: Repair and Maintenance Issues Arise with Old Equipment

Qs 174: Availability of trained operators is a serious/ non-serious issue.

Overall, 51 percent of respondents reported availability of trained operators to be a very serious/serious issue and only 20 percent said it was not. The responses point towards the need for trained operators if infrastructure development is to be scaled up as planned (Figure 120).

108

19

8

17

16

19

0

15

48

50

29

40

22

55

36

14

0

25

16

36

27

24

14

42

25

25

14

18

20

5

0

4

4

8

0

5

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very serious

Serious

Some whatserious

Not serious atall

Don't Know/NoResponse

33

8

25

25

17

18

21

19

25

29

25

28

36

27

19

25

17

19

22

27

21

24

42

29

30

25

18

27

5

0

0

2

8

0

4

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very serious

Serious

Some whatserious Not serious atall

Don't Know/NoResponse

24

17

25

23

14

9

18

43

33

21

32

33

45

34

14

25

17

18

22

36

21

14

25

29

23

22

9

21

5

0

8

5

8

0

6

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very serious

Serious

Some whatserious

Not serious atall

Don't Know/NoResponse

Figure 120: Availability of Trained Operators is a Problem Qs 175: Availability of maintenance staff is a serious/ non-serious issue.

Figure 121 shows that 48 percent of the respondents said availability of maintenance staff was a serious issue while a significant number (27 percent) said it was not. Results indicate a need to build up maintenance resources. Figure 121: Availability of Maintenance Staff is an Issue for the Industry

Qs 176: Availability of after sales service is a serious/non-serious issue.

After sales service was found lacking by most (52 percent) of the respondents however, 21 percent did not consider it to be a serious issue (Figure 122). Figure 122: After-Sales Service is Lacking

109

29

17

33

28

17

0

21

38

42

33

37

28

64

37

19

25

17

19

28

18

22

10

17

17

14

14

18

14

5

0

0

2

14

0

6

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very serious

Serious

Some whatserious Not serious atall Don't Know/NoResponse

38

17

33

32

25

18

28

24

58

25

32

36

55

36

24

25

13

19

19

9

18

10

0

21

12

11

18

13

5

0

8

5

8

0

6

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALL Very serious

Serious

Some whatserious

Not serious atall

Don't Know/NoResponse

Qs 177: Cost of maintenance is a serious/non-serious issue.

Figure 123 shows that overall, 58 percent of respondents reported costs of maintenance as being a serious issue. Of more relevance was the response of contractors with the majority (65 percent) saying that it was a serious issue while for only 14 percent it was not an issue. Figure 123: Maintenance is Expensive and a Constraining Factor Qs 178: Availability of spare parts is a serious/non-serious issue.

The majority (64 percent) of respondents stated availability of spare parts is a very serious/serious issue, whereas, only 13 percent disagreed (Figure 124). This is another area which could be improved to enhance productivity and capacity.

Use of older equipment coupled with shortage of trained operators, a lack of spare parts and maintenance facilities do not bode well for expecting the industry to be able to increase efficiency and productivity to levels which can meet the challenges of delivering a vastly increased infrastructure development program. Figure 124: Availability of Spare Parts Qs 179: In your view which has the higher value for money (cost vs. benefit): Old machinery or new machinery?

Overall, 74 percent said that the new machinery has the higher value for money (cost against benefit) [clients 82 percent, consultants 69 percent and contractors 75 percent].

110

86

75

92

86

72

100

83

0

25

4

7

11

0

8

10

0

4

5

11

0

7

5

0

0

2

6

0

3

C3

C2

C1

ALL CONTRACTORS

CONSULTANTS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

22%

9%

5%

17%

10%

37%

Lack of good maintenance facilities, no after sales serv ices,lack of spare parts, lack of trained technicians

Lack of trained operators, low pays of technical staff

Cost of ownership, lack of financing & leasing facilities, highrentals, poor government policies, cost of transportation

Most equipment is old, requires repair cause delays, highrunning costs

Due to low bids/rates, contractor cannot afford new equipment,most use rental equipment

Availability of the right equipment, new equipment notavailable, rentals not easily available, shortage of equipment

Qs 180: Some people think that the contractors should not save money on equipment as the quality of the equipment is more important than the money saved. Do you agree/disagree?

An overwhelming majority (83 percent) of respondents agreed with the statement. Clients were 100 percent in agreement, consultants 72 percent and contractors 86 percent (Figure 125). The challenge for the stakeholders is clearly defined. To facilitate availability of quality equipment at affordable prices, import policies, taxes and duties, financing, leasing, credit facilities and other mechanisms should all be examined. Figure 125: Quality of Equipment is more Important than the Money Saved Main Issues Related to Equipment & Machinery Qs 181: In your opinion what are the main issues related to equipment and machinery?

Figure 126 shows the percentage of key issues identified by respondents: • 37 percent of the comments received pertained to cost of ownership, a lack of financing

and leasing facilities, high rentals, poor government polices and cost of transportation • 22 percent said absence of good maintenance facilities, after sales services, spare parts

and a lack of trained technicians were serious issue • 17 percent said that old equipment with high running costs and repairs needed attention • 10 percent cited non availability of the right equipment • 9 percent said that with the low bid rates new equipment could not be bought and rented

machinery had to be used.

Figure 126: Main Issues with Construction Equipment

111

Qs 182: Recommendations/suggestions for resolving these issues:

Figure 127 gives the percent of suggested solutions related to equipment and machinery issues. These are:

• 47 percent suggested provision of loans, financing and leasing facilities along with reduction of duties and taxes on machinery

• 15 percent suggested setting up of repair facilities with adequately trained technicians and spare parts availability

• 15 percent suggested that vocational training institutes be established, engage international experts for this purpose to train on using latest equipment and, that skilled operators and technicians should be paid higher wages

• 8 percent said that the government should focus on planning and conducting equipment surveys, specialists should be available to provide guidance on appropriate equipment selection

• 7 percent said that policies should be such that encourage the use of new equipment

Figure 127: Suggestions to Solve Equipment & Machinery Issues

15%

47%

15%

7%

4%

4%

8% Ex pand v ocational training institutes - train technicians & machineoperators on latest equipment, engage international ex perts,increase salaries of operators and techniciansProv ide financing/leasing facilities, loans, adv ances, reducetax es and custom duties, simplify import and procurementprocess of machinerySet up maintenance facilities and w orkshops w ith trainedpersonnel, av ailability of spare parts

Equipment should be new , latest technology , reducetransportation costs

Equipment should be project specific

Encourage local assembly , manufacture of equipment

Gov ernment needs improv ed planning, equipment surv ey s,specialists to identify appropriate machinery , priority should begiv en to those w ho ow n w ell maintained equipment

112

52

33

38

42

18

38

29

33

38

33

64

38

0

8

0

2

0

1

19

25

25

23

18

22

C3

C2

C1

ALL CONTRACTORS

CLIENTS

OVERALL To a large extent

To some extent

Not at all

Don't Know/NoResponse

Section 6 Material Supply (cement, steel, bitumen, fuel) Availability of Materials & Cost Qs 183: How serious do you think is the shortage of the following construction materials in Pakistan (Contractors and Clients)?

Cement, steel and bitumen (asphalt) were the three construction materials which were stated to be in short supply and were a cause for concern to the construction firms and clients. Results are shown in Table 25. Table 25: Seriousness of Materials Shortage (percentage of respondents)

S.No Material

Very

Serious

Serious

Some what

Serious

Not

Serious at all

Don’t

Know/No Response

1 Cement 16 22 18 28 16 2 Steel 19 10 26 26 18 3 Bitumen/Asphalt 10 28 25 18 19 4 HSD 12 13 15 41 19 5 Furnace oil 7 16 22 31 24

Qs 184: Up to what extent is the cost of materials affected by multiple quarry regulations?

Figure 128 shows that overall, 76 percent of the respondents said that the cost of materials was affected by multiple quarry regulations to a large or to some extent (to a large extent 38 percent, to some extent 38 percent). 42 percent of contractors also agreed that multiple quarry regulations were a factor in the cost of materials Figure 128: Cost of Materials is Affected by Multiple Quarry Regulations Regulations Affecting Materials, Price Instability and a Lack of Data Qs 185: Some people argue that the quarry regulations should be uniform across the country.

The suggestion was supported by the majority (47 percent) of respondents, with only 18 percent disagreeing (Figure 129). Multiple regulations affecting the industry should be minimized.

113

52

58

42

49

36

47

19

8

17

16

27

18

14

17

21

18

18

18

14

17

21

18

18

18

C3

C2

C1

ALL CONTRACTORS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

67

58

63

63

82

66

5

8

4

5

0

4

14

17

13

14

0

12

14

17

21

18

18

18

C3

C2

C1

ALL CONTRACTORS

CLIENTS

OVERALL Agree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

33

33

21

28

36

29

24

25

33

28

45

31

14

0

21

14

0

12

10

25

8

12

0

10

19

17

17

18

18

18

C3

C2

C1

ALL CONTRACTORS

CLIENTS

OVERALL Very serious

Serious

Some whatserious

Not serious atall

Don't Know/NoResponse

Figure 129: Regulations should be Uniform

Qs 186: Multiple regulations and taxes are a serious cause of delays & cost overruns. Do you agree/disagree?

Figure 130 shows that multiple regulations and taxes were considered a major cause of delays and cost overruns by a majority (66 percent) of the respondents (clients 82 percent and contractors 63 percent). A need to simplify procedures is indicated here. Figure 130: Multiple Regulations and Taxes cause Delays and Cost Increases Qs 187: How seriously a lack of data on materials production requirements (locally produced and imported) impacts project planning and execution?

Overall, 60 percent of respondents thought a lack of data on materials production had a serious/very serious impact on the project planning and execution activities. However, a significant majority of clients (81 percent) showed a high concern to a lack of data (Figure 131). Therefore, production data & forecasts should be made available on a monthly basis.

Figure 131: A lack of Data has a Serious Impact on Project Planning and Execution

114

52

50

54

53

36

50

24

8

21

19

36

22

5

17

8

9

0

7

5

0

0

2

9

3

14

25

17

18

18

18

C3

C2

C1

ALLCONTRACTORS

CLIENTS

OVERALL

Very serious

Serious

Some whatserious Not serious atall Don't Know/NoResponse

71

58

50

60

45

57

5

8

25

14

9

13

10

8

8

9

27

12

0

8

0

2

0

1

14

17

17

16

18

16

C3

C2

C1

ALL CONTRACTORS

CLIENTS

OVERALL Very serious

Serious

Some whatserious

Not seriousat all

Qs 188: How serious is the issue of rapid escalation in price of materials

Figure 132 shows that rapid escalation in the price of materials was considered a serious issue by the majority (70 percent) of respondents. Similarly, 71 percent of the C3 Contractors in the sample rated escalation as being a very serious issue.

Figure 132: Rapid Escalation Creates Serious Issues Qs 189: How serious is the problem of instability of market prices in managing the cash flow Figure 133 shows that the majority (clients 72 percent and contractors 72 percent) of respondents said instability in market prices was a very serious/serious issue. Figure 133: Instability of Prices Causes Cash Flow Problems Qs 190: There is a view that clients resist giving the benefit of escalation to the contractors. Do you agree/disagree?

The majority of respondents (clients 64 percent and contractors 72 percent) agreed that clients resist giving the benefit of escalation to contractors. There is a need to draft contracts that are balanced and strictly implemented. The results indicate a lack of project administration and implementation capacities in the system or mistrust amongst stakeholders (Figure 134).

115

76

75

67

72

64

71

10

0

0

4

9

4

0

8

8

5

9

6

14

17

25

19

18

19

C3

C2

C1

ALL CONTRACTORS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

71

75

58

67

36

62

5

0

8

5

9

6

10

8

13

11

36

15

14

17

21

18

18

18

C3

C2

C1

ALL CONTRACTORS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

71

67

75

72

45

68

10

0

0

4

27

7

0

8

4

4

9

4

19

25

21

21

18

21

C3

C2

C1

ALL CONTRACTORS

CLIENTS

OVERALL Agree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

Figure 134: Clients Resist Passing on Escalation Costs Qs 191: There is a view that escalation clauses do not adequately compensate increase in prices. Do you agree/disagree?

Figure 135 shows that overall, 62 percent of respondents agreed with the statement whereas, clients were divided on the issue with equal numbers agreeing and disagreeing (36 percent). However, the majority of contractors agreed with the statement.

Figure 135: Escalation Clauses do Not Provide Adequate Compensation

Qs 192: There is a view that government controlling agencies are not in a position to control Cartels and Monopolies that exist. Do you agree/disagree?

Figure 136 shows that the overall majority (68 percent) agreed that government controlling agencies are incapable of checking cartels and monopolies. 72 percent of contractors and 45 percent of clients were of similar views. There is a clear indication that price control mechanisms need to be strengthened.

Figure 136: Cartels and Monopolies are not being Controlled

116

62

58

75

67

64

66

10

0

4

5

0

4

5

8

0

4

18

6

24

33

21

25

18

24

C3

C2

C1

ALL CONTRACTORS

CLIENTS

OVERALLAgree/StronglyAgree

Neither Agree orDisagree

Disagree/StronglyDisagree

Don't Know/Noresponse

24

8

21

19

27

21

19

42

25

26

36

28

43

33

38

39

18

35

14

17

17

16

18

16

C3

C2

C1

ALL CONTRACTORS

CLIENTS

OVERALLVery easilyavailable

Easilyavailable

Not easilyavailable

Not availableat all

Qs 193: There is a view that government price controlling agencies are not performing effectively. Do you agree/disagree?

Almost the same overall percentage of respondents as was in the previous question agreed with the statement. The majority of clients (64 percent), contractors (67 percent) and C1 contractors (75 percent) agreed that government price controlling agencies are not performing effectively (Figure 137). .

Figure 137: Price Controlling Agencies are Not Effective Qs 194: What are your views about the availability of facilities for transporting materials: Very easily available, easily available, not easily available, or not available at all?

49 percent of respondents said transport facilities for materials were easily available. Whereas, overall 35 percent and 39 percent contractors said such facilities were not easily available. Results from Figure 138 suggest transport facilities are not an issue for the current level of activities.

Figure 138: Views on Material Transportation Facilities

117

6%

18%

6%

5%5% 4%

20%

36%

High fuel costs, increase in carriage costs

Non effective price control hampers material supplies, highprices, unpredictable prices, inflation, cartels, inflation andescalation in materials costsNot enough tranportation available when demand is high,poor access to sites

Lack of availability of steel, cement, bitumen (especiallysummer months), demand is more than supply

Lack of quality control on materials

Smuggling, hoarding, export of materials

Quarry disputes, availability , rules, ownership disputes

Main Issues Related to Materials Qs 195: In your opinion what are the main issues related to material supply?

Following are the main issues related to construction materials inferred from 77 comments. • 36 percent said that there are non effective price control, inflation, unpredictable prices

and escalation in materials costs • 20 percent highlighted the shortage of steel, bitumen and cement • 18 percent said there is a lack of transportation and poor access to sites • 6 percent considered high fuel and carriage costs as issues and • only 6 percent said there is a lack of quality control on materials

Figure 139 shows that the majority of stakeholders concerned about coping with fluctuating

prices, inflation and shortages of materials in the market. Availability of bitumen during summer months was mentioned as being uncertain. Both price and availability of materials affect their cash flows, project planning and implementation adversely. Figure 139: Main Issues Related to Materials

Qs 196: Recommendations/suggestions to overcome these issues?

Following suggestions (Figure 140) were made for materials related issues:

• 32 percent of respondents said that government should put in place an efficient price control system and effectively perform the regulatory function to reduce inflation

• 19 percent suggested that proper planning for materials supplies is required. They were of the view that carriage facilities should be in place to ensure material supply

118

19%

32%

11%

6%

11%

11%

10%

Proper planning for materials supplies is needed, carriagefacilities, proper supplies ensured

Gov ernment should control prices, hav e effectiv e controlsy stem and regulatory function, reduce inflation, prices shouldbe rev ised only once each y ear

Quality checks on materials are lacking

Need more steel, bitumen and cement manufacturing plants andsupplies

End smuggling and hoarding and ex ports

Price escalation should be paid, should be fully compensated forfluctuation in prices, escalation clauses should be implemented,employ ees should ensure early pay ment and quick decisions

Railw ay s should play it role in transportation and road accessev en in remote areas should be there, reduce cost ofdiesel/transportation costs

• 11 percent asked for quality checks on materials to be more stringent • 11 percent said that price escalation should be fully compensated for and escalation

clause should be implemented. They said that timely payment should be ensured and there should be no delays in decision making

• 11 percent said that cost of transportation should be reduced and road access should be provided for remote areas. They highlighted that railways remains to be underutilized and;

• 10 percent asked for control on smuggling, hoarding and export

The above recommendations can be classified in to three main categories: Control the prices and compensate for escalation, plan the requirements and ensure supply, and reduce cost of transportation. Additional suggestions were to check on smuggling and hoarding of materials, and to control the quality of construction materials.

Figure 140: Suggestions to Overcome Construction Materials Issues

119

25%

3%25%

36%11%Sole

ProprietorshipPartnership

Pvt.Ltd

Govt /ExecutingAgencyNo Response

32%33%

4%5%

26%

SoleProprietorshipPartnership

Pvt.Ltd

Govt /ExecutingAgencyNo Response

Section 7 General Information Qs 199: Organizational setup: Sole proprietor, Partnership, Private Limited, Public Limited, Government/executing agency or other – please specify

35 percent of the total number of construction firms sampled were mostly organized as Private Limited firms, 28 percent were Partnerships and 33 percent Sole Proprietorships.

25 percent of the total number of consulting firms sampled was organized as Private Limited firms, 25 percent as Partnerships, with only 11 percent being Sole Proprietorships. A fairly large number (36 percent) of consultants chose not to give a response. Figure 141: Organizational Structure

Consulting Firms Construction Firms

Qs 200: Average annual turnover (for the past 5 years)

Data reported was erroneous and could not be analyzed. Qs 202: Have you worked in a Joint-Venture (JV) with foreign companies?

A significant majority of consultants (58 percent) and 30 percent of contractors have worked with foreign companies in the past. Qs 203: Do you have force account capability (for government agencies only)?

27 percent of clients had force account capability.

_______________________________________________

120

Annexure B: Survey Questionnaire

Questionnaire for All Stakeholders

COPING WITH EXPANSION

Are you ready to take up large infrastructure projects?

Submitted to

The World Bank, Islamabad

by

March 7, 2006

121

ID # Interviewer Name: Date of Interview: City: Start Time: End Time: Introduction: Hello. Thank you for taking the time to speak with me today. As you know from the letter/fax/email you received, the World Bank has commissioned Gallup Pakistan to conduct a survey and get opinions on various issues related to the implementation of large infrastructure in Pakistan. Do you have any questions before we begin? (For Interviewers’ only) Company Origin: Pakistani 1 Foreign 2 1. Year of Establishment: ___________________________________________________ 2. (For Contractors & Consultants only) PEC Registration Category : ________________ Experience:

3. Projects completed in the past 5 years. Specify by type; Roads & Bridges, Irrigation (dams

and canals only), Power (Hydel Generation, transmission and distribution only), Railways, Airports, Ports. Number and Total value includes work done as the main contractor and as a sub-contractor.

Projects Type Number Total Value

1. Road and Bridges _________ ________________

2. Irrigation _________ ________________

3. Power _________ ________________

4. Railways _________ ________________

5. Airports _________ ________________

6. Ports _________ ________________

7. Others (please specify) _________ ________________

Grand Total: ________________

4. Works-in-hand. Specify by type; Roads & Bridges, Irrigation (dams and canals only),

Power (Hydel Generation, transmission and distribution only), Railways, Airports, Ports. Number and Total value includes work done as the main contractor and as a sub-contractor.

122

Projects Type Number Total Value 1. Road and Bridges _________ ________________

2. Irrigation _________ ________________

3. Power _________ ________________

4. Railways _________ ________________

5. Airports _________ ________________

6. Ports _________ ________________

7. Others (please specify) _________ ________________

Grand Total: ________________

5. (For Contractors & Consultants only) Of your current and/or past projects (completed in

the last 5 years), on average, what percent of work has been: a. For private sector clients: _____________________________ % b. Subcontracted to you: _____________________________ % c. Subcontracted to others by you: _____________________________ % d. Completed on time: _____________________________ % e. Completed within the bid cost (Includes normal escalation but no change orders):_______ ______% 6. What has been the average delay in projects completed by you in the past 5 years? (Please

reconfirm that it is the average delay of all the projects) Less than six months 1 More than six months 2 More than 1 year 3 More than 2 years 4

7. What are the most common reasons of delay in project completion? (Please probe) a. _______________________________ b. _______________________________ c. _______________________________ 8. (For Contractors only) Have you ever filed claims for projects? Yes 1 No 2 8b. If yes, how many in the past 5 years? If No, why not? Explain. _________________________________________________________

123

_________________________________________________________ _________________________________________________________ 9. (For Clients/Govt. Agencies only) For how many projects have you received claims in the

past 5 years? _____________________________ SECTION 2: Capacity Now I will ask you questions related to capacity expansion. Please grade the following statements on a scale of 1-5. Select 6 if you have no response.

Statement Strongly Agree Agree

Neither agree nor

disagree

Disagree

Strongly

disagree

Don’t Know/N

o Respons

e 10. Some people believe that

local contractors lack capacity to expand. Do you agree/disagree with the statement?

5 4 3 2 1 6

10 (b). Please explain your answer briefly:

_______________________________________________________________________ _______________________________________________________________________

Statement Strongly

Agree Agree Neither

agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

11. Some people believe that local contractors have too much work. Do you agree/disagree with the statement?

5 4 3 2 1 6

11 (b). Please explain your answer briefly:

_______________________________________________________________________ _______________________________________________________________________

124

Statement Strongly Agree Agree

Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

12. Some people believe that local contractors give poor (substandard) quality. Do you agree/disagree with the statement?

5 4 3 2 1 6

12 (b). Please explain your answer briefly:

_______________________________________________________________________ _______________________________________________________________________ (For interviewer’s information only: The current PKR 900 billion PSDP is expected to grow to around 2000 billion in the next few years)

Statement Strongly

Agree Agree Neither

agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

13. Some people believe that in order to deliver twice the current volume of work, foreign contractors will have to come in. Do you agree/disagree?

5 4 3 2 1 6

13 (b). Please explain your answer briefly: _______________________________________________________________________ _______________________________________________________________________

Statement Strongly

Agree Agree Neither

agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

14. Some people believe that in order to deliver twice the current volume of work, foreign consultants will have to come in. Do you agree/disagree?

5 4 3 2 1 6

14 (b). Please explain your answer briefly: _______________________________________________________________________ _______________________________________________________________________

Statement Strongly

Agree Agree Neither

agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

15. Some people believe that local contractors/consultants can double their capacity if the current rates are significantly increased. Do you agree/disagree?

5 4 3 2 1 6

125

15 (b). Please explain your answer briefly: _______________________________________________________________________ _______________________________________________________________________ Please grade the following statements on a scale of 1-5, where 5 means Strongly Agree and 1 means Strongly Disagree:

Statement Strongly

Agree Agree Neither

agree nor disagree

Dis-agree

Strongly disagree

Don’t Know/No Response

16. Some people believe that use of force-account discourages private sector contractors/consultants from increasing capacity. Do you agree/disagree?

5 4 3 2 1 6

17. Some people believe that use of public sector companies discourages private sector contractors/ consultants from increasing capacity. Do you agree/disagree?

5 4 3 2 1 6

18. Some people believe that uncertainty of demand for construction/consulting services discourages the private sector from increasing capacity. Do you agree/ disagree?

5 4 3 2 1 6

19. Some people believe that while the country actively seeks employment for its skilled and unskilled labor overseas, considerable shortage of manpower exists at all levels in the country

5 4 3 2 1 6

20. Some people believe that current government policies create problems in the provision of appropriate equipment (machinery) for the construction and consulting industry. Do you agree/ disagree?

5 4 3 2 1 6

21. Some people believe that current government policies create problems in the provision of materials for the construction industry. Do you agree/disagree?

5 4 3 2 1 6

22. To what extent do you agree or disagree that _______ an issue with respect to the capacity

for implementing of large infrastructure projects in Pakistan? (Read one by one for each of the following statements)

Statement Strongly Agree Agree

Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

A Business Environment and Regulatory Framework 5 4 3 2 1 6

B Human resources 5 4 3 2 1 6 C Machinery 5 4 3 2 1 6 D Material 5 4 3 2 1 6

126

23. Please rank the following in terms of its importance as a capacity constraint (1 means

Highly important and 4 means Least important).Please assign a unique rank to each- no two issues should have the same rank.

Issues Ranking a Business Environment and Regulatory

Framework

b Human resources c Machinery d Material

127

SECTION 3: Business Environment & Regulatory Framework Procurement

Please grade the following statements on the scale of 1-5. where 5 means Strongly Agree and 1 means Strongly Disagree:

Statement Strongly

Agree Agree Neither

agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

24. Some people believe that the appointment of consultants takes too long. Do you agree/disagree?

5 4 3 2 1 6

25. Some people believe that the procurement procedures prescribed by donors lead to delays. Do you agree/disagree?

5 4 3 2 1 6

26. Some people believe that the government rules are in conflict with donor rules

5 4 3 2 1 6

27. Some people believe that the procurement process for contractors (from Notice Inviting Tender to mobilization) takes too long. Do you agree/disagree?

5 4 3 2 1 6

28. Some people believe that the pre-qualification procedures are complex and time consuming. Do you agree/disagree?

5 4 3 2 1 6

29. Some people believe that the enlistment procedure & criteria should be unified for all executing agencies (one window operation). Do you agree/disagree?

5 4 3 2 1 6

30. Some people believe that the post qualification should be the preferred method of procurement. Do you agree/disagree?

5 4 3 2 1 6

31. Some people believe that the FIDIC Contracts should be adopted by all clients. Do you agree/disagree?

5 4 3 2 1 6

32. Some people believe that the contracts should include escalation clauses. Do you agree/disagree?

5 4 3 2 1 6

33. Some people believe that the contracts are balanced and provide equal protection to both contractors and client agencies. Do you agree/disagree?

5 4 3 2 1 6

34. Some people argue that client agencies do not blacklist poor performance due to shortage of quality, contractors/consultants. To what extent do you agree/disagree with the statement.

5 4 3 2 1 6

128

35. Procurement process for contractors for major infrastructure projects (from Notice Inviting Tender to mobilization) takes:

Less than 6 months 1 6 to 9 months 2 9 to 12 months 3 More than 12 months 4 36. Appointment of consultants for major infrastructure projects take: Less than 6 months 1 6 to 9 months 2 9 to 12 months 3 More than 12 months 4 Please grade the following statements regarding Procurement on a scale of 1-5. Where 5 means Strongly Agree and 1 means Strongly Disagree:

Statement

Strongly Agree

Agree Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

37. Some people believe that the procurement of work is delayed by slow release of allocations. Do you agree/disagree?

5 4 3 2 1 6

38. Some people believe that the approvals related to procurement are not provided in a timely manner. Do you agree/disagree?

5 4 3 2 1 6

39. Some people believe that the preferential use of public sector companies lead to higher cost of work. Do you agree/disagree?

5 4 3 2 1 6

40. Some people believe that the preferential use of public sector companies discourages private companies. Do you agree/disagree?

5 4 3 2 1 6

41. Some people believe that the force account procurement causes inefficiency. Do you agree/disagree?

5 4 3 2 1 6

42. Some people believe that the incorrect project estimates cause problems in procurement. Do you agree/disagree?

5 4 3 2 1 6

43. Some people believe that the project estimates should be comparable to similar projects in Regional countries. Do you agree/disagree?

5 4 3 2 1 6

44. Some people believe that the practice of accepting lowest bids has led to deterioration in quality of inputs and output. Do you agree/disagree?

5 4 3 2 1 6

129

45. What dispute resolution mechanisms have you used or experienced? Select all applicable. Amicable settlement 1 Dispute resolution board 2 Arbitration 3 Court 4 None of the above 5 Not experienced 6 Don’t know 7

Statement Strongly

Agree Agree Neither

agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

46. Some people believe that the dispute resolution mechanisms are complex and lengthy. Do you agree/disagree?

5 4 3 2 1 6

46 (b). Please explain your reply briefly: _______________________________________________________________________

Statement Strongly

Agree Agree Neither

agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

47. Some people believe that recent invitation to tenders have solicited a poor response from local contractors/consultants. Do you agree/disagree?

5 4 3 2 1 6

47 (b). Please provide possible reasons: _______________________________________________________________________

Statement Strongly

Agree Agree Neither

agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

48. Some people believe that the recent invitation to tenders have solicited a poor response from International contractors/ consultants. Do you agree/disagree?

5 4 3 2 1 6

130

48 (b). Please give possible reasons: __________________________________________________________________________

Statements To a large extent

To some extent Not at all

Don’t Know/No Response

49. To what extent do the foreign contractors/ consultants receive preferential treatment?

3 2 1 4

49 (b). Please explain your answer: _______________________________________________________________________ Please grade the following statements regarding procurement on a scale of 1-5, where 5 means Strongly Agree and 1 means Strongly Disagree:

Statement: Strongly Agree Agree

Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

50. Local contractor/consultants are not provided fair opportunity to participate in the procurement process (right to invite)

5 4 3 2 1 6

51. Past performance of a contractor is not considered in the award of new contracts

5 4 3 2 1 6

52. Procurement processes will tremendously improve from the availability of an independent contractor/consultant rating system similar to the ENR rating

5 4 3 2 1 6

53. A special bank to support the construction industry should be created

5 4 3 2 1 6

54. Performance of Contractors is not adequately monitored 5 4 3 2 1 6

55. Inefficient consultants & contractors keep on getting work due to a lack of objective evaluation

5 4 3 2 1 6

56. Contractors keep on getting work despite a lack of capacity 5 4 3 2 1 6

57. In your opinion, what are the main weaknesses in the procurement process?(Read it aloud for the respondent’s convenience- For example: registration, prequalification, tender, contract, mobilization) a. _______________________________ b. _______________________________ c. _______________________________

131

58. What solutions would you recommend for resolving procurement related weaknesses? a. _______________________________ b. _______________________________ c. _______________________________ Budgeting, Financing and Cost

We will list for you a list of obstacles related to the budgeting, financing and cost, how strongly do you consider them to be a problem. Rate them on a scale of 1-4. (Where 4 means very strong problem and 1 means no problem at all)

Statements Very strong problem

Strong problem

Minor Problem

No problem

Don’t Know/No Response

59. Project costs are not estimated correctly causing problems in adequate release of funds

4 3 2 1 5

60. Delayed decisions lead to increased project costs 4 3 2 1 5

61. A lack of financial facilities are restricting the growth of the construction industry 4 3 2 1 5

62. Projects are delayed due to slow release of funds from Finance 4 3 2 1 5

63. Payment procedures for contractors are time consuming and hamper progress 4 3 2 1 5

64. Slow PSDP/ADP roll over and large throw forwards impede growth of the construction and consulting industry

4 3 2 1 5

65. Inadequate release of funds is a cause of delay in project implementation 4 3 2 1 5

66. A project in the PSDP/ADP should be fully funded for the planned completion time 4 3 2 1 5

67. Disbursement procedures prescribed by donors cause delays 4 3 2 1 5

Please rate the following statements on a scale of 1-5. (Where 5 means strongly agree and 1 means strongly disagree)

Statement: Strongly Agree

Agree Neither agree nor

disagree

Disagree

Strongly disagree

Don’t Know/No Response

68. (For Consultants and Client Agencies/Govt. Agencies only) Payment procedures for consultants are time consuming and constrain capacity

5 4 3 2 1 6

69. Advances given to contractors are not used for the correct purpose 5 4 3 2 1 6

70. Contractors don’t pay sub-contractors on time 5 4 3 2 1 6

71. Contractors who delay payments to 5 4 3 2 1 6

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subcontractors should be penalized by the client

72. Timely payments are essential for on-time project implementation 5 4 3 2 1 6

73. Disbursement of PSDP/ADP allocations should be streamlined and automated 5 4 3 2 1 6

74. Operational costs of conducting business in Pakistan are high 5 4 3 2 1 6

75. Poor planning is major cause of PSDP/ADP's roll-over/ throw-forwards 5 4 3 2 1 6

Administrative and other Systematic Weaknesses

We will list for you a list of administrative and other systematic weaknesses, how strongly do you consider them to be a problem. Rate them on a scale of 1-4. (Where 4 means very strong problem and 1 means no problem at all)

Statements Very strong problem

Strong problem

Minor Problem

No problem

Don’t Know/No Response

76. Contract administration is inefficient (delayed payment and decisions) 4 3 3 1 5

77. Local construction companies are not professionally managed 4 3 3 1 5

78. Client agencies are weak 4 3 3 1 5 79. Client agencies lack professional planning 4 3 3 1 5 80. Client agencies lack proper execution and

implementation skills 4 3 3 1 5

81. Client Agencies and other Govt. Departments lack competent management 4 3 3 1 5

82. There is a lack of competent people with contractors 4 3 3 1 5

83. There is a lack of competent people with consultants 4 3 3 1 5

84. Client agencies are slow in decision making 4 3 3 1 5

85. Capacity of the industry is not growing due to weak planning (No master plan) 4 3 3 1 5

86. Government offices and ministries lack coordination 4 3 3 1 5

87. Local consulting firms are not properly managed 4 3 3 1 5

88. (For Clients/Govt. agencies only) How many contractors has your organization blacklisted in the

past 5 years? _______________________________________________

89. (For Client/Govt. agencies only) How many consultants has your organization blacklisted in the

past 5 years? _______________________________________________

133

Statements To a large extent

To some extent Not at all

Don’t Know/No Response

90. To what extent are the executing agencies supported by the parent ministry. 3 2 1 4

90 (b). Please explain your answer briefly: _______________________________________________________________________ Please rate the following statements on a scale of 1-5. (Where 5 means strongly agree and 1 means strongly disagree)

Statements Strongly Agree Agree

Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

91. Construction companies should be supported and guided by client agencies and their client’s resources.

5 4 3 2 1 6

91 (b). Please explain your answer briefly: _______________________________________________________________________ Please rate the following statements on a scale of 1-5. (Where 5 means strongly agree and 1 means strongly disagree)

Statements Strongly Agree Agree

Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

92. Consulting companies should be supported by client agencies and their support machinery.

5 4 3 2 1 6

92 (b). Please explain your answer briefly: _______________________________________________________________________

134

Regulatory Framework

We will list for you a list of obstacles regarding regulatory framework, how strongly do you consider them to be a problem. Rate them on a scale of 1-4. (Where 4 means very strong problem and 1 means no problem at all)

Statements

Very strong

problem Strong

problem Minor

Problem No

problem

Don’t Know/No Response

93. The Government’s trade policy does not support or facilitate the construction and consulting industry

4 3 3 1 5

94. The regulatory framework discourages international contractors and consultants from seeking work in Pakistan

4 3 3 1 5

95. The cost of doing business in Pakistan is high due to government regulations 4 3 3 1 5

96. There are too many procedures involved in conducting business in Pakistan 4 3 3 1 5

97. Role of audit is negative 4 3 3 1 5 98. Audits are not concurrent 4 3 3 1 5 99. Delayed audits create opportunities for

corruption 4 3 3 1 5

100. Auditors are not held responsible for delays 4 3 3 1 5

101. Auditors do not have technical knowledge of the construction and consulting industry 4 3 3 1 5

102. Auditors do not have an engineering background 4 3 3 1 5

103. The Pakistan Engineering Council (PEC) is not playing an effective role in facilitating the industry

4 3 3 1 5

104. The Government’s decision to provide industry-status to the construction business did not have the desired impact

4 3 3 1 5

105. Declaration as an industry, without corresponding financial/lending facilities and reforms in trade policies, will not yield results

4 3 3 1 5

106. An ever changing trade policy is a constraint to growth 4 3 3 1 5

107. A lack of continuity in policies is the cause for low confidence in the industry 4 3 3 1 5

108. (For Clients/Govt Agencies only) Over control and monitoring by NAB/FIA/Audit creates a lack of confidence.

4 3 3 1 5

135

Country perceptions; Corruption and Security issues

Please grade the following statements on a scale of 1-5: (Where 5 means strongly agree and 1 means strongly disagree)

Statements

Strongly Agree

Agree Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

109. Some people believe that the political interference is restricting growth of the industry. Do you agree/disagree?

5 4 3 2 1 6

110. Some people believe that the widespread corruption is restricting growth of the industry. Do you agree/disagree?

5 4 3 2 1 6

111. Some people believe that the security risks are restricting growth of the industry. Do you agree/disagree?

5 4 3 2 1 6

112. Some people believe that the politically motivated interference is restricting the entry of quality local and international contractors and consultants. Do you agree/disagree?

5 4 3 2 1 6

113. Some people believe that the political interference discourages efforts of local stake-holders to invite international joint venture partners. Do you agree/disagree?

5 4 3 2 1 6

114. Some people believe that the law and order situation and political instability causes Pakistan to be a high risk country. Do you agree/disagree?

5 4 3 2 1 6

115. Some people believe that the low bids by local contractors and consultants and the clients’ practice to award contract based on price discourages foreign contractors and consultants from bidding in Pakistan. Do you agree/disagree?

5 4 3 2 1 6

116. Some people believe that the average size/value of contracts in Pakistan does not appeal to foreign contractors and consultants. Do you agree/disagree?

5 4 3 2 1 6

117. Some people believe that a lack of transparency in procurement and contract administration is an issue. Do you agree/disagree?

5 4 3 2 1 6

118. Some people believe that the client agencies in Pakistan lack adequate management capacity. Do you agree/disagree?

5 4 3 2 1 6

119. Some people believe that the corruption is endemic in the system. Do you agree/disagree?

5 4 3 2 1 6

136

120. (For Contractors and Consultants only) What is the approximate corruption cost endured

through the entire life of a project (as a percentage of the contract)? Less than 1% 1 1 to 5 % 2 5 to 10 % 3 10 to 15 % 4 More than 15% 5 Others

Please grade the following statements on a scale of 1-5: (Where 5 means strongly agree and 1 means strongly disagree)

Statements

Strongly Agree

Agree Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

121. Affordability of transportation and logistics support is an issue 5 4 3 2 1 6

122. Availability of transportation and logistics support is an issue 5 4 3 2 1 6

123. Cost of transportation and logistics support is highly irrational 5 4 3 2 1 6

124. Cost of infrastructure construction in Pakistan compares well with cost in regional countries

5 4 3 2 1 6

125. Cost of Engineering consultancy services in Pakistan compares well with cost in regional countries

5 4 3 2 1 6

126. In your opinion, what are the main issues related to the business environment? (Read it aloud for the respondent’s convenience- For example: procurement; budgeting, financing and cost; administrative and other systematic weaknesses; regulatory framework, corruption/security issues).

127. What recommendations/suggestions would you make to resolve these issues?

a.

b.

c.

d.

e.

a.

b.

c.

d.

e.

137

SECTION 4: Availability of Human Resources Lack of Adequately Trained Personnel

Statements To a large extent

To some extent Not at all

Don’t Know/No Response

128. Up to what extent is the human resource availability an issue/ constraint

3 2 1 4

129. Total no. of full-time employees in your company: __________________________ 130. Experience of staff:

Statement No. Less than 5 years experience

5-10 years experience

More than 10 years experience

Professional Engineers Qualified Project Managers Diploma Holding Engineers

131. (Contractors & Clients/Govt. Agencies only) No. of equipment/machinery operators __________________________________________________________ 132. (Contractors & Clients/ Govt. Agencies only) No. of Skilled labor. ___________________ 133. How much do the following categories of staff get paid?

Designation Years of Experience Minimum Salary Maximum Salary 1 Project manager 10+ 2 Senior design manager 10+ 3 Planning engineer Less than 5 4 Design engineer Less than 5 5 Resident Engineer 10+ 6 Site Engineers/Supervisors Less than 10 7 Materials Engineers 10+ 8 Surveyor 3-5 9 Inspector 3-5 10 Equipment Operator 5 +

138

134. Please grade the following statements regarding the availability of trained personnel on a scale of 1-5 where 1 means very easily available and 5 means very hard to find.

Statement Very Easily

Available Very Hard

to Find 1 Project manager 1 2 3 4 5 2 Senior design manager 1 2 3 4 5 3 Planning engineer 1 2 3 4 5 4 Design engineer 1 2 3 4 5 5 Resident Engineer 1 2 3 4 5 6 Site Engineers/Supervisors 1 2 3 4 5 7 Materials Engineer 1 2 3 4 5 8 Surveyor 1 2 3 4 5 9 Inspector 1 2 3 4 5 10 Equipment Operator 1 2 3 4 5

How important are the following factors on a scale of 1 to 4: (Where 4 means very important and 1 means not important at all)

Statement Very Important Important Some what

important

Not important

at all

Don’t Know/No Response

135. There is a need to institutionalize development of skill/vocational training of manpower

4 3 2 1 5

136. A database of skilled manpower would be useful 4 3 2 1 5

137. In house training at construction firms and client agencies is highly insufficient

4 3 2 1 5

Please rate the following statements on a scale of 1 to 5: (Where 5 means strongly agreed and 1 means strongly disagreed)

Statement Strongly Agree

Agree Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

138. Provision of training opportunities should form a part of criteria for evaluation and assessment of contractor/consultant by the client agency

5 4 3 2 1 6

139. Client agencies should help the contractors/consultants to build their manpower capacity

5 4 3 2 1 6

140. Shortage of qualified and skilled human resources at all levels is a number 1 constraint

5 4 3 2 1 6

139

High employee turnover Please grade the following statements regarding Employee Turnover on a scale of 1-5: (Where 5 means strongly agreed and 1 means strongly disagreed)

Statement Very high High Medium Low Very low 141. In your company the employee turnover

(for all level of employees) is 1 2 3 4 5

142. Average employee retention period in your company is: Less than 1 year 1 1-2 years 2 2-3 years 3 3-5 years 4 More than 5 years 5 Please grade the following statements regarding Employee Turnover on a scale of 1-5:

Statement

Very high High Medium Low

Very low

Don’t Know/No Response

143. What is the caliber of the available manpower 1 2 3 4 5 6

144. What is the most important cause of brain-drain in your industry? Lack of career growth 1 Inadequate salary structure 2 Any other (Please specify): __________________________________ Please rate the following statements on a scale of 1 to 5: (Where 5 means strongly agreed and 1 means strongly disagreed)

Statement Strongly Agree

Agree Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

145. Some people consider that the lowest price bids is the reason why contractors give non competitive salaries to their employees thus causing brain-drain. Do you agree/disagree?

5 4 3 2 1 6

146. High turnover discourages employers from investing in employee training

5 4 3 2 1 6

147. Poor quality of work can be caused by several factors. Rank the following possible factors

140

in order of their impact on the quality of work. (1 means the Highest impact and 3 means the Lowest impact). Please assign a unique rank to each- no two issues should have the same rank.

Issues Ranking a Inadequate quality of manpower at client level b A lack of professionalism at the contractors level c Shortage of quality human resource in the industry in general

Please grade the following statements regarding weak HR management at the contractor, consultant and client level:

Statement Very high High Medium Low Very low 148. How do you rate the quality of human

resource at the consultants level 1 2 3 4 5

149. How do you rate the quality of human resource at the contractors level 1 2 3 4 5

150. How do you rate the quality of human resource at the clients level 1 2 3 4 5

Please grade the following statements regarding weak HR management at the contractor/consultant level:

Statement

Strongly Agree

Agree Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

151. Some people believe that for the same salaries and work environment, qualified professionals prefer jobs in other industries as compared to the construction industry. Do you agree/disagree?

5 4 3 1 1 6

152. Some people argue that the engineers and other professionals should only be allowed to work if they have passed a professional examination. Do you agree/disagree?

5 4 3 1 1 6

153. Some people argue that there should not be any advancement in career of engineers and other professionals without any additional training and examination. Do you agree/disagree?

5 4 3 1 1 6

154. Who should bear the responsibility to carry out formal training in the industry as a whole?

(Rank the following in terms of responsibility. 1 means Highest responsibility and 4 means lowest responsibility).Please assign a unique rank to each- no two issues should have the same rank.

Issues Ranking a Contractors b Consultants

141

c Client Agencies d Others (please specify):

155. In your opinion, what are the main reasons which prevent development of human resources

in Pakistan? (Report those which are different from the ones mentioned above) a.

b.

c.

d.

e. 156. What recommendations/suggestions would you give for resolving these issues:

A- Short term

i.

ii.

iii.

iv.

v.

B- Long term

i.

ii.

iii.

iv.

v.

142

SECTION 5: Construction Equipment Please grade the following issues regarding construction equipment in order of importance (Where 4 means very important and 1 means not important at all)

Statement Very Important Important Some what

important

Not important

at all

Don’t Know/No Response

157. Some people believe that the affordability of machinery, plant and equipment is an issue. How important do you think this issue is?

4 3 2 1 5

158. Some people believe that the availability of machinery, plant and equipment is an issue. Do you agree/disagree?

4 3 2 1 5

159. (For Contractors and Clients/ Govt. Agencies only) Please provide the following

information about equipment and machinery owned by your company/organization:

Total No. Average age of machinery

Bulldozers Graders Back-hoe Tandem roller Steel roller Concrete mixers Pavers Excavators Transit mixtures Dumpers Wheel loaders Batching plants Asphalt plants Cranes Crusher plants

160. (For Contractors & Clients/ Govt. Agencies only) How have you obtained the machinery

and equipment in-use at your projects? Select all applicable. Purchased with: Cash 1 Finance 2 Lease 3 Other 4 Rented 5 161. (For Contractors & Clients/ Govt. Agencies) What percentage of machinery and

143

equipment used at your current projects is:

Percentage

Owned Rented Total 100%

162. (For Contractors & Clients/ Govt. Agencies) What percentage of machinery and

equipment used at your current projects is:

Percentage

New (purchased as new) Old (purchased as second hand) Total 100%

Import Policies for construction equipment

Please grade the following statements regarding import policies for construction equipment on a scale of 1-5. (5 means strongly agree and 1 means strongly disagree)

Statements To a large extent

To some extent Not at all

Don’t Know/No Response

163. Up to what extent the import policies regarding constructions equipment need to be liberalized 3 2 1 4

Please grade the following statements regarding import policies for construction equipment on a scale of 1-5. (5 means strongly agree and 1 means strongly disagree)

Statement Strongly

Agree Agree Neither

agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

164. Some people argue that in construction equipments import regulations, there is discrimination in favour of foreign contractors and against the local contractors. Do you agree/disagree?

5 4 3 2 1 6

165. What changes to the import policy would you suggest? _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ Financing facilities for equipment purchase

Please grade the following statements regarding financial facilities for equipment purchase on a scale of 1-3.

144

Statements To a large extent

To some extent Not at all

Don’t Know/No Response

166. Up to what extent, capacity to increase equipment resources, is restricted due to a a lack of facilitation from government agencies and financial institutions

3 2 1 4

167. Up to what extent is there a lack of financial facilities for acquisition/purchase of machinery

3 2 1 4

Please grade the following statements regarding import policies for contraction equipment on a scale of 1-5. (5 means strongly agree and 1 means strongly disagree)

Statement

Strongly Agree

Agree Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

168. Some people argue that there is a lack of government support/intervention for enabling better credit facilities. Do you agree/disagree?

5 4 3 2 1 6

169. Some people argue that there is an absence of reasonable leasing facilities. Do you agree/disagree?

5 4 3 2 1 6

Quality and Equipment

How serious are the following issues regarding the quality and equipment. Please grade on a scale of 1-4. (4 means very serious 1 means not serious at all)

Statement

Very serious

Serious Some what serious

Not serious at all

Don’t Know/No Response

170. A lack of new equipment restricts increase in productivity (Use of old machinery by contractors causes low productivity)

4 3 2 1 5

171. Most of the machinery used is imported second hand 4 3 2 1 5

172. Frequent break downs of old equipment is a problem 4 3 2 1 5

173. Repair and maintenance issues arise with old equipment 4 3 2 1 5

174. Availability of trained operators is a serious/ non-serious issue 4 3 2 1 5

175. Availability of maintenance staff is a serious/ non-serious issue 4 3 2 1 5

176. Availability of after sales service is a serious/non-serious issue 4 3 2 1 5

177. Cost of maintenance is a serious/non-serious issue 4 3 2 1 5

178. Availability of spare parts is a serious/non-serious issue 4 3 2 1 5

145

179. In your view which has the higher value for money (cost vs. benefit)? Old machinery 1 New machinery 2 Please grade the following statements regarding import policies for contraction equipment on a scale of 1-5. (5 means strongly agree and 1 means strongly disagree)

Statement

Strongly Agree

Agree Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

180. Some people think that the contractors should not save money on equipment as the quality of the equipment is more important than the money. Do you agree/ disagree?

5 4 3 2 1 6

181. In your opinion, what are the main issues related to equipment and machinery :

a.

b.

c.

d.

e. 182. Recommendations/suggestions for resolving these issues :

a.

b.

c.

d.

e.

146

(For Agencies and Contractors only) Section 6: Material supply (cement, steel, bitumen, fuel): Please grade the following statements regarding Availability of materials on a scale of 1-4: (Where 4 means very serious and 1 means Not serious at all)

Statement

Very serious

Serious Some what serious

Not serious at all

Don’t Know/No Response

183. How serious do you think is the shortage of these construction materials in Pakistan:

a. Cement 4 3 2 1 5 b. Steel 4 3 2 1 5 c. Bitumen 4 3 2 1 5 d. HSD 4 3 2 1 5 e. Furnace oil 4 3 2 1 5

Please grade the following statement regarding materials on a scale of 1-3. (3 means to a large extent and 1 means not at all)

Please grade the following statements regarding materials on a scale of 1-5. (5 means strongly agree and 1 means strongly disagree)

Statement

Strongly Agree

Agree Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

185. Some people argue that the quarry regulations should be uniform across the country

1 2 3 4 5 6

186. Multiple regulations and taxes are a serious cause of delays & cost overruns. Do you agree/disagree?

1 2 3 4 5 6

Please grade the following statements regarding Availability of materials on a scale of 1-4: (Where 4 means very serious and 1 means Not serious at all)

Statement

Very serious

Serious Some what serious

Not serious at all

Don’t Know/No Response

187. How seriously a lack of data on materials production requirements (locally produced and imported) impacts project planning and execution

4 3 2 1 5

188. How serious is the issue of rapid escalation in price of materials 4 3 2 1 5

Statements To a large extent

To some extent

Not at all

Don’t Know/No Response

184. Up to what extent is the cost of materials effected by multiple quarry regulations 3 2 1 4

147

189. How serious is the problem of instability of market prices in managing the cash flow.

4 3 2 1 5

Please grade the following statements regarding prices of equipment on a scale of 1-5. (5 means strongly agree and 1 means strongly disagree)

Statement

Strongly Agree

Agree Neither agree nor disagree

Disagree

Strongly disagree

Don’t Know/No Response

190. There is a view that clients resist giving the benefit of escalation to the contractors. Do you agree/disagree

5 4 3 2 1 6

191. There is a view that escalation clauses do not adequately compensate increase in prices. Do you agree/ disagree?

5 4 3 2 1 6

192. There is a view that government controlling agencies are not in a position to control Cartels and Monopolies. Do you agree/disagree?

5 4 3 2 1 6

193. There is a view that government price controlling agencies are not performing effectively. Do you agree/ disagree?

5 4 3 2 1 6

194. What are your views about the availability of facilities for transporting materials? Very easily available 1 Easily available 2 Not easily available 3 Not available at all 4 195. In your opinion, what are the main issues related to material supply?

196. Recommendations/suggestions to overcome these issues:

a.

b.

c.

d.

e.

a.

b.

c.

d.

e.

148

SECTION 7: General Information Now, I will ask you a couple of general questions related to the nature of your organization. Respondent’s Information:

197. Organization name: _________________________________________________________________ 198. Address: _________________________________________________________________________ _________________________________________________________________________ 199. Organizational setup: Sole proprietor 1 Partnership 2 Pvt. Ltd. 3 Public Ltd. 4 Government/executing agency 5 Other (specify): _________________________ 200. Average annual turnover (for the past 5 years)

2000-2001 _______________________

2001-2002 _______________________

2002-2003 _______________________

2003-2004 _______________________

2004-2005 _______________________ 201. (For Contractors & Consultants only) Kindly name the clients with whom you work

primarily?

a.

b.

c.

d.

e.

149

202. (For Contractors & Consultants only) Have you worked in a joint-venture with foreign companies?

Yes 1 No. 2 203. (For Government Agencies only) Do you have force account capability? Yes 1 No. 2

____________________________________

150

151

Amer Zafar Durrani, Aized H. Mir, Hasan Afzal Zaidi, Dr. Zafar Raja, Uzma Sadaf,

Hiam Abbas, Huma Waheed, Ermeena Malik, Abid Abrar Hussain, Mehreen Tanvir, Nazifa Sheikh, Shaukat Javed, Sohail Abidi, Ahsan Siddiqi, Salman Ahmed, S.M. Zafar, Abdul

Majeed, Z..M. Malik, S. Bukhari, O. Mansoor, Unjela Siddiqi, Huma Ajam, Dr. Ijaz Gilani, Fatima Idrees, Shmyalla Jawad, Khalid Khan

and all Stakeholders