Status of Class A Construction Entrepreneurs in Nepal

TABLE OF CONTENT

EXECUTIVE SUMMARY

ACKNOWLEDGEMENT

TABLE OF CONTENT

LIST OF TABLES

LIST OF FIGURES

LIST OF ABBREVIATIONS

CHAPTER-1 INTROCUCTION
1.1 Background of the Construction Industry
1. 2 Statement of the Problem
1. 3 Objective of the Study
1.5 Limitation of the Study

CHAPTER-2 LITERATURE REVIEW
2.1 Conceptual Framework
2.1.1 Acts & Regulation on Infrastructure Development in Nepal
2.1.2 Government Institutions for Infrastructure Development
2.1.2.1 Ministry of Physical Infrastructure and Transport
2.1.2.2 Public Procurement Monitoring Office (PPMO)
2.1.3 Public Entity
2.1.4 Foreign Aid in Nepal for Infrastructure Development
2.1.5 Requirements of Class A Construction Firms for Registration
2.1.6 Qualification Procedure for Contractors
2.1.6.1 Major Qualification Documents for Contractors
2.1.6.1.1 Particular Construction Experience
2.1.6.1.2 Turnover
2.1.6.1.3 Financial Capabilities Requirement for Contractors
2.1.6.1.4 Personnel Capabilities
2.1.6.1.5 Equipment Capabilities
2.1.7 Payment Schedule for Contractors
2.1.7.1 Advance Payment
2.1.7.2 Payment of Bill or Invoice or Running Bill
2.1.7.3 Final Bill Payment
2.1.7.4 Security Money
2.1.7.5 Price Escalated Amount
2.1.8 Public Private Partnership in Infrastructure Development
2.1.9 Federation of Contractor Association of Nepal (FCAN)
2.1.10 Related Studies
2.1.12 Contractors Perceptions towards Construction Industries
2.2 Research Review

CHAPTER-3 RESEARCH METHODOLOGY
3.1 Research Design
3.2 Data Collection
3.3 Population of the Study
3.4 Sample of the Study
3.5 Research Instrument
3.6 Data Collection Procedure
3.7 Data Analysis & Interpretation Procedure

CHAPTER-4 PRESENTATION AND ANALYSIS OF DATA
4.1 General Information
4.1.1 Types of Partners in Class A Firms
4.1.2 Active Partners in Class ‘A’ Firms in Terms of Registration
4.1.3 Experience on Specialized Construction of Work by Class A Construction Entrepreneurs
4.1.4 Work Experience Sector of Class A Construction Entrepreneurs
4.2 Comparison of the Existing Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR
4. 2.1 Machine and Equipment
4.2.2 Human Resources Available with Class A Construction Entrepreneurs
4. 3 Financial Capabilities of Class “A” Construction Entrepreneurs
4.3.1 Annual Turnover of Class A Construction Entrepreneurs
4.3.2 Credit Limit of Class A Construction Entrepreneurs
4.3.3 Bank Overdraft of Class A Construction Entrepreneurs
4.4 Satisfaction of Class A Construction Entrepreneurs in Current Situation with Construction Business
4. 4.1 Common Problem and Difficulties of Class A Construction Entrepreneurs
4.4.1.1 Difficulties Felt in Criteria of Achieving Qualification Documents During Bidding Procedure by Class A Construction Entrepreneurs
4. 4.1.2 Difficulties felt in Receiving Payment During Payment Schedule by Class A Construction Entrepreneurs
4.4.1.3 Difficulties Felt in Revenue & Taxation Part by Class A Construction Entrepreneurs
4.4.1.4 Difficulties Felt in Hiring Qualified Human Resource in Different Construction Sector by Class A Construction Entrepreneurs
4.4.1.5.1 Tender Purchasing
4.4.1.5.2 Tender Drop
4.4.1.5.3 Site Execution

CHAPTER-5 FINDING OF THE STUDY
5.1 General Information
5.2 Comparison of the Existing Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR
5.2.2 Human Resources Available with Class A Construction Entrepreneurs
5.3 Financial Capabilities of Class “A” Construction Entrepreneurs
5.4 Satisfaction of Class A Construction Entrepreneurs in Current Situation with Construction Business
5.4.1 Common Problem and Difficulties of Class A Construction Entrepreneurs
5.4.1.1 Difficulties Felt in Criteria of Achieving Qualification Documents during Bidding Procedure by Class A Construction Entrepreneurs
5.4.1.2 Difficulties felt in Receiving Payment During Payment Schedule by Class A Construction Entrepreneurs
5.4.1.3 Difficulties felt in Revenue & Taxation Part by Class A Construction Entrepreneurs
5.4.1.4 Difficulties Felt in Hiring Qualified Human Resource in Different Construction Sector by Class A Construction Entrepreneurs
5.4.1.5 Insecure Felt Due to Hooliganism During Stages of Tender Purchase, Tender Drop and Construction Site Execution Works by Class A Construction Entrepreneurs

CHAPTER-CONCLUSION AND RECOMMENDATION
6.2 Recommendation
6.2.1 General Information
6.2.2 Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR
6.2.3 Common Problem and Difficulties of Class A Construction Entrepreneurs
6.3 Recommendation for Future Research

References :

Bibliography:

APPENDICES :
Annex A : Figure of Special Purpose of Company
Annex B :Requirement of Machine & Equipment as per CBR
Annex C : List of Class A Contractors
Annex D :Overall Standard Meeting of Equipment as per CBA 2055 & CBR 2056 by Class A Firms

LIST OF TABLES

2.1 Classification of Construction Firms in 1974 & 1999 as per Bidding Limit (In Million’s)

2.2 Nos. of Registered Firms of Class A, B, C& D in Various Years

4.1 Types of Partners Registered During Firm’s Registration as Class ‘A’

4.2 Active Partners in Class ‘A’ Firm’s in Terms of Registration

4.3 Experience on Specialized Construction of Work by Class A Construction Entrepreneurs

4.4 Work Experience Sector of Class A Construction Entrepreneurs

4.5 Budget for Fiscal Year 2013/014 in Major Infrastructure Projects

4.6 Status of Machine & Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR 2056

4.7 Human Resources Available with Class A Construction Entrepreneurs

4.8 Range of Human Resource in Class A Firms

4.9 Annual Turnover of Class A Construction Entrepreneurs for F.Y 069/070 , F.Y 068/069 & 067/068

4.10 Credit Limit of Class A Construction Entrepreneurs

4.11 Bank Overdraft of Class A Construction Entrepreneurs

4. 12 Satisfaction of Class A Construction Entrepreneurs in Current Situation with Construction Business

4.13 Difficulties Felt in Criteria of Achieving Qualification Documents During Bidding Procedure by Class A Construction Entrepreneurs

4.14 Difficulties Felt in Receiving Payment During Payment Schedule by Class A Construction Entrepreneurs

4.15 Difficulties Felt in Revenue & Taxation Part by Class A Construction Entrepreneurs

4.16 Difficulties Felt in Hiring Qualified Human Resource in Different Construction Sector by Class A Construction Entrepreneurs

4.17 Insecure Felt During Stages of Tender Purchase, Tender Drop and Construction Site Execution Works by Class A Construction Entrepreneurs

LIST OF FIGURES

2.1 Distribution of Foreign Aid Disbursement per Policy Cluster of the Three Year Plan

3.1 Flow Chart of Research Design for Adopted Methodology

4.1 Types of Partners Registered During Firm Registration as Class ‘A’

4.2 Active Partners in Class A Firms in Terms of Registration

4.3 Experience on Specialized Construction of Work by Class A Construction Entrepreneurs

4.4 Work Experience Sector of Class A Construction Entrepreneurs

4.5 Budget for Fiscal Year 2013/014 in Major Infrastructure Projects

4.6 Annual Turnover of Class A Construction Entrepreneurs for F.Y 069/070 , F.Y 068/069 & 067/068

4.7 Credit Limit of Class A Construction Entrepreneurs

4.8 Bank Overdraft of Class A Construction Entrepreneurs

4.9 Satisfaction of Class Construction Entrepreneurs in Current Situation with Business

LIST OF ABBREVIATIONS

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EXECUTIVE SUMMARY

It is realized that Nepalese construction had undertaken a high rise in its image internationally and nationally and has been participating in various organization as an active member. Besides these, there are many rumours and conflicts about the capability of Nepalese contractors about their technical and financial ability for not completing the projects undertaken by them within the given timeframe and of standard quality. Although construction entrepreneur of Class A in Nepal, have the opportunities to withstand in construction industry (as country is still in construction phase of infrastructure development) with full enthusiasm and effort, they seems to be demoralized by the policies, rules, guidance and support from the government and procedure of procurement of donor agencies during bidding in Mega Projects.

The study has covered construction firms registered as class A construction entrepreneur. The numbers of construction firms studied were fifty one (51). Random sampling method was performed to select the respondents. A questionnaire was developed to collect the datas for the study. The close ended question, open ended question, and ranking method of prioritization was adopted to obtain the necessary datas from the respondents.

The purpose of the study was to compare the existing equipment capabilities of Class A construction entrepreneurs with the prescribed requirement as per CBA 2055 & CBR 2056 and also to determine the current capacity of the class A construction entrepreneurs in terms of technical and financial capabilities. The study also has covered the exploration of common problems and difficulties felt in criteria of achieving qualification documents during bidding procedure , receiving payment during payment schedule, , taxation part, hiring qualified human resource in different construction sector and insecure felt during stages of tender purchase, tender drop and construction site execution works by class A construction entrepreneurs.

Percentage, frequency and charts were used to analyze the data. The result has showed that, in owning equipments most of the companies have failed to meet the prescribed standard as per CBA 2055 & CBR 2056. Only few numbers of contractors are extremely satisfied with their business. There are various factors like annual turnover & similar experience part in qualification procedure, escalated amount & running bill payment in payment procedure, insecurity due to hooliganism in construction business during site execution and tender drop, taxation system during refunding of the tax deducted at source amount. The research has also shown the unavailability of human resources in tunnel sector, hydropower sector and bridge sector in construction sector in present context.

ACKNOWLEDGEMENT

I wish to express my gratitude to my advisor, Assoc. Prof. Er. Ramesh Banstola, Coordinator of M.Sc. Program in PEC, who guided and helped me greatly to complete my thesis.

I am also deeply indebted to Dr. Prof. Rajendra Prasad Adhikari, whose guidance from initial phase upon this completion had broaden mine vision more in setting up my objective more clearly on my research.

My heartful thanks goes to my father Mr. Mohan Prasad Adhikari, proprietor of Mangsuwa Nirman Sewa, for supporting me morally from my initial phase of this research till to the final publication.

I would also like to thank Mr.Keshab Prasad Gautam, vice-president of FCAN who helped me in providing his valuable suggestion and in arranging meetings with contractors for my necessary data collection. Also, I would like to thank all the official staff member of FCAN, who has provided me the necessary information that I have asked at any time.

I would also thank to my brother, Mr. Hem Kumar Adhikari, for his support in using SPSS.16 software during data analysis. I shall not forget my friends Er.Ujjwal Dahal, Er. Sandeep Gyawali and Mr. Jyoti Khatri for their help in distribution and collection of questionnaire. I am also highly debted to my friend Er. Sunder Adhikari for his help in everyway by providing me environment during preparation of final report.

To my wife Jyoti Shiwakoti for her spiritual support through prayers and encouragement, I thank you for providing me environment of study.

Lastly my sincere thanks goes to all who, in various ways have helped to make my research work complete especially contractors who were respondents to my questionnaire.

16 March, 2014

Suresh Adhikari

CHAPTER-1 INTRODUCTION

1.1 Background of the Construction Industry

Construction industry is regarded as the backbone of nation building as more than that of 70% of the gross capital formation is contributed by this sector. In Nepal, this industry contributes over 8% of GDP and has the growth rate of more than that of the national average (Pandey, 2069).

This industry is one of the major contributors to the process of the development of the country. The wide range of output provides the basis for social and economic development of many sectors. In addition, it also stimulates significant economic development through its backward and forward linkages like manufacturing, transportation and other sectors of the economy. Contractors are one of the most significant enteritis within the industry. They are the ones who actually convert the designed facility into a tangible output. Much of the resources are spent through them and success of the project is heavily dependent on the firm’s competence (Pandey, 2069).

Nepalese construction industry has taken a leap since 1990s with significant growth in the number of construction and consulting firms. However, we need to actively wok on the capacity building of all the stakeholders in the industry especially at the dawn of the nation building efforts that could evolve the end of current political transition period (Pandey, 2069).

The licensing and classification of contractors came into practise after implementation of the construction classification Regulation in 1975 as Class A, B, C & D respectively depending upon their physical facilities, resources and experience which again was amendment in 1994 and 1999.

1. 2 Statement of the Problem

Construction Industry is considered as one of the pioneering industry in Nepal. It is consider as a building block for the development of infrastructure of the nation. Among all the construction organization and contractors of Nepal, Class ”A” of construction organization and contractors are considered as the major party who are engaged in investing high budget projects, well equipped equipments with sufficient human resource, financial strength and experience as per CBA 2055 & CBR 2056. Although construction industry of the country is considered as pioneer sector in the development of the nation, it has to face lots of problems with numerous weakness and threats as follows:

i) The major challenges for the contractor is to complete project within the given timeframe with quality, which is seen difficult in most of the cases and may be due to the unavailability of owned full time technical personal, equipments or financial resources by the concerned firms.
ii) Most of the reputed and well established contractors are being harrased by the different political parties and holligans for large sum of money, which inturn has created insecurity among these contractors. Also, inconsistent and ineffective price escalation techniques used by the governments and unfavourable contract documents to contractors and high unhealthy competition during tendering due to current policies, rules and guidance had lead the contractor to get demoralized towards the profession. As a result, many of the firms registered as Class A who are responsible to undertake high active role and participation towards building the nation seems not being as active as they owned to be.
iii) Construction industry being root for the development of infrastructure of the nation and Class A contractor being the major party to perform such role for development activities, no thorough study about the current status of Class A contractor has been done so far.
iv) Also, current data about the Class A contractor in terms of their technical and financial capacity strength is unknown in order to perform or execution of construction projects. Thus, these are the main problem to be identified during the research study.

1. 3 Objective of the Study

The main objective of this study was:

i) To compare the existing equipment capacity of class “A” construction entrepreneurs with the prescribed requirements as per CBA 2055 & CBR 2056 ii) To find out the financial capabilities of class “A” construction entrepreneurs. iii) To explore the common problems and difficulties felt in criteria of achieving qualification documents during bidding procedure, receiving payment during payment schedule, taxation part, hiring qualified human resource in different construction sector and insecure felt due to hooliganisms during stages of tender purchase, tender drop and construction site execution works by Class A construction entrepreneurs.

1.4 Significance of the Study

The study on the status of Class ‘A’ construction entrepreneurs of Nepal will be important to all the contractors of Nepal as well as to new entrepreneurs who wants to enter in construction industry as construction entrepreneurs. The information will also be beneficial to other sectors like cement industry, iron industry, brick industry, sand industry and other related industry which has day to day relation with the construction industry. This research is more significant to the Government of Nepal as the research has provided information’s about the capability and strength of Nepalese contractor’s in terms of technical and financial capacity to accelerate and perform construction projects.

1.5 Limitation of the Study

The following are the limitation of the study

i) The respondents of the study are presumed to provide all the relevant and valuable information during the research and unbiased.
ii) This study has excluded the status of lab equipment as mentioned in machine and equipment defined by schedule-10 in CBA 2055 & CBR 2056.
iii) This study has not cover bank statement in order to find out the financial capabilities of the Class A registered firms.
iv) This study has only considered civil engineer, junior engineer, accountant and supervisor in determining the human resources available with Class A construction entrepreneurs.

CHAPTER-2 LITERATURE REVIEW

2.1 Conceptual Framework

The conceptual framework of this study clarifies about all the variables acts, policies & regulation, government organization and stakeholders about the construction industries in Nepal. The flow chart of special purpose company for infrastructure development has been attached in appendices (Annex- A). The different variable to be considered for relevant to this study has been as discussed herewith.

2.1.1 Acts & Regulation on Infrastructure Development in Nepal

According to the report of www.scaefe.com an official website of ‘Society Of Consulting Architectural and Engineering Firms’ Nepal, Er. Tulsi Prasad Sitaula, Infrastructure development has remained a priority of the government right from the beginning of first five year plan (1956-61) A.D. With a view to facilitate and to create enabling environment many legislations have been enacted since then rules, regulations and guidelines have been developed and put to use. Policy documents have been passed and practised so as to streamline the direction of the development. In this connections the following acts, regulations, policy frameworks etc. have been brought in place which are as:

Public Roads Act, 2031 , Local Self Governance Act 2054 and Regulations 2055 ,Public Procurement Acts 2063 and Regulations 2064 , Contract Act, 2023 and 2058 , Construction Industry Acts 2055 , Private Investment in infrastructure, Build and Operate Ordinance 2060 , BOOT Acts 2063 and Regulations 2064 ,Roads Board Act 2059 , Engineering Council Acts 2055 and Regulations 2057 , Road Sector Policy 1999 , Public Infrastructure Build, Operate and Transfer Policy 2057 ,Priority Investment Plan 1997- 2007, Priority Investment Plan 2007 - 2017, The Department of Roads Strategy 1995, Road Maintenance Training Policy 2001, Human Resource Development Policies and Strategy 2002 ,Bridge maintenance Policy, 2004 , Consulting Industry Acts (Development phase) (www.scaef.org.np).

2.1.2 Government Institutions for Infrastructure Development

2.1.2.1 Ministry of Physical Infrastructure and Transport

Ministry of Physical Infrastructure and Transport established in 2000 A.D during the course of the reorganization Government of Nepal. The main aim of reorganization was to bring important infrastructural development under the umbrella of a single ministry and to harmonize the policies and bring efficiencies and effectiveness in the provision of infrastructural services (www.moppw.gov.np). For contractor issuing of licensing and renewal had the department of Ministry of Physical Planning Works and Transport Management where again had a separate section known as Construction Business Promotion Section (CBPS).

The objective of Construction Business Promotion Section (CBPS)

i) To grant construction business license.
ii) To renew the license granted, maintain inventory of the revenue from renewal, prepare financial statements and have revenue earnings audited.
iii) To maintain updated records and data of the firms, companies or corporate bodies carrying on construction business.
iv) To give necessary direction and carry out monitoring in order to maintain quality standards of public construction works and enhance and upgrade capabilities of construction entrepreneurs.
v) To act as member secretary of the implementation committee in respect of promotion and management of construction business.
vi) To monitor implementation of the prevailing Acts and Regulations for the promotion of construction business, and take necessary action to make it further effective (www.cbps.gov.np).

2.1.2.2 Public Procurement Monitoring Office (PPMO)

PPMO was established as per the provision made in the new Public Procurement law of Nepal. The Public Procurement Act, 2063 (B.S.) and Public Procurement Regulation, 2064 (B.S.) have been enforced on 2063/09/30 (B.S.) and 2064/5/03 (B.S.) respectively. PPMO was established as the government agency on 2064/5/3 (B.S.) and is placed directly under the prime minister. It is the organization which has responsibility to act as guiding body for procurement policy formation, implementation and monitoring of effective public procurement system by maintaining transparency, accountability, effectiveness, efficiency and economy along-with non-discrimination and equality in public procurement proceedings of Nepal ( www.ppmo.gov.np) .

2.1.3 Public Entity

“Public Entity” means the following entity:

i) Constitutional organ or body, Court, Ministry, Secretariat, Commission, Department of the Government of Nepal or any other Governmental Entity or Office there under,
ii) Corporation, Company, Bank or Board owned or controlled fully or in majority by the Government of Nepal or Commission, Institute, Authority, Corporation, Academy, Board, Center, Council established at the public level or formed by the Government of Nepal under the laws in force and other corporate body of a similar nature
iii) University, College, Research Center, which is operated by the Government of Nepal or receives grants fully or in majority from the Government of Nepal, and other Academic or Educational Institution of a similar nature
iv) Local body
v) Development Board formed under the Development Board Act, 1956 vi) Body operated with loan or grant of the Government of Nepal, and
vii)Other Bodies as specified by the Government of Nepal by publishing a notification in the Nepal Gazette, as a Public Entity (PPA, 2063).

2.1.4 Foreign Aid in Nepal for Infrastructure Development

According to Development Corporation Report (DCR) F.Y 2010/011 foreign aid plays an important role in Nepal’s socio-economic development, representing 26 percent of the national budget. In addition, significant aid flows are channelled directly to beneficiaries outside the national budget. The main sectors receiving external support are education, local development, health, roads followed by drinking water, energy, agriculture, and peace and rehabilitation. Various economic and financial reform programs also receive significant external support.

Also the DCR report has mentioned that Nepal receives official development assistance from over 40 donors, including 35 resident agencies. About half of aid resources use national systems such as the budget or procurement systems, and a significant portion of aid is spent outside national systems. The Ministry of Finance is mandated for the overall coordination of foreign aid in Nepal, including its allocation in line with national priorities. The Foreign Aid Coordination Division (FACD) of the Ministry of Finance is empowered, among others, to oversee the Government's activities in the area of aid coordination, harmonization and alignment. The FACD of the Ministry is the focal point for this purpose. The FACD has also been acting as the secretariat to the high level committee on foreign aid coordination and mobilization and provides technical input to the committee in the implementation of foreign aid policy.

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Figure 2.1: Distribution of Foreign Aid Disbursements per Policy Cluster of the Three Year Plan (Source: www.mof.gov.np)

According to Asian Organisation of Supreme Audit Institutions (ASOSAI), published on Sep 1995, for in the case of Nepal, foreign-aided projects mainly involved roads, irrigation, electricity, drinking water and aviation. The donor countries and agencies involve the World Bank, Asian Development Bank, Japan, China, USA, Finland, U.K., India and France. These foreign-aided projects fall into two categories:

a) Turnkey projects
b) Loan projects

Turnkey projects are implemented by the donor countries or agencies themselves. Such projects are formally handed over to the government on completion. The government provides the land required for individual projects and makes available other facilities such as customs and taxation concessions and import licences. With such projects, the procurement of construction material, award of contracts and execution of works are the responsibility of the respective donors. Projects being implemented through loans are also financed jointly by the government and donor agencies. The proportion of funds to be contributed from each of these sources is determined when individual agreements are signed. Donor agencies provide most of the finance for civil works, procurement of equipment and consulting services.

Also the (ASOSAI) report mentioned that for large projects assisted by external agencies, competitive bids are invited internationally for construction and the procurement of machinery and consultancy services according to the official guidelines of donor agencies. Bids received are evaluated by a technical committee of the respective ministry and approved by the competent authority based on the provisions of the government's Financial Administration Rules. However, concurrence of the particular agency involved is also required for bid approvals. Project identification, feasibility studies, investment criteria, budgeting, funding and implementation procedures are common for all public works and projects. These procedures are guided by the existing financial rules and regulations of the government. Public works and projects carried out with external assistance are also guided by the terms and conditions of the particular agreement signed between the government and the donor agency (ASOSAI, Sep 1995) (www.asosai.org) .

2.1.5 Requirements of Class A Construction Firms for Registration

The first act which defined ‘Contractor’ was the Industrial Enterprises Act, 1974(A.D). It made provision for the classification and registration of contractor. According to this act, all construction firms must register themselves with the Ministry of Works and Transport in Class A, B, C or D contractors depending upon the technical manpower, value and number of works done, machinery and liquid assets available.

Industrial Enterprises Act 1974 provided for registration and classification of contractors. Accordingly contractors were classified as Class A, B, C and D depending upon their physical facilities, resources and experience.

The licensing and classification of the contractors came into practice after implementation of the construction classification Regulation in 1975. There were twice amendment of the regulation in 1994 and 1999.

Table 2.1: Classification of Construction Firms in 1974 & 1999 as per Bidding Limit (In Millions)

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Table 2.2: Nos. of Registered Firms of Class A, B, C& D in Various Years

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But, there is a debate regarding classification of contractors. The debating article is 10.3 of the act PPA 2063 & PPR 2064 which ignores the existing bidding limit of contractors by classification for the qualification criteria. Despite of this debate still the classification of contractor has been defined by CBA 2055 & CBR 2056 during registration of firms.

Realizing the need for enhancement of the construction industry, Construction Business Act CBA 2055 was promulgated and came into force from Baishak 1, 2056 (April 14, 1999). This is an effort made to institutionalize and systematize the construction sector. The act had defined the procedures and requirement relating to issues and renew of license and classification of obligation of construction entrepreneurs (FCAN 2007, vol. 14.).

As mentioned by CBA, 2055(1999), “construction entrepreneur ” means a firm or company registered under the prevailing law with an object to carry out construction business ”. The classification of construction entrepreneur as per clause 10 sub-rule (1), had classified the construction entrepreneur as Class A, Class B, Class C and Class D according to in Construction Business Rule CBR, 2056(2000A.D) Schedule10, Schedule-11, Schedule-12 and Schedule-13 respectively.

To be Class A ‘A’ construction entrepreneur as defined by CBA (2055) & CBR (2056) in Schedule-10, the following criteria must be meet by the registered firms:

Clause 10 sub-rule (1) Schedule -10

Financial Capacity: It has to be registered with the Department of Industries as a private or public limited company or partnership firm with the running capital of a minimum of ten millions rupees

Work Experience: It has to be satisfactorily completed four different public construction works valued at a minimum of Ten million Five thousand rupees each or various such works valued at a total of Sixty million rupees after having concluded an agreement on its own.

Provided that, nothing in this clause shall be deemed to prevent the classifying of a company having at least Two civil engineers with at least Twenty years of experience in public construction works or of a company with an engineer or equivalent being its shareholder or promoter, having experiences in construction works valued at Sixty million rupees in last Ten years as the class “A” construction entrepreneur.

Description of Key Human Resources: There should be a provision to avail the whole time service of two technicians having passed graduation level in civil engineering and four technicians having passed certificate level in that subject, Two persons having passed graduation level in any subject, three persons having passed certificate level in any subject, one person having passed graduation level in commerce and one person having passed certificate level in that subject.

Machine and Equipment: The checklist for machine and equipment as per CBA 2055 & CBR 2056 has been attached in Annex-B.

i) While submitting an inventory of equipment, ownership certificate of equipment as well as insurance document thereof shall be submitted.
ii) It has to be certified by a mechanical engineer who has possessed educational qualifications of at least graduation in mechanical engineer and obtained membership of Nepal Engineers Association that the above-mentioned machines and equipment are in proper condition.
iii) The above-mentioned machines and equipment shall not be sold and disposed of until at least Two years from the date of their registration.
iv) Any machines and equipment which are more than Fifteen years old shall not be recognized for purposes of enhancing the standard of, and new registration of, the construction entrepreneur.

2.1.6 Qualification Procedure for Contractors

According to PPR 2064, “A public Entity may, in specifying the criteria for qualification of a bidder or a pre-qualified proponent participating in procurement proceeding of a construction work above six million, specify such criteria by taking into account any one or all of the following matters according to necessity” ( PPR, 2064).

Namely two methods of qualification procedure are followed depending upon project sensitivity. i) Post qualification ii) Prequalification

i) Postqalification

An assessment made by the employer after the evaluation of bids and immediately prior to award of contract, to ensure that the lowest-evaluated, responsive eligible bidder is qualified to perform the contract in accordance with previously specified qualification requirements ( SPD, 2009).

ii) Prequalification

An assessment made by the Employer of the appropriate level of experience and capacity of firms expressing interest in undertaking a particular contract, before inviting them to bid (SPD, 2009).

2.1.6.1 Major Qualification Documents for Contractors

GoN's current policy on PQ is that all potential bidders that meet predefined minimum requirements regarding: general construction experience; particular or specialized experience; financial capabilities; personnel capabilities, and equipment availability should be invited to bid. The procedure requires the implementing agency (Employer) to set pass/fail criteria which, if all are not met substantially by the Applicants, would cause them to be disqualified ( SPD, 2009).

2.1.6.1.1 Particular Construction Experience

General experience of having carried out works solely as a prime contractor or under management contract or partner in a joint venture or sub-contractor. General experience consists of similar nature of works (PPR, 2064).

Applicants should demonstrate that they have successfully carried out work, substantially of a nature, size, value, and complexity similar to that of the contract in question. There are two principal criteria for prequalification.

(a) The Applicant should have carried out similar work of a magnitude approximating that of the package of Work for which prequalification is sought. Depending on the nature of the works to be bid, the criterion should be related to the Applicant having completed or substantially completed one or more contracts each of a value (not less than about 80 percent) of that of the proposed contract over the last five to ten years.
(b) The Applicant should have performed operations of a volume, quality, and rate of execution similar to those required for the timely completion of the subject contract. For example, where large-volume earthmoving, tunnelling, or concrete placing is involved, the applicant should demonstrate experience in those operations, having performed them at the rates necessary to meet a percentage (e.g., 80 percent) of the estimated peak monthly and/or annual rates required for the subject contract.

The range should be one to three (and is normally two), depending on the size and complexity of the subject contract. For example, for small- to medium-sized contracts in a country with newly privatized, but competitive construction firms (which have had some experience as parastatals), an employer may be prepared to risk an award to an applicant with only one previous similar contract completed. For contracts in a developed environment with a high potential supply of construction services, three similar contracts may not limit applications, but would reduce the risk of contractor default. The range is normally five to ten years, and should be related to the number of similar contracts stated above and to the duration of the subject contract, e.g., ten years for two contracts of about five years’ duration, or six years for two contracts of about three years’ duration (SPD, 2009).

2.1.6.1.2 Turnover

Turnover for construction works of or above the threshold as referred to in the bidding documents. Generally, turnover represents the total revenue received by the company. ie., Sale of goods, Service Revenues (depending upon the nature of the business) and here mainly concerned with supplies and construction works of public entities (PPR, 2064).

The Applicant’s general capabilities in managing construction contracts should be related to its record of recent experience and to the value of work undertaken.

Experience requirements should be stipulated as a minimum annual value of general construction work carried out over a stated period, normally five years, calculated by applying an appropriate multiplier to the projected annual construction rate on the subject contract. The recommended multiplier is normally 1.5 to 2.0.

Time Period in the Construction Business

The time period is normally five years or more, but may be reduced to not less than three years (in agreement with the Financing Agency) under special circumstances, such as to provide opportunities for new coming construction entrepreneurs for more competition, etc.

Required Average Annual Turnover

The amount stated should normally not be less than 1.5 to 2 times the estimated annual turnover or cash flow in the proposed works contract (based on a straight-line projection of the employer's estimated cost over the contract duration). The multiplier of 2 may be reduced to 1.5 times but should not be less than 1.5.The number of years is normally ten years but not less than three years (in agreement with the Financing Agency). Also clarify whether the annual turnover amount of past years are evaluated in the current year with inflation/ price index. Clarification on whether the average annual turnover for ten years is considered or average of best three years annual turnover is considered in the evaluation (SPD, 2009).

2.1.6.1.3 Financial Capabilities Requirement for Contractors

Economic and financial capacity of having or access to liquid assets, loan facilities and other financial (excluding advance payment under any procurement contract) sufficient to meet the cash flow requirement to complete the proposed construction work and construction work being carried out or committed to be carried out by the concerned bidder, in the event of stoppage or delays in payment of money required to start up construction work under a procurement contract.

- Minimum Required Cash Flow Amount

Calculate the construction cash flow requirement for a number of months (to the nearest half-month), determined as the total time needed by the employer to pay a contractor’s invoice, allowing for (a) the time of construction, from the beginning of the month invoiced, (b) the time needed by the engineer to issue the monthly payment certificate, (c) the time needed by the employer to pay the amount certified, and (d) a contingency period of one month to allow for unforeseen delays. The total period should not exceed six months. The assessment of the monthly amount should be based on a straight-line projection of the estimated cash flow requirement over the particular contract period, neglecting the effect of any advance payment and retention monies (SPD, 2009).

- Adequate Source of Finance

Minimum Bid Capacity (BC) to meet cash flow requirement for this and other contract commitment through the leveraged value of the applicant’s available resources: [ enter amount equal to the value of the work]

Where,

Bid Capacity (BC) = 5× total financial resources - 40% of total contract value of current commitments

- Applicant’s Financial Position

The Applicant’s Net Worth calculated, as the difference between Total Assets and Total Liabilities, from the audited balance sheets of the last [ insert No. of years] should be positive (SPD, 2009).

2.1.6.1.4 Personnel Capabilities

The managerial and technical competence of a contractor is largely related to the key personnel on site. The extent to which the Applicant should demonstrate having staff with extensive experience should be limited to those requiring critical operational or technical skills. The prequalification criteria should therefore refer to a limited number of such key personnel, for instance, the project or contract manager and those superintendents working under the project manager who will be responsible for major components (e.g., superintendents specialized in dredging, piling, tunnelling, or earthworks, as required for each particular project). Applicants should normally be required to name a principal candidate and an alternate for each key position. Criteria of acceptability should be based on: a minimum number of years of experience in a similar position and a minimum number of years of experience and/or number of comparable projects carried out in a specified number of preceding years.

The requirement of specified education and academic qualifications is normally unnecessary for such positions, as contractors often employ competent staffs who have learned their profession “on the job” rather than through academic training. It is appropriate to specify that certain positions are filled by individuals who have held posts of comparable authority for, say, three years with the applicant, so that key staff in executive site positions have sufficient knowledge of the applicant's management, policy, procedures, and practices to act with confidence and authority within that framework ( SPD,2009).

2.1.6.1.5 Equipment Capabilities

Equipment as set out in the bidding documents or prequalification documents in full working order of the ownership of the bidder or proponent of pre-qualification himself/herself or to be so available through rent, lease ,contract or other commercial means as can be used freely during the procurement contract period and depends upon the nature of works (PPR,2064). A complete inventory of construction equipment represents a high capital cost overhead to a contractor. Consequently, not all competent potential bidders will maintain an inventory of high-value items that are in suitable condition for major contracts. In most cases applicants can readily purchase, lease, or hire equipment for a particular contract; thus, it is usually unnecessary for prequalification to depend on the contractor’s owning readily -fail criteria adopted should therefore be limited only to those bulky or specialized items that are critical for the type of project to be implemented, and that may be difficult for the contractor to obtain quickly. Examples may include items such as heavy lift cranes and piling barges, dredgers, tunnel boring machines, asphalt mixing plants, etc. Even in such cases, Applicants may not own the specialized items of equipment, and may rely on specialist subcontractors or equipment-hire firms. The availability of such subcontractors and of the specified equipment should be subject to verification prior to bid invitation, and confirmed at bid submission and prior to contract award. The terms of any lease or hire agreement for equipment should preferably include a provision that the equipment will remain on the site (or be vested in the Employer) in the event of default of the contractor, thereby ensuring more timely continuity of work by a replacement contractor. (SPD, 2009).

2.1.7 Payment Schedule for Contractors

Payment procedure to the construction entrepreneurs is in the form of advance payment, running bills payment, final bills payment, escalated amount, bonus amount and refunding security amount by public entities.

2.1.7.1 Advance Payment

Advance payment is the initial payment provided by public entities when entering into contract agreement to construction entrepreneurs for initial mobilization of the services as advance after submission of performance bond guarantee (SPD, 2009).

2.1.7.2 Payment of Bill or Invoice or Running Bill

Payment of bill or invoice or running bill is the payment made by public entities as per the condition of contract and make payment to the construction entrepreneurs for further site mobilization (SPD, 2009).

2.1.7.3 Final Bill Payment

Final bill payment is the final payment made by public entities to the supplier, construction entrepreneurs, service provider or consultant, as the case may be, shall be made as per the condition of contract (SPD, 2009).

2.1.7.4 Security Money

Security Money refers to the performance security amount and fifty percent amount retention money deducted that is five percent of the running bills specified which shall be returned back after expiry of the defects liability period. The remaining fifty percent amount of the retention money shall be paid after the concerned supplier, construction entrepreneurs or service provider, as the case may be, submits evidential documents of having submitted income return issued from the concerned Inland Revenue Office. Provided that if the concerned construction entrepreneur does not correct the defects liability period, the public entity may correct the defects by using the retention money or the amount for security (SPD, 2009).

2.1.7.5 Price Escalated Amount

Price Escalated Amount, a public entity shall, in the procurement contract have to provide that price adjustment may be made. The maximum amount of price adjustment to be made pursuant to this Rule shall not, generally are more than twenty five percent of the initial contract prices (SPD, 2009).

2.1.8 Public Private Partnership in Infrastructure Development

As per website of FCAN, the government of Nepal has liberalizes its policies after 1980's and has released the act related to Build, Operate, Own and Transfer BOOT Act (PPP) - 2063, Road Sector Policy 1999, BOOT Regulation (PPP) - 2064, Hydropower Act - 1992, Public Infrastructure Build Operate and Transfer Policy - 2057, Private Investment in Infrastructure Build and Operate Ordinance - 2060. There is still some opportunity for the contractors through Contractual PPP’s as:

Build and Transfer (BT)

Build, Operate and Transfer (BOT)

Build, Operate, Own and Transfer (BOOT)

Build Transfer and Operate (BTO)

Lease, Operate and Transfer (LOT)

Develop, Operate and Transfer (DOT)

Also it has mentioned that PPP is regarded as the revolutionary approach towards infrastructure development which pulling in resources, pulling in expertise, maximizing service delivery, magnifying scope opportunities and creates the employment opportunities for the contractors also. The following are regarded as the prospective PPP projects now in Nepal.

- Kathmandu - Terai Fast Track, East-West Railway, Kathmandu-Terai Railway, KantiRajpat, Birgunj-Jitpur Roadway, Kathmandu Outer Ring Road, Janakpur- Jayanagar Railway, Janakpur-Jayanagar Railway, Sitapaila-Dharke Roadway, Airports (Nijgadh,Pokhara, Bhairahawa) , Cargo Complex at TIA, Cable Car and Ropeway, Road and Infrastructure Maintenance, Sky Bridge, Sub Way, Flyovers and Interconnections, City Parkings etc. (www.fcan.org.np).

2.1.9 Federation of Contractor Association of Nepal (FCAN)

As per journal published by FCAN (2007), Contractors of Nepal who are relatively established today are said to be started their profession with their own effort without any help, guidance or training during (1960-1990) A.D. After the restoration of multiparty democratic political system in 1990 A.D for their enlistment and developing further professional skills and built institution among the members, Contractor Association of Nepal (CAN) was born. Later in 1997 A.D, with the great enthusiasm of all the Contractors Association of Nepal to be under a single forum, name and structure of this association has been changed as Federation of Contractor’s Associations of Nepal (FCAN).

The FCAN Membership, at present, is comprised of three types:

i) Ordinary Member
ii) Associate Member
iii) Honorary Member

i) All the registered Regional and District Level Contractors’ Associations are capable to get the Ordinary Membership of FCAN. Till this date all 5 Regional Contractors' Associations and 75 District Contractors' Associations are associated with FCAN.
ii) Associated Members are those construction firms/companies, which have taken direct membership from FCAN. Currently more than 275 firms and companies are registered under this category.
iii) The Executive Board of FCAN may grant the Honorary Membership to those person, firm, company, institution or any international organization who has done specific contribution towards the field of construction business, science, technical know how or national development.( www.fcan.org.np)

Also, after establishment as an umbrella organization CAN (1990) and later as FCAN(1997), Nepalese contractor made participation and recognization of them with various international organization like International Federation of Asian and Western Pacific Contractors' Associations IFAWPCA (October 19, 1993), SAARC Chamber of Commerce and Industry - Construction Industry Council SAARC CCI- CIC (March 16, 1998) and International Chambers of Commerce ICC, China International Contractors’ Association CHINCA (6th June, 2000) mainly and nationally as in National Development Council (NDC), Construction Business Development Council (CBDC), Construction Business Development Implementation Committee (CBDIC) , Market Monitoring Board, District Administrative Office (DAO), Nepal Council of Arbitration (NEPCA), Federation of Nepalese Chambers of Commerce and Industry (FNCCI) , Construction Industry Training Centre (CITC) etc. and in many more organization (FCAN, 2007).

2.1.10 Related Studies

The relevant literatures that were selected finding importance to this research after studying and its finding are discussed in this chapter. The first part of this chapter deals with the issues and negative cases going around discussion about the technical and financial ability & management owned capacity of such Class A firms. The second part of this chapter deals with opportunity for qualified Class A contractor for construction as participating in Public Private Partnership model (PPP model) in developing infrastructure. The third part of this chapter deals with suggestion given by various contractors about the policy that they felt made by government towards construction industry. The last part of this chapter deals with finding out by previous researcher on same topic.

2.1.11 Issues of Construction Entrepreneurs in Newspaper

According to article ‘Project Incomplete as Contractor Flee’ by Mr. Rudra Khadka, Nepalgaunj published on Republica dated November 27, 2012, contract for constructing a building of BheriZonal Hospital was awarded to a joint venture of four contractors four years ago. However, even two years after the contractor’s term expired, the building meant for running the emergency ward at the zonal hospital remains incomplete. The Mid-Western regional office of the Department of Urban Development and Building Construction (DUDBC) had awarded the Rs. 40.56 million-contract to the joint venture of Nepal Pragati, Pradip, DC and Suppliers, Galva J/V contractor on July 13, 2008. As per their agreement with the DUDBC, the contractors should have completed the building construction by end of June 2010 (www.myrepublica.com).

According to article ‘Contractors warned for work delay’ published on Himalayan times daily newspaper dated Nov 15, 2011, the Ministry of Physical Planning and Works has issued a warning to 151 contractors and seven consultants for delaying various projects, including bridge and road construction. “The ministry has published the names of contractors and consultants who have not made expected progress in projects that have already been launched,” said Suman Sharma, spokesperson for the ministry. “If they do not complete the projects on time, we will take legal action against them,” he added (www.thehimalayantimes.com).

According to article ‘Development projects run late due to slow govermrnt, contractors’ published on ekantipur.com dated April 16, 2013, the 50th annual report from Office of the Auditor General (OAG), Out of the 1,748 contracts of type big and small awarded under 10 government agencies, the deadlines for 1,518 projects were extended in the last fiscal year. The time extensions ranged from 50 percent of the original period for 572 projects to 50-100 percent for 581 projects. The time limit was doubled for 365 projects. “This show a weakness in contract management and upgrading managerial capacity is essential,” the report states (www.ekantipur.com).

2.1.12 Contractors Perceptions towards Construction Industries

According to an article ‘Kalika Construction bags FCAN's Class 'A' Gold Award’ published in online magazine ‘Housing Nepal’ dated on Dec 9,2012, Bishnu Bhai Shrestha, vice president of FCAN, said emphasizing on the government´s role to make contractors are more efficient, contractors said that there were many opportunities within and outside the country. "We just need a supportive bureaucracy and policies to work constantly". Also in same heading, Bikram Pandey, chairman of Kalika Construction said the government was not supportive to uplift the quality of the contractors within the country. The government imposes unnecessary criteria in the bidding process to avoid participation of domestic contractors. (www.housingnepal.com).

As per an article ‘ Government Sits on Contractors Payment ’ published on “Arthik Abhiyan Daily” newspaper dated on Feb10, 2013, the lack of clarity in government’s action plan, delay in approval of development projects, and low capital expenditure, which remained a lowly 15 percent of an already low budget under the capital expenditure, are taking a serious toll on the contractors engaged in government projects. They claimed that they were not paid since Kartik for the work already completed and this is straining their resources. The dues stand at staggering Rs 10 billion. According to President of Federation of Contractors’ Association of Nepal (FCAN) Jay Ram Lamichhane, non-payment for the work done can hamper the ongoing projects where work has to be stopped for want of money. Since Kartik, payment has not been made for works already completed in over 200 projects. This is causing massive losses for the contractors. Despite taking up the issue with Finance Ministry, Financial Comptroller General Office (FCGO) and related ministries, payments are still stuck with the government, he claimed (www.abhiyan.com.np).

2.2 Research Review

As per the thesis written by Ang Dorji Lama on the topic “ Present status of Class A Contractors in Nepal and qualification criteria for them” dated on January, 2002., limited numbers of contractors were only able to get the contract from the bidding which may leads to the monopoly of ‘A’ class contractors in construction industry. The objective of research was to analyse the present status of the ‘A’ class construction companies in Nepal in terms of experience, technical and financial capability, nature of upcoming development work. The researcher adopted descriptive and analytical research design and data were collected via different sources like questionnaire survey, direct interview and through the study of profile of the construction companies under the study. Moreover, the collected data were analysed and presented by using tools like tables and figure. According to this report although there are various criteria to analyse and evaluate the quality and qualification of construction companies and contractors, there are no proper mechanism, tools and techniques to monitor, check and control it. Henceforth, the researcher has recommended taking active role in formulating policies, rules, guidelines for the betterment of contractor’s capability building to the Construction Enterprise Development Board and Committee in order to control and monitor all the construction companies of Nepal.

Deepak Bhattarai argues that specializing in one area is more important than classification of contractor from D to A. For example in macro level there is a need of Building Contractor, Road Contractor, Pavement Contractor, Bridge Contractor, Tunnel Contractor, Hydropower Contractor or similar specialist contractor then in such case quality would enhance at competitive cost also. Therefore he have thought about Super Speciality Contractors which would lead a construction industry to a new height (FCAN Journal, 2012).

CHAPTER-3 RESEARCH METHODOLOGY

3.1 Research Design

This study was carried out on the basis of primary data and secondary data. Descriptive research design were taken into consideration to describe all the information collected through primary sources and exploratory research design were taken into consideration to explore present status of contractor through secondary sources and literature reviews . The research methodology chart is shown in Fig. 3.1.

3.2 Data Collection: All the information were collected by using various sources like primary and secondary sources.

- Primary Sources: Primary sources of the study had included the sources like questionnaires survey via direct interview and online interview with the respondents selecting 30 % randomly from the list of class “A” contractors provided by the FCAN i.e. 30 % of total 194 of population is 59 number of Class A contractor which was taken as respondents sample for questionnaire survey.
- Secondary Sources: Additional information are collected through secondary sources such as : related websites, a journal of Federation of Contractor’s Associations of Nepal which is from Nepalese Construction Souvenir (Volume-1 to Volume 18) ,Construction News from Tri-annually Published Magazine from FCAN , daily national newspapers and others related published or unpublished materials such as thesis & reports.

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Figure 3.1: Flow Chart of Research Design for Adopted Methodology

3.3 Population of the Study: The population of the study includes all the Class A contractors of Nepal i.e 194 Class A contractors/construction company of Nepal as being listed in FCAN journal, Vol. 18, 2012 .(Annex C)

3.4 Sample of the Study: For the sample size, 30 % of total population i.e. 59 numbers of registered Class A contractor had been chosen by random sampling method, from the list of total population 194 as listed in FCAN Journal, Vol. 18, 2012.

3.5 Research Instrument: The instrument used in collecting data was through prepared questionnaire which was prepared after thorough study of literature review so that the defined objective of this purpose of research is fulfilled. The method followed during distribution of questionnaire was in the following ways:

- Explaining to respondents that the information they have provided shall be kept very confidential and shall be used for the research purpose only where overall data shall only be presented in research report rather then single firm’s information.
- Also, questionnaires were made to fill up by the concerned office representative personal (Engineers and Accountants) after permission from the managing directors and directors of the firms in the cases where the concerned respondents were unavailable to fill up by themselves.

The questionnaire contains four major section which includes general information of firms, technical information, financial information & problems, difficulties and satisfaction under which sub-section information are provided for respondents to fill up to obtain the objectives of the research. The first part, general information includes about the partners status and specialization of the firms in construction sector. The second part, technical information includes equipments hold by the firm as reference with the prescribed requirement defined by CBA 2055 & CBR 2056. In this part, the firm answered only the quantity of equipments they owns in whatever condition they acquired. The human resources available in the firm include only the numbers of engineers, junior engineer, supervisors, accountant and general labor. The third part financial capability includes the turnover of the firm of the three fiscal years 2069/70, 2068/069, 2068/067 B.S. , credit limit and permanent overdraft of the firm. The fourth part common problem and difficulties includes the questionnaire regarding satisfaction and common problems and that Class A construction entrepreneur are being mostly tackled with. Also, for satisfaction question respondents were asked to indicate with 5-point Likert-type rating scale: 1=Not at all satisfied, 2=Slightly satisfied, 3=Somewhat satisfied, 4=Very satisfied, 5=Extremely satisfied. Also for other ranking question respondents were asked to rank by their priority that they have felt during their business.

3.6 Data Collection Procedure

The researcher collected list of Class A contractor with their name, contact address and telephone number from FCAN, Kathmandu, office. Then, the list of 59 respondents(30 % of population) were selected by random sampling method. The respondents were then at first contact in telephone providing information about the research criteria and hence distributed questionnaire by personal meeting. The questionnaire was then distributed hardcopy to 52 respondents and by email (7 respondents). Out of 59 respondents only 51 respondents returned the questionnaire during 4 months of time, in which out of 52 respondents 44 respondents returned hardcopy and all of the 7 respondents who were mailed returned in email. The research has covered study of 29% of the respondents as sample from the list of 194 that is 51 respondents of total population as per total numbers provided by FCAN Journal, Vol. 18, 2012.

3.7 Data Analysis & Interpretation Procedure

The returned fill up questionnaires were collected, coded and made data entry in computer. The information obtained from questionnaires survey as raw data were analyzed using SPSS & MS Excel programmer and were converted into information. The information were presented by using the tools such as average, mean, weighted average mean, percentage and minimum/maximum ranges. To understand easily, some of the table & figures are presented in the form of horizontal, vertical bar chart & pie chart also.

CHAPTER-4 PRESENTATION AND ANALYSIS OF DATA

This section of the research fully depends upon the research design and methods to be undertaken while collecting the information. Henceforth, an analytical study was conducted to analyze the collected data. Then, the collected data was coded, edited and arranged in the systematic way. After that, this information were presented in the form of table and diagram ( bar chart and pie chart ) through which, readers of the report can easily understand the meaning of the findings of the research at a glance.

4.1 General Information

4.1.1 Types of Partners in Class A Firms

During registration of construction entrepreneurs, one may register at Ministry of Small Cottage & Industry and Company Registrar Office at any of the form like public limited company or private limited company or sole trader or partnership after meeting the prescribed criteria of CBA 2055 & CBR 2056. Similarly, the choice of persons in the company may be owned family members or groups of interested professional.

Table 4.1: Types of Partners Registered During Firm’s Registration as Class A

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Fig. 4.1: Types of Partners Registered During Firm Registration as Class A

Source: Field Survey, 2013.

As shown in figure 4.1, 37.3 % of the firms of Class A construction companies includes family member as partners in the firm where as again 37.3 % includes partners as other than family. Similarily, percentage of firms that has both family member and professional members as partners is 19.6 % and 5.8% of the construction companies is either owned by single investor respectively.

4.1.2 Active Partners in Class A Firms in Terms of Registration

It is not always necessary that all partners listed during firm’s registration gets active throughout the year. There can be various reasons through which the relationship between and within partners can be strengthen and weakened. Some partners may get much more active and some may not get active during firm’s operation.

Table 4.2 : Active Partners in Class ‘A’ Firm’s in Terms of Registration

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Source: Field Survey, 2013.

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Figure 4.2: Active Partners in Class Firms in Terms of Registration

Source: Field Survey, 2013.

The figure 4.2 depicts that out of the total respondents, 49% consists of active partners and the remaining 51 % of companies are operated by single entreprenuers.

4.1.3 Experience on Specialized Construction of Work by Class A Construction Entrepreneurs

Generally, there are many sectors in which any firm can take part in construction work of interested area after meeting specific criteria of qualification. But there has also been argue that there is a need of Building Contractor, Road Contractor, Pavement Contractor, Bridge Contractor, Tunnel Contractor, Hydropower Contractor or similar specialist contractor so as to enhance at competitive cost also.

Table 4.3: Experience on Specialized Construction of Work by Class A Construction Entrepreneurs

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Source: Field Survey, 2013.

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Figure 4.3: Experience on Specialized Construction of Work by Class A Construction Entrepreneurs

Source: Field Survey, 2013.

As shown in figure. 4.3, 7.8 % of the firm are specialized in particular construction works where as, remaining 92.2 % of the firm are engaged in two or more than two areas of construction work.

4.1.4 Work Experience Sector of Class A Construction Entrepreneurs

Table 4.4 : Work Experience Sector of Class A Construction Entrepreneurs

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Source: Field Survey, 2013.

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Figure 4.4: Work Experience Sector of Class A Construction Entrepreneurs Source: Field Survey, 2013.

Table 4.5: Budget for Fiscal Year 2013/014 in Major Infrastructure Projects

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Source: http://www.nepalenergyforum.com/

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Figure 4.5: Budget for Fiscal Year 2013/014 in Major Infrastructure Projects

Source: http://www.nepalenergyforum.com/

As shown in figure.4.4, most of the respondent are involved in construction and maintenance of building (98 % respondents) and road construction and maintenance works (96.1 % respondents) whereas, only 13.7 % of the respondent are only involved in tunnel and subway construction. Similarily, 47.1 % of the respondent are involved in airport building and maintenance and 56.9 % of respondents are involved in barrage, canal, reservoir, water structures. Moreover, 25.5 % of respondent are involved in hydraulic structure construction and 47.1 % of respondent are involve in reconstruction and maintenance. It was also found that 19.6 % of respondent are enagaged in construction of electricity transmission line and power station. Also it can be seen from figure 4.5 that the highest amount of budget is for the energy sector among other infrastructure development and the participant of contractors are very few in number as compare to other infrastructures.

4.2 Comparison of the Existing Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR 2056

4. 2.1 Machine and Equipment

A machine is a tool that consists of one or more parts, and uses energy to meet a particular goal. Machines are usually powered by mechanical, chemical, thermal, or electrical means, and are often motorized. Construction equipment refers to heavy- duty vehicles, specially designed for executing construction tasks, most frequently ones involving earthwork operations. They are also known as, heavy machines, heavy trucks, construction equipment, engineering equipment, heavy vehicles, or heavy hydraulics.

Table 4.6: Status of Machine & Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR 2056

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Source: Field Survey, 2013.

Table 4.6 shows that only 33.3 % of the respondents out of 51 respondents seem to meet the standard as prescribed by CBA 2055 & CBR 2056. (Annex-D)

4.2.2 Human Resources Available with Class A Construction Entrepreneurs

Human resources are the set of individuals who make up the workforce of an organization, business sector, or economy. Human resources in construction sector generally refers to the various personal like civil engineers, overseers, supervisors, accountant, general labour, various equipment operators etc.

Table 4.7 : Human Resources Available with Class A Construction Entrepreneurs

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Source: Field Survey, 2013.

Table 4.8: Range of Human Resources in Class A Firms

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Source: Field Survey, 2013.

Table 4. 8 shows that overall average numbers of civil engineer held by Class A firm is 2.92, junior engineer 3.25, accountant 2.06 and supervisor is 5.08.

4. 3 Financial Capabilities of Class “A” Construction Entrepreneurs

Financial Capabilities of firms can be defined in terms of their annual turnover achieved, credit limit owned by the firm and bank overdraft facilities available with the firm.

4.3.1 Annual Turnover of Class A Construction Entrepreneurs

Turnover represents the total Revenue received by the company. ie., Sale of goods, Service Revenues (depending upon the nature of the business) and here mainly concerned with supplies and construction works of public entities. (PPR, 2064).

Table 4.9 : Annual Turnover of Class A Construction Entrepreneurs for F.Y 069/070 , F.Y 068/069 & 067/068

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Source: Field Survey, 2013.

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Figure 4.6: Annual Turnover of Class A Construction Entrepreneurs for F.Y 069/070 , F.Y 068/069 & 067/068

Source: Field Survey, 2013.

Figure 4.6 shows that the majority of number of Class A firm’s annual turnover is below 10 crore and is by 64.52 % of firms in F/Y 067/068, 51.61 % in F/Y 068/069 and 61.29 % in F/Y 069/070. From table 4.9 it is also seen that numbers of firms having annual turnover in the recent three fiscal years above 20 crore is very less in number.

4.3.2 Credit Limit of Class A Construction Entrepreneurs

A credit limit is the maximum amount of credit that a financial institution or other lender will extend to a debtor for a particular line of credit by mortgaging the properties. It is also known as credit line, line of credit, or a trade line.

Table 4.10 : Credit Limit of Class A Construction Entrepreneurs

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Source: Field Survey, 2013.

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Figure 4.7: Credit Limit of Class A Construction Entrepreneurs

Source: Field Survey, 2013.

As shown in figure 4.7, most of the firms have the credit limit between 5 to 10 crore (50.9 % respondents) where as, only 11.8 % of the firms have credit limit above 10 crore.

4.3.3 Bank Overdraft of Class A Construction Entrepreneurs

A bank overdraft is a credit agreement made with a financial institution that permits an account holder to use or withdraw more than they have in their account, without exceeding a specified maximum negative balance, by mortgaging their properties. Establishing an overdraft facility with a bank can help an individual or small business with short term cash flow problems.

Table 4.11 : Bank Overdraft of Class A Construction Entrepreneurs

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Source: Field Survey, 2013.

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Figure 4.8 Bank Overdraft of Class A Construction Entrepreneurs

Source: Field Survey, 2013.

As shown in figure 4.8, most of the firms have overdraft below 1 crores (62.74 % respondents) whereas, only 1.97 % of the firms have overdraft above 10 crore.

29.41 % of the respondents has overdraft between 1 to 5crore. Also from fig.4.8 it is seen that 5.88 % of the respondents has overdraft of 5 to 10 crore .

4.4 Satisfaction of Class A Construction Entrepreneurs in Current Situation with Construction Business

Table 4.12 : Satisfaction of Class A Construction Entrepreneurs in Current Situation with Construction Business

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Source: Field Survey, 2013.

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Figure 4.9: Satisfaction of Class A Construction Entrepreneurs in Current Situation with Business

Source: Field Survey, 2013.

Fig.4.9 shows that construction entrepreneurs who are slightly satisfied and somewhat satisfied with their business is 33.33 % out of 51 respondents while those who are very satisfied is 11.8 %. From figure 4.9 it is seen that construction entrepreneurs who are not at all satisfied is 17.6 % and extremely satisfied is only 3.9 % out of 51 respondents.

4.4.1 Common Problem and Difficulties of Class A Construction Entrepreneurs

4.4.1.1 Difficulties Felt in Criteria of Achieving Qualification Documents During Bidding Procedure by Class A Construction Entrepreneurs

GoN's current policy on PQ is that all potential bidders that meet predefined minimum requirements regarding general construction experience, particular or specialized experience, financial capabilities including annual turnover and credit line information, personnel capabilities, and equipment availability should be invited to bid. Also bid security is an essential part of qualification document. The procedure requires the implementing agency (Employer) to set pass/fail criteria which, if all are not met substantially by the applicants, would cause them to be disqualified by public entity.

Table 4.13 : Difficulties Felt in Criteria of Achieving Qualification Documents During Bidding Procedure by Class A Construction Entrepreneurs

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Source: Field Survey, 2013. * f= Nos. of Firms

Note: S.E=Similar Experience, A.T=Annual Turnover, C.L.I=Credit Line Information H.R=Human Resource, E.R=Equipment Required, B.S=Bid Security

From Table 4.13, it is seen that the weighted average mean of 12.24 is highest for the annual turnover and second highest 11.38 for similar nature of work experience in prequalification part of bidding documents by the respondents.

Similarly from Table 4.13, it is seen that the weighted average mean for equipment required is 9.19, manpower engaged is 7.05, credit line information is 6.81 and bid security is 4.33 giving the third, fourth, fifth and sixth priority finding difficulties in prequalification part of bidding documents by the respondents.

4.4.1.2 Difficulties felt in Receiving Payment During Payment Schedule by Class A Construction Entrepreneurs

Payment procedure to the construction entrepreneurs is in the form of advance payment, running bills payment, final bills payment, escalated amount, bonus amount and refunding security amount by public entities.

4.14 : Difficulties Felt in Receiving Payment During Payment Schedule by Class A Construction Entrepreneurs

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Source: Field Survey, 2013. * f= Nos. of Firms

Note: A.P=Advance Payment, R.B.P=Running Bill Payment, F.B.P=Final Bill Payment, R.S.A=Refund of Security Amount, E.A=Escalation Amount, B.A=Bonus Amount

From Table 4.14, it is seen that the weighted average mean of 10.48 is highest for the escalation amount and second highest 9.86 for running bill payments in the process of payment procedure made by public entities.

Similarly from Table 4.14, it is seen that the weighted average mean for final bill payment is 8.90, bonus amount is 8.81, refunding of the security amount is 8.14 and advance payment is 4.95 giving the third, fourth, fifth and sixth priority finding difficulties in the process of payment procedure made by public entities.

4.4.1.3 Difficulties Felt in Revenue & Taxation Part by Class A Construction Entrepreneurs

There are various parts of taxation system that the construction entrepreneurs needs to deals with during their business. Mainly difficulties are felt during the issuing of license, yearly renewal, registration at Inland Revenue office, monthly tax submission, tax clearance and refunding of the security amount (TDS i.e Tax Deduct at Source) .

Table 4.15: Difficulties Felt in Revenue & Taxation Part by Class A Construction Entrepreneurs

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Source: Field Survey, 2013. * f= Nos. of Firms

Note: I.L=Issue of License, Y.R.F=Yearly Renewal of Firm, R.V.O=Registration at Vat Office, M.T.S=Monthly Tax Submission, T.C=Tax Clearance, R.T.D.S=Refund of Tax Deducted at Source

From Table 4.15, it is seen that the weighted average mean of 12.23 is highest for the refund of the tax deducted at source amount and second highest 10.57 for obtaining tax clearance certificate in the part of taxation process.

Similarly from Table 4.15, it is seen that the weighted average mean for issuance of license is 9.24, registration at vat office is 7.81, yearly renewal of firm is 7.71 and monthly tax submission at revenue office is 6.14 giving the third, fourth, fifth and sixth priority finding difficulties in the listed taxation parts.

4.4.1.4 Difficulties Felt in Hiring Qualified Human Resource in Different Construction Sector by Class A Construction Entrepreneurs

Brain drain (or human capital flight), is the large-scale emigration of a large group of individuals with technical skills or knowledge. The reasons usually include two aspects which respectively come from countries and individuals. In terms of countries, the reasons may be social environment (in source countries: lack of opportunities, political instability or oppression, economic depression, health risks, etc). (www.en.wikipedia.org).

Table 4.16 : Difficulties Felt in Hiring Qualified Human Resource in Different Construction Sector by Class A Construction Entrepreneurs

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Source: Field Survey, 2013. * f= Nos. of Firms

From Table 4.16, it is seen that the weighted average mean of 11.79 is highest for the tunnel sector and second highest 10.57 for hydropower sector in the part of manpower unavailability as felt by Class A contractors.

Similarly from Table 4.16, it is seen that the weighted average mean for bridge sector is 8.21, road sector is 6.04, irrigation sector is 5.32, water supply sector is 4.61 and building sector is 4.46 giving the third, fourth, fifth , sixth and seventh priority in the part of manpower unavailability as felt by Class A contractors.

4.4.1.5 Insecure Felt due to Hooliganism During Stages of Tender Purchase, Tender Drop and Construction Site Execution Works by Class A Construction Entrepreneurs

4.4.1.5.1 Tender Purchasing

A notice for invitation to bids or prequalification proposals shall have to be published in a daily newspaper of national circulation and, in the case of an international bid, it may also be published in any international communication media. Then, interested firms shall purchase the tender document from concerned offices upon submission of specified amount providing along with the necessary documents like registration certificate of a firm, organization or company, value added Tax registration certificate and permanent account number (PAN) registration certificate, tax clearance certificate and a written declaration made by bidder with a statement that he/she is eligible to participate in the procurement proceeding. Due to the hooliganism that had entered into the tendering process in contractor profession, it has become very difficult for most of the interested contractor for even to purchase tender document from concerned authority.

4.4.1.5.2 Tender Drop

In publishing a notice under, for invitation of national level bidding or prequalification proposals, a period of at least thirty days shall be given and at least forty five days shall be given in the case of a notice on invitation that of international level bidding or prequalification proposals. The place, manner, the deadline for the submission or forwarding of the bidding documents or prequalification documents and the place, date and time for the opening of bids, and matter that the bidders or their authorized agents shall be invited to attend the opening of bid must be mentioned during tender notice by public entities. Due to the hooliganism that had entered into contractor profession, it has become very difficult for most of the interested contractor for to drop their tender document to concerned authority.

4.4.1.5.3 Site Execution

Site execution has always become very difficult for most of the contractors from the initial establishment of site for work and ends till up to the completion of the project.

Table 4.17 : Insecure Felt due to Hooliganism During Stages of Tender Purchase, Tender Drop and Construction Site Execution Works by Class A Construction Entrepreneurs

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Source: Field Survey, 2013. * f= Nos. of Firms

From Table 4.17, it is seen that the weighted average mean of 21 is highest for the construction site execution, second highest 19.83 for tender document drop and third highest 10.17 for tender document purchase.

CHAPTER-5 FINDING OF THE STUDY

5.1 General Information

- The research has revealed that most of the partners in the firms include family member as partners (37.3 %), Other, than family member (37.3 %) both family member and other (19.6%) and no partners (5.9 %).
- 51 % of the partners those who were member of the organization during the registration phase have discontinued as an active member in the same company and profession.
- Few contractor ,(only 7.8 % ) are specialized in particular area of construction work. Most of the contractor are engaged specially in two areas of construction, viz. Construction and maintenance of building (98 %) and in road construction and maintenance (96.10 %). The study also shows that the contractor in the sector of tunnel and subway (only 13.70 %), electric line and power station constructions (19.6 %) are very few in numbers.

5.2 Comparison of the Existing Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR 2056

- Most of the companies, 66.7 % of the companies have failed to meet the exact prescribed standard in overall consumption of the equipment as prescribed by CBA 2055 & CBR 2056.

5.2.2 Human Resources Available with Class A Construction Entrepreneurs

- The overall average number of civil engineers hold by Class A firm is 3, junior engineer 3, accountant 2 and supervisor is 5.

5.3 Financial Capabilities of Class A Construction Entrepreneurs

- Most of the firm(51 % to 64 %) has the annual turnover below ten crore on viewing the recent three fiscal years F.Y 069/070, 068/069 & 067/068
- The credit limit for most of the firm (50.9 %) , ranges between five to ten crore.
- Most of the firm (62.74 %) , has the overdraft facility below one crore.

5.4 Satisfaction of Class A Construction Entrepreneurs in Current Situation with Construction Business

- Few construction entrepreneurs (only 3.9 %) ,are extremely satisfied with the profession.

5.4.1 Common Problem and Difficulties of Class A Construction Entrepreneurs

5.4.1.1 Difficulties Felt in Criteria of Achieving Qualification Documents during Bidding Procedure by Class A Construction Entrepreneurs

- It is seen that the weighted average mean of 12.24 is highest for the annual turnover, second highest 11.38 for similar nature of work experience and third 9.19 for equipment required which have been felt the most difficult by contractors in prequalification part of bidding documents made by public entities.

5.4.1.2 Difficulties felt in Receiving Payment During Payment Schedule by Class A Construction Entrepreneurs

- It is seen that the weighted average mean of 10.48 is highest for the escalation amount, second highest 9.86 for running bill payments and third 8.90 for final bill payment which have been felt most difficult by contractors in the process of payment procedure made by public entities.

5.4.1.3 Difficulties felt in Revenue & Taxation Part by Class A Construction Entrepreneurs

- It is seen that the weighted average mean of 12.23 is highest for the refund of the amount of tax deduct at source, second highest 10.57 for obtaining tax clearance certificate and third 9.24 for issuance of license in the part of taxation process.

5.4.1.4 Difficulties Felt in Hiring Qualified Human Resource in Different Construction Sector by Class A Construction Entrepreneurs

- It is seen that the weighted average mean of 11.79 is highest for the tunnel sector, second highest 10.57 for hydropower sector and third 8.21 for bridge sector which has been felt insufficient in the part of manpower availability.

5.4.1.5 Insecure Felt Due to Hooliganism During Stages of Tender Purchase, Tender Drop and Construction Site Execution Works by Class A Construction Entrepreneurs

- It is seen that the weighted average mean of 21 is highest for the construction site execution and second highest 19.83 for tender document drop during which contractors feels unsecure in their business.

CHAPTER-6 CONCLUSION AND RECOMMENDATION

Based on the observations and findings of the study, the following conclusion and recommendation are made:

6.1 Conclusion

6.1.1 General Information

- Specialization in construction by contractors seems not to be adopted as most of the contractor seems to work in various field of construction.
- Most of the budgets in this fiscal year 2013/014 has been allocated in energy sector (73.15 %) but the participation of contractors in building infrastructure regarding electric line and power station (19.6 %) are very few in number.

6.1.2 Existing Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR 2056

- Most of the construction entrepreneurs of Class A firm (66.7 %) in Nepal does not meet the standards of equipment as prescribed by CBA 2055 & CBR 2056.

6.1.3 Financial Capabilities of Class “A” Construction Entrepreneurs

- Most of the firm(51 % to 64 %) has the annual turnover below ten crore on viewing the recent three fiscal years F.Y 069/070, 068/069 & 067/068
- The credit limit for most of the firm (50.9 %) ranges between five to ten crore.
- Most of the firm(62.74 %) has the overdraft facility below one crore.

6.1.4 Satisfaction of Class A Construction Entrepreneurs

- Most of the construction entrepreneur (96.1 %) is not extremely satisfied with the current situation ongoing in their business.

6.1.4.1 Common Problem and Difficulties of Class A Construction Entrepreneurs

6.1.4.1.1 Difficulties Felt in Criteria of Achieving Qualification Documents during Bidding Procedure by Class A Construction Entrepreneurs

- Most of the contractor are finding difficulties in meeting criteria for turnover part and similar nature of work experience of qualification documents asked during the bidding procedure by public entity.

6.1.4.1.2 Difficulties felt in Receiving Payment During Payment Schedule by Class A Construction Entrepreneurs

- Most of the contractors are not satisfied with the process in getting escalated amount, running bill payment and final bill payment from public entity during making payment.

6.1.4.1.3 Difficulties felt in Revenue & Taxation Part by Class A Construction Entrepreneurs

- Most of the contractors are not satisfied with the process in refunding of the amount of tax deduct at source and obtaining tax clearance certificate at the end of fiscal year.

6.1.4.1.5 Difficulties Felt in Hiring Qualified Human Resource in Different Construction Sector by Class A Construction Entrepreneurs

- Currently, there is a lack of skilled manpower in tunnel sector, hydropower sector and in bridge sector most in Nepal by respectively as felt by Class A contractors.

6.1.4.1.6 Insecure Felt Due to Hooliganism During Stages of Tender Purchase, Tender Drop and Construction Site Execution Works by Class A Construction Entrepreneurs

- Most of the contractors feels insecure during site execution and during tender document drop.

6.2 Recommendation

6.2.1 General Information

- Contractors need to focus in some particular area or sector of construction work instead of targeting almost all the sectors inorder to expertise in a particular sector to enhance the quality and sepcialization of work.
- It is clear from the study that there is more opportunity in construction if the contractors manage to enter in the construction of energy sector.

6.2.2 Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR

- It was clear from the study that most of the firm were not following the standards to own heavy equipments, which means they are using these heavy equipments on rent or outsourcing from other. This means that these firm are still not following the standards on the ownsership of equipments as prescribed by CBA 2055 and CBR 2056. Hence these companies need to consider in purchse and ownership of heavy equipment as per the prescribed standards of CBA 2055 & CBR 2056. There should be a systematic monitoring system for to maintain the standard of equipment of class A contractors after the issuance of license as class A .

6.2.3 Common Problem and Difficulties of Class A Construction Entrepreneurs

6.2.3.1 Criteria on Qualification Documents

- Public entity must be more flexible in terms of present policy while preparing similar nature of work experience and annual turnover part during preparation of qualification procedure for procurement aiming more participation of contractor during bidding procedure.

6.2.3.2 Payment During Payment Schedule

- Public entity must create suitable environment for payment procedure in escalated amount, running bill and final bill payment.

6.2.3.3 Revenue & Taxation Part

- Simple procedure should be formulated for refunding of the tax deduct at source amount and tax clearance at the end of fiscal year for construction entrepreneurs by Inland Revenue Office.

6.2.4.4 Qualified Human Resource in Different Construction Sector

- Special training for labours should be provided to produce the skilled manpower in tunnel sector, hydropower sector and bridge sector.

6.2.4.5 Tender Purchase, Tender Drop and Construction Site Execution

- Special separate laws and policies regarding security should be formulated for contractor business during bidding procedure and for the execution of work at site .

6.3 Recommendation for Future Research

The aim of the study was to identify and compare the current status of Class A construction entrepreneurs in terms of equipment capability as prescribed by CBA 2055 and CBR 2056. Furthermore, this research also studies about the financial capabilities of firms in terms of credit limit and overdraft facilities and also explore the common problem in criteria of qualification, payment procedure, security matter, taxation and unavailability experienced by manpower by Class A contractor.

Furthermore, this study enclose particular scope. There can be requisite for a further research into other areas in the construction entrepreneur’s status. The following recommendations are suggested for future research on:

i) To study on status of construction companies of registered class B, C or D construction entrepreneur.
ii) To study on opportunity and challenges on specialization on nature of works to Nepalese contractor.
iii) To study on laws and policies regarding security for healthy construction environment of bidding procedure and working environment in Nepalese construction projects.

References:

Bhattarai, Deepak, (2069, Mangsir), The Neplease Construction Industry is at Risk, Nepalese Construction Souvernir , Vol: 18, No.21, Federation of Contractors’ Associations of Nepal (FCAN), Kathmandu

Deoja, B.B, Adhikari R.P, and B.R Pandey, Prospects and Approaches to Public Private Partnership in Transport Infrastructure(August 2009), Economic Policy Network

Government of Nepal, Standard Prequalification Document (2009), Public Procurement Monitoring Office, Tahachal, Kathmandu

Lama, Ang Dorje, 2002. “Present Status of ‘A’ Class Contractors in Nepal and Qualification Criteria for them” Centre for Post Graduate Studies, Nepal Engineering College

Pandey, Birendra Raj ( 2069, Mangsir,), Capacity Building of Construction Industry- Project Level, Nepalese Construction Souvernir , Vol: 18, No.21, Federation of Contractors’ Associations of Nepal (FCAN), Kathmandu

Pandey, Birendra Raj ( 2057, Mangsir,), Nepalese Contractors: A discussion, Nepalese Construction Souvernir , Vol: 10, No.13, Federation of Contractors’ Associations of Nepal (FCAN), Kathmandu

http://www.ppmo.gov.np/about_us.php?menu_id=1 cited on 2013-05-28

http://www.moppw.gov.np/ cited at 2013-05-28

http://www.cbps.gov.np/ cited at 2013-05-28

http://www.fcan.org.np/pages.php?pid=86 cited at 2013-05-29

http://scaef.org.np/conference/conference/pdf/Session-3/2.%20Tulasi%20Sitaula%20- %20Theme.pdf cited on 2013-05-28

http://www.mof.gov.np/files/DCR.pdf cited at 2013-05-28

http://www.asosai.org/R_P_auditpublicworks_projects/chapter_15_nepal.htm cited on 2013-15-18

http://www.fcan.org.np/pages.php?pid=83 cited at 2013-05-29

http://www.myrepublica.com/portal/index.php?action=news_details&news_id=45497 cited at 2013-05-20

http://www.thehimalayantimes.com/fullNews.php?headline=Contractors+warned+for +work+delay++&NewsID=309390 cited at 2013-05-22

http://www.ekantipur.com/2013/04/16/development/development-projects-run-late- due-to-slow-govt-contractors/370063.html cited at 2013-05-24

http://stats.kkk.com.np/2013/04/08/business/two-more-infra-projects-under-ppp- model/369671.html cited at 2013-05-24

http://www.housingnepal.com/news/national/kalika-construction-bags-fcans-class-a- gold-award cited at 2013-05-28

http://www.abhiyan.com.np/article- thecorporate_vol2_Issue51_mainnews1#.UZ8l_XWNFzU cited at 2013-05-24

http://en.wikipedia.org/wiki/Brain_drain cited at 2013-09-20

http://www.nepalenergyforum.com/govt-emphasizes-hydropower-infrastructure- development/cited at 2014-01-09

Bibliography:

Journal of Federation of Contractor Associations of Nepal (FCAN), “Volume; 9, no.12,Feburary 2000” ; “Volume 17,no.20, September 2011”; “Volume 18 , no.21, November 2012”

www.fcan.org.np cited at 2013, March 18

Appendices

Annex-A

(Figure of Special Purpose of Company)

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Source: Prospects and Approaches to Public Private Partnership in Transport Infrastructure, August 2005.

Annex-B

(Requirements of Machine & Equipments as per CBA 2055 & CBR 2056 for Class A Construction Entrepreneurs)

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Source: CBA, 2055. & CBR, 2056.

Annex-C

(List of Class A Contractors affliated with District Association)

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(List of Class A Contractors affliated with Associates Member)

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Source: FCAN Journal, 2012

Annex-D

(Overall Standard meeting of equipments as per prescribed in CBA 2055 & CBA 2056 by Class A Firms)

Equipment Analysis

Annex-E

(Questionnaire for Contractors)

The research is being undertaken by Mr. Suresh Adhikari, a third semester student in MSc. Construction Management. This study is being undertaken to identify the “Status of Class A Construction Entrepreneurs in Nepal of Nepalese Construction Industry”. You are kindly requested to participate by completing the questionnaire. The information you provide will be used together with other information to come out with finding, suggestions and recommendations on finding Status of Class A Contractors.

It is hoped that you will complete the questionnaire as frankly and honestly as possible. Please be assured that your responses will be treated as confidential and used only for the purpose of this research study only.

Thank you.

Note: Please [illustration not visible in this excerpt] wherever is correct. For subjective question, please provide answer with specific response.

While ranking the answers please start from lower values of ranking number as quoted in each of the questions. Eg. 1,2,3,4,5,…. and so on. The lowest numerical means highest priority & highest numerical means lowest priority. For example numeric value 1 means the most priority you have given, 2 means less priority you have given, 3 means least priority you have given and so on.

Name of the company :

Address:

Office phone no:

A. General Information

1. Please mention the type of partners involved in your Company.

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2. Are all partners listed in your company registration actively working in the firm?

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3. Has your firm only worked under a particular construction area (specialized) (eg. Building, Road, Bridge etc. Only one sector) construction, from the date of establishment of your firm?

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If yes, please mention in which sector?

4. Please provide the information about the nature of works that your firm had constructed from the date of establishment till present. Please mention

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B. Technical Information

5 . Please provide the information about equipments and machineries your company has been holding till the date.

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6. Please provide the permanent human resources in your organisation at recent employment. Please mention in detail as.

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C. Financial Information

7. Please provide the annual turnover of your company as specified in table?

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8. Please list out the present credit limit of yours firm in Nrs..

a) Below 1crore b) 1 - 5crore c) 5 - 10crore d) Above 10crore If above 10 crore, please specify in Nrs

9. Please list out the Permanent Overdraft of yours firm in Nrs..

a) Below 1crore b) 1 - 5crore c) 5 -10crore d) Above 10crore If above 10 crore, please specify in Nrs

D. Problems, Difficulties and Satisfaction

10. Are you satisfied with your profession as Class A construction entrepreneur. Please rank .The lowest numerical means highest priority & highest numerical means lowest priority.

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If not extremely satisfied, then

Please mention which of the following parameter has been hindering you for being not satisfied. Please rank .The lowest numerical means highest priority & highest numerical means lowest priority.

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11. Please mention which part of tender document you feel as tough pre-qualification procedure as per your experience. Please rank .The lowest numerical means highest priority & highest numerical means lowest priority

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12. Please mention in which part of payment procedure you have been delayed during project run from employer as per your experience. Please rank .The lowest numerical means highest priority & highest numerical means lowest priority.

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13. Please mention where have you felt not insecure during your profession as per your experience. Please rank .The lowest numerical means highest priority & highest numerical means lowest priority.

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14. Please rank the part of taxation system you have found has been tough in your profession as per your experience .The lowest numerical means highest priority & highest numerical means lowest priority.

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15. Please mention the sector where s you found deficit (unavailability) of skilled manpower during execution of project as per your experience. Please rank .The lowest numerical means highest priority & highest numerical means lowest priority.

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16. Please suggest based on your experience in Construction Field, how can we uplift the profession of Class A contractor in future. Please rank .The lowest numerical means highest priority & highest numerical means lowest priority.

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