ISLAMABAD: Based on the report of a consultant, the Federal Government Employees Housing Authority (FGEHA) wants to change the mode of contract for the development of Bhara Kahu Green Enclave-I housing project from the fixed price contract to measurement-based contract.

The FGEHA through a joint venture with a private firm M/s Green Tree is executing the delayed project. The project comprises 3375 kanals and has 3282 plots of different sizes.

The FGEHA had signed the construction agreement with the private company in April 2019 and the project started in December the same year. It was to be completed in two years, however till date the physical progress of the project is 55pc.

The project has missed several deadlines. According to documents of FGEHA, the project has been delayed substantially and the development activities at the site were halted multiple times. The project remained closed from April 4, 2022 to Jan 31, 2023 due to a dispute over its physical progress. Later, it was halted for five months from July 2023 to November 26 due to the expired performance bank guarantee. It was again halted from March to May 2024 due to an issue related to the extension of the deadline.

The documents said issues and challenges of the project can be divided into three main categories - financial, land and development/contractual. In order to resolve these issues and complete the project on time, the JV partner has been engaged multiple times at the departmental level.

According to the documents, the JV partner has mutated 3250 kanals out of the 3375 kanals in the name of FGEHA and remaining 125 kanals was yet to be mutated. Furthermore, pursuant to the JV agreement, the private company is bound for the construction of a road from Angori Road to the housing scheme free of cost, which is yet to be constructed. The total payment of land made by FGEHA to the JV partner till date is Rs3244 million.

The main challenge of the project is the existing mode or nature of construction agreement which in its current form makes the execution difficult, it added. The construction agreement was an EPC (design & build and fixed priced contract) which was initially set to expire on December 6, 2019, but extended twice upon the recommendations of the engineer. The first extension expired on May 25, 2023 and the second on January 25, 2024. Moreover, deletion of escalation and variation clauses further restricted its execution.

The documents said Bill of Quantity (BOQ) of the project was based on NHA and MES schedule-2014 with 20pc and 15pc premium, respectively.

“Due to Covid-19 and unprecedented price hike in the recent past, it became difficult for the JV partner to work on these rates. Accordingly, JV partner requested on 12th January 2024 to change the mode of the contract from EPC to measurement based. Subsequently, recommendations of the engineer, M/s Nespak were sought for conversion of mode of contract,” read the documents.

Meanwhile, the documents said PEC on March 4, 2024 allowed escalation on fixed-price contracts for the portion of the work executed from January 1, 2021 onwards. “Physical and financial progress of the project as in July 2024 is 55pc and 50pcm respectively,” it added.

Published in Dawn, August 20th, 2024