a) Key objectives of the policy.

i. Harmonizing roles and responsibilities of the public and private sectors for effective
management of the national construction industry. Strategies include: training staff in
Government departments to improve performance in their roles; strengthening public
institutions to manage their roles; and improving service delivery and implementation of
works using the private sector.
ii. Regulating and coordinating the national construction industry. Strategies include:
Establishing a Uganda Construction Industry Commission (UCICO) to regulate and
coordinate the construction industry; establishing a stable and secure regulatory
framework; and supporting the development and operations of the professional
stakeholders in the national construction industry.
iii. Developing and strengthening capacity of local firms for effective participation in the
construction industry. Strategies include: Supporting and strengthening the contractors’
and consultants’ associations and establishing a Construction Levy managed by UCICO.
The Commission will raise and manage funds to support training centers, institutions and
research initiatives in the construction industry.
iv. Facilitating local firms in the construction industry to access equipment, credit and work.
Strategies include: reviewing Clauses in the tender documents related to Advance
Payment and Performance Guarantees to make them less stringent and enable local firms
to access up-front financing of projects; contracting of physical infrastructure
maintenance works funded by Government to local firms; and formulating a Reservation
Scheme in line with Procurement and Disposal of Public Assets Act (PPDA) for physical
infrastructure development works and consultancy services funded by both Government
and Development Partners.
v. Promoting new and appropriate types of technologies in construction and maintenance of
physical infrastructure facilities. The number and type of employment opportunities to be
generated will influence the choice of technology to be applied. Strategies include:
Promoting labor-based technology as the technology of first choice in construction of
roads; and undertaking further research in the use of new and appropriate technologies
for construction and maintenance of physical infrastructure facilities.
vi. Removing restrictive practices to participation of marginalized groups in the construction
industry. Strategies include: ensuring that concerns of the marginalized groups are
explicit and verifiable in the policies, plans, and budgets of key stakeholders in the
construction industry; and concerns of marginalized groups are adequately addressed in
execution of physical infrastructure projects.
vii. Ensuring that the national construction industry supports sustainable economic and social
development of the country. Strategies include: ensuring that environment is protected in
the process of planning, design, development and maintenance of physical infrastructure
facilities; ensuring that contractors and consultants promote occupational health and
safety of workers in provision and maintenance of physical infrastructure facilities; and
ensuring that the construction industry promotes safety and security of the constructed
physical infrastructure and the providers.
b) Weaknesses identified by the policy and proposed remedies.
i. Contracting Issues

The following issues and constraints affecting development of the NCI have been identified
during recent studies in Uganda.

 Limited Capacity

The majority of big constructions are being executed solely by a few international firms.
Only a small percentage of the local firms are able to compete against, or work in joint-
venture with international firms. Consequently, small firms are unable to develop their
capacity and expand their market share to develop into medium-size or large-scale
companies. The small firms are confined, due to their limited size and resources, to
undertaking only small building and occasionally minor civil engineering works.

Limited management capacity and business acumen within the contracting sector is
exacerbated by the vicious circle of: no experience - no job - no experience…

Restricted access to equipment leads to poor performance and yet equipment enhances
performance and is one of the criteria for registration and classification of contractors.
  Limited Access to Credit

Limited access to credit and loan facilities for short term bridging finance required for project
implementation, and long term capital to cover the cost of business establishment and growth
is a serious barrier to the development of the capacity of private firms.

 Limited Work Continuity

Limited work continuity due to absence of adequate workload offered by the public sector
wipes out any gains the NCI may have registered from occasional contracts.

To ensure increasing effective participation of local entities in the construction industry,

which will facilitate their growth, measures need to be put in place to continuously generate
work for the contractors.

ii. Consulting Issues

 Informal Sector Practices

The number of registered consulting firms or consultants is quite small. The inference is that
there exists in the consultancy industry an ‘informal sector’ to cope with the net demand for
design and supervision of construction projects. This may be attributed to practical
difficulties faced by the respective registration boards in enforcing their mandate.

 Constrictions in Capacity Development

The consultants, like the contractors, are faced with the vicious circle of: Can’t get work-
can’t get experience- can’t get registered- can’t get work.

iii. Institutional and Human Resource Development Issues

 Need for Institutional Capacity

The role of Government and local councils in project planning and management, contract
procurement and administration is increasingly becoming more crucial in line with the
increasing departure from force account in favor of private sector participation at the
appropriate technology levels. Therefore, there is need for a well-developed institutional
capacity within each individual service provider in the public service domain.
  Need for Human Resource Development

The human resource skill in the public sector is not well developed in tandem with the
changing public service delivery culture. Project planning and management, and contract
administration skills need to be developed in order to ensure value for money.

In addition the number of technical professionals in the country is still low. Other than the
Ministries of Works and Transport and that of Water and Environment which have good
numbers of technical professionals other Ministries which are involved in supervision
construction work lack them.

Most training institutions are unwilling to develop tailor-made courses unless there is
effective demand from both public and private sector although they are equipped with
general management skills.

iv. Registration and Procurement Issues

 Registration and Classification Scheme

The classification of contractors and consultants under the current registration system in
Government departments lacks a legal basis. The scheme does not also differentiate between
foreign and local firms to avoid unfair competition for jobs. Government departments
carryout registration and classification of firms using differing criteria. In addition the criteria
are not stringent enough to bar ill-equipped and inexperienced firms. Even the review periods
are different.

 Tendering

a) Lowest price – the criteria for award of tenders based on lowest price is associated
with the following problems:

i) Underpricing and failure to execute the work;

ii) leads to too many claims, which are often cumbersome to evaluate and agree upon;

iii) Does not allow growth of providers, often leading to insolvency and bankruptcy; and

iv) PPDA Regulations do not explicitly state how to avoid underpriced bids.
 b) Competition - PPDA Regulations emphasize competition as a principal objective of
public procurement. However, there are cases where there are few providers e.g. construction
and maintenance of bitumen roads. This often encourages formation of cartels among
bidders, resulting in high prices. The use of competition is not practical in emergency
situations.

c) Joint Ventures and Mandatory Sub-Contracting - Most of the construction works,

particularly in the road and water sectors, are funded by development partners. None of our
local providers are able to compete in an International Competitive Bidding and win a bid on
their own. The PPDA Regulations needs a section which compels foreign companies to form
joint ventures or associate with local firms or sub-contract a defined percentage of the work
or services, for purposes of improving the participation and development of our local firms.

d) Cost Variations

i) No cost variations are allowed on maintenance contracts and yet the cost of some inputs
like fuel is erratic.

ii) The fairest method of assessing cost variation is the use of a Price Adjustment Formula
based on Consumer Price Indices. Capacity to develop and regularly update these indices is
required in UBOS to ensure readily available and reliable data.

e) Conditionalities for Guarantees

i) Bid Security and Advance Payment Guarantee – too harsh for most providers due to the
current requirement of Bank Guarantees.

ii) Performance Guarantees – Both Bank Guarantees and Insurance Bonds are allowed.
However, there are high chances of failure to recover funds guaranteed with Insurance
Bonds.

f) Conditionalities for Post-Qualification

Conditions for post-qualifications, particularly in ICBs, tend to be very stringent and can not
be met by local providers. These conditions often relate to Experience, Annual Turnover,
Equipment, Personnel, Audited Accounts, and Eligibility etc.
c) Extent to which the UCICO bill operationalizes the NCI policy.
i. Periodically review strategic issues that are crucial to the development of the
construction industry, develop priorities and establish reform objectives, targets and
appropriate performance indicators in the construction industry;
ii. Periodically collate information on construction expenditure, monitor construction
costs, propose cost control measures and advise Government on demand and public
sector measures to level spending into the sector in case of elasticity in demand;
iii. Register, classify, monitor and evaluate performance of contractors, consultants,
suppliers and manufacturers rendering services in the construction industry;
iv. Periodically assess and advise Government on levels of the construction levy charged
to contractors and consultants and its effective application in meeting the objectives
of this Policy;
v. Periodically develop measures to improve communication among industry
stakeholders to harness the commitment, experience and skills of industry participants
and to share the knowledge and experience in a manner which will assist them to
work together and appreciate each other; and
vi. Continuously promote programmes and projects aimed at supporting Small and
Medium Enterprises (SME), enhancing skills in the industry, accessing training,
providing career guidance, promoting best design practices and research and
development.