cownasszena/m0 i GOVERNMENT OF KERALA Abstract Finance Department — Kerala Infrastructure Investment Fund Roard - Guidelines for material price escalation for KIIFB projects- Sanctioned — Orders Issued FINANCE(INFRASTRUCTURE)DEPARTMENT G.0.(P)No.84/2023/FIN Dated, Thiruvananthapuram, | 023 Read Proceedings No.FA-7/2982/2022/KIIFB dated 07.08.2023 of the Chief Executive Officer, KIIFB ORDER Government has assigned KIIFB the key role of developing critical infrastructure through financial assistance and technical support to Special Purpose Vehicles (SPV)formed by Government. Considering the nature of the projects and their role in accelerating economic growth of the state, it is essential that they are completed in a time bound manner and put to use. These projects are being executed by SPVs through public works contract systems followed either Government of Kerala or Government of India. One of the major issues hindering the timely completion of the projects are reported by various SPVs as the increase in construction materials price, labour cost and other overheads. Many of the KIIFB projects are delayed or foreclosed in recent times as the contracts with fixed item rates could not be executed by the contractors due to reasons beyond their control. Some of these projects are extended beyond the original period of completion due to various reasons like non availability of land, shifting of utilities, Covid-19, delay in finalization of design/drawings etc. As these delays are not attributable to the agency who is executing the work, SPVs have intimated that the contractors arecounraes/20a0/r requesting for price variation due to increase in cost materials, labour and other overheads so that the projects can be completed and delivered. SPVs have also conveyed the fact that they are unable to process the price variation as the price variation clause applicable for long duration projects are not included in the original contract. ‘The specific situation of price increase and need tor completing the projects in a time bound manner, for incorporating price variation clause in ongoing contracts validly extended beyond 18 months or original time period whichever is higher due to reasons not attributable to the contracting agency were placed before the KIIF Board chaired by the Hon'ble Chief Minister which approved the proposal placed before it. Based on the approval received, Government have examined the matter in detail and is pleased to issue the following guidelines for KIIFB funded projects: 1. Whenever time period is fixed by SPV the contract period shall be realistic and shall not be reduced to avoid the applicability of price variation clause existing in the standard bidding documents of PWD/CPWD and also the provisions of respective manuals. SPV also shall ensure that the price variation clauses are not avoided when the time period prescribed in the tender notification qualify the introduction of such clauses as per PWD/CPWD manuals and standard bidding documents. 2. In case of ongoing contracts, if the period of completion gets extended beyond the period qualifying the applicability of extension it is found that SPVs are not considering such validly extended period for price escalation even though the extension is not due to any lapses attributable to the contractor. Such escalation needs to be considered only for the items and quantities of work carried out beyond the contract period and beyond the qualifying period for escalation whichever is higher. However, it is to be» avon 2 ensured that the hindrances claimed by the contractor deserve merit by analyzing the causes on a case-by-case basis. TS authority of the SPV for the specific project shall assess the causes of such hindrances and make recommendations to KIIFB for considering such extension as valid enough for price variation. SPV shall follow the following guidelines while submitting such proposals to KIUFB. |. Whenever there is a need for Extension of Time beyond 18 months or original time period whichever is higher, the TS authority of the SPV shall evaluate each case and submit report to KIIFB with recommendations in TIMS (Technical Inspection Monitoring System) platform with prescribed form with all required documents. The detailed forms include the following: . Delay occurs in handing over the hindrance free site, due to LA, utility shifting ete. Natural calamities, restrictions during Covid-19 period etc. . Delay or slow progress not because of fault of contractor . Unforeseen delay not attributable to contractor Justified extension of time without penalty. SPV shall ensure all hindrance related documents as per G.O.(P) No. 254/14/Fin dated 02.07.2014, SPV shall submit all certified hindrance related documents in TIMS while submitting the proposal for price variation. . Wherever price variation is applicable in extended period as per para 2 above, it is calculated as per the formula detailed below: V= 0.85 x Rx {[ PL (L-LOYLO] + [PC (CI-COyCO] + [PS (SI-SO)/SO] + [PB (BI-BOYBO] + [PF (FI-FO)/FO] + [PM (MI-MOy/MO] + [PP (PI-PO)/PO]}‘Where, V - Price variation for increase or decrease in the cost due to various component. R- Total value of work done during the month. It would include the amount of secured advance granted, if any, during the month, less the amount of secured advance recovered, if any during the month. It will exclude value for works executed under variations for which price adjustment will be worked separately based on the terms mutually agreed. PL, PC, PS, PB, PF, PM, PP - Percentage of Labour, Cement, Steel, Bitumen, POL, Plant & Machinery and Other materials component of the work respectively. (Refer Table 2) LO - the consumer price index for industrial workers for All India on 28 days preceding the date of opening of Bids as published in R.B.I Bulletin, LI - The consumer price index for industrial workers for the Alll India for the period under consideration as published in R.B.I Bulletin. CO - All India average wholesale price index for cement, lime & Plaster for on 28 days preceding the date of opening of Bids as published in R.B.I Bulletin. CI- All India average wholesale price index for cement, lime & Plaster for the period under consideration as published in RBI Bulletin. SO - All India wholesale price index for Mild Steel — Long bars on 28 days preceding the date of opening of Bids as published in R.B.I Bulletin. SI - All India average wholesale price index for Mild Steel — Long bars for the period under consideration as published in R.B.I Bulletin. BO — Official retails price of Bitumen at IOC Depot at thenearest center on the 28 days prior to the date of opening of tender. BI — The average official retails price of Bitumen at IOC Depot at the nearest center for the 15 day of Calendar month under Consideration. FO - The official retail price of High-Speed Diesel (HSD) at the existing consumer pumps of IOC at the nearest center on the day 28 days prior to the date of opening of Bids. FI - The official retail price of HSD at the existing consumer pumps of IOC at nearest centre for the 15th day of the calendar month under consideration. MO - All India wholesale price index (all commodities) on 28 days preceding the date of opening of Bids, as published in RBI Bulletin. MI - All India wholesale price index (all commodities) for the period under consideration, as published in R.B.I Bulletin. PO - Alll India wholesale price index for heavy machinery and parts on 28 days preceding the date of opening of Bids as published in R.B.I Bull PI - All India average wholesale pri index for heavy machinery and parts for the period under consideration as published in R.B.I Bulletin. 4. The percentage of Labour, Cement, Steel, Bitumen, Fuel & Lubricants, Other Materials, Plant & Machinery for Roads, Bridges/Flyovers and RoBs are detailed below in Table 1. Table 1: Percentage weightage of components for Transportation projects ‘No, Component | Type of Projects (Percentage weightage of each | Component) | Bridges || Roads | /Flyovers | Railway Over Bridges | | 15 10 1 Fixed [ee 2 [Labour ‘Cement 4 Bitumen Steel Fuel & Lubricants Plant & Machinery Other Materials No price variation is applicable for the fixed component. 5. The percentage weightage of components for buildings and other than building works shall be considered as per Table 2. Table 2: Percentage weightage of components for Non- ‘Transportation projects | Type of Projects (Percentage weightage of | \No| Component each Component) ildings | Other than building works 1 Fixed 15 2 (Labour Egg SRE 3. (Cement Shree. fia) 0D aE iW lstect 20 | 0 5 [Other materials | 20 6 [Fuel & Lubricants| 10 | 15 Plant, Machinery | Eg ane a anGounase/202y77% 7. |& Spares 0 30 No price variation is applicable for the fixed component. 6. Price variation is applicable for contracts only after obtaining approval from KIIEB in TIMS platform. Price variation is applicable for projects where the actual/original completion date is after 31/03/2020 and satisfies para 2 above. Price variation is not applicable for the projects completed before 31/03/2023 and for the projects where final bills are submitted. Price variation is only applicable for the running projects. It is reiterated that only KIIFB funded projects which come under the scope of this order will be eligible for the price variations referred to herein. (By order of the Governor) K M ABRAHAM EX-OFFICIO SECRETARY To: The Principal Accountant General (A&E), —_Kerala, Thiruvananthapuram The Principal Accountant General (G&SSA), Kerala, Thirnvananthapuram The Accountant General (E & RSA) Kerala, Thiruvananthapuram SPV's Concerned The Chief executive Officer, KIIFB Forwarded /By order erg Mees ye« Accounts Officer