60% local, Contractors Association wants greater input in home construction

Glenn Mahabirsingh is primed and ready to lobby for the local construction industry. As the new president of the TT Contractors’ Association, he wants to raise awareness of the group’s causes, especially its advocacy for increased transparency in procurement and tending processes in the sector, in accordance to the Procurement Act.

“Our objective at this time is to continue our lobbying for the full proclamation of the procurement legislation as well as driving local content. It’s most critical (for the industry). With this legislation fully proclaimed, it will be added value to the industry as well as taxpayers and the country in general,” Mahabirsingh told Newsday in a recent interview.

There are two specific sections that the association wants proclaimed urgently: Section 27, which requires state agencies to publish all planned projects for the next 12 months within six weeks of the national budget being approved, and Section 29, which outlines the due diligence for which a contract may be awarded, including ensuring bidders for contracts are solvent and able to meet obligations and industry standards.

Section 27, Mahabirsingh said, would assist private sector and contractors in planning their capacity for the year ahead because then they would know what projects are in the pipeline and what would be coming to the market, as opposed to the current situation where contractors only know what’s happening if it’s formally announced or published in the press.

Then there’s funding for payment, Section 29 (b), where a project can’t be started unless funding has been identified and secured.

Overall though, Mahabirsingh said in general the legislation will level the playing field because all contractors would have an equal opportunity to bid.

Another big issue for the association is local content. “We have contractors with large establishments who have made big investments in plant and equipment and at this point in time we have idle capacity.”

Among the local industry’s competitors are Chinese firms who by virtue of Chinese funding on certain projects end up being the preferred contractor. One such project is the recent multi-million-dollar agreement between the Housing Development Corporation (HDC) and China Gezhouba Group International Engineering Co Ltd (CGGC) for 5,000 housing units throughout TT, starting with 235 units at Lady Hailes Avenue in San Fernando, and 204 at South Quay in Port of Spain in phase one. Phase one was estimated to cost US$72 million.

The TTCA has reached out to the Ministry of Housing to discuss how local contractors can be incorporated into the process.

“We understand that the decision would have been made because of a finance arrangement which any government would accept in a state where there are limited financial resources,” Mahabirsingh said. “We need participation. We need to understand what is the local content policy and conditions written into the contract.”

The figure always bandied around is 40 per cent local content, but on a housing project the association feels that could be higher – closer to 60 per cent.

Most other foreign contractors would target the mega projects, he said, but some state agencies, like the National Infrastructure Development Corporation (Nidco) with the Tobago airport and highway expansion project, specify which parts will be allocated exclusively to the local market and include it in their pre-qualification questionnaires.

“There has been a move by the state in the procurement model that they can engage locals as well as foreigners especially in expertise,” Mahabirsingh said.

Regardless, he has a positive outlook on the industry’s trajectory, not the least because of an election season boom.

The last two to three years have been slow but over the last 12 months there have been a lot of projects out to tender, including the Sir Solomon Hochoy Highway extension, lots of bridges, coastal projects, the Valencia highway, the Curepe interchange and several ongoing projects for upgrades to critical infrastructure.

“TT is a developing state so we really need the government develop critical infrastructure – roads, highways, drainage – but we are always open to more public-private partnerships… where private sector investment and the development programme can dovetail. It’s critical that that happens.”

The industry would, however, also like to see more policies directed to projects that could add to the country’s productive ability.

“We would want to see more projects that support diversifying the economy, where you construct a manufacturing facility or agro-processing facility that could generate export potential and foreign exchange earnings.”

But construction has always depended on government spending, he added, which is why the association demands the proclamation of the procurement legislation.

In terms of the debt owed to contractors – a constant bugbear of the industry – Mahabirsingh said the Cabinet committee on the construction industry, set up last year and chaired by the Prime Minister, has been working diligently to get the issue resolved. He declined to give a figure on the outstanding amount owed because of the dynamic nature of the discussions. It had been reported that after discussions and reviews of outstanding claims, last September the government agreed to pay $676 million to settle some of its debt. The struggle to get paid from the state is also apparently getting better.

“What we have seen over the last two years is most of the current contracts that have been awarded, they might be late but contractors are getting paid. We haven’t had any major report from membership in terms of delayed payments from current contracts. Yes, there is a backlog but the committee is dealing with it.”

Overall, despite some technical issues, like waiting on licences from the government to alleviate the red sand shortage, revising the wait time for a class seven driver’s permit to drive heavy machinery, and the cost and strain of foreign exchange constraints for importing equipment parts – and most recently with the closure of Petrotrin – bitumen for roadworks, Mahabirsingh and the TTCA have a positive outlook for the industry.

“The industry is rebounding. Really, with the procurement legislation and the upcoming election the only damper we see in the next six months is the weather.”

About Glenn Mahabirsingh

Glenn Mahabirsingh was previously the vice president of the TTCA. He is the general manager for operations at Coosal’s Group of Companies. He has over 20 years' experience within the construction sector, specialising in project management, construction management and contacts administration. He has a master's in construction management from the University of the West Indies. Prior to joining Coosal’s, he held various management positions at eTecK, Home Construction Limited, West Atlantic Construction Co Ltd and Vikab Engineering Consultants Limited.