Time and cost overruns in execution of Projects in Indian context, is a rule rather than exception . Among several maladies giving rise to the time and cost over runs, two, were found to be very prominent :

• Absence of an Equitable procurement process (Bidding conditions, contract agreement etc.)

• Dispute resolution mechanism adopted by various owner/contracting organization.

Absence of an equitable contract form, and inter-alia an effective and speedy dispute resolution mechanism ails the overall performance of the Industry, and results in substantial drain on public exchequer as well. It is noteworthy to mention that, the Government, in all its forms viz:. Ministries, Departments, Public Sector Undertakings, both at Central and state level, are the biggest procurers / purchasers of services and therefore suffer most.

Survey conducted by CIDC shows that disputes valuing over Rs.52,000 Crores are lying unresolved, for an average period of 7 years, resulting in infructous effort and higher costs, for all concerned.

With a conscious thrust on the development of Physical Infrastructure, and new emerging opportunities, it is now very necessary that these two impediments, be removed, lest the fruits of such opportunities are lost.

Recognizing, introduction of an effective dispute resolution mechanism, as an integral part of the overall procurement system among several other issues, CIDC set up a high powered committee, to rationalize /harmonize core conditions of domestic bidding contracts, and also to recommend a model contract document, embodying provisions for a speedy dispute resolution.

Recognizing, introduction of an effective dispute resolution mechanism, as an integral part of the overall procurement system among several other issues, CIDC set up a high powered committee, to rationalize /harmonize core conditions of domestic bidding contracts, and also to recommend a model contract document, embodying provisions for a speedy dispute resolution.

The document thus prepared was forwarded to the Ministry of Statistics and programme Implementation, for adoption and the Ministry, after a long deliberation and seeking comments from various Ministries and PSUs, recommended following guidelines for procurement of projects.

• Standard Contract Clauses for Domestic Bidding Contracts

• Standard General Conditions for Domestic Contracts ( SGCDC )

Further, CIDC discussed the issue of dispute resolution, within their Board of Governors and it was felt that apart from laying down a working system, logistical support be also provided by CIDC to successfully implement the recommended mechanism viz. Establishing Arbitration courts etc. Relevant extracts of the minutes of the Board Meeting attached.

This Action Plan details the proposed actions to be taken by CIDC.

CIDC Mandate:

As recommended by the Ministry of Statistics and Programme Implementation through the approved guide lines, the mandate and role of CIDC, shall be as follows.

• To appoint the Conciliator at the request of party entering in contract ………Ref. Clause 36 conciliator, PP 31 of SGCDC.

• To determine the terms and rate of payment for the services of the Conciliator …Ref clause 36 Settlement of disputes, PP 52 &53 of SGCDC.

• To consider reference made by a party and to appoint an Arbitrator from their Panel…. Ref clause 25.4 (i) Arbitration PP 54 of SGCDC.

• To conduct Arbitration proceedings by CIDC committee of Arbitrators ….Ref. clause 25.4 (vi) Arbitration PP 54 of SGCDC

CIDC, shall not conduct the Conciliation, adjudication and arbitration process themselves, however shall act as a facilitator by initiating following actions : -

• Developing a Facilitation Frame Work :

  • Preparing a panel of Conciliation and Arbitration for enabling the partners to make an early selection.

  • Laying down the qualifications / eligibility criteria for admission of Conciliators / Adjudicators / Arbitrators, for inclusion in a CIDC Panel, and to periodically upgrade this panel, based on the performance reports of such individuals, who are a part of CIDC Panel

  • Laying down the norms for the practice of Conciliation / Adjudication / Arbitration, in accordance with the prevalent legal provision, and modifying them based on any changes in the legal / regulatory framework, as applicable from time to time.

  • Laying down the code of conduct / ethics/ service fee structure for the Conciliators / Adjudicators/ Arbitrators, to establish dispensation of a fair, transparent, and efficient dispute resolution service.

  • To ensure adherence of code of conduct / ethics and other norms, by empanelled experts on CIDC panel, and to take such remedial measures in case of violations by empanelled experts , as may be prescribed from time to time by CIDC.

  • To network with other bodies, who offer such facilitation, whether domestic or overseas, to introduce good work practices in the operations.

  • To propagate the benefits of the processes adopted by CIDC, for achieving wider acceptability.

• Logistical support for the conduct of Arbitration Proceedings :

  • To provide physical infrastructure, such as designated arbitration / conciliation premises for an uninterrupted conduct of the proceedings.

  • To provide related logistical support, such as recording, secretarial assistance to ensure smooth operation.

  • To maintain and keep the records, build a reference library of past proceedings, for the reference and benefit of the users.

  • To convert the entire transaction in e-mode for speedy dispensation of cases.

  • To take any other action to fulfil the stated objectives.

Duration :

The time for concluding the blue print would be one month, with another month for initiating the application of plan.

Chairman, CIDC may approve for implementation.