Highway projects: Earnest money deposit must for bidding

Highway projects: Earnest money deposit must for bidding

The ministry of road transport and highways (MoRTH) has reinstated the provision of Earnest Money Deposit (EMD) for highway project bids, a move that will ensure only serious bidders take part in the bidding process.

“Since there is no EMD deposit, bidders are quoting abnormally low prices for the bid and after winning the bid, they start searching for sub-contractor. This tendency will have an adverse impact on quality and timely completion of important highway projects,” MoRTH said, reversing its earlier decision.

At the rate of 1-1.5% of the project cost, EMD is required to be submitted at the time of submission of bid. Sans the requirement of the EMD, withdrawn from November 2020 to provide relief to contractors facing acute cash crunch during the pandemic time, the numbers of bidders for a project sharply increased, much higher than usual.

The trend of submitting very low bids has also been noticed for consultancy contracts as well in recent times.

“MoRTH’s decision to reinstate EMD will ensure only serious bidders take part. In the recent past, we have noticed the numbers of bidders for an EPC project going up to 40-45 compared with around 20 in normal situation. For HAM projects also, the number went up substantially,” said ICRA’s Rajeshwar Burla.


Check the source here –Source, Financial Express.