The Road Development Authority (RDA) has re-advertised the first phase of the Central Expressway Project’s fourth section, cutting the estimated cost of the 38.5-kilometre Galewela-Dambulla stretch by nearly Rs. 44.7 billion.
The revised engineer’s estimate stands at Rs. 190.855 billion, down 20 percent from the original Rs. 235.529 billion. The dramatic reduction follows a review by the Bid Evaluation Committee (BEC) and the Ministry of Transport, Highways and Urban Development of how construction prices were benchmarked for the project.
The initial estimate was based largely on average prices submitted by contractors for CEP 3 Phase 2, covering the Rambukkana-Galagedara section. Those rates were then subjected to price escalation between January and May this year, followed by another escalation intended to reflect prevailing market conditions.
But the BEC found a problem with that approach.
According to its report released this week, contractor bids for CEP 3 Phase 2 were approximately 20 percent above the original estimates for that project. The committee attributed those higher prices to project-specific construction difficulties.
Using those already inflated bid prices as the benchmark for CEP 4 Phase 1, and then adding further escalation, could therefore have produced an artificially high estimate, the BEC and ministry concluded.The committee instead recommended using the average contractor bid rates from CEP 3 Phase 2 after removing the escalation component. That methodology has now translated into a significantly lower estimate for the new tender.
The reduction raises an important question for public finances: whether the original CEP 4 estimate reflected genuine prevailing construction costs or inherited the consequences of exceptional conditions on another section of the expressway project.
The answer matters because the project will be financed entirely through government funds.CEP 4 Phase 1 has been divided into 12 packages covering the Galewela-Dambulla route. The second phase, from Kurunegala to Galewela, has not yet been advertised.
The re-advertisement also comes with changes designed to affect who can compete for the contracts. The bidding period has been extended to at least 21 days from the date of republication because of the substantial revisions made to the tender documents.
Among the new provisions is a requirement intended to prevent contractors from relying entirely on a bank credit line to demonstrate financial capacity. Instead, bidders will need to show that they have substantial working capital available to execute the work.
Several qualification requirements have also been relaxed to widen participation among capable local contractors. Bidders must demonstrate completion or substantial completion of at least five similar contracts within the past 10 years.
The revised tender therefore represents more than a simple cost reduction. It changes both the financial benchmark and the competitive rules governing one of the country’s largest infrastructure projects.