Financial Times

Like all good things, a report gathering dust
Kadirgamar: Pride of local building consultants
By Rukshan Widyalankara President, Sri Lanka Institute of Architects
Early in 1990 a Committee was appointed under the joint auspices of the International Labour Organization (ILO), Institute for Construction Training and Development (ICTAD), and Ministry of Policy Planning and Implementation, to examine the existing Consultancy services available to the Construction Industry and to make recommendations for upgrading those services.
The Chairman of the Committee was (the late) Lakshman Kadirgamar, President’s Counsel, who was appointed by the ILO.

The first meeting of the Committee took place on 22nd October, 1990, and thereafter the Committee held over 50 meetings. The final Report of the Committee commonly known as the 'Kadirgamar Report' was forwarded to the then government for implementation.

The consultancy sector of our industry is grateful to Minister Kadirgamar for his vision in the zeal with which he almost single handedly spearheaded the recommendations. It was almost the first time such a detailed document was compiled comprehensively analyzing the current issues.

Sweeping changes were recommended by this committee and these were to be adopted by the government for implementation as the national policy in the field of Consultancy Services in the Construction Industry.

Firstly, it was established that the array of skills and expertise available in Sri Lanka cannot be compared to those available in developed nor the newly industrialized countries.

This is largely due to the fact that in Sri Lanka the workload has not been maintained at a level at which new firms can be formed nor at which the established ones can maintain their staff strengths during slack periods. The lament has been that even the available work has been given to expatriates.
The financial resources available to the local consultancy industry are very limited. The cost of funds is extremely high; technical staff is relatively highly paid; and the cost of inputs such as consumables and other services is expensive and sophisticated.

While contractors are routinely given advances up to 20% of the contract value, consultants are rarely given that privilege. Indeed, our banking system is such that the ubiquitous BANK GUARANTEE requires that one deposits a sum equivalent to 110% of the value of the advance to obtain such a bank guarantee.

There has been no attempt to analyze what is needed in terms of support to encourage the formation of new firms or to enhance the performance of the established ones. On the contrary, the expectations of the clients in terms of the level of services, responsibility, presentation and performance have increased. But unfortunately, there has been no corresponding acknowledgement by clients of the increase in the price that one has to pay for such an improved service.

Consequently, many of our professionals have left the country for far more attractive terms and conditions of employment abroad, with greater job satisfaction. They have in numerous instances been engaged on major works, holding posts with great responsibility.

There are a number of our professionals who have gained varied skills and experience working abroad in major projects whose expertise is available in Sri Lanka. Perhaps an even greater number are still working abroad, who might be enticed to return home if the prospects are right and adequate remuneration is ensured. Such remuneration will certainly be a fraction of the remuneration paid to expatriates; in addition our professionals will certainly bring a greater degree of commitment and continuity to the projects with which they are entrusted. In Sri Lanka at the present time there are very few practices which can be classified as multi-disciplinary. The practice hitherto has been to commission individual professional skills as and when the need arises. This has led to some consultants being listed on more than one firm’s brochure as their consultant.

With more opportunities being available for professionals with special skills, there is a growing tendency for consultants to establish their own offices. This trend needs to be encouraged. The basic requirement if this is to happen, is to have continuity of work, and recognition by clients that special skills, if needed for a project, warrant an extra fee.

The Committee identified the most significant factors affecting the development of consultancy services in Sri Lanka. These were:

* Perceived lack of recognition of the capabilities of local consultants and the inadequate remuneration paid to them as compared with expatriates of similar or lower competence.

* A sense of frustration created by the constant litany of denigration of their worth expressed so often by those who should on the contrary be encouraging the use of local consultants.

* Lack of continuity or regular work, so that skills cannot be developed and fully staffed establishments cannot be maintained, which in turn leads to pre-qualification difficulties for new work.

* Perception that with more and more projects being foreign funded, the absence of a commitment on the part of negotiators to fight for the involvement of locals wherever possible has meant that the plum jobs are given to the expatriates with locals having only the crumbs.

* Having to work as sub contract labour for expatriates at rates that are only marginally higher than local rates; very often under persons who are less qualified, who eventually receive all the credit.

* The inability to break the vicious circle of lack of pre-qualification experience as they will always be sub contractors to expatriates.

* Imposition of unfair conditions, not imposed in other countries, such as Bid Bonds, Performance Bonds, Retention Fees, Bank Guarantees, Compulsory Professional Indemnity Insurance and requiring consultants to bear the cost of escalations beyond a pre-set limit, etc.

* Requiring fee bids called by clients which are counterproductive and lead to competent consultants opting not to comply; and those that do marking impossibly low bids. Thus this leads to the consequent result of poor performance and the erosion of ethical standards leading to corruption.

* Lack of appreciation by the client organizations of the degree of responsibility and expertise which is brought to bear on professional assignments for which the consultant is legally and morally responsible in law, of which every professional is acutely aware.

* Insistence by client organizations on unrealistic and unnecessary prior experience criteria when calling for pre-qualifications which militates against the younger professional’s development.

* Sense of frustration among young professionals that the criteria for pre-qualification are heavily biased towards the larger established practices and that they will never get a foot in the door.

* That many of the cost over-runs are the result of unrealistic budgeting in the Departmental Estimate stage, without regard to a proper brief, nor an evaluation of the site conditions.

* Consultants being blamed for delays in completion of projects which in most cases were the result of changes of instructions by clients in mid stream and non-settlement of contractor’s bills in time although these had been properly certified.

* Consultants being unfairly held responsible in many cases for cost over-runs and completion delays, resulting in consultants being used as scapegoats by bureaucrats and clients.

* Equitable payment for delays in setting claims for fees due. The interest payable should reflect at least the cost of funds obtainable from the commercial banks and not the Central Bank rates.

* The indifference shown by government in fostering and encouraging the local consultancy industry by means of special fiscal incentives bearing in mind that failure to do so has resulted in an exodus of skilled persons which has cost the government a lot to train.

Recommendations
Some of the sweeping changes that were recommended by the committee were:

* Consultancy Services for locally funded projects carried out by all Ministries, Government Departments, Provincial Administrations, Public Sector Organizations and Statutory Bodies be given only to local consultants.
Local consultants were defined as a citizen of Sri Lanka (individual), a company where the majority of shares is held by Sri Lankans, in the case of a partnership, a partnership where the majority ownership is in the hands of Sri Lankans, where foreign funded projects involve counterpart local funding, provision for local consultancy inputs, where appropriate, be included in the protocol agreement.

It said foreign consultants who come to Sri Lanka on foreign aided [including NGO funded] projects be debarred from accepting consultancy work on a different project in Sri Lanka, except by a separate application in respect of such project made after the party has left Sri Lanka.

It was recommended that the relevant ministries which issue visas / work permits be directed to comply with the principle that job opportunities for the local consultants are promoted and to refer all such applications for visas / work permits to the relevant local professional organization for comments before issuing same, as is the practice in most other countries.

Where foreign aided projects are concerned, the funding of such projects be negotiated so that local consultants are involved to the maximum possible extent and their area and extent of involvement be stated in the protocol.
It was proposed that NGO funded projects be monitored by ICTAD to determine whether there is a consultancy input required and if so to ensure that the consultancy input is provided by local consultants as far as possible to promote the development of local consultancy services.

A few of the recommendations of the late Mr. Kadirgamar with regard to the preparation of consultancy documents have been implemented. The rest of the recommendations have not been implemented. This report at present, I believe, is gathering dust.

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