Construction Industry Development Act soon

A Construction Industry Development Act presented by the Chamber of Construction Industry (CCI) Sri Lanka is to be adopted soon to tackle problems faced by the domestic construction industry which is dominated by small and medium scale enterprises. CEO and Secretary General of CCI Dakshitha Thalgodapitiya told The Sunday Times FT that the draft bill for this purpose will be presented to the cabinet for its approval before the end of next month.

This Act has been formulated as an alternative to the Construction Industry Authority Act, currently in force, which only dealt with regulation. The proposed legislation contains provisions for the establishment of a construction industry authority as a regulating body. It will address security of payments to contractors and consultants, occupation health and safety standards to be adhered to by those undertaking construction contracts, uniform treatment relating to unsolicited development involving construction contracts and strict adherence to environmental standards. He added that payment delays have been experienced by the entire construction industry.

But he noted that since SMEs have limited financial resources and constraints to accede funds, the impact on payment delays faced by the SME sector is serious and this matter requires legal protection.

P.H. Ruwan De Silva, President of the National Construction Association of Sri Lanka (Southern branch) has brought issues relating to payment delays to the notice of the President, Ministry of Finance and other relevant authorities in a comprehensive letter and report sent recently. But no action has been taken to remedy the situation, he said. De Silva noted that payment delays have become the ‘killer No. 1’ of the small and medium scale sector of the construction industry as delays occur for months and years because of an inefficient bureaucracy and not due to insufficient funds with the government. Also it affects the use of foreign funds in the form of grants and loans.

Most of the infrastructure development projects, funded by multilateral development agencies suffer due to delays and low productivity, poor progress, poor quantity outputs, etc, which will retard the economic and social development and millennium goals to be achieved and expected by the funding agencies. He stressed the need of the enactment of the construction industry payment of Security Act to safeguard stability and the advancement of this vital sector.

Commenting on this issue, Thalgodapitiya said the proposed new Act has provision to address security of payments to contractors and consultants. He added that CCI has articulated the need of a legislative enactment more commonly known as Security of Payments Act which is being incorporated in the legislation. The CCI now recognizes that the domestic construction industry is dominated by small and medium enterprise sector and plans to provide better opportunities for the local SMEs who are connected with the construction industry, he said.