Pakistan weighs construction regulator and three-year defect liability rule
The federal government is considering a new institutional setup for the construction sector: a regulatory authority alongside a separate body to market and promote the industry. The proposals came up at an exploratory meeting in Islamabad chaired by Economic Affairs Minister Ahad Cheema. Minister of State for Finance Bilal Azhar Kayani, Housing Secretary Captain (retd) Muhammad Mahmood and other senior officials also attended.
The meeting reviewed the proposed Construction Industry Development Authority (CIDA) Bill. Cheema said the draft needs detailed consideration, mainly whether one body should handle the sector or whether regulation and promotion should be split. Participants agreed to keep consulting stakeholders, including the Constructors Association of Pakistan (CAP), before settling on a structure.
The meeting directed the Pakistan Public Procurement Regulatory Authority (PPRA) to start work on a defect liability period of at least three years for major projects. The rule would later be extended to smaller projects in phases.
The threshold is still disputed. The industry wants these rules, and the Dispute Avoidance and Adjudication Board (DAAB) mechanism for government projects, to apply only to projects worth Rs20bn or more. Cheema asked for a lower threshold. Under DAAB, a board would monitor project delivery and help prevent or settle disputes.
Officials also discussed retention money held back from contractors during the liability period. One proposal is to keep these funds in interest-earning accounts and return both principal and interest once the period ends. Cheema asked for more consultation to design a workable mechanism.
The framework will draw on standards set by the International Federation of Consulting Engineers (FIDIC), which Cheema called a key reference. The talks build on a revival package the government considered in August. That package included a Construction Industry Development Board, an evaluation of a dedicated construction bank, and targeted tax reforms.
