New pricing rules for public works, at last

The government yesterday released a new price list of materials and types of work involved in the budgeting of public projects, hoping to boost transparency, standardize costs and minimize legal disputes. The new lists replace outdated ones which bore no relation to present costs. «Public project budgets will be higher than in the past but the ultimate cost will be the same, if not lower,» said Environment and Public Works Minister Giorgos Souflias. For the time being, the new lists will apply to roadworks, park and greenery projects, water-pipe and port works, will be common for all public agencies auctioning projects, and are hoped to put an end to the phenomenon of wide costing gaps between similar projects. But primarily, Souflias said, the new lists will boost transparency as they reflect real market prices, taking into account modern equipment, new materials and international specifications. They will be regularly updated. The upper limit of «reasonable and acceptable» discounts offered by bidders is set at 12 percent. A higher discount requires additional guarantees, in line with the stipulations of a recent law abolishing the infamous, so-called «mathematical formula» which had been designed to prevent deliberate excessive underbidding and had led to collusive practices among bidders. Discounts offered by bidders above 12 percent of the budget require that letters of guarantee are upped 0.5 percent for each additional percentage unit of discount offered, above the minimum 5 percent of the project budget. Thus, a company offering a discount of 22 percent will have to provide a letter of guarantee equaling 10 percent of the budget. Larger discounts (above 22 percent) require still larger guarantees for each percentage unit. Market circles said the new price lists are significantly lower than market prices and will lead to new disputes regarding the cost of projects. New price lists for buildings and tunnels will be issued next month.