Status of Class A Construction Entrepreneurs in Nepal

Status of Class A Construction Entrepreneurs in Nepal
grin.com/document/280463
Suresh Adhikari (Author)
TABLE OF CONTENT
EXECUTIVE SUMMARY
ACKNOWLEDGEMENT
TABLE OF CONTENT
LIST OF TABLES
LIST OF FIGURES
LIST OF ABBREVIATIONS
CHAPTER-1 INTROCUCTION
1.1 Background of the Construction Industry
1. 2 Statement of the Problem
1. 3 Objective of the Study
1.5 Limitation of the Study
CHAPTER-2 LITERATURE REVIEW

2.1 Conceptual Framework
2.1.1 Acts & Regulation on Infrastructure Development in Nepal
2.1.2 Government Institutions for Infrastructure Development
2.1.2.1 Ministry of Physical Infrastructure and Transport
2.1.2.2 Public Procurement Monitoring Office (PPMO)
2.1.3 Public Entity
2.1.4 Foreign Aid in Nepal for Infrastructure Development
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2.1.5 Requirements of Class A Construction Firms for Registration
2.1.6 Qualification Procedure for Contractors
2.1.6.1 Major Qualification Documents for Contractors
2.1.6.1.1 Particular Construction Experience
2.1.6.1.2 Turnover
2.1.6.1.3 Financial Capabilities Requirement for Contractors
2.1.6.1.4 Personnel Capabilities
2.1.6.1.5 Equipment Capabilities
2.1.7 Payment Schedule for Contractors
2.1.7.1 Advance Payment
2.1.7.2 Payment of Bill or Invoice or Running Bill
2.1.7.3 Final Bill Payment
2.1.7.4 Security Money
2.1.7.5 Price Escalated Amount
2.1.8 Public Private Partnership in Infrastructure Development
2.1.9 Federation of Contractor Association of Nepal (FCAN)
2.1.10 Related Studies
2.1.12 Contractors Perceptions towards Construction Industries
2.2 Research Review
CHAPTER-3 RESEARCH METHODOLOGY

3.1 Research Design
3.2 Data Collection
3.3 Population of the Study
3.4 Sample of the Study
3.5 Research Instrument
3.6 Data Collection Procedure
3.7 Data Analysis & Interpretation Procedure
CHAPTER-4 PRESENTATION AND ANALYSIS OF DATA

4.1 General Information
4.1.1 Types of Partners in Class A Firms
4.1.2 Active Partners in Class ‘A’ Firms in Terms of Registration
4.1.3 Experience on Specialized Construction of Work by Class A Construction
Entrepreneurs
4.1.4 Work Experience Sector of Class A Construction Entrepreneurs
4.2 Comparison of the Existing Equipment Capacity of Class A Entrepreneurs as per CBA
2055 & CBR
4. 2.1 Machine and Equipment
4.2.2 Human Resources Available with Class A Construction Entrepreneurs
4. 3 Financial Capabilities of Class “A” Construction Entrepreneurs
4.3.1 Annual Turnover of Class A Construction Entrepreneurs
4.3.2 Credit Limit of Class A Construction Entrepreneurs
4.3.3 Bank Overdraft of Class A Construction Entrepreneurs
4.4 Satisfaction of Class A Construction Entrepreneurs in Current Situation with
Construction Business
4. 4.1 Common Problem and Difficulties of Class A Construction Entrepreneurs
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4.4.1.1 Difficulties Felt in Criteria of Achieving Qualification Documents During Bidding
Procedure by Class A Construction Entrepreneurs
4. 4.1.2 Difficulties felt in Receiving Payment During Payment Schedule by Class A
Construction Entrepreneurs
4.4.1.3 Difficulties Felt in Revenue & Taxation Part by Class A Construction Entrepreneurs
4.4.1.4 Difficulties Felt in Hiring Qualified Human Resource in Different Construction Sector
by Class A Construction Entrepreneurs
4.4.1.5.1 Tender Purchasing
4.4.1.5.2 Tender Drop
4.4.1.5.3 Site Execution
CHAPTER-5 FINDING OF THE STUDY

5.2 Comparison of the Existing Equipment Capacity of Class A Entrepreneurs as per CBA
2055 & CBR
5.3 Financial Capabilities of Class “A” Construction Entrepreneurs
5.4 Satisfaction of Class A Construction Entrepreneurs in Current Situation with
5.4.1 Common Problem and Difficulties of Class A Construction Entrepreneurs
5.4.1.1 Difficulties Felt in Criteria of Achieving Qualification Documents during Bidding
5.4.1.2 Difficulties felt in Receiving Payment During Payment Schedule by Class A
5.4.1.3 Difficulties felt in Revenue & Taxation Part by Class A Construction Entrepreneurs
5.4.1.4 Difficulties Felt in Hiring Qualified Human Resource in Different Construction Sector
by Class A Construction Entrepreneurs
5.4.1.5 Insecure Felt Due to Hooliganism During Stages of Tender Purchase, Tender Drop
and Construction Site Execution Works by Class A Construction Entrepreneurs
CHAPTER-CONCLUSION AND RECOMMENDATION

6.2 Recommendation
6.2.1 General Information
6.2.2 Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR
6.3 Recommendation for Future Research
References :
Bibliography:
APPENDICES :
Annex A : Figure of Special Purpose of Company
Annex B :Requirement of Machine & Equipment as per CBR
Annex C : List of Class A Contractors
Annex D :Overall Standard Meeting of Equipment as per CBA 2055 & CBR 2056 by Class
A Firms
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LIST OF TABLES
2.1 Classification of Construction Firms in 1974 & 1999 as per Bidding Limit (In Million’s)
2.2 Nos. of Registered Firms of Class A, B, C& D in Various Years
4.1 Types of Partners Registered During Firm’s Registration as Class ‘A’
4.2 Active Partners in Class ‘A’ Firm’s in Terms of Registration
4.3 Experience on Specialized Construction of Work by Class A Construction

Entrepreneurs
4.4 Work Experience Sector of Class A Construction Entrepreneurs
4.5 Budget for Fiscal Year 2013/014 in Major Infrastructure Projects
4.6 Status of Machine & Equipment Capacity of Class A Entrepreneurs as per CBA 2055 &
CBR 2056
4.7 Human Resources Available with Class A Construction Entrepreneurs
4.8 Range of Human Resource in Class A Firms
4.9 Annual Turnover of Class A Construction Entrepreneurs for F.Y 069/070 , F.Y 068/069
& 067/068
4.10 Credit Limit of Class A Construction Entrepreneurs
4.11 Bank Overdraft of Class A Construction Entrepreneurs
4. 12 Satisfaction of Class A Construction Entrepreneurs in Current Situation with

4.13 Difficulties Felt in Criteria of Achieving Qualification Documents During Bidding

4.14 Difficulties Felt in Receiving Payment During Payment Schedule by Class A

4.15 Difficulties Felt in Revenue & Taxation Part by Class A Construction Entrepreneurs
4.16 Difficulties Felt in Hiring Qualified Human Resource in Different Construction Sector by
Class A Construction Entrepreneurs
4.17 Insecure Felt During Stages of Tender Purchase, Tender Drop and Construction Site
Execution Works by Class A Construction Entrepreneurs
LIST OF FIGURES
2.1 Distribution of Foreign Aid Disbursement per Policy Cluster of the Three Year Plan
3.1 Flow Chart of Research Design for Adopted Methodology

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4.1 Types of Partners Registered During Firm Registration as Class ‘A’
4.2 Active Partners in Class A Firms in Terms of Registration
4.3 Experience on Specialized Construction of Work by Class A Construction

Entrepreneurs
4.4 Work Experience Sector of Class A Construction Entrepreneurs
4.5 Budget for Fiscal Year 2013/014 in Major Infrastructure Projects
4.6 Annual Turnover of Class A Construction Entrepreneurs for F.Y 069/070 , F.Y 068/069
& 067/068
4.7 Credit Limit of Class A Construction Entrepreneurs
4.8 Bank Overdraft of Class A Construction Entrepreneurs
4.9 Satisfaction of Class Construction Entrepreneurs in Current Situation with Business
LIST OF ABBREVIATIONS
illustration not visible in this excerpt
EXECUTIVE SUMMARY
It is realized that Nepalese construction had undertaken a high rise in its image
internationally and nationally and has been participating in various organization as an active
member. Besides these, there are many rumours and conflicts about the capability of
Nepalese contractors about their technical and financial ability for not completing the
projects undertaken by them within the given timeframe and of standard quality. Although
construction entrepreneur of Class A in Nepal, have the opportunities to withstand in
construction industry (as country is still in construction phase of infrastructure
development) with full enthusiasm and effort, they seems to be demoralized by the policies,
rules, guidance and support from the government and procedure of procurement of donor
agencies during bidding in Mega Projects.
The study has covered construction firms registered as class A construction entrepreneur.
The numbers of construction firms studied were fifty one (51). Random sampling method
was performed to select the respondents. A questionnaire was developed to collect the
datas for the study. The close ended question, open ended question, and ranking method
of prioritization was adopted to obtain the necessary datas from the respondents.
The purpose of the study was to compare the existing equipment capabilities of Class A
construction entrepreneurs with the prescribed requirement as per CBA 2055 & CBR 2056
and also to determine the current capacity of the class A construction entrepreneurs in
terms of technical and financial capabilities. The study also has covered the exploration of
common problems and difficulties felt in criteria of achieving qualification documents during
bidding procedure , receiving payment during payment schedule, , taxation part, hiring
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qualified human resource in different construction sector and insecure felt during stages of
tender purchase, tender drop and construction site execution works by class A construction
entrepreneurs.
Percentage, frequency and charts were used to analyze the data. The result has showed
that, in owning equipments most of the companies have failed to meet the prescribed
standard as per CBA 2055 & CBR 2056. Only few numbers of contractors are extremely
satisfied with their business. There are various factors like annual turnover & similar
experience part in qualification procedure, escalated amount & running bill payment in
payment procedure, insecurity due to hooliganism in construction business during site
execution and tender drop, taxation system during refunding of the tax deducted at source
amount. The research has also shown the unavailability of human resources in tunnel
sector, hydropower sector and bridge sector in construction sector in present context.
ACKNOWLEDGEMENT
I wish to express my gratitude to my advisor, Assoc. Prof. Er. Ramesh Banstola,
Coordinator of M.Sc. Program in PEC, who guided and helped me greatly to complete my
thesis.
I am also deeply indebted to Dr. Prof. Rajendra Prasad Adhikari, whose guidance from
initial phase upon this completion had broaden mine vision more in setting up my objective
more clearly on my research.
My heartful thanks goes to my father Mr. Mohan Prasad Adhikari, proprietor of Mangsuwa
Nirman Sewa, for supporting me morally from my initial phase of this research till to the final
publication.
I would also like to thank Mr.Keshab Prasad Gautam, vice-president of FCAN who helped
me in providing his valuable suggestion and in arranging meetings with contractors for my
necessary data collection. Also, I would like to thank all the official staff member of FCAN,
who has provided me the necessary information that I have asked at any time.
I would also thank to my brother, Mr. Hem Kumar Adhikari, for his support in using
SPSS.16 software during data analysis. I shall not forget my friends Er.Ujjwal Dahal, Er.
Sandeep Gyawali and Mr. Jyoti Khatri for their help in distribution and collection of
questionnaire. I am also highly debted to my friend Er. Sunder Adhikari for his help in
everyway by providing me environment during preparation of final report.
To my wife Jyoti Shiwakoti for her spiritual support through prayers and encouragement, I
thank you for providing me environment of study.
Lastly my sincere thanks goes to all who, in various ways have helped to make my
research work complete especially contractors who were respondents to my questionnaire.
16 March, 2014
Suresh Adhikari
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CHAPTER-1 INTRODUCTION
1.1 Background of the Construction Industry

Construction industry is regarded as the backbone of nation building as more than that of
70% of the gross capital formation is contributed by this sector. In Nepal, this industry
contributes over 8% of GDP and has the growth rate of more than that of the national
average (Pandey, 2069).
This industry is one of the major contributors to the process of the development of the
country. The wide range of output provides the basis for social and economic development
of many sectors. In addition, it also stimulates significant economic development through
its backward and forward linkages like manufacturing, transportation and other sectors of
the economy. Contractors are one of the most significant enteritis within the industry. They
are the ones who actually convert the designed facility into a tangible output. Much of the
resources are spent through them and success of the project is heavily dependent on the
firm’s competence (Pandey, 2069).
Nepalese construction industry has taken a leap since 1990s with significant growth in the
number of construction and consulting firms. However, we need to actively wok on the
capacity building of all the stakeholders in the industry especially at the dawn of the nation
building efforts that could evolve the end of current political transition period (Pandey,
2069).
The licensing and classification of contractors came into practise after implementation of
the construction classification Regulation in 1975 as Class A, B, C & D respectively
depending upon their physical facilities, resources and experience which again was
amendment in 1994 and 1999.
1. 2 Statement of the Problem

Construction Industry is considered as one of the pioneering industry in Nepal. It is consider
as a building block for the development of infrastructure of the nation. Among all the
construction organization and contractors of Nepal, Class ”A” of construction organization
and contractors are considered as the major party who are engaged in investing high
budget projects, well equipped equipments with sufficient human resource, financial
strength and experience as per CBA 2055 & CBR 2056. Although construction industry of
the country is considered as pioneer sector in the development of the nation, it has to face
lots of problems with numerous weakness and threats as follows:
i) The major challenges for the contractor is to complete project within the given timeframe
with quality, which is seen difficult in most of the cases and may be due to the unavailability
of owned full time technical personal, equipments or financial resources by the concerned
firms.
ii) Most of the reputed and well established contractors are being harrased by the different
political parties and holligans for large sum of money, which inturn has created insecurity
among these contractors. Also, inconsistent and ineffective price escalation techniques
used by the governments and unfavourable contract documents to contractors and high
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unhealthy competition during tendering due to current policies, rules and guidance had lead
the contractor to get demoralized towards the profession. As a result, many of the firms
registered as Class A who are responsible to undertake high active role and participation
towards building the nation seems not being as active as they owned to be.
iii) Construction industry being root for the development of infrastructure of the nation and
Class A contractor being the major party to perform such role for development activities, no
thorough study about the current status of Class A contractor has been done so far.
iv) Also, current data about the Class A contractor in terms of their technical and financial
capacity strength is unknown in order to perform or execution of construction projects.
Thus, these are the main problem to be identified during the research study.
1. 3 Objective of the Study

The main objective of this study was:
i) To compare the existing equipment capacity of class “A” construction entrepreneurs with
the prescribed requirements as per CBA 2055 & CBR 2056 ii) To find out the financial
capabilities of class “A” construction entrepreneurs. iii) To explore the common problems
and difficulties felt in criteria of achieving qualification documents during bidding procedure,
receiving payment during payment schedule, taxation part, hiring qualified human resource
in different construction sector and insecure felt due to hooliganisms during stages of
tender purchase, tender drop and construction site execution works by Class A construction
entrepreneurs.
1.4 Significance of the Study

The study on the status of Class ‘A’ construction entrepreneurs of Nepal will be important
to all the contractors of Nepal as well as to new entrepreneurs who wants to enter in
construction industry as construction entrepreneurs. The information will also be beneficial
to other sectors like cement industry, iron industry, brick industry, sand industry and other
related industry which has day to day relation with the construction industry. This research
is more significant to the Government of Nepal as the research has provided information’s
about the capability and strength of Nepalese contractor’s in terms of technical and
financial capacity to accelerate and perform construction projects.
1.5 Limitation of the Study

The following are the limitation of the study
i) The respondents of the study are presumed to provide all the relevant and valuable
information during the research and unbiased.
ii) This study has excluded the status of lab equipment as mentioned in machine and
equipment defined by schedule-10 in CBA 2055 & CBR 2056.
iii) This study has not cover bank statement in order to find out the financial capabilities of
the Class A registered firms.
iv) This study has only considered civil engineer, junior engineer, accountant and
supervisor in determining the human resources available with Class A construction
entrepreneurs.
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CHAPTER-2 LITERATURE REVIEW
2.1 Conceptual Framework

The conceptual framework of this study clarifies about all the variables acts, policies &
regulation, government organization and stakeholders about the construction industries in
Nepal. The flow chart of special purpose company for infrastructure development has been
attached in appendices (Annex- A). The different variable to be considered for relevant to
this study has been as discussed herewith.
2.1.1 Acts & Regulation on Infrastructure Development in Nepal

According to the report of www.scaefe.com an official website of ‘Society Of Consulting
Architectural and Engineering Firms’ Nepal, Er. Tulsi Prasad Sitaula, Infrastructure
development has remained a priority of the government right from the beginning of first five
year plan (1956-61) A.D. With a view to facilitate and to create enabling environment many
legislations have been enacted since then rules, regulations and guidelines have been
developed and put to use. Policy documents have been passed and practised so as to
streamline the direction of the development. In this connections the following acts,
regulations, policy frameworks etc. have been brought in place which are as:
Public Roads Act, 2031 , Local Self Governance Act 2054 and Regulations 2055 ,Public
Procurement Acts 2063 and Regulations 2064 , Contract Act, 2023 and 2058 , Construction
Industry Acts 2055 , Private Investment in infrastructure, Build and Operate Ordinance 2060
, BOOT Acts 2063 and Regulations 2064 ,Roads Board Act 2059 , Engineering Council
Acts 2055 and Regulations 2057 , Road Sector Policy 1999 , Public Infrastructure Build,
Operate and Transfer Policy 2057 ,Priority Investment Plan 1997- 2007, Priority Investment
Plan 2007 - 2017, The Department of Roads Strategy 1995, Road Maintenance Training
Policy 2001, Human Resource Development Policies and Strategy 2002 ,Bridge
maintenance Policy, 2004 , Consulting Industry Acts (Development phase)
(www.scaef.org.np).
2.1.2 Government Institutions for Infrastructure Development

2.1.2.1 Ministry of Physical Infrastructure and Transport
Ministry of Physical Infrastructure and Transport established in 2000 A.D during the course
of the reorganization Government of Nepal. The main aim of reorganization was to bring
important infrastructural development under the umbrella of a single ministry and to
harmonize the policies and bring efficiencies and effectiveness in the provision of
infrastructural services (www.moppw.gov.np). For contractor issuing of licensing and
renewal had the department of Ministry of Physical Planning Works and Transport
Management where again had a separate section known as Construction Business
Promotion Section (CBPS).
The objective of Construction Business Promotion Section (CBPS)
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i) To grant construction business license.
ii) To renew the license granted, maintain inventory of the revenue from renewal, prepare
financial statements and have revenue earnings audited.
iii) To maintain updated records and data of the firms, companies or corporate bodies
carrying on construction business.
iv) To give necessary direction and carry out monitoring in order to maintain quality
standards of public construction works and enhance and upgrade capabilities of
construction entrepreneurs.
v) To act as member secretary of the implementation committee in respect of promotion
and management of construction business.
vi) To monitor implementation of the prevailing Acts and Regulations for the promotion of
construction business, and take necessary action to make it further effective
(www.cbps.gov.np).
2.1.2.2 Public Procurement Monitoring Office (PPMO)

PPMO was established as per the provision made in the new Public Procurement law of
Nepal. The Public Procurement Act, 2063 (B.S.) and Public Procurement Regulation, 2064
(B.S.) have been enforced on 2063/09/30 (B.S.) and 2064/5/03 (B.S.) respectively. PPMO
was established as the government agency on 2064/5/3 (B.S.) and is placed directly under
the prime minister. It is the organization which has responsibility to act as guiding body for
procurement policy formation, implementation and monitoring of effective public
procurement system by maintaining transparency, accountability, effectiveness, efficiency
and economy along-with non-discrimination and equality in public procurement
proceedings of Nepal ( www.ppmo.gov.np) .
2.1.3 Public Entity
“Public Entity” means the following entity:
i) Constitutional organ or body, Court, Ministry, Secretariat, Commission, Department of the

Government of Nepal or any other Governmental Entity or Office there under,
ii) Corporation, Company, Bank or Board owned or controlled fully or in majority by the
Government of Nepal or Commission, Institute, Authority, Corporation, Academy, Board,
Center, Council established at the public level or formed by the Government of Nepal under
the laws in force and other corporate body of a similar nature
iii) University, College, Research Center, which is operated by the Government of Nepal or
receives grants fully or in majority from the Government of Nepal, and other Academic or
Educational Institution of a similar nature
iv) Local body
v) Development Board formed under the Development Board Act, 1956 vi) Body operated
with loan or grant of the Government of Nepal, and
vii)Other Bodies as specified by the Government of Nepal by publishing a notification in the
Nepal Gazette, as a Public Entity (PPA, 2063).
2.1.4 Foreign Aid in Nepal for Infrastructure Development
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According to Development Corporation Report (DCR) F.Y 2010/011 foreign aid plays an
important role in Nepal’s socio-economic development, representing 26 percent of the
national budget. In addition, significant aid flows are channelled directly to beneficiaries
outside the national budget. The main sectors receiving external support are education,
local development, health, roads followed by drinking water, energy, agriculture, and peace
and rehabilitation. Various economic and financial reform programs also receive significant
external support.
Also the DCR report has mentioned that Nepal receives official development assistance
from over 40 donors, including 35 resident agencies. About half of aid resources use
national systems such as the budget or procurement systems, and a significant portion of
aid is spent outside national systems. The Ministry of Finance is mandated for the overall
coordination of foreign aid in Nepal, including its allocation in line with national priorities.
The Foreign Aid Coordination Division (FACD) of the Ministry of Finance is empowered,
among others, to oversee the Government's activities in the area of aid coordination,
harmonization and alignment. The FACD of the Ministry is the focal point for this purpose.
The FACD has also been acting as the secretariat to the high level committee on foreign
aid coordination and mobilization and provides technical input to the committee in the
implementation of foreign aid policy.
Figure 2.1: Distribution of Foreign Aid Disbursements per Policy Cluster of the Three Year
Plan (Source: www.mof.gov.np)
According to Asian Organisation of Supreme Audit Institutions (ASOSAI), published on Sep

1995, for in the case of Nepal, foreign-aided projects mainly involved roads, irrigation,
electricity, drinking water and aviation. The donor countries and agencies involve the World
Bank, Asian Development Bank, Japan, China, USA, Finland, U.K., India and France.
These foreign-aided projects fall into two categories:
a) Turnkey projects
b) Loan projects
Turnkey projects are implemented by the donor countries or agencies themselves. Such
projects are formally handed over to the government on completion. The government
provides the land required for individual projects and makes available other facilities such
as customs and taxation concessions and import licences. With such projects, the
procurement of construction material, award of contracts and execution of works are the
responsibility of the respective donors. Projects being implemented through loans are also
financed jointly by the government and donor agencies. The proportion of funds to be
contributed from each of these sources is determined when individual agreements are
signed. Donor agencies provide most of the finance for civil works, procurement of
equipment and consulting services.
Also the (ASOSAI) report mentioned that for large projects assisted by external agencies,
competitive bids are invited internationally for construction and the procurement of
machinery and consultancy services according to the official guidelines of donor agencies.
Bids received are evaluated by a technical committee of the respective ministry and
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approved by the competent authority based on the provisions of the government's Financial
Administration Rules. However, concurrence of the particular agency involved is also
required for bid approvals. Project identification, feasibility studies, investment criteria,
budgeting, funding and implementation procedures are common for all public works and
projects. These procedures are guided by the existing financial rules and regulations of the
government. Public works and projects carried out with external assistance are also guided
by the terms and conditions of the particular agreement signed between the government
and the donor agency (ASOSAI, Sep 1995) (www.asosai.org) .
2.1.5 Requirements of Class A Construction Firms for Registration
The first act which defined ‘Contractor’ was the Industrial Enterprises Act, 1974(A.D). It
made provision for the classification and registration of contractor. According to this act, all
construction firms must register themselves with the Ministry of Works and Transport in
Class A, B, C or D contractors depending upon the technical manpower, value and number
of works done, machinery and liquid assets available.
Industrial Enterprises Act 1974 provided for registration and classification of contractors.
Accordingly contractors were classified as Class A, B, C and D depending upon their
physical facilities, resources and experience.
The licensing and classification of the contractors came into practice after implementation
of the construction classification Regulation in 1975. There were twice amendment of the
regulation in 1994 and 1999.
Table 2.1: Classification of Construction Firms in 1974 & 1999 as per Bidding Limit (In
Millions)
Table 2.2: Nos. of Registered Firms of Class A, B, C& D in Various Years
But, there is a debate regarding classification of contractors. The debating article is 10.3 of
the act PPA 2063 & PPR 2064 which ignores the existing bidding limit of contractors by
classification for the qualification criteria. Despite of this debate still the classification of
contractor has been defined by CBA 2055 & CBR 2056 during registration of firms.
Realizing the need for enhancement of the construction industry, Construction Business
Act CBA 2055 was promulgated and came into force from Baishak 1, 2056 (April 14, 1999).
This is an effort made to institutionalize and systematize the construction sector. The act
had defined the procedures and requirement relating to issues and renew of license and
classification of obligation of construction entrepreneurs (FCAN 2007, vol. 14.).
As mentioned by CBA, 2055(1999), “construction entrepreneur ” means a firm or company

registered under the prevailing law with an object to carry out construction business ”. The
classification of construction entrepreneur as per clause 10 sub-rule (1), had classified the
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construction entrepreneur as Class A, Class B, Class C and Class D according to in
Construction Business Rule CBR, 2056(2000A.D) Schedule10, Schedule-11, Schedule-12
and Schedule-13 respectively.
To be Class A ‘A’ construction entrepreneur as defined by CBA (2055) & CBR (2056) in
Schedule-10, the following criteria must be meet by the registered firms:
Clause 10 sub-rule (1) Schedule -10
Financial Capacity: It has to be registered with the Department of Industries as a private or

public limited company or partnership firm with the running capital of a minimum of ten
millions rupees
Work Experience: It has to be satisfactorily completed four different public construction

works valued at a minimum of Ten million Five thousand rupees each or various such
works valued at a total of Sixty million rupees after having concluded an agreement on its
own.
Provided that, nothing in this clause shall be deemed to prevent the classifying of a
company having at least Two civil engineers with at least Twenty years of experience in
public construction works or of a company with an engineer or equivalent being its
shareholder or promoter, having experiences in construction works valued at Sixty million
rupees in last Ten years as the class “A” construction entrepreneur.
Description of Key Human Resources: There should be a provision to avail the whole time
service of two technicians having passed graduation level in civil engineering and four
technicians having passed certificate level in that subject, Two persons having passed
graduation level in any subject, three persons having passed certificate level in any subject,
one person having passed graduation level in commerce and one person having passed
certificate level in that subject.
Machine and Equipment: The checklist for machine and equipment as per CBA 2055 &
CBR 2056 has been attached in Annex-B.
i) While submitting an inventory of equipment, ownership certificate of equipment as well as

insurance document thereof shall be submitted.
ii) It has to be certified by a mechanical engineer who has possessed educational
qualifications of at least graduation in mechanical engineer and obtained membership of
Nepal Engineers Association that the above-mentioned machines and equipment are in
proper condition.
iii) The above-mentioned machines and equipment shall not be sold and disposed of until
at least Two years from the date of their registration.
iv) Any machines and equipment which are more than Fifteen years old shall not be
recognized for purposes of enhancing the standard of, and new registration of, the
construction entrepreneur.
2.1.6 Qualification Procedure for Contractors
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According to PPR 2064, “A public Entity may, in specifying the criteria for qualification of a
bidder or a pre-qualified proponent participating in procurement proceeding of a
construction work above six million, specify such criteria by taking into account any one or
all of the following matters according to necessity” ( PPR, 2064).
Namely two methods of qualification procedure are followed depending upon project
sensitivity. i) Post qualification ii) Prequalification
i) Postqalification
An assessment made by the employer after the evaluation of bids and immediately prior to
award of contract, to ensure that the lowest-evaluated, responsive eligible bidder is
qualified to perform the contract in accordance with previously specified qualification
requirements ( SPD, 2009).
ii) Prequalification
An assessment made by the Employer of the appropriate level of experience and capacity
of firms expressing interest in undertaking a particular contract, before inviting them to bid
(SPD, 2009).
2.1.6.1 Major Qualification Documents for Contractors

GoN's current policy on PQ is that all potential bidders that meet predefined minimum
requirements regarding: general construction experience; particular or specialized
experience; financial capabilities; personnel capabilities, and equipment availability should
be invited to bid. The procedure requires the implementing agency (Employer) to set
pass/fail criteria which, if all are not met substantially by the Applicants, would cause them
to be disqualified ( SPD, 2009).
2.1.6.1.1 Particular Construction Experience

General experience of having carried out works solely as a prime contractor or under
management contract or partner in a joint venture or sub-contractor. General experience
consists of similar nature of works (PPR, 2064).
Applicants should demonstrate that they have successfully carried out work, substantially of
a nature, size, value, and complexity similar to that of the contract in question. There are
two principal criteria for prequalification.
(a) The Applicant should have carried out similar work of a magnitude approximating that of
the package of Work for which prequalification is sought. Depending on the nature of the
works to be bid, the criterion should be related to the Applicant having completed or
substantially completed one or more contracts each of a value (not less than about 80
percent) of that of the proposed contract over the last five to ten years.
(b) The Applicant should have performed operations of a volume, quality, and rate of
execution similar to those required for the timely completion of the subject contract. For
example, where large-volume earthmoving, tunnelling, or concrete placing is involved, the
applicant should demonstrate experience in those operations, having performed them at the
rates necessary to meet a percentage (e.g., 80 percent) of the estimated peak monthly
and/or annual rates required for the subject contract.
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The range should be one to three (and is normally two), depending on the size and
complexity of the subject contract. For example, for small- to medium-sized contracts in a
country with newly privatized, but competitive construction firms (which have had some
experience as parastatals), an employer may be prepared to risk an award to an applicant
with only one previous similar contract completed. For contracts in a developed
environment with a high potential supply of construction services, three similar contracts
may not limit applications, but would reduce the risk of contractor default. The range is
normally five to ten years, and should be related to the number of similar contracts stated
above and to the duration of the subject contract, e.g., ten years for two contracts of about
five years’ duration, or six years for two contracts of about three years’ duration (SPD,
2009).
2.1.6.1.2 Turnover
Turnover for construction works of or above the threshold as referred to in the bidding
documents. Generally, turnover represents the total revenue received by the company. ie.,
Sale of goods, Service Revenues (depending upon the nature of the business) and here
mainly concerned with supplies and construction works of public entities (PPR, 2064).
The Applicant’s general capabilities in managing construction contracts should be related

to its record of recent experience and to the value of work undertaken.
Experience requirements should be stipulated as a minimum annual value of general

construction work carried out over a stated period, normally five years, calculated by
applying an appropriate multiplier to the projected annual construction rate on the subject
contract. The recommended multiplier is normally 1.5 to 2.0.
Time Period in the Construction Business
The time period is normally five years or more, but may be reduced to not less than three
years (in agreement with the Financing Agency) under special circumstances, such as to
provide opportunities for new coming construction entrepreneurs for more competition, etc.
Required Average Annual Turnover
The amount stated should normally not be less than 1.5 to 2 times the estimated annual
turnover or cash flow in the proposed works contract (based on a straight-line projection of
the employer's estimated cost over the contract duration). The multiplier of 2 may be
reduced to 1.5 times but should not be less than 1.5.The number of years is normally ten
years but not less than three years (in agreement with the Financing Agency). Also clarify
whether the annual turnover amount of past years are evaluated in the current year with
inflation/ price index. Clarification on whether the average annual turnover for ten years is
considered or average of best three years annual turnover is considered in the evaluation
(SPD, 2009).
2.1.6.1.3 Financial Capabilities Requirement for Contractors

Economic and financial capacity of having or access to liquid assets, loan facilities and
other financial (excluding advance payment under any procurement contract) sufficient to
meet the cash flow requirement to complete the proposed construction work and
construction work being carried out or committed to be carried out by the concerned bidder,
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in the event of stoppage or delays in payment of money required to start up construction
work under a procurement contract.
- Minimum Required Cash Flow Amount
Calculate the construction cash flow requirement for a number of months (to the nearest
half-month), determined as the total time needed by the employer to pay a contractor’s
invoice, allowing for (a) the time of construction, from the beginning of the month invoiced,
(b) the time needed by the engineer to issue the monthly payment certificate, (c) the time
needed by the employer to pay the amount certified, and (d) a contingency period of one
month to allow for unforeseen delays. The total period should not exceed six months. The
assessment of the monthly amount should be based on a straight-line projection of the
estimated cash flow requirement over the particular contract period, neglecting the effect of
any advance payment and retention monies (SPD, 2009).
- Adequate Source of Finance
Minimum Bid Capacity (BC) to meet cash flow requirement for this and other contract
commitment through the leveraged value of the applicant’s available resources: [ enter
amount equal to the value of the work]
Where,
Bid Capacity (BC) = 5× total financial resources - 40% of total contract value of current
commitments
- Applicant’s Financial Position
The Applicant’s Net Worth calculated, as the difference between Total Assets and Total
Liabilities, from the audited balance sheets of the last [ insert No. of years] should be
positive (SPD, 2009).
2.1.6.1.4 Personnel Capabilities

The managerial and technical competence of a contractor is largely related to the key
personnel on site. The extent to which the Applicant should demonstrate having staff with
extensive experience should be limited to those requiring critical operational or technical
skills. The prequalification criteria should therefore refer to a limited number of such key
personnel, for instance, the project or contract manager and those superintendents working
under the project manager who will be responsible for major components (e.g.,
superintendents specialized in dredging, piling, tunnelling, or earthworks, as required for
each particular project). Applicants should normally be required to name a principal
candidate and an alternate for each key position. Criteria of acceptability should be based
on: a minimum number of years of experience in a similar position and a minimum number
of years of experience and/or number of comparable projects carried out in a specified
number of preceding years.
The requirement of specified education and academic qualifications is normally

unnecessary for such positions, as contractors often employ competent staffs who have
learned their profession “on the job” rather than through academic training. It is appropriate
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to specify that certain positions are filled by individuals who have held posts of comparable
authority for, say, three years with the applicant, so that key staff in executive site positions
have sufficient knowledge of the applicant's management, policy, procedures, and practices
to act with confidence and authority within that framework ( SPD,2009).
2.1.6.1.5 Equipment Capabilities

Equipment as set out in the bidding documents or prequalification documents in full working
order of the ownership of the bidder or proponent of pre-qualification himself/herself or to
be so available through rent, lease ,contract or other commercial means as can be used
freely during the procurement contract period and depends upon the nature of works
(PPR,2064). A complete inventory of construction equipment represents a high capital cost
overhead to a contractor. Consequently, not all competent potential bidders will maintain an
inventory of high-value items that are in suitable condition for major contracts. In most
cases applicants can readily purchase, lease, or hire equipment for a particular contract;
thus, it is usually unnecessary for prequalification to depend on the contractor’s owning
readily -fail criteria adopted should therefore be limited only to those bulky or specialized
items that are critical for the type of project to be implemented, and that may be difficult for
the contractor to obtain quickly. Examples may include items such as heavy lift cranes and
piling barges, dredgers, tunnel boring machines, asphalt mixing plants, etc. Even in such
cases, Applicants may not own the specialized items of equipment, and may rely on
specialist subcontractors or equipment-hire firms. The availability of such subcontractors
and of the specified equipment should be subject to verification prior to bid invitation, and
confirmed at bid submission and prior to contract award. The terms of any lease or hire
agreement for equipment should preferably include a provision that the equipment will
remain on the site (or be vested in the Employer) in the event of default of the contractor,
thereby ensuring more timely continuity of work by a replacement contractor. (SPD, 2009).
2.1.7 Payment Schedule for Contractors

Payment procedure to the construction entrepreneurs is in the form of advance payment,
running bills payment, final bills payment, escalated amount, bonus amount and refunding
security amount by public entities.
2.1.7.1 Advance Payment

Advance payment is the initial payment provided by public entities when entering into
contract agreement to construction entrepreneurs for initial mobilization of the services as
advance after submission of performance bond guarantee (SPD, 2009).
2.1.7.2 Payment of Bill or Invoice or Running Bill

Payment of bill or invoice or running bill is the payment made by public entities as per the
condition of contract and make payment to the construction entrepreneurs for further site
mobilization (SPD, 2009).
2.1.7.3 Final Bill Payment

Final bill payment is the final payment made by public entities to the supplier, construction
entrepreneurs, service provider or consultant, as the case may be, shall be made as per
the condition of contract (SPD, 2009).
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2.1.7.4 Security Money
Security Money refers to the performance security amount and fifty percent amount
retention money deducted that is five percent of the running bills specified which shall be
returned back after expiry of the defects liability period. The remaining fifty percent amount
of the retention money shall be paid after the concerned supplier, construction
entrepreneurs or service provider, as the case may be, submits evidential documents of
having submitted income return issued from the concerned Inland Revenue Office.
Provided that if the concerned construction entrepreneur does not correct the defects
liability period, the public entity may correct the defects by using the retention money or the
amount for security (SPD, 2009).
2.1.7.5 Price Escalated Amount

Price Escalated Amount, a public entity shall, in the procurement contract have to provide
that price adjustment may be made. The maximum amount of price adjustment to be made
pursuant to this Rule shall not, generally are more than twenty five percent of the initial
contract prices (SPD, 2009).
2.1.8 Public Private Partnership in Infrastructure Development

As per website of FCAN, the government of Nepal has liberalizes its policies after 1980's
and has released the act related to Build, Operate, Own and Transfer BOOT Act (PPP) -
2063, Road Sector Policy 1999, BOOT Regulation (PPP) - 2064, Hydropower Act - 1992,
Public Infrastructure Build Operate and Transfer Policy - 2057, Private Investment in
Infrastructure Build and Operate Ordinance - 2060. There is still some opportunity for the
contractors through Contractual PPP’s as:
Build and Transfer (BT)
Build, Operate and Transfer (BOT)
Build, Operate, Own and Transfer (BOOT)
Build Transfer and Operate (BTO)
Lease, Operate and Transfer (LOT)
Develop, Operate and Transfer (DOT)
Also it has mentioned that PPP is regarded as the revolutionary approach towards
infrastructure development which pulling in resources, pulling in expertise, maximizing
service delivery, magnifying scope opportunities and creates the employment opportunities
for the contractors also. The following are regarded as the prospective PPP projects now in
Nepal.
- Kathmandu - Terai Fast Track, East-West Railway, Kathmandu-Terai Railway,

KantiRajpat, Birgunj-Jitpur Roadway, Kathmandu Outer Ring Road, Janakpur- Jayanagar
Railway, Janakpur-Jayanagar Railway, Sitapaila-Dharke Roadway, Airports
(Nijgadh,Pokhara, Bhairahawa) , Cargo Complex at TIA, Cable Car and Ropeway, Road
and Infrastructure Maintenance, Sky Bridge, Sub Way, Flyovers and Interconnections, City
Parkings etc. (www.fcan.org.np).
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2.1.9 Federation of Contractor Association of Nepal (FCAN)
As per journal published by FCAN (2007), Contractors of Nepal who are relatively
established today are said to be started their profession with their own effort without any
help, guidance or training during (1960-1990) A.D. After the restoration of multiparty
democratic political system in 1990 A.D for their enlistment and developing further
professional skills and built institution among the members, Contractor Association of
Nepal (CAN) was born. Later in 1997 A.D, with the great enthusiasm of all the Contractors
Association of Nepal to be under a single forum, name and structure of this association has
been changed as Federation of Contractor’s Associations of Nepal (FCAN).
The FCAN Membership, at present, is comprised of three types:
i) Ordinary Member
ii) Associate Member
iii) Honorary Member
i) All the registered Regional and District Level Contractors’ Associations are capable to get
the Ordinary Membership of FCAN. Till this date all 5 Regional Contractors' Associations
and 75 District Contractors' Associations are associated with FCAN.
ii) Associated Members are those construction firms/companies, which have taken direct
membership from FCAN. Currently more than 275 firms and companies are registered
under this category.
iii) The Executive Board of FCAN may grant the Honorary Membership to those person,
firm, company, institution or any international organization who has done specific
contribution towards the field of construction business, science, technical know how or
national development.( www.fcan.org.np)
Also, after establishment as an umbrella organization CAN (1990) and later as

FCAN(1997), Nepalese contractor made participation and recognization of them with
various international organization like International Federation of Asian and Western Pacific
Contractors' Associations IFAWPCA (October 19, 1993), SAARC Chamber of Commerce
and Industry - Construction Industry Council SAARC CCI- CIC (March 16, 1998) and
International Chambers of Commerce ICC, China International Contractors’ Association
CHINCA (6th June, 2000) mainly and nationally as in National Development Council (NDC),
Construction Business Development Council (CBDC), Construction Business Development
Implementation Committee (CBDIC) , Market Monitoring Board, District Administrative
Office (DAO), Nepal Council of Arbitration (NEPCA), Federation of Nepalese Chambers of
Commerce and Industry (FNCCI) , Construction Industry Training Centre (CITC) etc. and in
many more organization (FCAN, 2007).
2.1.10 Related Studies

The relevant literatures that were selected finding importance to this research after studying
and its finding are discussed in this chapter. The first part of this chapter deals with the
issues and negative cases going around discussion about the technical and financial ability
& management owned capacity of such Class A firms. The second part of this chapter
deals with opportunity for qualified Class A contractor for construction as participating in
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Public Private Partnership model (PPP model) in developing infrastructure. The third part of
this chapter deals with suggestion given by various contractors about the policy that they
felt made by government towards construction industry. The last part of this chapter deals
with finding out by previous researcher on same topic.
2.1.11 Issues of Construction Entrepreneurs in Newspaper
According to article ‘Project Incomplete as Contractor Flee’ by Mr. Rudra Khadka,

Nepalgaunj published on Republica dated November 27, 2012, contract for constructing a
building of BheriZonal Hospital was awarded to a joint venture of four contractors four
years ago. However, even two years after the contractor’s term expired, the building meant
for running the emergency ward at the zonal hospital remains incomplete. The Mid-Western
regional office of the Department of Urban Development and Building Construction
(DUDBC) had awarded the Rs. 40.56 million-contract to the joint venture of Nepal Pragati,
Pradip, DC and Suppliers, Galva J/V contractor on July 13, 2008. As per their agreement
with the DUDBC, the contractors should have completed the building construction by end
of June 2010 (www.myrepublica.com).
According to article ‘Contractors warned for work delay’ published on Himalayan times daily
newspaper dated Nov 15, 2011, the Ministry of Physical Planning and Works has issued a
warning to 151 contractors and seven consultants for delaying various projects, including
bridge and road construction. “The ministry has published the names of contractors and
consultants who have not made expected progress in projects that have already been
launched,” said Suman Sharma, spokesperson for the ministry. “If they do not complete the
projects on time, we will take legal action against them,” he added
(www.thehimalayantimes.com).
According to article ‘Development projects run late due to slow govermrnt, contractors’
published on ekantipur.com dated April 16, 2013, the 50th annual report from Office of the
Auditor General (OAG), Out of the 1,748 contracts of type big and small awarded under 10
government agencies, the deadlines for 1,518 projects were extended in the last fiscal
year. The time extensions ranged from 50 percent of the original period for 572 projects to
50-100 percent for 581 projects. The time limit was doubled for 365 projects. “This show a
weakness in contract management and upgrading managerial capacity is essential,” the
report states (www.ekantipur.com).
2.1.12 Contractors Perceptions towards Construction Industries
According to an article ‘Kalika Construction bags FCAN's Class 'A' Gold Award’ published
in online magazine ‘Housing Nepal’ dated on Dec 9,2012, Bishnu Bhai Shrestha, vice
president of FCAN, said emphasizing on the government´s role to make contractors are
more efficient, contractors said that there were many opportunities within and outside the
country. "We just need a supportive bureaucracy and policies to work constantly". Also in
same heading, Bikram Pandey, chairman of Kalika Construction said the government was
not supportive to uplift the quality of the contractors within the country. The government
imposes unnecessary criteria in the bidding process to avoid participation of domestic
contractors. (www.housingnepal.com).
As per an article ‘ Government Sits on Contractors Payment ’ published on “Arthik Abhiyan

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Daily” newspaper dated on Feb10, 2013, the lack of clarity in government’s action plan,
delay in approval of development projects, and low capital expenditure, which remained a
lowly 15 percent of an already low budget under the capital expenditure, are taking a
serious toll on the contractors engaged in government projects. They claimed that they
were not paid since Kartik for the work already completed and this is straining their
resources. The dues stand at staggering Rs 10 billion. According to President of
Federation of Contractors’ Association of Nepal (FCAN) Jay Ram Lamichhane, non-
payment for the work done can hamper the ongoing projects where work has to be stopped
for want of money. Since Kartik, payment has not been made for works already completed
in over 200 projects. This is causing massive losses for the contractors. Despite taking up
the issue with Finance Ministry, Financial Comptroller General Office (FCGO) and related
ministries, payments are still stuck with the government, he claimed
(www.abhiyan.com.np).
2.2 Research Review

As per the thesis written by Ang Dorji Lama on the topic “ Present status of Class A
Contractors in Nepal and qualification criteria for them” dated on January, 2002., limited
numbers of contractors were only able to get the contract from the bidding which may leads
to the monopoly of ‘A’ class contractors in construction industry. The objective of research
was to analyse the present status of the ‘A’ class construction companies in Nepal in terms
of experience, technical and financial capability, nature of upcoming development work.
The researcher adopted descriptive and analytical research design and data were collected
via different sources like questionnaire survey, direct interview and through the study of
profile of the construction companies under the study. Moreover, the collected data were
analysed and presented by using tools like tables and figure. According to this report
although there are various criteria to analyse and evaluate the quality and qualification of
construction companies and contractors, there are no proper mechanism, tools and
techniques to monitor, check and control it. Henceforth, the researcher has recommended
taking active role in formulating policies, rules, guidelines for the betterment of contractor’s
capability building to the Construction Enterprise Development Board and Committee in
order to control and monitor all the construction companies of Nepal.
Deepak Bhattarai argues that specializing in one area is more important than classification
of contractor from D to A. For example in macro level there is a need of Building Contractor,
Road Contractor, Pavement Contractor, Bridge Contractor, Tunnel Contractor, Hydropower
Contractor or similar specialist contractor then in such case quality would enhance at
competitive cost also. Therefore he have thought about Super Speciality Contractors which
would lead a construction industry to a new height (FCAN Journal, 2012).
CHAPTER-3 RESEARCH METHODOLOGY
3.1 Research Design

This study was carried out on the basis of primary data and secondary data. Descriptive
research design were taken into consideration to describe all the information collected
through primary sources and exploratory research design were taken into consideration to
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explore present status of contractor through secondary sources and literature reviews . The
research methodology chart is shown in Fig. 3.1.
3.2 Data Collection: All the information were collected by using various
sources like primary and secondary sources.
- Primary Sources: Primary sources of the study had included the sources like
questionnaires survey via direct interview and online interview with the respondents
selecting 30 % randomly from the list of class “A” contractors provided by the FCAN i.e. 30
% of total 194 of population is 59 number of Class A contractor which was taken as
respondents sample for questionnaire survey.
- Secondary Sources: Additional information are collected through secondary sources such
as : related websites, a journal of Federation of Contractor’s Associations of Nepal which is
from Nepalese Construction Souvenir (Volume-1 to Volume 18) ,Construction News from
Tri-annually Published Magazine from FCAN , daily national newspapers and others related
published or unpublished materials such as thesis & reports.
Figure 3.1: Flow Chart of Research Design for Adopted Methodology
3.3 Population of the Study: The population of the study includes all the Class A
contractors of Nepal i.e 194 Class A contractors/construction company of Nepal as being
listed in FCAN journal, Vol. 18, 2012 .(Annex C)
3.4 Sample of the Study: For the sample size, 30 % of total population i.e. 59 numbers of
registered Class A contractor had been chosen by random sampling method, from the list
of total population 194 as listed in FCAN Journal, Vol. 18, 2012.
3.5 Research Instrument: The instrument used in collecting data was through prepared
questionnaire which was prepared after thorough study of literature review so that the
defined objective of this purpose of research is fulfilled. The method followed during
distribution of questionnaire was in the following ways:
- Explaining to respondents that the information they have provided shall be kept very
confidential and shall be used for the research purpose only where overall data shall only
be presented in research report rather then single firm’s information.
- Also, questionnaires were made to fill up by the concerned office representative personal
(Engineers and Accountants) after permission from the managing directors and directors of
the firms in the cases where the concerned respondents were unavailable to fill up by
themselves.
The questionnaire contains four major section which includes general information of firms,
technical information, financial information & problems, difficulties and satisfaction under
which sub-section information are provided for respondents to fill up to obtain the
objectives of the research. The first part, general information includes about the partners
status and specialization of the firms in construction sector. The second part, technical
information includes equipments hold by the firm as reference with the prescribed
requirement defined by CBA 2055 & CBR 2056. In this part, the firm answered only the
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quantity of equipments they owns in whatever condition they acquired. The human
resources available in the firm include only the numbers of engineers, junior engineer,
supervisors, accountant and general labor. The third part financial capability includes the
turnover of the firm of the three fiscal years 2069/70, 2068/069, 2068/067 B.S. , credit limit
and permanent overdraft of the firm. The fourth part common problem and difficulties
includes the questionnaire regarding satisfaction and common problems and that Class A
construction entrepreneur are being mostly tackled with. Also, for satisfaction question
respondents were asked to indicate with 5-point Likert-type rating scale: 1=Not at all
satisfied, 2=Slightly satisfied, 3=Somewhat satisfied, 4=Very satisfied, 5=Extremely
satisfied. Also for other ranking question respondents were asked to rank by their priority
that they have felt during their business.
3.6 Data Collection Procedure

The researcher collected list of Class A contractor with their name, contact address and
telephone number from FCAN, Kathmandu, office. Then, the list of 59 respondents(30 % of
population) were selected by random sampling method. The respondents were then at first
contact in telephone providing information about the research criteria and hence distributed
questionnaire by personal meeting. The questionnaire was then distributed hardcopy to 52
respondents and by email (7 respondents). Out of 59 respondents only 51 respondents
returned the questionnaire during 4 months of time, in which out of 52 respondents 44
respondents returned hardcopy and all of the 7 respondents who were mailed returned in
email. The research has covered study of 29% of the respondents as sample from the list
of 194 that is 51 respondents of total population as per total numbers provided by FCAN
Journal, Vol. 18, 2012.
3.7 Data Analysis & Interpretation Procedure

The returned fill up questionnaires were collected, coded and made data entry in computer.
The information obtained from questionnaires survey as raw data were analyzed using
SPSS & MS Excel programmer and were converted into information. The information were
presented by using the tools such as average, mean, weighted average mean, percentage
and minimum/maximum ranges. To understand easily, some of the table & figures are
presented in the form of horizontal, vertical bar chart & pie chart also.
CHAPTER-4 PRESENTATION AND ANALYSIS OF DATA

This section of the research fully depends upon the research design and methods to be
undertaken while collecting the information. Henceforth, an analytical study was conducted
to analyze the collected data. Then, the collected data was coded, edited and arranged in
the systematic way. After that, this information were presented in the form of table and
diagram ( bar chart and pie chart ) through which, readers of the report can easily
understand the meaning of the findings of the research at a glance.
4.1.1 Types of Partners in Class A Firms

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During registration of construction entrepreneurs, one may register at Ministry of Small
Cottage & Industry and Company Registrar Office at any of the form like public limited
company or private limited company or sole trader or partnership after meeting the
prescribed criteria of CBA 2055 & CBR 2056. Similarly, the choice of persons in the
company may be owned family members or groups of interested professional.
Table 4.1: Types of Partners Registered During Firm’s Registration as Class A
Fig. 4.1: Types of Partners Registered During Firm Registration as Class A
Source: Field Survey, 2013.
As shown in figure 4.1, 37.3 % of the firms of Class A construction companies includes
family member as partners in the firm where as again 37.3 % includes partners as other
than family. Similarily, percentage of firms that has both family member and professional
members as partners is 19.6 % and 5.8% of the construction companies is either owned by
single investor respectively.
4.1.2 Active Partners in Class A Firms in Terms of Registration

It is not always necessary that all partners listed during firm’s registration gets active
throughout the year. There can be various reasons through which the relationship between
and within partners can be strengthen and weakened. Some partners may get much more
active and some may not get active during firm’s operation.
Table 4.2 : Active Partners in Class ‘A’ Firm’s in Terms of Registration
Figure 4.2: Active Partners in Class Firms in Terms of Registration
The figure 4.2 depicts that out of the total respondents, 49% consists of active partners and
the remaining 51 % of companies are operated by single entreprenuers.
4.1.3 Experience on Specialized Construction of Work by Class A Construction

Entrepreneurs
Generally, there are many sectors in which any firm can take part in construction work of
interested area after meeting specific criteria of qualification. But there has also been argue
that there is a need of Building Contractor, Road Contractor, Pavement Contractor, Bridge
Contractor, Tunnel Contractor, Hydropower Contractor or similar specialist contractor so as
to enhance at competitive cost also.
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Table 4.3: Experience on Specialized Construction of Work by Class A Construction
Entrepreneurs
Figure 4.3: Experience on Specialized Construction of Work by Class A Construction

Entrepreneurs
As shown in figure. 4.3, 7.8 % of the firm are specialized in particular construction works
where as, remaining 92.2 % of the firm are engaged in two or more than two areas of
construction work.
4.1.4 Work Experience Sector of Class A Construction Entrepreneurs
Table 4.4 : Work Experience Sector of Class A Construction Entrepreneurs
Figure 4.4: Work Experience Sector of Class A Construction Entrepreneurs Source: Field
Survey, 2013.
Table 4.5: Budget for Fiscal Year 2013/014 in Major Infrastructure Projects
Source: http://www.nepalenergyforum.com/
Figure 4.5: Budget for Fiscal Year 2013/014 in Major Infrastructure Projects
Source: http://www.nepalenergyforum.com/
As shown in figure.4.4, most of the respondent are involved in construction and

maintenance of building (98 % respondents) and road construction and maintenance works
(96.1 % respondents) whereas, only 13.7 % of the respondent are only involved in tunnel
and subway construction. Similarily, 47.1 % of the respondent are involved in airport
building and maintenance and 56.9 % of respondents are involved in barrage, canal,
reservoir, water structures. Moreover, 25.5 % of respondent are involved in hydraulic
structure construction and 47.1 % of respondent are involve in reconstruction and
maintenance. It was also found that 19.6 % of respondent are enagaged in construction of
electricity transmission line and power station. Also it can be seen from figure 4.5 that the
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highest amount of budget is for the energy sector among other infrastructure development
and the participant of contractors are very few in number as compare to other
infrastructures.
4.2 Comparison of the Existing Equipment Capacity of Class A

Entrepreneurs as per CBA 2055 & CBR 2056
4. 2.1 Machine and Equipment
A machine is a tool that consists of one or more parts, and uses energy to meet a particular
goal. Machines are usually powered by mechanical, chemical, thermal, or electrical means,
and are often motorized. Construction equipment refers to heavy- duty vehicles, specially
designed for executing construction tasks, most frequently ones involving earthwork
operations. They are also known as, heavy machines, heavy trucks, construction
equipment, engineering equipment, heavy vehicles, or heavy hydraulics.
Table 4.6: Status of Machine & Equipment Capacity of Class A Entrepreneurs as per CBA
2055 & CBR 2056
Table 4.6 shows that only 33.3 % of the respondents out of 51 respondents seem to meet
the standard as prescribed by CBA 2055 & CBR 2056. (Annex-D)
Human resources are the set of individuals who make up the workforce of an organization,
business sector, or economy. Human resources in construction sector generally refers to
the various personal like civil engineers, overseers, supervisors, accountant, general
labour, various equipment operators etc.
Table 4.7 : Human Resources Available with Class A Construction Entrepreneurs
Table 4.8: Range of Human Resources in Class A Firms
Table 4. 8 shows that overall average numbers of civil engineer held by Class A firm is
2.92, junior engineer 3.25, accountant 2.06 and supervisor is 5.08.
4. 3 Financial Capabilities of Class “A” Construction Entrepreneurs

Financial Capabilities of firms can be defined in terms of their annual turnover achieved,
credit limit owned by the firm and bank overdraft facilities available with the firm.
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4.3.1 Annual Turnover of Class A Construction Entrepreneurs
Turnover represents the total Revenue received by the company. ie., Sale of goods,
Service Revenues (depending upon the nature of the business) and here mainly concerned
with supplies and construction works of public entities. (PPR, 2064).
Table 4.9 : Annual Turnover of Class A Construction Entrepreneurs for F.Y 069/070 , F.Y
068/069 & 067/068
Figure 4.6: Annual Turnover of Class A Construction Entrepreneurs for F.Y 069/070 , F.Y
068/069 & 067/068
Figure 4.6 shows that the majority of number of Class A firm’s annual turnover is below 10
crore and is by 64.52 % of firms in F/Y 067/068, 51.61 % in F/Y 068/069 and 61.29 % in
F/Y 069/070. From table 4.9 it is also seen that numbers of firms having annual turnover in
the recent three fiscal years above 20 crore is very less in number.
4.3.2 Credit Limit of Class A Construction Entrepreneurs
A credit limit is the maximum amount of credit that a financial institution or other lender will
extend to a debtor for a particular line of credit by mortgaging the properties. It is also
known as credit line, line of credit, or a trade line.
Table 4.10 : Credit Limit of Class A Construction Entrepreneurs
Figure 4.7: Credit Limit of Class A Construction Entrepreneurs
As shown in figure 4.7, most of the firms have the credit limit between 5 to 10 crore (50.9 %
respondents) where as, only 11.8 % of the firms have credit limit above 10 crore.
4.3.3 Bank Overdraft of Class A Construction Entrepreneurs
A bank overdraft is a credit agreement made with a financial institution that permits an
account holder to use or withdraw more than they have in their account, without exceeding
a specified maximum negative balance, by mortgaging their properties. Establishing an
overdraft facility with a bank can help an individual or small business with short term cash
flow problems.
27/40
Table 4.11 : Bank Overdraft of Class A Construction Entrepreneurs
Figure 4.8 Bank Overdraft of Class A Construction Entrepreneurs
As shown in figure 4.8, most of the firms have overdraft below 1 crores (62.74 %
respondents) whereas, only 1.97 % of the firms have overdraft above 10 crore.
29.41 % of the respondents has overdraft between 1 to 5crore. Also from fig.4.8 it is seen
that 5.88 % of the respondents has overdraft of 5 to 10 crore .
4.4 Satisfaction of Class A Construction Entrepreneurs in Current Situation

with Construction Business
Table 4.12 : Satisfaction of Class A Construction Entrepreneurs in Current Situation with
Figure 4.9: Satisfaction of Class A Construction Entrepreneurs in Current Situation with

Business
Fig.4.9 shows that construction entrepreneurs who are slightly satisfied and somewhat
satisfied with their business is 33.33 % out of 51 respondents while those who are very
satisfied is 11.8 %. From figure 4.9 it is seen that construction entrepreneurs who are not at
all satisfied is 17.6 % and extremely satisfied is only 3.9 % out of 51 respondents.

4.4.1.1 Difficulties Felt in Criteria of Achieving Qualification Documents During
Bidding Procedure by Class A Construction Entrepreneurs
GoN's current policy on PQ is that all potential bidders that meet predefined minimum
requirements regarding general construction experience, particular or specialized
experience, financial capabilities including annual turnover and credit line information,
personnel capabilities, and equipment availability should be invited to bid. Also bid security
is an essential part of qualification document. The procedure requires the implementing
agency (Employer) to set pass/fail criteria which, if all are not met substantially by the
applicants, would cause them to be disqualified by public entity.
28/40
Table 4.13 : Difficulties Felt in Criteria of Achieving Qualification Documents During Bidding
Source: Field Survey, 2013. * f= Nos. of Firms
Note: S.E=Similar Experience, A.T=Annual Turnover, C.L.I=Credit Line Information

H.R=Human Resource, E.R=Equipment Required, B.S=Bid Security
From Table 4.13, it is seen that the weighted average mean of 12.24 is highest for the
annual turnover and second highest 11.38 for similar nature of work experience in
prequalification part of bidding documents by the respondents.
Similarly from Table 4.13, it is seen that the weighted average mean for equipment
required is 9.19, manpower engaged is 7.05, credit line information is 6.81 and bid security
is 4.33 giving the third, fourth, fifth and sixth priority finding difficulties in prequalification part
of bidding documents by the respondents.
4.4.1.2 Difficulties felt in Receiving Payment During Payment Schedule by Class

A Construction Entrepreneurs
Payment procedure to the construction entrepreneurs is in the form of advance payment,
running bills payment, final bills payment, escalated amount, bonus amount and refunding
security amount by public entities.
4.14 : Difficulties Felt in Receiving Payment During Payment Schedule by

Note: A.P=Advance Payment, R.B.P=Running Bill Payment, F.B.P=Final Bill Payment,

R.S.A=Refund of Security Amount, E.A=Escalation Amount, B.A=Bonus Amount
escalation amount and second highest 9.86 for running bill payments in the process of
payment procedure made by public entities.
Similarly from Table 4.14, it is seen that the weighted average mean for final bill payment is
8.90, bonus amount is 8.81, refunding of the security amount is 8.14 and advance payment
is 4.95 giving the third, fourth, fifth and sixth priority finding difficulties in the process of
payment procedure made by public entities.
4.4.1.3 Difficulties Felt in Revenue & Taxation Part by Class A Construction

Entrepreneurs
There are various parts of taxation system that the construction entrepreneurs needs to
deals with during their business. Mainly difficulties are felt during the issuing of license,
yearly renewal, registration at Inland Revenue office, monthly tax submission, tax clearance
and refunding of the security amount (TDS i.e Tax Deduct at Source) .
29/40
Table 4.15: Difficulties Felt in Revenue & Taxation Part by Class A Construction
Entrepreneurs
Note: I.L=Issue of License, Y.R.F=Yearly Renewal of Firm, R.V.O=Registration at Vat

Office, M.T.S=Monthly Tax Submission, T.C=Tax Clearance, R.T.D.S=Refund of Tax
Deducted at Source
refund of the tax deducted at source amount and second highest 10.57 for obtaining tax
clearance certificate in the part of taxation process.
Similarly from Table 4.15, it is seen that the weighted average mean for issuance of license
is 9.24, registration at vat office is 7.81, yearly renewal of firm is 7.71 and monthly tax
submission at revenue office is 6.14 giving the third, fourth, fifth and sixth priority finding
difficulties in the listed taxation parts.
4.4.1.4 Difficulties Felt in Hiring Qualified Human Resource in Different

Construction Sector by Class A Construction Entrepreneurs
Brain drain (or human capital flight), is the large-scale emigration of a large group of
individuals with technical skills or knowledge. The reasons usually include two aspects
which respectively come from countries and individuals. In terms of countries, the reasons
may be social environment (in source countries: lack of opportunities, political instability or
oppression, economic depression, health risks, etc). (www.en.wikipedia.org).
Table 4.16 : Difficulties Felt in Hiring Qualified Human Resource in Different Construction
Sector by Class A Construction Entrepreneurs
tunnel sector and second highest 10.57 for hydropower sector in the part of manpower
unavailability as felt by Class A contractors.
Similarly from Table 4.16, it is seen that the weighted average mean for bridge sector is
8.21, road sector is 6.04, irrigation sector is 5.32, water supply sector is 4.61 and building
sector is 4.46 giving the third, fourth, fifth , sixth and seventh priority in the part of
manpower unavailability as felt by Class A contractors.
4.4.1.5 Insecure Felt due to Hooliganism During Stages of Tender Purchase,

Tender Drop and Construction Site Execution Works by Class A Construction
Entrepreneurs
4.4.1.5.1 Tender Purchasing
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A notice for invitation to bids or prequalification proposals shall have to be published in a
daily newspaper of national circulation and, in the case of an international bid, it may also
be published in any international communication media. Then, interested firms shall
purchase the tender document from concerned offices upon submission of specified
amount providing along with the necessary documents like registration certificate of a firm,
organization or company, value added Tax registration certificate and permanent account
number (PAN) registration certificate, tax clearance certificate and a written declaration
made by bidder with a statement that he/she is eligible to participate in the procurement
proceeding. Due to the hooliganism that had entered into the tendering process in
contractor profession, it has become very difficult for most of the interested contractor for
even to purchase tender document from concerned authority.
4.4.1.5.2 Tender Drop

In publishing a notice under, for invitation of national level bidding or prequalification
proposals, a period of at least thirty days shall be given and at least forty five days shall be
given in the case of a notice on invitation that of international level bidding or
prequalification proposals. The place, manner, the deadline for the submission or
forwarding of the bidding documents or prequalification documents and the place, date and
time for the opening of bids, and matter that the bidders or their authorized agents shall be
invited to attend the opening of bid must be mentioned during tender notice by public
entities. Due to the hooliganism that had entered into contractor profession, it has become
very difficult for most of the interested contractor for to drop their tender document to
concerned authority.
4.4.1.5.3 Site Execution

Site execution has always become very difficult for most of the contractors from the initial
establishment of site for work and ends till up to the completion of the project.
Table 4.17 : Insecure Felt due to Hooliganism During Stages of Tender Purchase, Tender
Drop and Construction Site Execution Works by Class A Construction Entrepreneurs
From Table 4.17, it is seen that the weighted average mean of 21 is highest for the
construction site execution, second highest 19.83 for tender document drop and third
highest 10.17 for tender document purchase.
CHAPTER-5 FINDING OF THE STUDY

- The research has revealed that most of the partners in the firms include family member as
partners (37.3 %), Other, than family member (37.3 %) both family member and other
(19.6%) and no partners (5.9 %).
- 51 % of the partners those who were member of the organization during the registration
phase have discontinued as an active member in the same company and profession.
31/40
- Few contractor ,(only 7.8 % ) are specialized in particular area of construction work. Most
of the contractor are engaged specially in two areas of construction, viz. Construction and
maintenance of building (98 %) and in road construction and maintenance (96.10 %). The
study also shows that the contractor in the sector of tunnel and subway (only 13.70 %),
electric line and power station constructions (19.6 %) are very few in numbers.
5.2 Comparison of the Existing Equipment Capacity of Class A

Entrepreneurs as per CBA 2055 & CBR 2056
- Most of the companies, 66.7 % of the companies have failed to meet the exact prescribed
standard in overall consumption of the equipment as prescribed by CBA 2055 & CBR 2056.

- The overall average number of civil engineers hold by Class A firm is 3, junior engineer 3,
accountant 2 and supervisor is 5.
5.3 Financial Capabilities of Class A Construction Entrepreneurs

- Most of the firm(51 % to 64 %) has the annual turnover below ten crore on viewing the
recent three fiscal years F.Y 069/070, 068/069 & 067/068
- The credit limit for most of the firm (50.9 %) , ranges between five to ten crore.
- Most of the firm (62.74 %) , has the overdraft facility below one crore.
5.4 Satisfaction of Class A Construction Entrepreneurs in Current Situation

with Construction Business
- Few construction entrepreneurs (only 3.9 %) ,are extremely satisfied with the profession.

5.4.1.1 Difficulties Felt in Criteria of Achieving Qualification Documents during
- It is seen that the weighted average mean of 12.24 is highest for the annual turnover,
second highest 11.38 for similar nature of work experience and third 9.19 for equipment
required which have been felt the most difficult by contractors in prequalification part of
bidding documents made by public entities.
5.4.1.2 Difficulties felt in Receiving Payment During Payment Schedule by Class

A Construction Entrepreneurs
- It is seen that the weighted average mean of 10.48 is highest for the escalation amount,
second highest 9.86 for running bill payments and third 8.90 for final bill payment which
have been felt most difficult by contractors in the process of payment procedure made by
public entities.
5.4.1.3 Difficulties felt in Revenue & Taxation Part by Class A Construction

Entrepreneurs
- It is seen that the weighted average mean of 12.23 is highest for the refund of the amount
of tax deduct at source, second highest 10.57 for obtaining tax clearance certificate and
third 9.24 for issuance of license in the part of taxation process.
32/40
5.4.1.4 Difficulties Felt in Hiring Qualified Human Resource in Different
- It is seen that the weighted average mean of 11.79 is highest for the tunnel sector, second
highest 10.57 for hydropower sector and third 8.21 for bridge sector which has been felt
insufficient in the part of manpower availability.
5.4.1.5 Insecure Felt Due to Hooliganism During Stages of Tender Purchase,

Entrepreneurs
- It is seen that the weighted average mean of 21 is highest for the construction site
execution and second highest 19.83 for tender document drop during which contractors
feels unsecure in their business.
CHAPTER-6 CONCLUSION AND RECOMMENDATION

Based on the observations and findings of the study, the following conclusion and
recommendation are made:
6.1 Conclusion

- Specialization in construction by contractors seems not to be adopted as most of the
contractor seems to work in various field of construction.
- Most of the budgets in this fiscal year 2013/014 has been allocated in energy sector
(73.15 %) but the participation of contractors in building infrastructure regarding electric line
and power station (19.6 %) are very few in number.
6.1.2 Existing Equipment Capacity of Class A Entrepreneurs as per CBA 2055 &
CBR 2056
- Most of the construction entrepreneurs of Class A firm (66.7 %) in Nepal does not meet
the standards of equipment as prescribed by CBA 2055 & CBR 2056.
6.1.3 Financial Capabilities of Class “A” Construction Entrepreneurs
- Most of the firm(51 % to 64 %) has the annual turnover below ten crore on viewing the
recent three fiscal years F.Y 069/070, 068/069 & 067/068
- The credit limit for most of the firm (50.9 %) ranges between five to ten crore.
- Most of the firm(62.74 %) has the overdraft facility below one crore.
6.1.4 Satisfaction of Class A Construction Entrepreneurs
- Most of the construction entrepreneur (96.1 %) is not extremely satisfied with the current
situation ongoing in their business.
6.1.4.1 Common Problem and Difficulties of Class A Construction Entrepreneurs

6.1.4.1.1 Difficulties Felt in Criteria of Achieving Qualification Documents during
33/40
- Most of the contractor are finding difficulties in meeting criteria for turnover part and
similar nature of work experience of qualification documents asked during the bidding
procedure by public entity.
6.1.4.1.2 Difficulties felt in Receiving Payment During Payment Schedule by

- Most of the contractors are not satisfied with the process in getting escalated amount,
running bill payment and final bill payment from public entity during making payment.
6.1.4.1.3 Difficulties felt in Revenue & Taxation Part by Class A Construction

Entrepreneurs
- Most of the contractors are not satisfied with the process in refunding of the amount of tax
deduct at source and obtaining tax clearance certificate at the end of fiscal year.
6.1.4.1.5 Difficulties Felt in Hiring Qualified Human Resource in Different

- Currently, there is a lack of skilled manpower in tunnel sector, hydropower sector and in
bridge sector most in Nepal by respectively as felt by Class A contractors.
6.1.4.1.6 Insecure Felt Due to Hooliganism During Stages of Tender Purchase,

Entrepreneurs
- Most of the contractors feels insecure during site execution and during tender document
drop.
6.2 Recommendation

- Contractors need to focus in some particular area or sector of construction work instead
of targeting almost all the sectors inorder to expertise in a particular sector to enhance the
quality and sepcialization of work.
- It is clear from the study that there is more opportunity in construction if the contractors
manage to enter in the construction of energy sector.
6.2.2 Equipment Capacity of Class A Entrepreneurs as per CBA 2055 & CBR
- It was clear from the study that most of the firm were not following the standards to own
heavy equipments, which means they are using these heavy equipments on rent or
outsourcing from other. This means that these firm are still not following the standards on
the ownsership of equipments as prescribed by CBA 2055 and CBR 2056. Hence these
companies need to consider in purchse and ownership of heavy equipment as per the
prescribed standards of CBA 2055 & CBR 2056. There should be a systematic monitoring
system for to maintain the standard of equipment of class A contractors after the issuance
of license as class A .

6.2.3.1 Criteria on Qualification Documents
34/40
- Public entity must be more flexible in terms of present policy while preparing similar
nature of work experience and annual turnover part during preparation of qualification
procedure for procurement aiming more participation of contractor during bidding
procedure.
6.2.3.2 Payment During Payment Schedule

- Public entity must create suitable environment for payment procedure in escalated
amount, running bill and final bill payment.
6.2.3.3 Revenue & Taxation Part

- Simple procedure should be formulated for refunding of the tax deduct at source amount
and tax clearance at the end of fiscal year for construction entrepreneurs by Inland
Revenue Office.
6.2.4.4 Qualified Human Resource in Different Construction Sector

- Special training for labours should be provided to produce the skilled manpower in tunnel
sector, hydropower sector and bridge sector.
6.2.4.5 Tender Purchase, Tender Drop and Construction Site Execution

- Special separate laws and policies regarding security should be formulated for contractor
business during bidding procedure and for the execution of work at site .
6.3 Recommendation for Future Research

The aim of the study was to identify and compare the current status of Class A construction
entrepreneurs in terms of equipment capability as prescribed by CBA 2055 and CBR 2056.
Furthermore, this research also studies about the financial capabilities of firms in terms of
credit limit and overdraft facilities and also explore the common problem in criteria of
qualification, payment procedure, security matter, taxation and unavailability experienced
by manpower by Class A contractor.
Furthermore, this study enclose particular scope. There can be requisite for a further
research into other areas in the construction entrepreneur’s status. The following
recommendations are suggested for future research on:
i) To study on status of construction companies of registered class B, C or D construction

entrepreneur.
ii) To study on opportunity and challenges on specialization on nature of works to Nepalese
contractor.
iii) To study on laws and policies regarding security for healthy construction environment of
bidding procedure and working environment in Nepalese construction projects.
References:
Bhattarai, Deepak, (2069, Mangsir), The Neplease Construction Industry is at Risk,
Nepalese Construction Souvernir , Vol: 18, No.21, Federation of Contractors’ Associations
of Nepal (FCAN), Kathmandu
35/40
Deoja, B.B, Adhikari R.P, and B.R Pandey, Prospects and Approaches to Public Private
Partnership in Transport Infrastructure(August 2009), Economic Policy Network
Government of Nepal, Standard Prequalification Document (2009), Public Procurement

Monitoring Office, Tahachal, Kathmandu
Lama, Ang Dorje, 2002. “Present Status of ‘A’ Class Contractors in Nepal and Qualification
Criteria for them” Centre for Post Graduate Studies, Nepal Engineering College
Pandey, Birendra Raj ( 2069, Mangsir,), Capacity Building of Construction Industry- Project
Level, Nepalese Construction Souvernir , Vol: 18, No.21, Federation of Contractors’
Associations of Nepal (FCAN), Kathmandu
Pandey, Birendra Raj ( 2057, Mangsir,), Nepalese Contractors: A discussion, Nepalese

Construction Souvernir , Vol: 10, No.13, Federation of Contractors’ Associations of Nepal
(FCAN), Kathmandu
http://www.ppmo.gov.np/about_us.php?menu_id=1 cited on 2013-05-28
http://www.moppw.gov.np/ cited at 2013-05-28
http://www.cbps.gov.np/ cited at 2013-05-28
http://www.fcan.org.np/pages.php?pid=86 cited at 2013-05-29
http://scaef.org.np/conference/conference/pdf/Session-3/2.%20Tulasi%20Sitaula%20-
%20Theme.pdf cited on 2013-05-28
http://www.mof.gov.np/files/DCR.pdf cited at 2013-05-28
http://www.asosai.org/R_P_auditpublicworks_projects/chapter_15_nepal.htm cited on
2013-15-18
http://www.fcan.org.np/pages.php?pid=83 cited at 2013-05-29
http://www.myrepublica.com/portal/index.php?action=news_details&news_id=45497 cited
at 2013-05-20
http://www.thehimalayantimes.com/fullNews.php?headline=Contractors+warned+for
+work+delay++&NewsID=309390 cited at 2013-05-22
http://www.ekantipur.com/2013/04/16/development/development-projects-run-late- due-to-
slow-govt-contractors/370063.html cited at 2013-05-24
http://stats.kkk.com.np/2013/04/08/business/two-more-infra-projects-under-ppp-
model/369671.html cited at 2013-05-24
http://www.housingnepal.com/news/national/kalika-construction-bags-fcans-class-a- gold-
award cited at 2013-05-28
http://www.abhiyan.com.np/article-
thecorporate_vol2_Issue51_mainnews1#.UZ8l_XWNFzU cited at 2013-05-24
36/40
http://en.wikipedia.org/wiki/Brain_drain cited at 2013-09-20
http://www.nepalenergyforum.com/govt-emphasizes-hydropower-infrastructure-
development/cited at 2014-01-09
Bibliography:
Journal of Federation of Contractor Associations of Nepal (FCAN), “Volume; 9,
no.12,Feburary 2000” ; “Volume 17,no.20, September 2011”; “Volume 18 , no.21,
November 2012”
www.fcan.org.np cited at 2013, March 18
Appendices
Annex-A
(Figure of Special Purpose of Company)
Source: Prospects and Approaches to Public Private Partnership in Transport

Infrastructure, August 2005.
Annex-B
(Requirements of Machine & Equipments as per CBA 2055 & CBR 2056 for Class A
Construction Entrepreneurs)
Source: CBA, 2055. & CBR, 2056.
Annex-C
(List of Class A Contractors affliated with District Association)
(List of Class A Contractors affliated with Associates Member)
Source: FCAN Journal, 2012
Annex-D
(Overall Standard meeting of equipments as per prescribed in CBA 2055 & CBA 2056 by
Class A Firms)
Equipment Analysis
37/40
Annex-E
(Questionnaire for Contractors)
The research is being undertaken by Mr. Suresh Adhikari, a third semester student in MSc.
Construction Management. This study is being undertaken to identify the “Status of Class A
Construction Entrepreneurs in Nepal of Nepalese Construction Industry”. You are kindly
requested to participate by completing the questionnaire. The information you provide will
be used together with other information to come out with finding, suggestions and
recommendations on finding Status of Class A Contractors.
It is hoped that you will complete the questionnaire as frankly and honestly as possible.
Please be assured that your responses will be treated as confidential and used only for the
purpose of this research study only.
Thank you.
Note: Please [illustration not visible in this excerpt] wherever is correct. For subjective
question, please provide answer with specific response.
While ranking the answers please start from lower values of ranking number as quoted in
each of the questions. Eg. 1,2,3,4,5,…. and so on. The lowest numerical means highest
priority & highest numerical means lowest priority. For example numeric value 1 means the
most priority you have given, 2 means less priority you have given, 3 means least priority
you have given and so on.
Name of the company :
Address:
Office phone no:
A. General Information
1. Please mention the type of partners involved in your Company.
2. Are all partners listed in your company registration actively working in the firm?
3. Has your firm only worked under a particular construction area (specialized) (eg.
Building, Road, Bridge etc. Only one sector) construction, from the date of establishment of
your firm?
If yes, please mention in which sector?
4. Please provide the information about the nature of works that your firm had constructed
from the date of establishment till present. Please mention
38/40
B. Technical Information
5 . Please provide the information about equipments and machineries your company has
been holding till the date.
6. Please provide the permanent human resources in your organisation at recent

employment. Please mention in detail as.
C. Financial Information
7. Please provide the annual turnover of your company as specified in table?
8. Please list out the present credit limit of yours firm in Nrs..
a) Below 1crore b) 1 - 5crore c) 5 - 10crore d) Above 10crore If above 10 crore, please

specify in Nrs
9. Please list out the Permanent Overdraft of yours firm in Nrs..
a) Below 1crore b) 1 - 5crore c) 5 -10crore d) Above 10crore If above 10 crore, please

specify in Nrs
D. Problems, Difficulties and Satisfaction
10. Are you satisfied with your profession as Class A construction entrepreneur. Please
rank .The lowest numerical means highest priority & highest numerical means lowest
priority.
If not extremely satisfied, then
Please mention which of the following parameter has been hindering you for being not
satisfied. Please rank .The lowest numerical means highest priority & highest numerical
means lowest priority.
11. Please mention which part of tender document you feel as tough pre-qualification
procedure as per your experience. Please rank .The lowest numerical means highest
priority & highest numerical means lowest priority
12. Please mention in which part of payment procedure you have been delayed during
project run from employer as per your experience. Please rank .The lowest numerical
39/40
means highest priority & highest numerical means lowest priority.
13. Please mention where have you felt not insecure during your profession as per your
experience. Please rank .The lowest numerical means highest priority & highest numerical
means lowest priority.
14. Please rank the part of taxation system you have found has been tough in your
profession as per your experience .The lowest numerical means highest priority & highest
numerical means lowest priority.
15. Please mention the sector where s you found deficit (unavailability) of skilled manpower
during execution of project as per your experience. Please rank .The lowest numerical
means highest priority & highest numerical means lowest priority.
16. Please suggest based on your experience in Construction Field, how can we uplift the
profession of Class A contractor in future. Please rank .The lowest numerical means
highest priority & highest numerical means lowest priority.
40/40

Status of Class A Construction Entrepreneurs in Nepal

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Status of Class A Construction Entrepreneurs in Nepal

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Status of Class A Construction Entrepreneurs in Nepal

Suresh Adhikari (Author)

CHAPTER-2 LITERATURE REVIEW

CHAPTER-3 RESEARCH METHODOLOGY

CHAPTER-4 PRESENTATION AND ANALYSIS OF DATA

CHAPTER-5 FINDING OF THE STUDY

CHAPTER-CONCLUSION AND RECOMMENDATION

2.2 Nos. of Registered Firms of Class A, B, C& D in Various Years

4.1 Types of Partners Registered During Firm’s Registration as Class ‘A’

4.2 Active Partners in Class ‘A’ Firm’s in Terms of Registration

4.3 Experience on Specialized Construction of Work by Class A Construction

4.4 Work Experience Sector of Class A Construction Entrepreneurs

4.5 Budget for Fiscal Year 2013/014 in Major Infrastructure Projects

4.7 Human Resources Available with Class A Construction Entrepreneurs

4.8 Range of Human Resource in Class A Firms

4.10 Credit Limit of Class A Construction Entrepreneurs

4.11 Bank Overdraft of Class A Construction Entrepreneurs

4. 12 Satisfaction of Class A Construction Entrepreneurs in Current Situation with

4.13 Difficulties Felt in Criteria of Achieving Qualification Documents During Bidding

4.14 Difficulties Felt in Receiving Payment During Payment Schedule by Class A

3.1 Flow Chart of Research Design for Adopted Methodology

4.2 Active Partners in Class A Firms in Terms of Registration

4.3 Experience on Specialized Construction of Work by Class A Construction

4.4 Work Experience Sector of Class A Construction Entrepreneurs

4.5 Budget for Fiscal Year 2013/014 in Major Infrastructure Projects

4.7 Credit Limit of Class A Construction Entrepreneurs

4.8 Bank Overdraft of Class A Construction Entrepreneurs

4.9 Satisfaction of Class Construction Entrepreneurs in Current Situation with Business

1.1 Background of the Construction Industry

1. 2 Statement of the Problem

1. 3 Objective of the Study

1.4 Significance of the Study

1.5 Limitation of the Study

2.1 Conceptual Framework

2.1.1 Acts & Regulation on Infrastructure Development in Nepal

2.1.2 Government Institutions for Infrastructure Development

The objective of Construction Business Promotion Section (CBPS)

2.1.2.2 Public Procurement Monitoring Office (PPMO)

2.1.3 Public Entity

“Public Entity” means the following entity:

i) Constitutional organ or body, Court, Ministry, Secretariat, Commission, Department of the

2.1.4 Foreign Aid in Nepal for Infrastructure Development

illustration not visible in this excerpt

According to Asian Organisation of Supreme Audit Institutions (ASOSAI), published on Sep

2.1.5 Requirements of Class A Construction Firms for Registration

illustration not visible in this excerpt

Table 2.2: Nos. of Registered Firms of Class A, B, C& D in Various Years

illustration not visible in this excerpt

As mentioned by CBA, 2055(1999), “construction entrepreneur ” means a firm or company

Clause 10 sub-rule (1) Schedule -10

Financial Capacity: It has to be registered with the Department of Industries as a private or

Work Experience: It has to be satisfactorily completed four different public construction

i) While submitting an inventory of equipment, ownership certificate of equipment as well as

2.1.6 Qualification Procedure for Contractors

2.1.6.1 Major Qualification Documents for Contractors

2.1.6.1.1 Particular Construction Experience

The Applicant’s general capabilities in managing construction contracts should be related

Experience requirements should be stipulated as a minimum annual value of general

Time Period in the Construction Business

Required Average Annual Turnover

2.1.6.1.3 Financial Capabilities Requirement for Contractors

- Minimum Required Cash Flow Amount

- Adequate Source of Finance