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with tolls from users. On the other hand, higher
limit of 200% of the prescribed limits was adopted
for some of the BOT (Annuity) projects. In case of
BOT (Annuity) model, the traffic risk and revenue
risk is taken care of by the government and high
technical expertise has been set to limit the number
of bidders as the level of competition is quite high
due to the reduced risk exposure to private entities.
In addition, three projects of project cost more
than INR 4000 crore exceeded the minimum PQ
limits. With maturity of PPP market in India, the
number of competent bidders has also increased.
Implementing agency for highway projects,
therefore, has further modified the minimum net
worth based on the project cost. The minimum net
worth has been set to 25% of the project cost for
project cost of below INR 2000 crores, 50% of the
project cost of INR 2000-3000 crores and 100%
for project cost of above INR 3000 crores26. The
reason for setting higher limit for high value
projects was to ensure that the project do not get
delayed due to participation of smaller firms in
bidding for large projects that are beyond their
capacity26. This has been a move to facilitate
megaprojects, defined as spanning over 400 to
600 km and costing more than INR 5000 crores,
by bringing in very sound domestic and
international companies.
9. Inferences
The findings of highway projects could indicate a
sort of saturation in the experience gained by the
procuring authorities due to centralized governing
body coupled with timely rules and regulations.
This also could be due to the fact that significant
number of players in the road sector exists and the
winning bidder is expected to perform similar to
the project in past. This would ensure participation
of experienced and competent bidders and screen
out bidders with less experience that hinder strong
competition in the procurement process.
Another inference from the study is the comparison
of PQ with that of contractor selection procedures
followed in the traditional and Design-Build
procurement. The criteria of PQ are quite simple in
nature when compared with the robustness of other
procurement systems. The reason for this could be
that the granting authorities might have wanted to
keep the PQ simple on purpose so as to facilitate
Journal of the indian Roads Congress, July - September, 2017 107
a thorough analysis in the bid proposal stage.
Nevertheless, suggestion could be made that PPP
PQ has to incorporate other dimensions like past
performance related metrics apart from technical
and financial assessments.
10. Conclusions
This paper identified and analysed the PQ limits
observed in highway PPP projects of India. The
findings indicate that in case of national highways
the prequalification limits converged to a common
value whereas. Prequalification limits in case of
highway projects it is less dependent on the project
size. This study found that there are inconsistencies
in the practices being adopted in prequalification
in India from the theory.
The prequalification limits are set in such a way
that the numbers of private parties qualifying
for the project is neither so large so as to cause
enormous efforts and time in evaluation nor so
small so as to thwart competitions. In India, a range
of 5-8 shortlisted bidders is considered enough
to foster healthy competitions. While the
conventional prequalification limits of 100%
Technical capacity and 25% financial capacity is the
recommended required standards, many projects
shows extreme deviation. High prequalification
limits is adopted in expressway projects and
also in National Highways projects which lies in
the Golden Quadrilateral. The reason for this is
attributed to high traffic density in these projects
and ultimately interest of the large number of
private parties. Lower prequalification limits than
the conventional occurs in the projects when PPP
was taken up in 2007- 2008 possibly due to global
recession and corresponding low GDP of India.
Due to involvement of high level of risks in
BOT (Toll) project, the private parties’ interests
varies from project to project. As a result, the
prequalification limits in these projects fluctuates.
On the contrary, in BOT (Annuity) projects, the
traffic risk is eliminated since a fixed payment is
assured by the Government. Therefore, for BOT
(Annuity) projects the prequalification limits do
not fluctuate.
This paper sum up that prequalification limits are
directly dependent on the number of interested
private parties in the project which again is
dependent on the traffic density and willingness