Source: Asia Development Bank
A proven solution that has been adopted by the government of Papua New Guinea (PNG) is to break larger projects into structured logical construction stages. These stages reflect the technical sequencing of works and contracts for individual stages that typically do not exceed K10 million (about $2.35 million). This structure opens the door for smaller, PNG-based businesses to bid, because they are able to meet the financial liquidity, business turnover, and performance bond requirements of the tender. Often, they can also offer more competitive pricing. A successful bid for one stage of the work does not automatically guarantee the contractor’s success in bidding for the next stage. This creates a strong incentive to perform well at every stage. This way, project costs and timelines are managed through disciplined contract administration.
When PNG-based construction companies are engaged, they typically bring employment and skills transfer to the communities where they work. The work ranges from basic site clearance to skilled trades, including construction, plastering, and painting. A construction company typically has between 100 and 250 workers involved in each project and hires up to 80% of them locally. The company’s own local staff trains and supervises the workers, thereby facilitating skills transfer over the 2.5 years to 3 years that it takes to complete a project. Building local capacity also supports facility maintenance and equipment servicing. Thus, upon completion, the community has skilled people to maintain the infrastructure. Further, where projects have been financed by international partners, the contractor is obliged to adopt and train local workforce in safeguards, safety, and environmental standards.
To get paid, workers are encouraged to open an individual bank account, so the project brings them into the formal economy. This is especially important for women, who are hired as laborers and artisans, because it improves their financial independence and equips them with marketable skills for future work.
Tendering in this way builds relationships at the provincial government and community levels. This is important because, upon completion, the management and ownership of the facilities will also be handed over to the Provincial Health Authority. The project increases local ownership because officials, for example, from the local governor’s office, building inspectorate, and local staff from the provincial administration, get involved. Bringing employment to the local people helps establish a relationship with the community and increases their sense of ownership of the health facility. This can also help when negotiating with customary owners of land to make it available for a health facility.