Higher performance guarantees from lower bids in highway projects: Road transport ministry

The centre will seek higher performance guarantees from bidders offering to build highway projects at 30% or more below original estimates. This is aimed at deterring abnormally low bids and safeguard the quality of national highway infrastructure, a Road Transport and Highways Ministry circular issued Tuesday said.

This directive comes into force with immediate effect. It applies to all future Engineering, Procurement, and Construction (EPC), Hybrid Annuity Model (HAM), and maintenance contracts. Under the updated guidelines, the ministry noted that the issue of abnormally low bids was reviewed "considering the continuing trend of abnormally low quoting in National Highways projects”

Consequently, any bid discounted by 30% or more against the project cost will see the additional performance security “incremented by 0.5% for every percentage of bid price below 30% of the project cost put to bid in addition to 3% of the bid price.”


The ministry has also barred the use of insurance surety bonds for this specific requirement, mandating that “Additional performance Security shall only be submitted in form of E-Bank Guarantee” and that “Surety bond shall not be accepted.”