Thursday, December 01, 2022

Construction Crisis: Controller authorizes MOP to re-adjust existing public works contracts. financial journal

The Comptroller General of the Republic gave effect to taking cause of the Ministry of Public Works (MOP) decree allowing readjustment of existing contracts. The measure was announced in early October and proposes Increase the amount of contracts to a maximum of 20% to offer more margin of financial maneuverability to companies that need it.

Thus, the mechanism that would operate “at the request of the contractor and through the signing of an agreement approved by the waiver resolution” and that will allow the inclusion of a readjustment index in the contracts governed by that regulation, And that is a fact.

According to the regulations, companies can benefit from this modality as long as they meet requirements, such as not unilaterally abandoning work and not having previously terminated the contract, and retroactively reinstating those companies. will give way to adjustments that are currently under contract with MOP.

Minister Juan Carlos García referred to the issue and explained that given the significant increase in construction costs, this unprecedented measure is intended “so that the contracts we currently have in place can be successful, and that the companies working with the state may have a healthy position”.

In this sense, the head of public works expressed that “in the face of extraordinary circumstances, such as those we are experiencing today as a result of the pandemic, extraordinary measures are necessary Like we are applying”.

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“We will never stop working together with the industry, so that We can ensure quality public works in all corners of the country and on time.Told.

Change in Article 14

the document considers A last minute change that was previously incorporated by the executive. This is the first letter of Article 14, which indicated in its latest edition that contracts that wanted to take advantage of this re-adjustment had to fulfill the requirement of “not finding a single provisional reception or in administrative procedures after the said Act. ”

this last sentence. was replaced by “The resolution specifying the sole or provisional reception commission has not been issued.”

In the opinion of Victor Rios, President of the Chilean Society of Construction Law and founding partner of Molina Ríos Abogados, this readjustment index constitutes “a valuable initiative” for some sources associated with the industry, largely because it mitigates the problems of inflation that affect it. “In that, the leadership and competence of the current minister is noted,” he points out.

But he points out that “Unfortunately, the controlling office has excluded those contractors from the application for readjustment which, Despite the cost being higher for the same reasons, their works are in the process of being received”.

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“This is discriminatory, as there are many cases that are in the process of being received, but they have also had an adverse economic impact. This should be corrected,” he mentions.

CPI price adjustment

Among the conditions indicated in the document, is the fact that this adjustment will be “applicable to payment statements of works done from September 1, 2021” until the final issuance. and it is mentioned that The same portfolio of public works will be responsible for determining the value of the difference in salary “For such purposes as may be prescribed by the Directorate General of Public Works”.

From the industry he gave importance to this fact. Carlos Cruz, executive director of the Infrastructure Policy Council, said that “Readjustment formulas are fundamental for contracts with a fixed extension”. and that “the modalities should be defined by the technical authority in accordance with the itemization of the contract.”

Furthermore, Cruz argued that “Initiatives of this nature should not be limited to construction contracts, But also include engineering contracts in their different expressions”.

“It’s a way for companies to deal with periods of inflation, which is clearly not their responsibility,” he said.

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