The government is actively exploring strategic options to revitalize the construction industry, including the potential establishment of a Construction Industry Development Authority (CIDA). Officials are currently deliberating whether to create a single comprehensive body or two distinct entities - one dedicated to the development of the sector and another focused on its regulation.
This structural initiative requires formal approval from the federal cabinet followed by legislative endorsement from the parliament. A comprehensive bill is currently being drafted to be tabled before the National Assembly and the Senate of Pakistan.
The objective is to implement a robust construction package backed by parliamentary assent. Federal Minister for Economic Affairs and Establishment Division, Senator Ahad Cheema, recently chaired a high-level meeting to discuss structural reforms aimed at strengthening Pakistan's construction sector, improving project delivery timelines, and addressing critical industry challenges.
According to an official announcement, participants engaged in a detailed discussion regarding the proposed CIDA Bill. Minister Cheema emphasized that the legislation requires meticulous consideration, specifically regarding the institutional framework - whether a single unified body or two separate entities would better serve the interests of regulation and promotion.
He directed relevant officials, including Minister of State for Finance Bilal Azhar Kayani and representatives of the Constructors Association of Pakistan (CAP), to consult further on the optimal institutional structure. The meeting also addressed the issue of 'retention money' deposited by contractors during the defect liability period.
The government is considering a proposal to place these funds into interest-bearing accounts, ensuring that both the principal amount and the accrued profit are returned to the contractors after the stipulated period. Minister Cheema underscored the need for a transparent and viable mechanism to manage these funds effectively.
Furthermore, the participants discussed the implementation of the Dispute Avoidance/Adjudication Board (DAAB) mechanism for government-funded projects. This board is intended to monitor project implementation and resolve disputes in a timely manner.
While the Constructors Association of Pakistan proposed applying this mechanism to projects valued at Rs20 billion and above, Minister Cheema advocated for lowering this threshold to ensure broader coverage and better oversight across various project scales. The forthcoming regulatory framework will also incorporate international standards set by the International Federation of Consulting Engineers (FIDIC).
Minister Cheema highlighted the importance of aligning local practices with these global benchmarks to enhance project quality and accountability. Additionally, the Pakistan Public Procurement Regulatory Authority (PPRA) has been directed to introduce a mandatory minimum three-year defect liability period for major infrastructure projects, with plans to extend this requirement to smaller projects in subsequent phases.
This reform agenda reflects the government's commitment to creating a more stable and efficient environment for construction firms. By streamlining regulations and adopting international best practices, the authorities aim to boost investor confidence and accelerate the completion of vital national infrastructure projects.
The ongoing consultations with industry stakeholders are expected to finalize the draft bill before it is formally introduced in the parliament.