Moses Eddy from Kobelco shares views on L1 Bidding System

Use of low-cost equipment often results in compromised quality, frequent breakdowns, and higher long-term costs. Ultimately, performance, reliability, and timely execution are all negatively affected.

Moses Eddy
Director
Kobelco

L1 Bidding Undermines Quality, Safety, and Timeliness

I am completely against the way the L1 system currently works in India. The main reasons are quality, safety, and timeliness: three essentials of any contract. Unless a project can be completed with full quality, strict safety standards, and within the scheduled time, L1 has no real value.

Once a project is awarded purely on the basis of L1, contractors are often forced to cut corners to deliver within the low bid. They may compromise on machine quality, use non-standard technology, employ unskilled labour, or even delay payments to subcontractors. These compromises directly undermine the three key aspects of project execution and affect the adoption of high-quality, technologically advanced equipment in India.

Low-Cost Focus Drives Poor Procurement Decisions

The L1 system pushes buyers toward lower-cost equipment. Many bidders lack the basic qualifications to execute the job or the knowledge to select the right machinery. Naturally, they go for what is readily available and cheap, focusing only on the initial cost. This approach overlooks recurring expenses and operational challenges. Low-cost equipment often results in compromised quality, frequent breakdowns, and higher long-term costs. Ultimately, performance, reliability, and timely execution are all negatively affected.

Strong Implementation and Incentives Needed

The main issue with the L1 system is not the framework itself, but its implementation. There is a significant gap between what is considered right and what is actually executed. The government should take a more active role in enforcement. Contractors who fail to complete projects on time should face heavy penalties, while those who adopt technologically advanced equipment and deliver projects safely, quickly, and with high quality, even if they are the lowest bidder, should be incentivized.

A combination of carrot and stick is essential: strict enforcement on delays and shortcomings, paired with support and rewards for using advanced technology and maintaining quality and safety. Clear processes and systems for implementation are key to making this approach effective.