MoF sets strict deadlines and guidelines for project construction and budget implementation

KATHMANDU: The Ministry of Finance has issued directives to all ministries and agencies, instructing them to prepare procedures for a construction project by the end of July and finalize the contract agreement by October. This instruction was given while releasing an 81-point guidance on the budget implementation for the financial year 2023-24.

The guidance emphasizes the need for timely implementation of the approved program and states that any necessary revisions or new formulations should be completed before the end of July with the approval of the Ministry of Finance.

Furthermore, after completing the project’s preparation stages, a quarterly division of the procurement plan should be prepared, along with detailed designs and cost estimates. Bids must be invited before the end of October 08.

The Ministry has set a deadline for evaluating tenders, signing contracts, and commencing work within 15 days of contract signing. Failure to proceed with the contract process within this timeframe may result in withholding the allocated funds for the respective program.

The Ministry of Finance has also announced that there will be no amendments to the money transfer program in the first quarter and in June of the financial year. Additionally, funds allocated for projects in remote and backward areas cannot be redirected elsewhere.

Finance Secretary Arjun Prasad Pokharel explains that the guidance aims to ensure development work is carried out on time and within the designated budget. He emphasizes that contracts must be signed by the end of November, procedures must be finalized by July, and no changes should occur in the first or last quarter.

The government is urging overall financial discipline and adherence to existing legal systems. The Ministry of Finance requires completion of preparatory work for the annual plans and programs in the current financial year’s budget.

Businesses completing construction work within the specified quantity, cost, quality, and time limit will receive incentives, while those failing to maintain the specified quality and deadlines will face consequences.

The guidance emphasizes cost-effectiveness in administrative expenses, including water, electricity, communication, house rent, fuel, maintenance, office materials, training, seminars, and tour expenses.

To manage cash flow, the Ministry of Finance must be notified seven days in advance of payments exceeding 1 billion. Any financial obligations beyond the approved budget and program must have mandatory consent from the Ministry before decisions are made.

Projects other than those of national pride must be completed within three years of resource consent approval. Failure to reach a contract agreement within nine months from resource consent will result in automatic cancellation.

Resource consent for previously approved projects without bids or budget allocation proposals for this financial year will be canceled.

The relevant ministries will implement the Parliamentary Area Infrastructure Development Program and Production and Employment Creation Program according to the prescribed procedure.

Accountability for project achievements lies with project managers and construction professionals, who are encouraged to develop a system to ensure timely completion within budget and maintaining quality.

Subsidiary contracts may not be entered into at multiple levels except for essential work. The National Vigilance Center will inspect the construction quality of projects worth more than 100 million.

The guidance emphasizes payment arrangements based on physical progress and program/project quality. No physical progress is required for first-quarter withdrawals and payments.

For second and third-quarter withdrawals and payments, at least 30 percent and 50 percent physical progress, respectively, should be achieved. Payments with less physical progress can be made after receiving progress in the next quarter.

In the fiscal year 2023-24, employees will not receive incentive allowances, overtime pay, etc. The guidance also restricts the purchase of new vehicles and furniture and furnishings.