Rate schedules for govt works to be unified, market-based
The decisions were taken at the first meeting of a working committee formed to review and revise the government’s construction rate schedule
Highlights:
- Government plans unified market-based construction rate system across agencies
- Static pricing model replaced with dynamic, continuously updated cost estimates
- Current schedules lag market prices, causing unrealistic project budgets
- Web-based platform proposed for managing and updating construction rates
- New system will include green construction and emerging sectors
- Revised framework awaits committee review and final Ecnec approval
The government is set to overhaul the system used to estimate costs for public construction projects by introducing a unified, market-based rate schedule across agencies and replacing the current static model with a dynamic one that reflects changes in material, labour and other input costs.
The decisions were taken at the first meeting of a working committee formed to review and revise the government's construction rate schedule. The meeting, held on 22 June at the Planning Commission's Physical Infrastructure Division, was chaired by its head, Kabir Ahmad.
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The committee also agreed to examine the feasibility of a web-based platform to prepare, update and manage rate schedules, alongside regular item-wise rate analyses.
A rate schedule is the government's standard cost list for construction activities such as brickwork, concrete, steel reinforcement, labour and transport. Although most agencies follow the framework developed by the Public Works Department (PWD), organisations including the Local Government Engineering Department (LGED), Roads and Highways Department (RHD) and Bangladesh Water Development Board (BWDB) use modified versions, leaving Bangladesh without a unified national system.
Officials said the existing static schedules often fail to keep pace with market prices, resulting in unrealistic project estimates and repeated cost revisions. Manual and Excel-based processes, differing agency-specific rates, limited coverage of sectors such as green buildings and interior works, and the lack of real-time data have also weakened transparency and cost control.
The reform follows a 13 May decision by the Executive Committee of the National Economic Council (Ecnec) to reassess construction rate schedules. A high-level committee, headed by the adviser for finance and planning and comprising senior officials from key ministries, implementing agencies and Bangladesh University of Engineering and Technology (Buet), was formed to oversee the exercise.
The working committee has decided to develop separate rate structures for environmentally friendly construction and other emerging sectors while using data from both the public and private sectors to determine realistic rates. All implementing agencies have been asked to form subcommittees to review their existing schedules.
Planning Commission officials said a unified, market-based system would improve transparency, strengthen cost control and enhance the quality of public infrastructure projects.
Kabir Ahmad said the current static model no longer reflects actual construction costs because prices of materials, labour and equipment change continuously. He said an index-based unified rate schedule has become essential.
During the meeting, LGED recommended introducing a market-based dynamic rate schedule, while RHD said the revised methodology should consider inflation, construction material prices, labour and transport costs, VAT, income tax and other economic indicators.
The Department of Architecture proposed dedicated rate segments for landscaping, interior works, furniture and environmentally friendly construction materials. Representatives of Bangladesh Railway, BIWTA, BWDB, the Bangladesh Bridge Authority and the Civil Aviation Authority said project-specific costing methods currently vary across agencies.
The committee also recommended consulting contractors, material suppliers and other private-sector stakeholders before finalising the new framework. It further decided to compare the rate-setting systems of at least two or three countries to incorporate international best practices while ensuring realistic project costs and quality standards.
A member of the working committee, speaking on condition of anonymity, said the review aims to address conflicting claims over whether existing government rates are inflated or outdated.
"There is considerable debate over the current rate schedule. We are examining the entire system through a structured process," the member said, adding that a technical working group is preparing a report that will be reviewed alongside consultations with experts and private-sector representatives.
The committee is reviewing whether existing allocations reflect prevailing market prices and whether the methodologies used to calculate rates remain valid, the member added.
Officials familiar with the process said the high-level committee, chaired by the adviser for finance and planning, is expected to meet on 23 July to review the technical report. Following its assessment, the revised rate schedule will be placed before Ecnec for approval.
