Construction-Related Initiatives in Sri Lanka's 2025 Budget

 On February 17, 2025, the President of Sri Lanka presented the proposed national budget for the year 2025 to Parliament. The following is a summary of key provisions related to the construction industry.

While the budget introduces limited initiatives specifically aimed at fostering growth in the construction sector compared to the 2020 budget or 2016 budget, several proposed measures support its development:

Key Policy Initiatives Benefiting the Construction Industry

·         Establishment of a Development Bank – Aimed at facilitating financial support for various sectors, including construction.

·         Introduction of a Public Procurement Law – Expected to enhance transparency, minimize corruption, and effectively utilise public funds.

·         VAT Arrears Relief for Construction Contractors – Value Added Tax (VAT) arrears on projects carried out by construction contractors under the Tsunami reconstruction initiative will be written off.

·         Public-Private Partnership (PPP) Bill – Intended to encourage more PPP projects, including those in the construction sector, by providing a legal framework for collaboration between the public and private sectors.

Proposed Infrastructure Projects Supporting Industry Growth

The government has announced several large-scale infrastructure projects that will create opportunities for the construction industry:

·         Port and Terminal Developments:

o    Colombo West Terminal 2 & Colombo North Port.

o    Kerawalapitiya Custom Inspection Yard, Bloemendhal Logistics Park, and a Container Dry Port (ICD) in Veyangoda.

·         Airport Expansion:

o    Bandaranaike International Airport Terminal 2 expansion.

Budget Allocations for Construction and Development Projects

Significant budgetary allocations have been made for various infrastructure developments, which will directly contribute to industry growth:

·         Water Sector Projects (LKR 3 billion):

o    Rehabilitation of downstream development in Galoya, Rajanganaya, Minneriya, and Hurulu Wewa schemes.

o    Community water supply schemes.

o    Resumption of the Giribawa-Eppawala Water Supply Scheme.

·         Railway Projects (LKR 350 million):

o    Extension of the Kelani Valley Railway Line.

o    Upgrading the Thambuththegama Railway Station.

·         Road Infrastructure (LKR 10 billion):

o    Improvement and rehabilitation of rural roads.

o    Rehabilitation of rural bridges.

o    Construction of the Vadduvakal Bridge.

·         Housing and Building Development:

o    Estate housing and infrastructure development.

o    Construction of a treatment center for children with neurodevelopmental disabilities.

o    Development of a model daycare center.

o    School improvement programs.

o    Establishment of chemical product manufacturing industrial parks.

These initiatives highlight the government's continued investment in infrastructure, creating potential opportunities for the construction industry despite the absence of a dedicated sector-specific stimulus.

For construction professionals, the proposed new projects and budgets represent a positive shift, with an indication of increased job prospects, especially in road construction. 

 

Source: https://www.treasury.gov.lk/api/file/016f7fff-9659-49ba-ac59-2fed25030671

Sydney Trains v Argo Syndicate AMA 1200 [2024] NSWCA 101

  

Summary of Case

The Appellant (Sydney Trains) successfully challenged a District Court of New South Wales decision that found it had broken the chain of causation in a personal injury case. A commuter had slipped on wet tiles on a stairway, and the court initially held that Sydney Trains was liable because it reopened the stairway despite knowing the tiles were slippery.

The Appellant argued that the injury resulted from a breach of an implied contractual term by the contractor, as the tiles were not reasonably fit for purpose. The Court of Appeal agreed with the Appellant, determining that the contractor’s public liability insurance policy covered the commuter’s injury.

Issues Addressed

1. Implied Contractual Term: Whether tiles provided by a contractor must be reasonably fit for purpose.
2. Breach of Implied Term: Whether the contractor breached this term by providing tiles that were moderately slippery when wet.
3. Causation: Whether the slipperiness of the tiles contributed to the commuter’s injury.
4. Chain of Causation: Whether the Appellant broke the chain by reopening the stairway despite knowing about the tile risks.
5. Insurance Response: Whether the public liability insurance policy should respond to the injury.

Background

In 2016, Sydney Trains hired a contractor to install tiles on a stairway at Penshurst Railway Station. A commuter slipped on the wet tiles and was injured. Testing had shown a moderate slip risk when wet. In 2018, Sydney Trains was found liable for the injury.

Sydney Trains then sued the contractor’s insurer, alleging a breach of an implied contractual term and claiming the insurance policy should cover the liability. The trial judge found that the contractor had breached the implied term and that Sydney Trains had broken the chain of causation by reopening the stairway.

Decision on Appeal

The Court of Appeal upheld that the contractor breached the implied term that the tiles be fit for purpose, rejecting the argument that it was not proven the tile was wet. The court also found Sydney Trains did not break the chain of causation by reopening the stairway. It ruled that the insurance policy covered the injury liability, and no exclusion clauses applied.

Implications

This case emphasizes that multiple factors can contribute to an injury, and the chain of causation is not automatically broken by immediate causes. The ruling also highlights that courts consider the broader commercial context when interpreting insurance policies.

Note: The article was also published on www.aact.lk

 

Strategic Thinking

Can you recall a success story in your life? (e.g., Passed A/L with 3 As)

 

Was it something that happened by chance or because of a well-planned strategy?

 

You can use your strategic thinking to plan and achieve success like your success story above.

 

Strategic thinking is a cognitive process and a management approach that involves the ability to analyse complex situations (analyse - break down into small pieces, e.g., school work and tuition work), envision future scenarios (if I'm unable to go to school), and formulate effective strategies to achieve specific goals or objectives (e.g. study for 3 hours every day, complete tuition assignments within the week, if absent, ask a friend to WhatsApp me the notes).

 

Below are the aspects of strategic thinking. I have listed an example to understand each element.

 

• Big-Picture Perspective (see the broader context and understand how various elements interact) – Complete the contract within budget and on time.

• Forward-thinking (be ready to anticipate future trends, challenges, and opportunities) – Trends: Demand for companies with sustainable projects, Challenges: latent condition risk & subcontractor shortage/strike, Opportunities: the ability to win similar projects.

• Goal-oriented (have clear and specific objectives) - Complete the project with a 15% margin and submit all notices on time.

• Analytical Skills (analyse data before making decisions, do a SWOT analysis) – Analyse: Check rainfall data and decide potential rain dates when preparing the project program. Weakness: If well-trained welding technicians are unavailable, your company may subcontract it.

• Creativity (generate solutions to solve complex problems) – Should we subcontract or recruit skilled welding technicians or train current staff?

• Risk Assessment (assess risks associated with various courses of action, develop mitigation plans, and take calculated risks) – Take photos of adjoining properties before starting the work (manage any property damage claims). Refuse to accept unforeseeable ground condition risk but accept only the calculated underground rock or buried car risk (calculated risk = 100k).

• Resource Allocation – QS1 manages head contract payments and QS2 manages subcontractor payments.

• Adaptability (adjust strategies in response to changing circumstances) - Even though we initially decided to purchase an excavator, we have now changed it to hiring, as we had to invest respective funds in another project that generates more revenue.

• Communication – Prepare a communication matrix to ensure all relevant parties receive correspondence.

• Alignment with Values and Mission – Regularly meet Clients and facilitate a joint New Year party (value = maintaining relationships).

• Continuous Learning – Conduct a lesson-learned presentation after the end of the project and maintain a lesson-learned register.

 

How to be better in Strategic Thinking?

Adapt the strategies below if you want to be excellent in strategic thinking.

 

·         Have a growth mindset- this helps you to better resilience and be willing to tackle challenges.

·         Seek Diverse Perspectives – Engage a team comprising a wide range of expertise; for contract strategy meetings, you can invite the engineering, design, commercial, legal, etc.

·         Scenario planning & analysis- thinking about and planning various possible future scenarios.

·         Ask Critical Questions – Be a sceptic person; ask "what if" and "Why not?"

·         Mentorship- Get mentored by someone excellent in Strategic Thinking.

·         Practice Problem-Solving- regularly tackle complex problems using problem-solving tools like 5Whys or Fishbone diagram.

·         Feedback and Reflection – get feedback on your strategic plan and improve.

·         Use SWOT analysis, Mind Mapping, and prioritisation skills during strategic planning.

 

 

Some companies require to have a "Strategic Meeting" upon the award of any new project. Strategic thinking will be the key to future construction professional success, especially when some of your traditional duties are replaced with BIM or AI-powered solutions. Start conducting further research in this area and implement it in your organisation.

 

Image - https://www.bridgesconsultancy.com/bridges-courses/strategic-thinking-leaders-essential-skill-todays-turbulent-times/

 

Note: The article was also published on www.aact.lk

 

 

 

 

S.H.A PREMIER CONSTRUCTIONS PTY LTD v LANSKEY CONSTRUCTIONS PTY LTD No BS1485 of 2019

The case covers a few key issues.

Background: This Australian case relates to the issue of a payment schedule. Under the Security of Payment Act, each payment claim shall be replied to by the CA with a payment schedule within a specified period. Also, CA cannot issue one payment schedule for multiple payment claims. If no payment schedule is issued, C is entitled to get paid for the payment claimed (even if there is no entitlement under the contract). CA issued a payment schedule for the payment claims as the payment due is “NIL”. So, the C trying to establish that the additional work they executed is a separate contract rather than variations, so he should be paid as no payment schedule was issued for the additional work/separate contract.

 

1)Is the additional work a variation or a separate contract?

1.     Contract- All V to be in writing as directed by the CA (Superintendent in this case)

2.     Email dated 29 August 2017- From C to CA:

“We have noticed some changes like additional freezer room; therefore, are we to proceed on this basis, or is this subject to variation approval”.

3.     Email dated 30 August 2017- From CA of the E to C:

“Should this result in a cost or time impost pls submit a variation which will be processed in the normal manner. Work orders will be raised on all approved variations. No work to proceed without work orders.”

The above email is significant due to the following reasons:

·         Work orders will be raised

·         No work to proceed without work orders

·         Issued by the CA(in the contract superintendent)

·         The project was conducted thereafter in accordance with that direction

·         The director was never revoked

 4.     So, the above email is an affirmation of the work order as a confirmation of an approved variation.

5.     CA issues number of Work Orders

6.     Conclusion- None of the work orders constituted separate contracts. Each was an approved variation.

 

2) Is there a waiver?

 1.     E waived the requirement for strict compliance with the variation provisions

““A party may expressly or impliedly give up its right to insist on a contractual condition. On the evidence, the referee found that that was what the plaintiff had done. By its conduct throughout it had waived a right to insist on strict performance of the conditions of the Contract with respect to the making of claims generally…” (Hammerschlag J in Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1163 [110] )

“According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right by acting in a matter inconsistent with that right.” (Mason CJ in Commonwealth of Australia v Verwayen (1990) 107 CLR 394 at [406]-[407] )

2.     Conclusion - E’s conduct in respect of the approval of the additional work on the contract constituted a waiver of its right based on the following:

·         The email of 23 February 2018 did not direct the first respondent to cease all work

·         E intended the C to continue to make enquiries with respect to the requirements for the roadworks.

 

How to avoid such issues: Make sure the CA issue V only uses a pre-defined format, not via email, etc. As the QS, always ask for the V instruction when certifying the payment.

 

Case: https://archive.sclqld.org.au/qjudgment/2019/QSC19-081.pdf

Note: The article was also published on www.aact.lk

Ceremonies and Cultural Aspects in the Construction Industry

Any construction will occur in a country with a unique culture and traditions. So, there are certain cultural things will take place on construction sites. The contractor may even practice their cultural stuff on the site if the contractor is a foreign company.

Even if we educate in science(s) innovated/ developed in the Western world, there is no issue in practice or adapting our cultural things in our industry.

This article discusses the various events conducted in construction projects in various countries.

Topping out ceremony

A topping-out ceremony is a construction tradition that has been occurring to celebrate project milestones. Traditionally, this ceremony occurs when the final concrete/ final structural beam is raised into place/ when the highest beam is placed/the last roofing piece. This typically includes a party with the participation of the project team and other stakeholders like the Client, media personalities, prospective buyers, etc. This is a good event in terms of marketing for the buyers to communicate that their product is nearing completion. Another historical belief is that Native Americans believed no structure could be taller than the trees, so they placed a tree in the final and highest beam.

 During ceremonies, they place an evergreen on top of the building, which usually stays on top until the building is finished.

 David, states in one of his articles that this has some ancient root. According to him, during the pre-Dark Age(5^th century-11^th century), in the Scandinavian cultures (Denmark, Norway, and Sweden), a tree was placed on top of a new building. The purpose was to appease the tree-dwelling spirits of their ancestors that had been displaced. Further, he states that during the 14th century in England, it was customary to put a yew tree branch at the highest point of the building to keep evil spirits at bay.

 

https://www.oxfordlearnersdictionaries.com/definition/american_english/evergreen

 

 http://www.scientiaproject.monte.nsw.edu.au/post/topping-out-ceremony

 

https://miron-construction.com/blog_entries/what-is-a-topping-out-ceremony/

This article (written by David) also provides more insight into this ceremony. https://www.linkedin.com/pulse/20141106224320-128875744-what-do-you-know-about-the-tradition-of-topping-out/

See the video below of a topping out ceremony.

https://www.facebook.com/watch/live/?ref=watch_permalink&v=3537842272921945

 

Ground-breaking ceremony

A common ceremony in construction projects is ground-breaking (cutting, sod-cutting, turning the first sod, or a sod-turning ceremony). This ceremony aims to celebrate the commencement of the construction project. The ground-breaking ceremony is usually attended by the Client, contractor's management and even politicians and businesspeople to generate interest in the project. During the ceremony, key personnel will break the ground to mark the commencement of construction.

According to Wikipedia, The first documented ground-breaking ceremony occurred in ancient China in 113 BC.

https://en.wikipedia.org/wiki/Groundbreaking

 

 Opening Ceremony

The opening ceremony may include a ribbon-cutting function by a special guest to mark the official opening of a building. The construction team, together with the consultant and client team, will take part in the ceremony. Many distinguished guests, including media personnel, may also be invited to get public attention, especially for marketing. The ceremony

 Apart from those widely spread worldwide, each country has its ceremonies. Below are such ceremonies. These are essential milestones in a construction project.

 Foundation stone laying ceremony

During the ground-breaking ceremony of a larger-scale construction project or even in small-scale residential construction projects before they start the masonry works, certain countries have a tradition of laying the 1st stone ceremonially. In residential projects, the foundation stone is not a cement block or engineering brick we use for the construction but a special block/unit that contains various herbal and other ingredients. However, in larger-scale projects, it may be cement blocks. The ceremony usually consists of religious work, too.

 

Place a special block/unit and cover it with mortar (Location: Sri Lanka)

Source: https://fim.cmb.ac.lk/foundation-stone-laying-ceremony-for-the-new-building-institute-of-indigenous-medicine-university-of-colombo/

 

Traditional religious and cultural activities. (Location: Sri Lanka)

Source: https://fim.cmb.ac.lk/foundation-stone-laying-ceremony-for-the-new-building-institute-of-indigenous-medicine-university-of-colombo/

 

Traditional religious and cultural activities. (Location: Sri Lanka)

Source: https://fim.cmb.ac.lk/foundation-stone-laying-ceremony-for-the-new-building-institute-of-indigenous-medicine-university-of-colombo/

 

Placing a special block/unit and having it covered with mortar by a group of guests. (Location: Sri Lanka)

 Source: https://www.zamzam.lk/foundation-stone-laying-event-for-green-community-experience-centre/

 

Placing a cement block and have it covered with mortar by a group of guests. (Location: Sri Lanka)

Source: https://cmb.ac.lk/foundation-stone-laying-ilc

 

Traditional religious and cultural activities(Location: Sri Lanka)

Source: https://cmb.ac.lk/foundation-stone-laying-ilc

 1St Steel Cut Ceremony

For the first time, I heard about this ceremony some time ago through a LinkedIn post by another professional. Although I am not fully aware of all the ceremony details, it appears that they organize it to celebrate the first ceremonial cut of steel, as the name suggests.

Source: LinkedIn post from Najmuddin Afham (Location: Middle East)

 

Keeping the First Door Frame and Jump over the Door frame.

This marks another ceremony frequently observed in residential construction projects across some regions of the world. In this ritual, a carpenter, attired in white clothing, jumps through the door frame into the house after placing a few of his tools inside the house through the door frame. This event usually unfolds at an auspicious moment determined by local traditions and is further enriched by customary practices.

 See the video below to understand the tradition.

https://www.youtube.com/watch?v=cQd-Km--5r4  (Location: Sri Lanka)

https://www.youtube.com/watch?v=emQg_IfqOWY  (Location: Sri Lanka)

 

Keeping the First Roof Tile

This ceremony is often observed in residential construction projects within certain cultural contexts. During this occasion, the homeowner typically prepares milk rice and other traditional dishes as a celebratory gesture to mark this milestone of the construction project.

 

If you are aware of any similar cultural practices or events in your region, please send me an email containing additional details, including photographs and videos, so that I may enhance and update this article.

 Note: The article was also published on www.aact.lk