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