Chile looks to speed up infra tenders amid 'monumental readjustment'

Chile’s public works ministry (MOP) wants to speed up tenders after a sluggish H1 that saw less than half of those programmed for 2023, involving 2.6tn pesos (US$3.2bn) in total, being launched as of July 14.

“I would say that 2023 is a year of monumental readjustments that should allow us to mostly get back to normal in 2024,” public works minister Jéssica López told a senate committee in a broadcast session. 

Since December, MOP has been carrying out regulatory modifications such as creating a new division aimed at improving contractual management and speeding up tenders. 

Other modifications are under study and include allowing firms to create consortiums not only to supplement specialties, but to complement economic capacities as well, and incorporating contract provisions to ensure that works are performed even if other aspects are being renegotiated.

Construction firms in Chile have been hit hard by higher costs, and this has resulted in projects being abandoned and companies declaring bankruptcy, such as the case of Claro Vicuña Valenzuela (CVV).

According to MOP, as of this month 163 projects were abandoned by contractors since 2021, of which 36 were during this year. So far 87 of these projects are being re-tendered, have been awarded or are in execution, including seven contracts previously held by CVV.

To help construction firms, MOP set out a price readjustment mechanism. As of June, 547 contracts worth 110bn pesos (US$136mn) have been modified under this tool.

The ministry also wants to expand the mechanism to 75 projects handled by regional governments (GORE), which involve 20bn pesos.

MOP expects prices to stabilize towards the end of the year which, in conjunction with the measures to improve contract management, should translate into faster tenders and fewer abandoned projects.