disaster area, infrastructure, miyagi, reconstruction

Firms shun Tohoku public works / Unprofitable small-scale projects in disaster-hit region go begging, yomiuri, 12/26/11

The Yomiuri Shimbun

Many public works projects that have been opened for bids in the Tohoku region have attracted few or even no takers, as businesses appear to be shunning small-scale work as unprofitable, especially amid a labor shortage caused by increased building activity as the region recovers from the March 11 disaster.

According to Miyagi Prefecture’s Government Contract Division, bidding for 137 public works projects failed, with no contracts made. They account for 23 percent of the 591 projects ordered from the start of the fiscal year on April 1 through the end of November. Most of the failed projects attracted no bidders.

The failure rate in normal years is only several percent, according to the division. Businesses maintain they are short of workers as they are already doing a large amount of post-disaster reconstruction work.

Many projects with no or almost no bidders are small in scale, with anticipated prices of about 30 million yen.

A prefectural source said many businesses choose to bid on projects they expect to be profitable.

The prefecture’s civil engineering office in Kesennuma invited tenders by Nov. 25 for 23 public works projects, all for repairing prefectural streets damaged in the disaster. Bidding on 11 of them failed.

Last fiscal year, the number of projects to get such a weak response was zero.

Most of the projects for which bidding failed were to repair cracks on streets. As the sites where this work needs to be done are spread over a wide area, contractors are required to move their equipment and temporary construction offices.

The civil engineering office said bidding on projects with work to be carried out at a single location are more likely to be successful.

“It’s true we’re short of workers. But now we can pick and choose among projects as there are so many orders for disaster reconstruction,” said a local construction source. “Projects requiring us to move around cost us a lot and don’t pay.”

In Miyako, Iwate Prefecture, bidding for 36 of 152 public works projects, including repairing damaged electrical equipment at schools, failed from June onward. The anticipated prices were less than 10 million yen in 28 of the 36 projects.

In fiscal 2010, the number of projects for which bidding failed was just 13.

Another factor behind the trend is the existence of a large number of private projects, such as repairing homes and offices damaged in the disaster or constructing new ones. Such work is more attractive for businesses as the process of accepting the orders is easy, according to the Miyako local branch of the prefecture’s construction companies association.

Governments have begun taking steps to try to solve the problem.

From September, to attract more bidders, the Kesennuma civil engineering office bundled several public repair works together to make packages with total anticipated prices of 100 million yen or more.

The Miyako municipal government has eased some regulations for public works projects, such as allowing a worker stationed at one construction site to work at other construction sites concurrently under certain conditions. However, the measure has not worked well, according to a local government official.

Some officials said measures taken by local governments have limitations and if the situation continues, post-disaster reconstruction in the region will not make progress.

“The conditions for small-scale public works projects can be eased in ways that do not impair the fairness and competitiveness of bidding,” said Prof. Izuru Makihara at Tohoku University’s School of Public Policy, who is familiar with the bidding system.

“It’s also important to place orders so as not to deter reconstruction–for example, repairing cracks on streets just up to first-aid level [rather than spending the time and resources to make them perfect] and deciding which projects take priority and having them done first.”
(Dec. 26, 2011)

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About liz

from the u.s., recently moved from kobe to sendai, japan, researching community-based housing recovery after disaster.

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