Brazil's infrastructure projects need more clarity, less flexibility, says specialist

Wednesday, January 29, 2014

Large scale infrastructure projects being offered by federal and state governments in Brazil need more clarity and less flexibility, US-based business development advisor and corporate attorney Jeff Taylor told BNamericas.

Governments should sign contracts that firmly define total costs and stipulate exact timelines, as well as increase daily fines for those who fail to complete works on time, Taylor said. Moreover, amending contracts after being signed should not be allowed, according to the lawyer.

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"Contractors of large scale [transportation, waterworks, energy, telecom] projects are sophisticated entities that are capable of carrying out necessary research before civil works are started. If they bid too low, it's their problem," Taylor said.

In addition, project developers in the country should require performance bonds, ensuring contractors guarantee their work for sufficient time for most defects to become apparent.

If governments keep a better eye on contractors, federal audit court TCU would have less work to do and thus interfere less in projects, Taylor said.


According to Taylor, recent setbacks to large scale works include delays for the São Francisco river integration project. After closing the deal, the contractors complained they did not realize what type of rocks they were dealing with.

Also, some rail construction works have been put off due to not having enough track, and road construction works have been delayed after the TCU claimed low quality asphalt was being used.

With more clarity and better contract enforcement, delays such as these can be reduced, Taylor said.