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Construction Contracts and Contracting Reg. No.



1. Name 2. Reg. No. 3. Course No. 4. Course Title 5. Assignment No. Manish Kumar 27-09-11-4192-292 NCP 23 Construction Contracts and Contracting Three

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

Contract administration and monitoring is the most important area of construction management. Contract administration process should start right from the day work is assigned to the company. Discuss any project contract currently in progress with your organization chart for this activity and explain all the functions carried out. Do you think the system is achieving results? Discuss.

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

Project Brief:
Contract Administration and Monitoring is the most important area of construction management. Contract Administration process should start right from the day work is assigned to the company. Recently our company had been awarded a contract of Finishes and Wall Cladding Works for one of the most, prestigious commercial buildings in Mumbai City. Attached herewith is a report giving briefs about Administration and Monitoring done for the said project. Project Details: Project is about, Construction and development of Commercial premises for finance companies at Bandra-Kurla Complex, Mumbai, and the new developing financial center of Mumbai. This project had been conceived by its owners when the finance market was at its peak. Thus the investment involved at that particular time was enormous, since the property market in Mumbai than was really very high. Thus the plot bought by these owners was at real high price. But eventually somehow the clients decided to develop the property in order to gain benefit from the investment already made. Project involved top people from the field of design, Engineers, Consultants, and Project Managers etc. This Building designed, consisted of 2 basements, stilt and eight storied Superstructure. The building proposed was to be a high-tech building, with all kind of modern facilities to be provided. But eventually, with financial crisis being at its peak, it was not very feasible to tackle all the hi-tech, services within the fixed budgets. But still the outlook of the building never changed, and the faade remain as envisioned by the Architect at the start of the Project. Thus the Building faade had to be finished with base (Podium Level.) in Granite and the top (Towers) in Curtain Wall.

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

The contracts for all the above works was divided into number of agencies. The first contract that they tendered was for Construction of Diaphragm Wall. Then came the work of sub- structure, which consisted of Construction of two Basements, Then the clients proceeded with the tendering for Construction for Superstructure Work. Contractors involved in the work of Basements, were only finally considered for the works of Super Structure. It was only towards the finishing of super structure work, that Medium Size contractors like us were involved in the project. Since the structural works for the building was done, it became necessary to invite tenders for finishing, wall cladding and curtain wall tenders. Curtain wall falls under a special item and thus special curtain wall contractors were invited for quoting for the above mentioned project. Medium sized civil contractors like ourselves were invited, to quote for finishing works, which consisted of various items as given further in this project along with carrying out work of dry and wet cladding of granite on the external wall surface as per Architects requirement. Given above was the brief history of the project, of which we also became a part contractor. Now being the project Engineer in Charge for the entire work to be carried out, it was necessary for me to read through the entire contract document thoroughly and note down any special clause, terms of payments and details which could become items of conflicts later. So it was most important to read the contract thoroughly and if any discrepancies see, to resolve prior to starting of work. Some of the important items in the conditions of contract are as mentioned below:

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

Contract Conditions: (I) Instructions to Tenderer a) Earnest Money Deposit: Tender must be accompanied by E.M.D. in the form of Demand draft in favor of . Or Bank guarantee in approved format and shall be interest free and valid for a period as given in Appendix TF to Tender Form from the date of submission of tender or as extended by mutual agreement. Items Included in Appendix TF a) Validity of tender b) Period of commencement from Employers order c) Time of Completion d) Amount for compensation for delays e) Maximum amount of Compensation f) Period of Maintenance g) Amount of E.M.D. h) Amount of Security Deposit And Retention Money i) Mobilization advance j) Interim Certificates k) Submission of Final Bill 05% per week 10% of Contract value 12 months Rs. XYZ 7.5 % of Contract Value 5.0 % of Contract Value monthly 30 days from date of completion virtual calendar 15 days 7 months (incld. Monsoon) 90 days

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

k) Approval and payment of final bill

90 days from the date of receipt of certificate

l) Time within which R.A. Bill payment to be made after Certificate

75% in 10 days of submission. Balance date submission. 25% of 7 days within 30 days of

m) Program Submission n) Third Party Insurance


from work order Rs. 2 Lakhs per person Rs. 10 Lakhs per accident o) Mobilization 15 days

Besides the above there were certain special conditions also levied in the tender, which also contained scope of work etc. as mentioned below: Brief Scope of Work: This tender is for finish work and providing, designing and installation of external stone dry wall cladding. It shall be:

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

Finishing Work: R.C.C. work (where required) Masonry (where required) Plastering work (where required) Finishes Doors Railing False- ceiling Painting Plumbing works (Sanitary Fittings and Fixtures) Rolling Shutter Space Frame Canopy Water Proofing External Cladding: Design to Indian and other International Standards Shop drawings and samples Installation Testing of permanent work as directed by Architect/EIC Performance Guarantee for 10 years ITEM RATE CONTRACT The contract is item rate and quantities set out in the B.O.Q. are tentative. Tenderers shall quote for each item at the place given in the bills of Quantities. Cost evaluation shall be based on these quantities and price quoted. Work shall be measured in actual and paid as per terms set out in contract.

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

Firm Rate: The rates shall be firm and shall not be subjected to any variation in cost of materials, labor or due to any other condition except as ordered by the Architect and provided for in the Contract. The description given in B.O.Q. shall include all items required to complete a particular item. Anything not specifically stated shall not be taken as an exclusion from the same item. Any claim for extra Item or variation on this ground shall not be accepted. Rate to include: The rates quoted in the tender shall include all charges for tools, plants, temporary water and electric connections ( if any), overhead reservoirs, sheds for material ( of the contractor and as issued by the employer), hire charges if any, maintenance of all services and equipment clearing the site etc. for the execution of the works. It shall also include all taxes such as sales tax, octroi, excise, or any other duties of any public body or corporation (duly authorized to collect) Extra- item/ variations: All additional items and variance from those given in B.O.Q. and accepted by the architect shall be treated as extra items. These shall be expressly ordered by the E.I.C. in writing with prior approval of the architect prior to start of work by the contractor. The Contractor shall be paid as per similar item in B.O.Q. In absence, actual rate analysis shall be prepared considering market rates of labor and materials with the contractors overhead profit as 15 % added to such cost thus arrived. The contractor shall have to produce vouchers to support the rate analysis. The architect reserves the right to call additional quotations for material, labor/ workmanship if felt necessary and rates approved by the architect shall be final. The architects decision shall not be subjected to arbitration.

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

Execution of additional work: The successful tenderer is bound to carry out any items of work necessary for the completion of the job even though such items may not be part of his offer. He shall be instructed in writing by the Architect/ EIC for such works and rates shall be settled as detailed above. Compensation by extension of time only: The contractor shall not be entitled to any compensation for any loss suffered by him on account of delays may be, including delays arising out of modifications to the works entrusted to him or in any sub-contract agencies connected there with or delays in awarding contracts for other trades of the project or in commencement or completion of such works or in procuring government controlled or other building material or in obtaining water or power connections for construction purposes or for any other reasons what so ever and the employer shall not be liable for any claim in respect thereof. The employer does not accept any liability for any such besides the tender amount, subject to such variation as are provided for herein. However the Employer shall compensate for the loss of time suffered by the contractor, by extension of time as approved by EIC. PROGRAM AND METHOD CARRYING OUT THE WORKS As detailed above, the contractor shall prepare a detailed comprehensive program for approval of the EIC within the time stipulated in the tender form. Program shall cover: Descriptive note explaining sequence of various activities. Network( Pert/ CPM) (I) (II) (III) (IV) (V) Design Submission Program of shop drawing Program of mock-up Program of Testing mock-up Program of Fabrication

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292


Program of Shipment

(VII) Program of Installation (VIII) Program of Testing Cash flow based on program to be earmarked by the employer for the purpose of the contract. Phased requirement of plant and equipment to be deployed by the contractor. Phased requirement of areas to be made available with stage of civil/ mechanical/ plumbing work needed to be completed by other agencies. All these program and plans submitted by the contractor and approved by the E.I.C. shall become part of the contract. The acceptance of programmers as submitted by the contractor or with any modification thereto in the opinion of the E.I.C., shall not relieve the contractor of any extension of time unless delay, if any, is expressly sanctioned by the E.I.C. Plant Requirements: The contractor shall submit, with the program and method statement mentioned above, a comprehensive plant schedule which shall include the dates of arrival on and removal from site of each major item of plants. Sufficiency: The contractor shall take upon himself the full and entire responsibility for the sufficiency of plants, centering, scaffolding, timbering, machinery, tools, or implements and generally for all means used for the fulfillment of the contract. In the event of any day of these means proving insufficient, the contractor even then shall be fully and entirely responsible for the sufficiency of these means notwithstanding any previous approval or recommendation that may have been given by the E.I.C.

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

Drawings: Contractor shall receive from the E.I.C. two prints of the drawings approved for construction. Standards to be followed: At various places throughout this specification and the B.O.Q., reference is made to the standards, specifications and the bye-laws issued by the Indian Standard Institution and other similar organizations. These references shall in every case be deemed to include the latest edition or issue of such standards, specifications and byelaws including the revisions, amendments and addenda subsequently issued. Where materials are not specified and standards exist in respect of such materials, then the materials shall in all respects comply with the relevant and current I.S.I. In such cases where I.S.I. do not exist, the specified manufacturers specification shall be followed; in absence of all these, the architects instructions shall be followed. Materials: All the materials and manufactured goods are to be the best of their respective kinds and as described in the specifications, drawings and the B.O.Q., cement used shall be 43 grade unless specified otherwise. The contractor shall submit for the approval of the architect through the E.I.C. within a reasonable time after receipt of the employers order to commence the Works, a list of the names and addresses of the manufacturers, the trademarks and types of all materials and articles he proposes to employ together with all specifications and descriptions and samples that may be required in this connection before any orders are placed. Within a reasonable time the E.I.C. shall issue written decision on the Contractors proposals. If any of the manufacturers, materials etc., have been rejected then the contractor must propose acceptable alternatives within one week of such rejection. The Architects decision shall be final and binding on the contractor. The contractor shall submit to the E.I.C. copies of all orders for materials.

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

Where a particular proprietary product, supplier or suppliers catalogue is referred to in this specification or in the B.O.Q., the material specified is for quality type etc. Other equal and approved source shall be permitted in use. If, during the course of the contract, certain materials required for use in the works should be unobtainable despite the best efforts of the contractor, then the contractor may offer substitute materials for the approval of the E.I.C. These substitute materials, although not complying fully with the specification, must nevertheless be suitable and appropriate for use in works. Acceptance or refusal of such substitute materials shall be at the sole discretion of the Architect/E.I.C. In the event of acceptance of the substitute materials a suitable price reduction shall be made in respect of decrease in quality or value but no price addition shall be made in respect of increase in quality or value. In the event of refusal of the substitute materials, the contractor shall not be relieved of any delay or loss occasioned by his failure to provide materials as specified. Temporary Works: The contractor is entirely responsible for the design, construction, and maintenance and removal of all temporary works employed in carrying out the contract. Within a reasonable time (and in any case not less than fifteen days) before he intends to commence construction of any temporary works, the contractor shall submit full particulars including drawings of the same, for the approval of the E.I.C. The E.I.C.s approval will in no way relieve the contractor of his responsibility for the safety of the works, operators, adjoining property, structures or services and compliance with appropriate regulations and codes of practice. Temporary works supporting adjoining buildings, property and public utilities and roads shall also be submitted to the appropriate authority for their approval if requested/required.

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

The temporary works shall be designed and constructed in such a manner as to enable the permanent structures to be built around them without detriment to their effectiveness and due allowance will be deemed to have been made for all necessary adjustments thereto to enable the works to proceed. Price escalation: The rates quoted by the contractor shall be firm for the entire duration of contract and no price escalation shall be allowed; with the exception or adjustment towards difference in basic price for cement and steel. Taxes, Levies, Duties: The contractor shall be responsible to pay the appropriate authorities as applicable taxes, levies, such as sewerage fees, royalties, octroi, sales tax, excise duty, income tax etc. as applicable from time to time. Changes to statutory taxes, duties etc. during period of depositing of tender till completion shall be paid by the contractor and no escalation payable on account. Like wise brief descriptions regarding facility for water and electric supply are briefly given in the special conditions of contract. It has also been recommended that the contractor who shall mobilize to site shall be responsible for constructing and maintaining temporary structure for site office for architect /E.I.C. Special mention has been made to site drainage/cleaning, safety codes to be followed, fire precautions, accidents, labor accommodation site supervision etc. After studying through the contract thoroughly there were certain discrepancies, and clarifications required pertaining to design, Items and specifications mentioned in the B.O.Q. etc and mainly for works contract tax. It was not very clearly mentioned who would pay the works contract tax. These doubts were clarified at the time of pre-bid meeting itself.

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Construction Contracts and Contracting Reg. No. 27-09-11-4192-292

First of all we had to prepare a site-organization chart, indicating number of people to be involved on the job and duty of each individual at site. As can be observed in the diagram no. 2, where a comprehensive site-organization chart had been prepared, to know the works of each engineer in charge. The work mainly constituted of Civil finishing work, plumbing works, Metal works, waterproofing works and external cladding work. First of all we had a project manager, whose main responsibility is to arrange all input such as material, labor, plant and equipment. This duty was given to me by my company. Thus my other duty was to coordinate with the representative of the client, get quality control carried out from time to time, work acceptance, measurement taken and bills raised for payments. Different engineers appointed had different tasks to perform. Some of these engineers had to accomplish the task of completing the work for which they were appointed. It was the duty of the plumbing engineer to ensure that all the plumbing work to be done under scope of work is accomplished in the right way. Besides engineers in charge of civil works had to ensure that works under their scope of work was completed in time. Besides it was the duty of each of these engineers to check whether there has been any deviation from contract, and if so to bring the same to notice of the project Manager. There was a daily site record maintained of important noteworthy events. If there had been any work stoppage or holdup, the same to be recorded in the hindrance book. An extract of these records of hindrance register had to be the basis for future claims to be established on account of work delay. There were weekly meetings arranged, where a representative from the clients side, representative from Architects, Consultants, and Contractors along with their team members were expected to be present and discuss the progress of the work at site. This was a platform where, problems faced by us as regarding any delays etc. could be

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directly discussed in presence of everyone. Besides these were minuted and became records for future claims if any. Clarifications for extra-items and the price escalations if any were also discussed during these meetings. Most of the work went ahead as per schedule, with of course some hindrances etc. which generally are a part of a project. Only one big issue came up regarding paying of works contract tax. It was right in the beginning we had brought the same to the notice of the clients, that since the contract did not mention anything regarding the work contract tax, it shall be the responsibility of the Clients to bear the same. After continuous discussions, it was decided that the same shall be sorted out with the architects since they are the once who have prepared the tender documents in consultation with Project Managers. It was also decided that the same shall be discussed towards the end of the project, and if required we should go in for arbitration. Towards the end, once again, the issue of Works Contract Tax rose, and a joint meeting in the presence of the architects, Project managers and a consulting arbitrator was called. After making a detailed study of the contract, finally arbitrator gave his final verdict In favor of us. Except for the problem of works contract tax, no major issues ever became a part of this contract. The essence of our method of work was on emphasis on communication, particularly in the lateral direction, among the teams and within the teams. In a way, communication was the key to managing this gigantic project. To get the best from our team members, being the person In-charge of the site, I spoke to them frequently on the goals and objectives of the organization, emphasizing the importance of each members specific contribution towards realization of these goals. At the same time, I tried to be receptive to every constructive idea emanating from any sub-ordinates and to relay it in an appropriate form for critical examination and implementation. I used communication to promote understanding and to come to an agreement with

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colleagues in defining the problems that existed and in identifying the action necessary to be taken to solve them. Authentic communication was the tool used for managing the project. We learned the hard way that the biggest problem of the project management is to achieve a regular and efficient interfacing between the different individuals (Team members at site) and work centers i.e. the head office. Hard work can be set at naught in absence of proper co-ordination. Close intervention with different work centers create such harmony, that the fine threads of individual efforts were woven into a mighty fabric of great strength. It was here that the actual site execution work would really take off. It is the activity through which all plans are transferred into reality. The completion of project and realization of goal is achieved through the satisfactory conduct of this activity. As it is said, Proof of Pudding is in eating it therefore execution only can determine whether the project is going on well or otherwise. In site management operation, actual execution is the important theatre activity. The planning process, organization, agencies, material and equipment all come into play in execution. Its so truly said that emergencies and unforeseen problems might crop up. But they should not upset or delay the normal activities planned for the day. Facing the pressure with commitment, determination and positive approach, would certainly lead to success in achieving the goal. The main reason for our successfully accomplishing the given task without much delays and problems, was a good communication set up amongst the team members and the head office.

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Another reason for the success was responsibility. My C.E.O. had put complete faith on me and so did he give me the responsibility of handling the complete project. This itself gave great confidence and independence towards handling of the project. The same faith had to be entrusted upon my sub-ordinates by me and this also made them responsible individuals. Thus it was our group effort that made us accomplish our task. References: 1) Course Material, NICMAR 2) Tender Documents of one of the prevailing projects.

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