Contracts&Disputes HT5

Tenders & Contracts.
Clauses & Conditions.
Recent Developments
Purpose of a Tender
Get offers from alternate parties
who have the competency & capability
Tender evaluation – C & C – First Step
Establish equality or clears a set benchmark
Tender pricing -
to be from parties of equal C & C
to be on common platform – based on
Specifications, BOQ and price schedules
Payment, intermediate & final
Technology & Time for completion & Quality
Selected tenderer becomes contractor on acceptance
of tender and signing of the contract
INSTRUCT
JNB Program on Emerging Trends In Contract Management &
Dispute Resolution 2
Purpose of a contract
Bring two parties together to work for a
commo n obj ective
Both parties to benefit as a result of the activity
Parties ---- Owner & Contractor
Parties ---- Developer & Architect
Parties ---- User & Regulator
Do these parties have a common objective???
Each party has its own private goal.
Contra ct is to t ie the par ties to the
commo n goa l by satis fying the priva te
go
JNB
al of each par ty.
INSTRUCT
Program on Emerging Trends In Contract Management &
Tenders & Contracts
Infrastructure work contracts constantly gets blamed
for cost & time overruns.
Most of the contracts result in disputes either during
the contract period or at the end of it.
Conditions in tenders, which on acceptance become
contract conditions are designed or drafted to avoid
overruns and disputes.
Costi ng or estima ti ng the project cost &
mea sur ement & pa yme nts are very critical
activities responsible for the healthy operation of a
contract.
Projects are complex & Unknown elements either exist
or crop up during the life of the project.
INSTRUCT
Tenders & Contracts
PROCESS
SKETCH DESIGN
Room Building
Demands Demands
Terminal Network Plant

Device Design Spec
Spec
Room Riser and Plant
Design Void Room
Design Design
Co-Ordination
Equipment Fabricatio Plant

Selection n Selection
Drawings
Installation, Testing & Commissioning
INSTRUCT
Tenders & Contracts
Project Brief By By
Employer Employer
Concept Design
Detail Design
By By
Production Info
Contractor Contractor
Construction
Testing & Comm
Occupation INSTRUCT
Tenders & Contracts
Change & Cost of Change
INSTRUCT
Tenders & Contracts
All contracts basically involve an element of risk
transfer from one party to the other contracting
party.
The coverage for picking up the risk is the
profit.
Conditions in tenders, particularly the non-
specific ones such as “Any other costs arising
due to event xxx are to be borne by the
contractor” are the ones which create problem.
Errors in Co sti ng o r es ti mat ing the project
cost result in an implied risk.
INSTRUCT
Tenders & Contracts
TIME
Most Certain
Earliest Start
Quickest on Site
5 5
4 4
3 3
Design 2 2
1 Lowest in Use
1
Client
Most Certain
Controlled
COST
QUALITY
Products Lowest to Buy
INSTRUCT
CONTRACT PROFILE
Tenders & Contracts
TIME
Most Certain
Earliest Start
Quickest on Site
5 5
4 4
3 3
Design 2 2
1 Lowest in Use
1
Client
Most Certain
Controlled
COST
QUALITY
INSTRUCT
D&B CONTRACT PROFILE
Tenders & Contracts
TIME
Most Certain
Earliest Start
Quickest on Site
5 5
4 4
3 3
Design 2 2
1 Lowest in Use
1
Client
Most Certain
Controlled
COST
QUALITY
INSTRUCT
MANAGEMENT CONTRACT PROFILE
Tenders & Contracts
TIME
Most Certain
Earliest Start
Quickest on Site
5 5
4 4
3 3
Design 2 2
1 Lowest in Use
1
Client
Most Certain
Controlled
COST
QUALITY
INSTRUCT
TRADITIONAL CONTRACT PROFILE
Infrastructure Projects
Infrastructure projects require inputs from at
least about 22 different entities for its success.
Non cooperation from any-one will cause delay.
Project success - benefits a few out of the 22.
-- causes loss or problems to some.
-- few are unaffected.
-- few beneficiaries have no voice.
-- few have capacity to put spokes.
Categorization of the 22
INSTRUCT
Tenders & Contracts
Ceilings
Cladding Partitioning
Structure Floors
Basement Voids &

Planning Risers
M/E Design
Horiz/Vert
Reception
Circulation
Toilet
Joinery
Cores
Passive
Catering/
Design
Refrigeration
Elements
INSTRUCT
Project & Contracts
Employer
ME Their
A CS role QS
& Employer’s
Agent
the emerging changes in their role
with changes in construction
Contractor
contracting practices.
SC1 SC2 SC3 SC4

Contract Manager - Functions
Manage and control costs

within construction projects
Use a wide range of
management procedures and
technical tools to achieve this
goal.
INSTRUCT
Change over the years
Costs have become dynamic; Fast Changes.
Technology change, Mechanization.
From primarily civil engineering work
to a mix of work of different disciplines, particularly
Electrical, Air-Conditioning, Plumbing, Electronics,
Fire detection & protection-----
Corresponding to change from single & double story
construction
to multistory complexes.
Energy costs and Environmental requirements.
INSTRUCT
Change over the years
Energ y cost s have also brought in a change
in the outlook of the architectural design of
buildings.
We cannot afford to overlook the opera ting
cost of t he b uil di ng as a whole.
Closely associated with the energy are the
envi ronmenta l f actors associated with
energy usage.
INSTRUCT
Energy & Environment
Global Warming which was considered to be a
distant dream of a pessimistic scientist is now
identified to be a reality staring at us.
Energy consumption is directly associated
with the production of green house gasses
and global warming.
We cannot afford to face the consequences
on the environment
INSTRUCT
Building & Energy
Our building designs should keep energy in all
its forms and stages of utilization
Energy that goes into the formation of the
building materials.
Energy that is utilized in the construction.
Energy that will be spent during the life time of
the building.
CDM (Clean Development) & Green Buildings
are also becoming important.
INSTRUCT
Speed of Construction &
Maintainability
The speed of construction has also been
assuming importance.
Speed of construction is dependent on the
method adopted and the type of structure.
Maintainability is another aspect.
Today with the gradual but continuous
increase in the labor costs it is essential that
the design is such that the requirements of
resources are kept to the minimum.
Computers, IT & Automation.
INSTRUCT
Requirement Today
Contract administrator is required to know(?)
Basic civil work processes & costing.
Component materials.
Services work processes & components.
Material selection & Equipment Selection and
effect on costs.
Building operation costs based on the
aspects of Energy efficiency, Environment
friendliness, Maintainability.
INSTRUCT
Drivers for the Change
Changes driven by energy, environment, IT,
fire, natural hazards like earthquake, floods,
cyclone, tsunami have influenced
construction in a big way.
Major change in technology, materials.
Standards & Codes.
Regulatory bodies, Local Byelaws, pollution,
Manpower availability, shortage of trained &
skilled workers
INSTRUCT
Wide range of responsibility
Cost controller, Material Management
Procurement of material & equipment
Work coordination strategy
Life cycle costing
Taxation & Tax planning
Outsourcing & sub contracting
Work break-down & package development
Special work packages and costing
Dispute resolution INSTRUCT
Contract systems
Item Rate, Percentage rate, Lump sum
Labour only, turn key, composite
Design & Build, Construct,
Design, Finance, Build, Operate & Transfer
Build & Operate
Build, Operate, Transfer,
Build, own, operate & transfer
Propose, design, build, own, run, share
INSTRUCT
Financial & Legal aspects
Process financial controls, inventory control
Dispute resolution –
ADR, Concilliation, Arbitration
Labour welfare management, worker training
Valuation of assets
Asset management
Plant & Machinery, materials, equipment
INSTRUCT
New Subjects In Curriculum
Economics, Derivatives,
Financing
Risk Evaluation & Management
International contracting,
exports
Intellectual property rights
Health & Safety regulations
INSTRUCT
Case Study
Heathrow Airport Extension
Europe’s largest and most complex
construction projects.
HEATHROW TERMINAL 5
4.3 billion Pound; Nov 2001 start; March 2008
finish
260 Hectare site; 16 projects; 140 sub projects
1500 contracts; Monthly 80 million Pounds
work; over 8000 workers.
Gives 50% additional capacity to the terminal.
INSTRUCT
Unique Landmark Contract
The T5 agreement is a unique legal contract in
the construction industry – in essence it
is a cost reimbursable form of contract in
which suppliers’ profits are ring-fenced and
the client retains the risk.
non-adversarial style on the causes of risk and
risk management through integrated team
approaches.
no claims for additional payments and no
payment disputes so far on the project
Will save 24 months of construction time!!!
INSTRUCT
BAA uses cost information from other
projects, validated independently, to set cost
targets. If the out-turn cost is lower than the
target, the savings are shared with the
relevant partners.
This incentivises the teams to work together
and innovate. It is the only way to improve
profitability: all other costs, including the
profit margin, are on a transparent open-book
basis
Agreement focuses on managing the cause
and not the effect and ensures success in an
uncertain environment. High performance
levels and high benchmarking standards are
INSTRUCT
demanded
JNB from
Program allTrends
on Emerging parties. “The idea
In Contract Management & is to
BAA selected a consultancy framework
for cost consultancy on the T5 project
comprising the Turner & Townsend Group
and EC Harris Group Ltd (known as
TechT).
Both companies were selected under the
same terms of commission and each
provided 50% of the staff.
On this project these two major
consultancy companies became one team
“joined at the hip”. At its peak the cost
INSTRUCT
consultancy
JNB team
Program on comprised
Emerging Trends 120
In Contract Management
Dispute Resolution
& staff.
31
Conclusions
Preparing development appraisals
• Development of the business case
and master planning.
• Producing the facility cost model
allowing option appraisals within the
master planning phase and functionally
based cost planning.
• Executing the business case
sensitivity analysis to test each option’s
rates of return on investment.
• International benchmarking of airport
indicators
JNB (operational INSTRUCT
and
Program on Emerging Trends In Contract construction
Management &
Conclusions
2. Advising clients on project brief,
preferred procurement route and cash
flow
• Design of the incentivised procurement
strategy and resultant contract terms and
conditions involving the development of an
innovative strategy and framework agreement
against which contracts could be let.
• TechT and Laing O’Rourke provided
comprehensive commercial benchmarking
across the whole T5 programme to enable BAA
to judge whether the Anticipated Final Cost
(AFCs) provided good/poor INSTRUCT value for money
compared
JNB
to otherDispute BAA and non BAA projects.
Resolution 33
Conclusions
3. Analysing whole life costs
• Implementation and management of an
innovative value improvement process which
secures cost and time based on themes of
designing, buying and delivering better.
4. Planning the construction process
• Project management of the Planning
Supervision process.
• Project planning undertaken jointly between
BAA/Laing O’Rourke based on overall T5
Strategic Plan using Primavera; however QS
role minimal.
• Sub-Project Planning - each sub-project (£75-
INSTRUCT
£100m)
JNB has
Programits ownTrends
on Emerging cost and
In Contract programme
Management &
Conclusions
5. Monitoring control of cost during pre-
contract stage
• TechT cost managers engaged with
suppliers’ cost managers to verify the cost
plans and ensure alignment with the schedule.
The aim was to achieve a cost plan that was
95% bottom up i.e. based on figures from
suppliers by BAA’s “D Day” (the milestone
before the site assembly starts but when most
of the manufacture is complete and design is
95% complete).
• Contractors were required to monitor their
pre-contract
JNB Program on Emerging Trends Incontinually
costs and
INSTRUCT
Contract Management & update BAA
Conclusions
6. Preparing tender and contractual
documentation
• TechT supported BAA’s Supply Chain team
to negotiate and periodically review
the Commercial Model Agreements (CMAs)
between BAA and each of the 1st
tier suppliers.
• TechT supported BAA’s Supply Chain in
providing advice on appropriate
procurement routes and choice of Supply for
each work package then utilised
the
JNB
CMAs as a basis for agreeing the AFC.
INSTRUCT
7. Advising on payments to
contractors, cost control and
settlement of final accounts
Majority of 1st tier contractors reimbursed on “an
actual cost based” form of contract; interim payments
and final account based on actual cost.
• TechT work in conjunction with BAA’s cost verification
team to check, audit and then verify that the costs
approved for payment are valid.
• used COINS (accounting package) to collate costs;
BAA/TechT had read-only access to COINS to verify that
costs were properly incurred.
• BAA ran the project using Oracle/Artemis; contractors
feed information into Artemis using comma separated
variable (CSV) files on a weekly basis, updating costs,
progress
JNB
and forecasts on a work breakdown structure
INSTRUCT
(WBS) basis. Dispute Resolution 37
Laing O’Rourke developed their own data-base system
of weekly capturing costs against WBSs, recording
progress and forecasting final costs, this was loaded
electronically into BAA’s Artemis system every
Wednesday for the previous week.
8. Controlling the project on behalf of their
employer
• Supporting BAA’s integrated team in the preparation
of the project process and procedures and
implementation of a project control system and
software including change control and risk
management.
• Introduction of performance management system
with KPIs based on cost, time and quality criteria.
• Provision of monthly earned value analyses (linking
time and cost) and schedule INSTRUCT performance indices.
• TechT have driven the Disputeproduction
Resolution of – and are the
38
9. Negotiating with client or subcontractors
• TechT work with BAA in agreeing AFC targets
throughout the duration of the programme; each
project and sub-project has its own AFC target,
progress against which is reported on and discussed
on a monthly basis.
• TechT together with BAA’s supply chain and 1st tier
contractors work as collaborative teams.
10. Reporting on the programme and financial
matters
• The TechT cost managers are integrated within their
project and sub-project teams, they report to the
project leader, who in turn reports to the T5 Directors;
TechT are also represented at Programme Office level.
• The Heads of Cost Management, Commercial
Management and Performance INSTRUCT Measurement are all
senior TechT people reporting
Dispute Resolution to BAA Directors. 39
Conclusions
11. Risk and value management
• Ongoing option appraisal and value
engineering of construction systems.
• On going value improvement initiative
focusing on productivity improvements
and global acquisition combining
leverage and partnering based buying.
• Development of bespoke Risk
Management Process aligned to the T5
insurance cover.
12. Giving contractual advice in
case of disputeINSTRUCT
• Minimal dispute Disputedue
Resolution to collaborative 40
Conclusions
The example of the present running
project gives an overview of
Contract Management without
disputes in the context of the mega
projects that are coming up with
great complexity.
Thank You
INSTRUCT

Contracts&Disputes HT5

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Contracts&Disputes HT5

Загружено:

Авторское право:

Доступные форматы

Tenders & Contracts.

Clauses & Conditions.

Terminal Network Plant

Equipment Fabricatio Plant

Testing & Comm

Basement Voids &

SC1 SC2 SC3 SC4

Manage and control costs

Вам также может понравиться