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A - PROJECT

Presented by : Pushkar Mankar (P81084)


Sanket Nawale (P81091)

PROJECT DETAILS
Project Name:
Vang Ang 1 Thermal Power
Plant Project
(1200 MW)
Client:
Vietnam Machinary
Installation Corporation
Contractor:
Tecpro Ashtech Ltd (TECPRO)
Project Duration: For Unit 1: 24 months
For Unit 2: 34 months
Contract type:
EPC Contract
Contract Price:
USD 12,525,000
Project Location: Ha Tinh Province, Vietnam

Story behind this contract


Tecpro Ashtech Ltd comparatively a
small player
Wanted to enter International
Projects Market
Hence, formed a contract with
Vietnam Machinary Installation
Corporation
The project is in progress but with lot
of issues arisen between the two.

Project Scope
Two units of Ash Handling System:

Engineering,
off loading at site,
design,
handling,
manufacture,
supervision and
work inspection & testing, responsibilities for
supply,
quality of installation,
packing for transport, testing,
commissioning,
delivery to site,
handing over,
custom clearance,
warranty
insurance,

Employer and Contractor agrees as


follows:
Contract Agreement
Forms : Performance Security, Advance Payment
Security, Warranty security, Taking Over certificate,
Performance certificate, Training completion
certificate
Conditions of contract
Appendix: terms & procedures of payments, contract
discussion agreement (Technical Requirements),
Project time schedules, Price schedules
The Contracts proposal
The bidding documents

Issues observed under conditions of


contracts
1. Contract Price : USD 12,525,000
Problem: How to mitigate variations risk in USD vs
Rupee, parity?
(This is nowhere mentioned in the contract document)
2. Project Schedule : from NTP:
Unit 1- 28 Months &
Unit 2- 34 Months
Problem: i) NTP Date not mentioned
ii)When will the applicability of warranty
period start, whether from taking over of unit 1 or
unit 2 or unit wise?

3. Determinations (Cl 3.5):


Under this clause it is given that employer
shall consult with the contractor in an
endeavour
to
reach
agreement.
If
agreement is not achieved, the employer
shall make fair determination in accordance
with the contract, taking due regard of all
the circumstances.

Problem: Here instead of employing an


engineer to intervene, employer himself is
taking the decision & there is a chance that
employer will take a biased decision.

4. Interim Payment (Cl. B(2.1) , App1):


5% of Contract Price (USD 626,250) on
Approval of Civil load input data & Drawing
(layout of inplant Ash Handling System), within
30 days, by TT.
[TT: Telegraphic Transfer, mode of payment ]

Problem: It is not given that if this payment is


not received, what should be done.

5. Service payment (Cl. B(2.3) ,


App1 ):
It is mentioned that payment of 80% of
certified work of Preceding Month will be
done by TT, within 30 days

Problem: How balance 20% amount will


be paid is nowhere mentioned.

6. Change in Legislation (Cl 13.7): Price


adjustment due to change in legislation is
allowed, but it is not mentioned that for change
in Legislation of which country whether India or
Vietnam is to be taken
7. Co-operation (Cl 4.6):
It mentions that contractor should co-operate
with associated works contractors. And in case of
any damage or delay by the associated works
contractors, contractor can complain to the
employer
Problem : what if because of contractor, the
associated works contractors faces any damage
is not mentioned

8. Spare parts after taking over: To


be made available for 10 years from
the date of taking-over, else contractor
is liable to employer for such losses.
Problem: Here open ended liability is
observed, that upto what extent the
contractor will supply the spare parts
and it is nowhere mentioned that if the
parts are needed due to improper
handling, what should be done.

9. Adjustment for Escalation


Contract Document is Silent on this aspect
10. Training of Employers Personal
It is stated that training to employers
personal is contractors responsibility (within
the contract price), not to be considered for
taking-over
Problem: It is a open ended clause. The
price consideration, duration and number of
people to be trained not mentioned.

11. Civil Detail Design LD


USD 10,000 per day delay in submission
of each civil engineering drawing, subject to
Maximum USD 200,000/Problem: Drawing Schedule are not given.
12. Supply Delivery LD
It will be charges @ 0.3% of Delayed
Shipment Value
Problems: Extent of delay is not mentioned,
whether perday, per week..? Delivery
Schedule? Shipment values?

13.Project Delay LD
It will be charged @ 0.1% per day for each
unit.
Problems: The concept of all activities
under same contractor is blurred.
14. Electricity, Water, Coal & other
Consumables
Contractor to pay to employer, if available.
Problems: The charges that will be
applicable are not stated & no where the
availability of Coal for performance test.

Thank You.