CONSTRUCTION CONTRACTS & CONTRACTING

COURSE NO- NCP 23

ASSIGNMENT - 2

SUBMITTED BY

Aniket Mahashabde

Course- GPCPM

National Institute of Construction Management and Research

School Of Distance Education, Pune

ASSIGNMENT

NICMAR / CODE OFFICE

1. Course No. - NCP 23

2. Course Title - Construction Contracts &

contracting

3. Assignment No. - Fourth

Assignment- Construction contracts management

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 company and how administration and monitoring is being done. Draw the

organization chart for this activity and explain all the functions carried out. Do you

think the system is achieving results? Discuss.

PROJECT FACTS

NAME OF PROJECT - Kirloskar showroom / workshop at Akola.

SITE LOCATION - Akola, Maharashtra

SITE AREA - 66500.00 sq.ft.

PROPOSED COVERED AREA - 45600.00 sq.ft.

SCOPE OF WORK

Scope of work covers following points:

Civil works as per BOQ and drawings for the proposed work at Akola.

Familiarization with site: inspection and examination of the site and its surroundings

thoroughly. Study of the nature of the ground, subsoil means of access to the site, the

facilities available at site etc.

Planning and control

Providing information and data: providing complete set of information which includes

tender documents, tender drawings and contract document complete in all respects,

to the contractors

Inviting tenders

Tendering and award of works: processing of tenders, award of work to the

contractor, and signing contract with concerning parties.

Selection of project manager and his team, giving possession of site and setting up of

communication network.

Supplying working drawings.

Payment of Progress Bills.

Checking the progress of the work at site through timely inspections.

Settlement of variations and claims.

Filing and Records- Maintaining proper files and records of construction works Progress

record, field dairy, daily reports, feedback reports, inspection reports, misc. reports.

Settlement of fees and claims.

IMPORTANT DETAILS OF CONTRACT, COST, TIME, TYPE ETC,

The contract documents' typically contain the notice inviting tender, information and

instructions to the renderers, general conditions of contract, special conditions of contract,

schedule of quantities and cost, tender drawings, specifications for work forms of bank

guarantee in respect of earnest money, performance guarantee, mobilization advance etc.

Important details of the contract for the construction of BAJAJ SHOWROOM/ WORKSHOP are-

A. TYPE OF CONTRACT-

The above-said contract is ITEM RATE CONTRACT In this contract, payment for work

done is made on the basis of the quantities of work actually executed and measured,

materials supplied and used by the contractor on the project, each such quantity being

multiplied by the contractor's corresponding unit rate given his tender for that unit.

The mode of measurement shall be as specified in the specifications at the materials.

However for items for which no mode of measurement given for any item, same shall

be taken as IS-1200. For a contractor to submit an item rate tender, it will be necessary

to provide him general specification designs and drawings together with estimates of

quantity.

B. DEFINING FOLLOWING TERMS:

Contract, means the documents forming tender and acceptance thereof and the

formal agreement executed between the owner and the contractor. Contractor,

means individual or firm or company undertaking the works in this case contractors

are

Owner, means - PATNI AUTOMOBILES

Clerk of Works/Engineer-in-charge means the authorized representative of the

owners who shall sup-'i-vise and be in charge of the work on behalf of the owner. He

shall be employed and paid by the owners.

Architect/Consultant means, in this case means S.D.ASSOCIATES PVT. LTD., NAGPUR.

C. TIME LIMIT

Time allowed for carrying out the work shall be 16 months from the contractual date

of start of work

Time is the essence of the contract and the contractor is required to complete work in

all respects within stipulated lime of completion strictly as per the applied PERT/BAR

chart and hand over the same complete in all respects to the satisfactions of the

architects.

D. COST OF THE WORK

Cost of the work is arrived upon by the bid by the contractor who have been awarded

the work is 86 - lakhs . (Only civil works)

Total cost of the project however will take into account.

Final bills of each and every item submitted by the contractors

Consultancy fees of the architects.

Salaries of the Project Manager and his team.

Cost of tendering

Cost of subsequent site visits of owners, architects, project managers.

Site supervisors etc. during various stages of execution.

Costs of maintain backup office.

E. PAYMENT TERMS/ RUNNING ACCOUNT BILLS

Submission of running bills at regular interval keeping a minimum interval of 15 days

between two bills

The owner shall make the payment of running bills within 7 days after getting certified

from the architects and the architect shall certify the bills within 7 days after

submission of each bill by the contractors.

F. MOBILISATION ADVANCE

Interest free mobilization advance @2% of the contract value against bank guarantee

of equivalent amount.

G. SECURED ADVANCE

Secured advance @75% of the cost of the material brought from outside for

construction.

H. LIQUIDATED DAMAGES

A sum equal to 0.5% of the total value of incomplete works for every week’s delay

subject to a maximum of 5% of total contract value.

I. DEFECTS LIABILITY PERIOD

The defect liability period in respect of works executed under this contract shall be

nine months or one rainy season, whichever is later from the date of handing over of

the works to the owner

J. QUALITY NORMS

All civil works shall be executed, measured and paid as per standard latest CPWD

specification included up-to-date correction slips. In case specifications of any item are

not covered under above specifications, relevant IS code shall be followed.

All materials are specified to comply with IS code, when required proper testing of

materials should be done.

Mode of measurement shall be in accordance with IS: 1200

IMPORTANT POINTS FROM CONTRACTOR'S POINT OF VIEW TO BE

MONITORED/ RESOLVED

1. FAMILIARISATION WITH SITE

The contractor is advised to inspect and examine the site and surroundings thoroughly

and satisfy himself before submitting the tender as to the nature of ground and

subsoil, means of access to the site, the facilities available at the site etc. In general,

they shall themselves obtain all required information as to risks, contingency and all

other circumstances which, according them may influence or affect the rates. The

Contractor shall be deemed to have full knowledge of the site.

2. COMPLETE THE WORK

The first and foremost obligation of a contractor is to carry out and complete the

works in accordance with the contract. The obligation has two facets,-the first is to

carry out the work and complete it in time, and the second facet is the maintenance

and rectifying defects during defect liability period winch starts immediately after

completion of the work.

3. SELECTION OF RESOURCEFUL SUB-CONTRACTORS

In most cases, the prime contractor entrusts different work packages to various sub-

contractors. The selection of sub-contractors is very significant to the success of the

project. It is desirable that sub-contracts should be awarded to a resourceful sub-

contractor on workable rates. The prime contractor must satisfy himself whether the

resources committee would be available for deployment and whether the equipment

committed to other projects by the sub-contractor would be made available in time

4. PLANNING AND CONTROL

Planning and control is very important for a successful project. Time, Cost and Quality

are always the critical targets for the contractor in implementation of construction

project The contractor shall adhere to the construction programmes as instructed by

the architects from time to time by deploying extra labor, equipments etc. The

contractor shall submit to the architects, the weekly bar charts showing the progress

of works achieved as per the programme and projected progress to be achieved in the

next week. The contractor shall also give daily/weekly report of labor and equipments

deployed at the site as per the Performa prescribed by the architects,

5. QUALITY ASSURANCE

It is seen from the experience that wherever adequate attention is not paid by the

contractor to quality assurance requirements, this has not only led to delays and extra

cost to the contractor but had created friction in relations between employer and

contractor. Hence quality assurance is very important to the contractor. If it shall

appear to the architect that any work has been executed with unsound, imperfect, or

unskillful workmanship or with materials of any inferior description, it is contractor’s

responsibility to rectify or remove and reconstruct the work materials or articles at his

own cost.

6. PROCUREMENT OF LATERIAL

The contractor shall provide at his own cost all materials, except specified.

Innumerable projects get delayed due to delay in procurement of material. Effective

planning and control of material procurement system is essential to avoid delay in

implementation of the project and to avoid wastage of material and extra expenditure

due to loss of labor.

Control on waste of material within the prescribed limits is of ultimate importance for

achieving the planned profitability Level. Excessive wastage of material caused due to

imperfection in the workmanship, imperfect storage system, improper handling,

absence of bar bending schedule/ shop drawings, improper checking of quantities

while delivery from the supplier can be reduced by having a regular system of wastage

accounting and to advise measures for reducing it by eliminating the causes.

Occasional surprise checks should be carried out for ensuring the proper use of

material and for checking the wastage limit.

7. LABOUR WELFARE

The contractor shall obtain a valid license under the Contract Labor

(Regulation and Abolition) Act, l970 and the Contract Labor (Regulation and

Abolition) Central Rules, 1971 before the commencement of the work. No labor

below the age of eighteen years shall be employed on the work.

The contractor shall pay to labour employed wages as defined in the Contractor's

Labour Regulation or as per provisions of the above mentioned acts. The contractor

shall comply with the provisions of the Payment of Wages Act, 1936, Minimum Wages

Act, 1948, Employee's Liability Act, 1938, and Workmen's Compensation Act, 1961.

The contractor shall provide ft his own cost with a sufficient number of huts inside the

site, adequate water supply for the use of labourers, sufficient arrangements for

draining away silage water so as to keep the camp neat and tidy, sufficient lighting

arrangement, proper arrangements for conservancy and sanitation in the labor camps

according to the rules of the Local Public Health and Medical Authorities.

8. MAINTENANCE OF CONSTRUCTION EQUIPMENT

Effective operation and maintenance of construction equipment is very important for

the contractor. It is duty of the contractor to check the maintenance costs of the

various equipments, finding ways to check these costs, providing adequate work sheds

to store these equipments, tools and accessories, proper oiling of all the machinery

etc. so that the maintenance cost and hence the operating costs could be reduced

9. FILES AND RECORDS

Construction records

Daily progress report

Telephone calls recording

Records of Tests of Materials

Daily Diary or Log

Construction site Office Files

Copies of all Correspondence

Job Drawings

Shop drawing Submittals

Copies of all approved Requisitions for payment

Copies of Reports of all Types

Record of all approved Samples

Files of all Operating Tests

Deviation Requests

Construction Progress Record

Daily Progress Record

Field Diary or Log

Special Feedback Reports

Report of Field Correction

Concrete Batch Plant Daily Reports

Plant Inspection Reports

Field Inspection Report

Documentation of Safety Hazard Warnings

Misc. Records

Recording the proceedings of Job Conferences

Construction photographs

ORGANIZATIONAL CHART WITH FUNCTIONS

As a part of the architectural organization, the Organizational Chart as conceived by me is

as follows:

Functions of each and every member of the above chart are well defined and those are as

follows:

Astt. Architects

(Draughtsman to work -under them- actual preparation of the drawings).

Preparation of tender drawings, deciding materials and its specifications to be used for

the project, providing information and drawings to civil engineer. for the preparation of

tender documents & BOQ, assigning work to the draughtsman, attending all me

meetings related to the project, release of the working drawing, communication with

various consultants, owners, representatives, project managers & contractor, visiting the

site as required, proper feedback to the architect, making site visit reports etc.

Engg. Staff

ARCHITECT

(Head of the organization)

(Functions Dealing with owners, contractors, consultants Overall control and monitoring)

STUDIO STAFF ENGG. STAFF/ CONSULTANTS ADMIN STAFF

Astt. Architect (2 no.) Structural consultant Accountant (1no.)

Draughtsman ( 1 no.) Plumbing/sanitation CLERK (1 no)

Electrical Consultants

Landscape consultants

Civil Engg. (1 Nos.)

Consultants to provide drawings and information of their respective field of work, visit

site as directed by the architect to check the progress/quality of the work along with the

Astt Architects/ Project Manager.

Civil engineer's functions are preparation of tender documents preparation of BOQ,

filling up of quantities, checking all the final submitted tenders, checking of actual

measurements of various works on site, checking of quality of construction at site,

proper feedback to architect/asst. architect.

Administrative Staff

Clerk's job is to maintain all records of letters/communication with the either party,

maintain record of progress reports from the site, to draft letters of communication to

various party, to make sure that the letters, samples, drawings etc. has been delivered to

the right party, to maintain, as far as possible, record of all the telephonic

communication with the either party

Accountant's job is to maintain all the accounts bills of consultancy, bills of site visits,

and other misc. spending related with the project.

Organizational Structure of the contractor, in brief, is as follows:

1) Contractor- The Head-Overall Control and Monitoring.

2) Sub-contractors- Handling construction works of their respective fields, arranging

materials and equipments.

3) Site engineers/site supervisors- Qualitative and Quantitative check at site.

4) Administrative staff- Filing and Recording, Accounting and Billing.

Organizational Structure of Owner, in brief, is as follows:

1) Owner-The Client-The money Spender.

2) Representatives of owner-Overall planning, meetings with architects and

contractors, time scheduling, feedback to owner, handling misc. matters.

3) Project Manager-In this case employed by the owner for the project only- completes

control and monitoring.

Points of disputes, ambiguity arising out of various levels of the organization are

resolved by face to face meeting between the concerning persons. The disputes are

however tried to be minimized by keeping open a proper communication channel

which includes the clean instructions given by the superiors to the juniors and proper

feedback given by the juniors to the seniors

However, the disputes arising between the various parties involved in the project have

been tried to be minimized by clearly mentioning all the important and sensitive points

in the tender/contract document and keeping the communication network open as

planned in the tender document.

METHODS FOLLOWED FOR ADMINISTRATION/MONITORING

Methods followed for the proper administration and monitoring of the project are as

follows:

a) Maintaining proper communication with the concerning parties through

telephones and letters.

b) Making it very clear the duties of the contractor in the tender document itself.

c) Clearly specifying all the materials specifications in the tender document.

d) Timely site visits by architect/asstt. Architect to monitor the construction work.

e) Proper preparation of tender and working drawings.

f) Demanding site progress reports weekly from the contractor

g) Sending site visits report to the clients/owners for their feedback.

h) Asking for manufacturer's report, testing reports of various materials used for

construction from the contractors.

i) Arranging timely meetings to discuss and reschedule the progress of the work.

CONCLUSION

Thus, we can see that how important is a contract and contract management to

carry out a project to the satisfaction of all the parties. Contract defines me duties of

contractor, it provides guidelines to proceed for the work, and also provide a system

of control and management so that the project is completed in time. Instruction

from the concern parties, feedback reports from the contractor help in establishing a

proper communication network that ultimately helps in timely completion of the

project. And this system is achieving result in the farm house project as a proper

overall control and management is possible because of the Contract Management.

BLIOGRAPHY/ READINGS

1. Contract Management in Civil Works Project—V. A. Prakash NICMAR Publication.

2. Tender document of Kirloskar showroom/ workshop, Akola.

3. Suggestions from Mr. Sanjay Kulkarni, project manager client side.