contract management- fidic 1999

PROJECT CONTROL DIVISION

PRESENTATION

PROJECT MANAGEMENT

Prepared / Presented by:

PROJECT CONTROL DIVISION – Karthi


PROJECT MANAGEMENT

DISCIPLINES of PROJECT MANAGEMENT

CONTRACT MANAGEMENT

CONSTRUCTION MANAGEMENT

RISK MANAGEMENT

FINANCE MANAGEMENT

HUMAN RESOURCES MANAGEMENT

SAFETY MANAGEMENT

LEGAL MANAGEMENT


CONTRACT MANAGEMENT

PRESENTATION

CONTRACT MANAGEMENT


Content of Presentation

Part Name

I. Introduction of Contract Management

II. FIDIC based Contracts

III. Contract Administration

IV. Claims and Counter Claims

TAISEI CORPORATIONCONTRACT MANAGEMENT

CONTENT OF PRESENTATION

Conclusion of Presentation


Part I: Introduction of Contract Management

Chapter Name

1. Merit of Contract Management

2. Contract Management Participants

3. General Types of Contracts


Part I: INTRODUCTION

Back to Content of Presentation


TAISEI CORPORATIONCONTRACT MANAGEMENTPart I: INTRODUCTIONMERIT OF CONTRACT MANAGEMENT

A, Contract Management is PROCESS of managing: Contracts Deadlines

Deliveries Customer satisfaction



based on above CONTRACT DOCUMENTS are PREPARED

B, Phases of the Contract Management from time point of view:

Pre-award Contract Management involving

preparatory activities with adequate investigations to cover all aspect:

1. that Influence design 3. Study possible technological alternatives

2. to Minimize uncertainties thatmay arise at the time of execution

4. Preparation of detail designs, construction drawings and estimates



B, Phases of the Contract Management from time point of view:

Post-award Contract Management

Contractor performs during project execution => Main Topic of Presentation

to fulfill Contractual obligations to Customer, the Contractor need:

To be equipped with latest technology Proper mobilization

To have sufficient skilled personnel Efficient schedule control

Expect unforeseeable events and prepare countermeasures



C, Contract Management influences Company’s: Budget Customer Service

Operation Public Image

D, Therefore through proper Contract Management, Company can have the following benefits:

increase in production and reduced inventory

improvement in product quality and customer satisfaction

reduction in purchasing costs, scheduling conflicts and manufacturing waste

transformation of fixed contract costs into cash that goes directly to the bottom line

Back to Content of Part I


TAISEI CORPORATIONCONTRACT MANAGEMENTPart I: INTRODUCTIONCONTRACT MANAGEMENT PARTICIPANTS


CONTRACT MANAGEMENT Organization Chart

Project Manager

Project Control Manager

Contract Engineers

Quantity Surveyor

Schedule Controller

Document Controller

Administration Manager Construction Manager

Accountant Site Engineers

Geologists

Passive Members Active Members Passive Members


TAISEI CORPORATIONCONTRACT MANAGEMENTPart I: INTRODUCTIONGENERAL TYPES OF CONTRACTS

General Types of CONTRACTS

International Contracts Domestic Contracts

Contract parties in General: Employer Contractor Employer Designer/Consultant Contractor Contractor

(Joint Venture) Contractor Subcontractor Contractor Designer/Consultant Contractor Supplier

Types of Contract in General: Lump Sum Contract Item Rate Contract / Re- measurement Contract Cost plus percentage contracts Cost plus fixed fee contracts Maximum Price Contracts Turnkey Contracts



Part II: FIDIC based Contracts

Chapter Name

1. Background & History

2. FIDIC Forms of Contracts and its Concepts

3. FIDIC First Edition 1999 Red Book


Part II: FIDIC based Contracts



TAISEI CORPORATIONCONTRACT MANAGEMENTPart II: FIDIC BASED CONTRACTSBackground & History

FIDIC Background & History:

FIDIC – acronym for “Federation Internationale des Ingenieurs-Conseils” (International federation of Consulting Engineers).

founded in Ghent, Belgium in 1913 by the national associations of consulting engineers of Belgium, France and Switzerland

FIDIC has its Secretariat now in Lausanne, Switzerland

one of the first 5 committees established in 1913 was “Contract Documents Committee” having the following terms of reference:

a, To monitor Contract documents of interest to Consulting Engineers regarding:

Construction of objects or works Maintenance of installation in operation

Erection and installation of works Supply of materials

b, To inform contractors, suppliers and officials concerning contract documents recommended by FIDIC

Back to Content of Part II


TAISEI CORPORATIONCONTRACT MANAGEMENTPart II: FIDIC BASED CONTRACTSFIDIC Forms of Contracts and its Concepts

FIDIC Forms of Contracts and its Concepts:

A, Conditions of Contract for Works of Civil Engineering Construction

For Building And Engineering Works

Designed By The Employer

(Red Book)

Edition:

1. First Edition in 1957, presently fourth edition from 1987 reprinted with amendments in 1988 and 1992

Basic Feature: Design is provided by the Employer

Type of Contract: Item Rate Contract / Re-measurement Contract

Note: Fourth Edition reprinted with amendments from the year 1992 was used in our Sitina Tunel project in Slovakia




B, Conditions of Contract for Electrical and Mechanical Works including erection on site (Yellow Book)

Edition: First Edition in 1963, presently third edition from 1987

Basic Feature: Design is Contractor’s responsibility

Type of Contract: Item Rate Contract / Re-measurement Contract

Note: Third edition was used in our Sitina Tunel project in Slovakia

PROJECT CONTROL DIVISION – MIDDLE EAST BRANCH



C, Conditions of Contract for Design-Build and Turnkey (Orange Book)

Edition: First Edition in 1995 Basic Feature: Turnkey type of Contract

=> “Engineering - Procurement – Construction” is Contractor’s responsibility

Type of Contract: Lump Sum Contract

Note: in 1999 replaced by new FIDIC concept => Silver book (explained later)

Common feature of the above mentioned Forms of Contracts(i.e. RED, YELLOW and ORANGE book) is:

Contract parties: Employer Main Contractor




D, Conditions of Sub-contract for Works of Civil Engineering construction

Edition: First Edition in 1994 Basic Feature: - coming from the RED Book concept, therefore it is most suitable for Civil Engineering Subcontract Works- after adjustment, it is possible to use, even if the Main Contractor follows YELLOW book - the Main Contractor’s responsibilities covers with the Subcontractor’s responsibilities within his scope of Works

Type of Contract: depends upon the circumstances

Contract parties: Contractor Subcontractor

Note: First Edition was used in our Sitina Tunel project in Slovakia




E, Client/Consultant – model services agreement (White Book)

Edition: Third Edition from 1998

Basic Feature: General use for the purpose of pre-investment and feasibility studies, design and administration of contract and project management

Type of Contract: Lump Sum Contract (Schedule of Payments) Contract parties: − Employer Designer/Consultant− Contractor Designer/Consultant




F, Sub-Consultancy Agreement Edition: First Edition in 1992 Basic Feature: - This Form of Agreement relates to the “Client/Consultant – model services agreement (White book)”- It is Sub-contract Form for the Client/Consultant – model services agreement

Type of Contract: Lump Sum Contract (depends on the Client/Consultant Form of Contract)

Contract parties: Main Designer/Consultant Sub-Designer/Consultant




G, Joint Venture (Consortium) Agreement

Edition: First Edition in 1992 Basic Feature: - can be used irrespective of Form of Contract

Type of Contract:

Contract parties: between Main Contractors, if its Join Venture

Note: Some conditions are used in our JV Agreement




H, Tendering Procedure

Edition: First Edition in 1982, Second Edition 1994 Basic Feature: - useful for the Employer/Engineer/Consultant within the process of Tender preparation- possible to use by the Main Contractor




J, FIDIC 1999 – Four NEW Forms of Contracts

Conditions of Contract for Construction

For Building and Engineering Works

Designed By The Employer

(Red Book)

Edition: New concept following the Fourth Edition of Red book, 1999

Basic Feature: Design by Employer

Type of Contract: Item Rate Contract / Re-measurement Contract Differences compared to Fourth Edition of RED Book: - position of the Engineer – Fourth Edition – independent 1999 Edition – fair determination - different structure – Fourth Edition - has 72 Clauses 1999 edition has 20 Clauses





Conditions of Contract for Plant and Design-Build

for Electrical and Mechanical Plant, and for Building and Engineering Works

(Yellow Book)

Edition: New concept following the Third Edition of Yellow book

Basic Feature: Design by Contractor

Type of Contract: Lump Sum Contract Differences compared to Third edition of YELLOW Book: -position of the Engineer -Fourth Edition – independent 1999 Edition – fair determination - different structure - Fourth Edition - has 72 Clauses 1999 Edition has 20 Clauses





Conditions of Contract for EPC/Turnkey Projects

(Silver Book)

Edition: First Edition of Silver book

Basic Feature: Engineering, Procure, Construct is Contractor’s responsibilities

Type of Contract: Turnkey Contracts (similar to Lump Sum Contract)

Note: Successor of Orange book





First Edition of the New Green Book FIDIC 1999

Edition: First Edition

Basic Feature: Short Form of Contract Agreement

Content:- General Conditions- Rules for Adjudication - Notes for Guidance




Common feature of the mentioned Forms of Contracts(i.e. RED, YELLOW, ORANGE, Subcontract Conditions and WHITE book) is:

Each Form of Contract contain Two Main Parts:

Part I – Standard Conditions Part II – Conditions of particular application / Special conditions (in Yellow book)

Adjusting the Standard conditions considering the local conditions



Aspects to consider when selecting suitable FIDIC Form of Contract:

1) The allocation of the essential FUNCTIONS found in a construction or engineering project and in particular the design function

2) The allocation of the RISKS inherent in the projects

3) The allocation of the MANAGEMENT role

4) The method and timing of REMUNERATION for the Contractor

Whereas there are so many FIDIC Forms of Contract, developed for different conditions, the Promoter (Employer or Owner) of the project should consider following aspects while selecting appropriate form:



1) Allocation of FUNCTIONS:

The following functions are allocated to certain parties:

Promoter/Employer

Financier• Self financing• A simple lender• A lender in Build–Transfer• A lender in Build–Own- Transfer (BOT)• A lender in Build–Own-operate-transfer (BOOT)• A lender in Build–Own-operate (BOO)• A lender in Build-Rent-Transfer (BRT)• BLT in leasing rather than renting

Designer• Sketch design• Preliminary design• Final design

Engineer

Adjudicator

Contractor

Subcontractor, supplier and manufacturer



2) Allocation of RISK:

Allocation of Risk to party:

- Which party can BEST FORESEE the risk?

- Which party can BEST CONTROL the risk?

- Which party can BEST BEAR the risk?

- Which party MOST BENEFIT or SUFFER if the risk eventuates?

Details pertaining to RISK are in Presentation “RISK MANAGEMENT”.



2) Allocation of RISK:

FIDIC RISK DIAGRAM

RED BOOK – YELLOW BOOK – SILVER BOOK

•Increased Employer’ Risk

•Increased Design Control

•Greater Design Certainty

•Increased Contractor’s Risk

•Increased Project Price

•Greater Time & Cost Certainty



3) Allocation of MANAGEMENT ROLE

4) Allocation METHOD and TIMING of REMUNERATION:

(a)cost-reimbursable contracts

(b)re-measurement contracts based on unit rates and prices

(c) lump sum contracts


Allocation of Management Role & Method and Timing of Remuneration is closely linked with the RISK sharing.

From the point of RISK sharing. i.e. RISK accepted by the Promoter/Employer, there are the following categories of contracts:


TAISEI CORPORATIONCONTRACT MANAGEMENTPart II: FIDIC BASED CONTRACTSFIDIC First Edition 1999 Red Book

FIDIC First Edition 1999 Red Book:

Documents forming the Contract:Document Purpose Priority

Bid Contractor Tender offer/price proposal

3Pre Tender Correspondences including addendums

Clarification within the Tender period

Letter of Acceptance Employer send to successful bidder 2

Contract Agreement Agreement between Employer / Contractor

1

General Conditions of Contract Standard FIDIC Form of Red book 5

Special Conditions of Contract Adjustments to Local conditions 4





Documents forming the Contract:Document Purpose Priority

General Technical Specifications Standard specification for particular type of project 6

Special Technical Specifications Adjustments to Local conditions

Drawings Provided by the Employer 7

BOQ Items, Description of Items, Estimated Quantity priced by the Contractor

8Any other documents forming part of the contract

Any other document provided by the Employer along with the Tender Document such as Geological reports, Environmental report, etc.




Contractual obligations

Contractor’s obligation Engineer's obligation Employer's obligations

Note: this second category extends in legal terms beyond the Contractor’s obligations under the Contract with the employer and in time beyond the completion of that contract.

Two main categories

1, Coming from AGREEMENT between parties

(as specified in theCONTRACT CONDITION)

2, The obligations which apply under APPLICABLE

LAW of Contract






MAIN AREAS:

1. CONSTRUCTION & COMPLETION: with DUE DILIGENCE / WITHIN TIME

2. MATERIAL, PLANT & WORKMANSHIP according to CONTRACT/ INSTRUCTION

3. Provision of SECURITIES (Bank guarantees/Bonds), INDEMNITIES and INSURANCES

4. Provision of INFORMATION required for EXECUTION / COMPLETION ALERTING the Employer => IMPORTANT EVENTS / COST

INCREASE / TIME EXTENTION 5. Performance of ADMNINISTRATIVE & other FUNCTIONS






In STAGES:

Tendering Stage LETTER OF ACCEPTANCE

SUBSTANCIAL COMPLETION of

WORKS

AFTER SUBSTANCIAL

COMPLETION of WORKS

1st 2nd 3rd



Contractor’s Contractual obligations

Clause Description of event Time schedule

4.10

Inspect the Site

Inspect any information

Satisfy himself as to form and nature of the Site

Interpret the data provided by the Employer

Base tender on the data

4.11 Satisfy himself as to correctness and sufficiency of the tender and of the rates and prices

13.1 Consider the provision in Part II regarding increase or decrease of cost

Tender Submission, Analyses and Decision on Award

18.1 Agree general terms of insurance

Ten

derin

g pe

riod

Price Adjustment

Insurance

1st - Tendering Stage



Contractor’s Other obligations

Arising from Technical specifications and/or other documents:

We have to pay attention to other documents as well.

Contract Negotiations:

Always there will be a meeting between the Employer and the Contractor prior to sign the agreement.

The Contractor must carefully put few conditions such as possession of site, permission from third parties etc.

1st- Tendering Stage





Issue of Letter of Acceptance

Initiating Mobilization formalities

Finalizing commitments with Subcontractors and Suppliers

4.2 Provide security for proper Performance

Up to 28 days14.1(d) Provide breakdown for each of Lump Sum items

(The Contract Price)

8.3 Submit Construction schedule (Programme)

14.4 Schedule of Payment - Submit Cash flow

Issue of Notice to Commence

18.1 Provide evidence prior to the start of work at the Site that required Insurance have been effected

General Requirement for Insurances

2nd - LETTER OF ACCEPTANCE SUBSTANCIAL COMPLETION of WORKS

Performance Security





Commencement Date

8.1 Commence the works as soon as reasonably possible (Commencement of Works)

18.1 General Requirement for Insurances - Provide Insurance policy

4.1 Carry out Design (to the extend of Contract) Execute and complete the Works

Contractor’s General Obligations

9.1 Test on Completion – Contractor’s Obligations

10.2 Notice of Substantial Completion - Written

undertaking to Finish Outstanding Works within Defect Liability Period

14 days before Taking Over Cert. issuance

Issue of Taking Over Certificate

2nd - LETTER OF ACCEPTANCE SUBSTANCIAL COMPLETION of WORKS





Issue of Taking Over Certificate = Substantial Completion of Works

4.23 Clear away site and leave clean

14.10 Submit Statement at completion Within 84 days

End of Defect Liability Period

11.1 Completion of Outstanding Work and Remedying Defects

On or before the expiry of the Defects Notification Period

Defect Liability Certificate

14.11 Submit Draft Final Statement /

Submit Final Statement

Within 56 days

14.12 Give Written Discharge

Final Certificate

AFTER SUBSTANCIAL COMPLETION of WORKS



FIDIC 4th Edition 1987 Red Book:



Two main categories

1, The Engineer as DESIGNER2, Engineer’s role in

PRE-CONTRACT and POST-CONTRACT

PROACTIVE DUTIES REACTIVE DUTIES PASSIVE DUTIES

ENGINEER’S DUTIES AND AUTHORITIES:



FIDIC 4th Edition 1987 Red Book:



• In principle, most of the Employer’s obligations are very closely associated with the Engineer’s obligations.• All the payment as certified by the engineer shall be made by the Employer.



CLAUSES referring to COMPLETION:

Clause CLAUSE Title

1.1.3.2 Commencement date

3.3 Supplementary Drawing and Instruction

4.1 Contractor’s General Responsibilities

4.11 Sufficiency of the Accepted Contract Amount

3.3 Instructions of The Engineer

8.3 Programme to be submitted

8.3 Revised Programme

3.1(c) Contractor not relieved of duties and responsibilities

6.8 Contractor’s Superintendence



CLAUSES referring to COMPLETION :

Clause CLAUSE Title

4.8, 4.18, 4.22 & 6.7

Safety Procedures, Protection of Environment, Security of the Site and Health and Safety

18.2 Insurance of works and Contractor’s Equipment

17.1 Indemnities

18.3 Insurance against Injury to Persons and Damage to property

18.3(d) Exceptions

1.13 Compliance with Laws

6.4 Labour Laws

4.14 Avoidance of Interference

8.2 Time for completion

8.4 Extension of Time for Completion

8.7 Delay Damages



CLAUSES referring to COMPLETION:

Clause CLAUSE Title

10.2 Reduction of Liquidated damages

10.1& 10.2 Taking-Over of the Works and Sections / Taking Over of Parts of the Works

11.1 Completion of Outstanding Work and Remedying Defects

12.4 Omissions

14.9 Payment of Retention Money

14.10 Statement at Completion

11.9 Performance Certificate

19 Damage to Works by Special Risks / Force Majeure

19 Outbreak of war / Force Majeure



CLAUSES leading to EXTENTION OF TIME:

Clause CLAUSE Title

1.9 Delayed Drawings or Instructions

4.12 Unforeseeable Physical Conditions

17.4 Consequences of Employer’s Risks

4.24 Fossils

7.4 Testing - Engineer’s determination where tests are not provided for

8.9 Consequences of Suspension

2.1 Right of Access to the Site

8.4 Extension of Time for Completion

8.4 Extension of Time for Completion - Determination

19 Force Majeure - Special Risks

16.1 Contractor’s Entitlement to Suspend Work



CLAUSES referring to SECURITIES, INDEMNITIES & INSURANCE:

Clause CLAUSE Title

4.2 Performance security

17 Risk and Responsibility

18 Insurance

1.13 Compliance with Laws

17.5 Intellectual and Industrial Property Rights

4.14 Avoidance of Interference

4.15 Access Route

4.16 Transport of Goods

4.17 Contractor’s Equipment



CONTRACTOR’S ADMINISTRATION FUNCTIONS:

Clause CLAUSE Title

1.1 Definitions

1.7 Assignment

4.4 Subcontractors

1.8 Care and Supply of Documents

1.6 Contract Agreement

4.6 Co-operation

6 Staff and Labour



CONTRACTOR’S ADMINISTRATION FUNCTIONS:

Clause CLAUSE Name

4.15 Access Route (to the site and maintenance of)

14.3 Application for Interim Payment Certificates

15.2 Assignment of Benefit of Agreement to Employer incase of Termination

20.5 Amicable Settlement of disputes to be attempted

7.3 Inspections – Give full opportunity to the Employer’s Personnel / Engineer to inspect by giving notice when work is ready

8.11 Prolonged Suspension – Entitled for payment if suspension exceeds 84 days

4.15 Access Route – Satisfy as to the suitability of the route, be responsible to maintain and put up signs

4.16 Transport of Goods – Give 21 days notice to the Engineer

4.17 Contractor’s Equipment – Will take the consent of the Engineer before removal



PAYMENT related CLAUSES:

Clause CLAUSE Title

1.9 Delayed Drawings or Instructions

4.12 Unforeseeable Physical Conditions

4.24 Fossils

7.4 Testing – Engineer’s requirement for Additional Test

7.3 Inspections – Delay by the Engineer

8.9 & 8.10 Consequence of Suspension & Payment for Plant and Materials in the Event of Suspension

42.2 Right of Access to the site

11.8 Contractor to search




Clause CLAUSE Title

13 Valuations and Adjustments

14.3(f) & 20.1

Payment of Claims

5.3 Payments to Nominated Subcontractors

14 Contract Price and Payments

15.4 Payment after Termination

17.4 Consequences of Employer’s Risks (War, rebellion, roit, etc.)

15 & 19.6 Payment if Contract is Terminated

19.7 Release from Performance under the Law

16.4 Payment on Termination




Clause CLAUSE Title

16.1 Contractor’s Entitlement to Suspend the Work

13.1 Right to Vary

13.7 Adjustment for changes in Legislation

13.4, 13.7 &14.15

Currency and Rates of Exchange



INFORMATION and ALERTS required to be PROVIDED BY the CONTRACTOR during CONSTRUCTION PERIOD

1, DESIGN INFORMATION

2, PROGRAMME

3, CASH FLOW ESTIMATE

4, GEOLOGICAL AND ARCHEOLOGICAL FINDS

5, DETAILS OF LABOUR AND EQUIPMENT

6, PARTICULARS OF EXTENSION OF TIME

7, EMERGENCY WORK

8, VARIED WORKS



INFORMATION and ALERTS required to be PROVIDED BY the CONTRACTOR during CONSTRUCTION PERIOD


9, CONTEMPORAY RECORDS

10, MEASUREMENT

11, LUMP SUM ITEMS

12, PROVISIONAL SUMS

13, PAYMENT TO NOMINATED SUBCONTRACTOR

14, MONTHLY STATEMENT


Part III: Contract Administration

Chapter Name

1. General

2. Project Records

3. Project Control Division and its Members


Part III: CONTRACT ADMINISTRATION



TAISEI CORPORATIONCONTRACT MANAGEMENTPart III: CONTRACT ADMINISTRATIONGENERAL

FACTORS to be CONTROLED within CONTRACT ADMINISTRATION:

Performance Cost Time

To CONTROL above mentioned, FOLLOWING IS NECESSARY:

Well understanding of obligations to be fulfilled by the parties

Cooperation between each party

Deployment of right personnel for right job

Timely mobilization

Prompt decision making

Settlement of Payment


TAISEI CORPORATIONCONTRACT MANAGEMENTPart III: CONTRACT ADMINISTRATIONGENERAL

To be presented in

Part IV – “Claims and Counterclaims”

Contract Administration

focuses on:

Claim CheckList

VariationProcedure

ClaimAdministration

Preparation of List of Submittals

by Contractor

Project Records

Back to Content of Part III


TAISEI CORPORATIONCONTRACT MANAGEMENTPart III: CONTRACT ADMINISTRATIONPROJECT RECORDS

PROJECT RECORDS

Documentation of FACTS & FIGURES = Key Element

in preparation of CLAIMS

In prevention / defends against CLAIMS

ORAL Interpretation DO NOT SUBSTITUDE Written RECORDS

Written RECORDS IDENTIFY RESPONSIBILITIES

provide SUBSTANTIATION for DELAY & ADDITIONAL COST



PROJECT RECORDS

DOCUMENTATION RECORD is BURDENSOME TASK

FOLLOWING NEED TO BE SPECIFIED / ARRANGED:

DATA to be COLLECTED

COLLECTION INTERVALS

PERSON in charge of RECORDING / CHECKING

SYSTEM OF FORMS FILLING-UP / ITS STORAGE

PERSON in charge DO NOT SEE immediate BENEFIT

PERSON in charge BECOMES NEGLIGENT

DOCUMENT FLOWCHART is HELPFULL



CATEGORIES of PROJECT RECORDS / FILES:

LEGAL FILES:

Contract documents(Condition of Contract) Specifications,(e.g. GTS,STS etc.) Change orders Related materials

CORRESPONDENCE

Chronological files for all INTERNAL and EXTERNAL CORRESPONDENCE

SUBJECT-MATTER FILES:

Subject-matter files for each subcontract, construction phase, or other readily identifiable unit of the project

E.G. - Exchange Loss - Temp. Stock Yard - Acceleration - Time Extension - Monthly Progress Report



PROJECT RECORDS / FILES should specifically INCLUDE at least following:

1) Record for Works Progress and Schedule2) Daily Report3) Cost Record for Labour, Equipment, Materials4) Project Photographs5) Project Diary6) Tests Report7) Variation Order 8) Drawing Change Log9) Incoming and Outgoing Correspondence Log



FORMS used within PROJECT RECORD ADMINISTRATION:

1) WORK DISRUPTION REPORT (WDR)

Purpose: Reporting DISRUPTION WORK occurred, in the course of daily construction activities

Flowchart:

Site Engineer / Forman prepare

WDR

Chief Engineer / Construction

manager review WDR

Contract Engineer / Proj. Contr. Manager record WDR to WD Log incl.

details (QS,Time Impact)

Engineer receive Notice on Work Disruption

Note: If WORK DISRUPTION is due to Employer/Engineer Risk => Contractor raise CLAIM.




2) AVOID VERBAL INSTRUCTION (AVI)

Purpose: Reporting of VERBAL INSTRUCTIONS (VI) received from Engineer / Employer

Flowchart:

Site Engineer record VI to

DAILY REPORT

Chief Engineer / Construction

Manager prepare AVI

Contract Engineer / Engineer / Proj. Contr. Manager review AVI

alt. put record to VARIATION LOG

AVI from Notice to Employer/Engineer

Note:




3) REQUEST FOR INFORMATION (RFI)

Purpose: Request for Additional INFORMATION / CLARIFICATION / INSTRUCTION to be provided by Employer/Engineer

Flowchart:

Site Engineer / Chief Engineer request INFO/

CLARIFICATION

Contract Engineer prepare RFI Form & record it to RFI

Log

Notice to Employer / Engineer

Note: RFI Log is essential tracking system monitoring status of all RFI (IDENTIFICATION OF OUTSTANDING)




4) DAILY REPORT (DR)

Purpose: Recording of essential daily events of given day & shift

Flowchart:Individual Site

Engineers prepare DAILY

REPORT

Chief Engineer review DR and select IMPORTANT

INFORMATION

Construction Manager review

IMPORTANT INFO

Note: IMPORTANT INFORMATION:

Contract Engineer check CONTENT of IMPORTANT

INFO; TAKE STEPS according to CONTRACT

Notice to Employer/Engineer

WEATHERTEMPERATUREWORK EXECUTED

WORK COMMENCEMENTDISRUPTIONACCIDENT




5) DRAWING LOG (DL)

Purpose: Control system

Tracking/Comparison of SCHEDULED and ACTUAL DATES of:

• DRAWING RECEIPT• DRAWING ISSUE

Identification of MISSED SUBMITTAL DATES => early ALERT for DELAY




6a) MANPOWER DAILY REPORT (MDR)

Purpose: Recording of total MANPOWER for PROJECT COST CONTROL

Flowchart:

Forman/Site Engineer prepare

MDR

Chief Engineer check MDR

Construction Manager approve

Cost Control Engineer/Quantity Engineer for Data

Processing




6b) TIME CARD (TC)

Purpose: Recording of WORKING HOURS for calculation of PAYMENTS & WAGES

Flowchart:

Forman record WORKING

HOURS on TC

Site Engineer review TC

Section Manager approve TC

Personal Manager prepare WAGES

Note: MDR & TC both relate to LABOUR recording Administration




7) EQUIPMENT DAILY REPORT (EDR)

Purpose: Recording of DAILY OPERATING HOURS per EQUIPMENT

Flowchart:

OPERATOR / DRIVER CONTROLER records

Operating hours

EQUIPMENT CONTROL

ENGINEER review

PROJECT CONTROL MANAGER

approve

Cost Control Engineer for Data

Processing




8) MATERIAL ISSUING REPORT (MIR)

Purpose: Recording of MATERIAL CONSUPTION / NECESSITY for PROJECT COST CONTROL

Flowchart:

Store Controller prepare MIR

Purchase Manager check

MIR

Cost Control Engineer for Data

Processing




9) PROJECT PHOTOGRAPHS + PHOTOGRAPH INDEX

Purpose: Recording is helpful for:

Accurate Asses of Work Progress

Dispute Settlement

Future Claims

Good Public Relations



TAISEI CORPORATIONCONTRACT MANAGEMENTPart III: CONTRACT ADMINISTRATIONPROJECT CONTROL DIVISION - MEMBERS

PROJECT CONTROL DIVISION – ORGANIZATION STRUCTURE


Contract Engineer Quantity Surveyor Document Controller




RESPONSIBILITY to the Project Manager

HOLD overall RESPONSIBILITY of SECTION

CO-ORDINATION with Other Section Heads for Effective Functioning

TEAM DEVELOPMENT with his Experience

PERFORM as CONSULTANT in the Organisation



Contract Engineer

STUDY the Contract Documents (CC, GTS, STS etc.)

PREPARE the STATEMENT of SUBMITTALS / APPROVALS requirement from Engineer

CO-ORDINATION with Construction Division (Method statements, Quality etc.)

VARIED Works Identification => Notice to Engineer

CLAIM Identification => prepare FACTS and GROUND

STUDY INCOMING CORRESPONDENCE

PREPARE OUTGOING CORRESPONDENCE in cooperation with Project Manager



Contract Engineer

Prepare KEY DATES of CONSTRUCTION: (Commencement date, Possession of Sites, other important dates)

Prepare NEW CONTRACTS

ORGANIZATION of MEETINGS (Weekly, Monthly)

SCHEDULE CONTROLLING with the Engineer and the Subcontractors

INFORM concern DIVISIONS of any CONTRACTUAL LACKINGS

MONITOR status of other CONTRACTUAL ADMIN. ISSUES (Bank Guarantees, Retention money etc.)

Preparation of ADDENDUMS to Contract / Subcontract



STUDY: - BOQ & Description of items - Measurement/Payment part of Technical specifications

Prepare MONTHLY STATEMENT in coordination with Site Engineers

CLAIM of PROVISIONAL PAYMENT (non-approved Varied works)

PRICE INDICES collection & CLAIM of PRICE ADJUSTMENT

Subcontractor/Other parties INVOICE evaluation

QUANTITY PREPARATION (revised drawing)

RECONCILIATION TABLE (certified QUANTITY Engineer vs. Subcontractor)

Preparation of REVISED CONTRACT PRICE

Quantity Surveyor



Flow chart of Preparation of Monthly statement (Invoice)

Quantity Surveyor

Subcontractor submit SUMMARY OF WORKS23rd day of Actual month

Contractor prepare SUMMARY OF WORKS

Submissions of SITE DIARIES to Engineer26th of Actual month

Substantiation of SUMMARY OF WORKS

APROVAL BY

ENGINEER

Preparation/Submission of INVOICES Object wise

Signature of INVOICES Object wise by the

Engineer / Contractor

Preparation/Submission of CLAIM FORM, COVER

LETTER, OBJECT SUMMARIES, GENERAL

ITEMS, INVOICE for whole PROJECT

Signature of SUBMITTED documents

Finalization of INVOICE

SUBMISSION to the EMPLOYER

8pcs / 7th day of next month after actual



CORRESPONDENCE SUBMISSION to relevant parties

CIRCULATION of incoming / outgoing correspondences

DOCUMENT CONTROL RECORD Updation

MONTHLY PROGRESS REPORT preparation – to Employer / Internal

DRAWING Control

ASSISTANCE to QS within MONTHLY STATEMENT / INVOICE submission

ASSISTANCE to CONTRACT ENGINEER within REMINDERS / REPLIES to Various parties

Keeping RECORDS of QUALITY CONTROL, SITE DIARY etc.

Document Controller




Part IV: CLAIMS AND COUNTERCLAIMS


Part IV: Claims and Counterclaims

Chapter Name

1. Definition

2. Claim Administration

3. Variation Procedure


TAISEI CORPORATIONCONTRACT MANAGEMENTPart IV: CLAIMS AND COUNTERCLAIMSDEFINITION

Literal meaning of CLAIM:

“A statement that something is true that you have no definite proof”

Back to Content of Part IV


TAISEI CORPORATIONCONTRACT MANAGEMENTPart IV: CLAIMS AND COUNTERCLAIMSCLAIM ADMINISTRATION

ORIGIN of CLAIM:

ADVERSE OBSTRUCTIONSor CONDITIONS ENCOUNTERED

For example: • NON-DELIVERY or DELAY IN DELIVERY OF MATERIAL/ APPROVAL/ DRAWING•ABNORMAL RAINFALL• etc.

RISKMAIN PURPOSE OF

CONTRACT : DISTRIBUTE RISK AMONG PARTIES

EMPLOYER vs.CONTRACTOR

=

Raise of CLAIMby CONTRACTOR or

EMPLOYER

• Additional/ Reduced PAYMENT • TIME Extension



SOURCE of CLAIM:

No. Source Name Remark

1) Authorities, Instructions, Approvals of the Engineer including Engineer's Representative

2) Discrepancy or description of contract documents

3) Underground and physical conditions Variation of Geology

4) Time for completion, construction method and temporary work plan

5) Setting-out, exploratory excavation and boreholes

6) Possession of site Delay, Third party rights

7) Occurrence of Employer's risks or force major

War, Rebelien. Missile

8) Arising of damage and insurance



SOURCE of CLAIM:


9) Damage to third party (crack, noise, traffic, fishery etc)

Damage to adjacent houses, buildings etc.

10) Test and inspection (attendance on inspection, excess inspection, results, timing, contents)

11) Labour, working hours, night and rest day work, foreign labour, local preference)

Extention of working hours to accelerate the progress

12) Supply of samples More samples than required

13) Increase or decrease of quantities in BQ

14) Variations, additional works, scope change

Different character of the Works

15) Completion and taking-over (list of outstanding works, date of certificate)

Issue of Taking Over Certificate



SOURCE of CLAIM:


16) Statement and payment

17) Suspension Disruption of Works due to Employer fault

18) Employer supplied materials (electricity and water)

Interruption in delivery/supply

19) Fluctuation of materials and labour

20) Works done by other contractors

21) Changes or enactment of legislation Change of VAT, tax, levy

22) Design

23) Licenses and permission

24) Defects liability Delay in completion

25) Currencies and rate of exchange Exchange loss/gain



CLAIM PROCEDURE:Occurrence of

Adverse Condition

Forecast of Additional Cost and/or Delay in progress resulted from Condition

Recognition of Entitlement with Contract Documents

Recognition of Extend of Claim

Preparation of Claim Documents Facts, Record,

Ground Quantum

Notice of Occurrence to Engineer/Employer

Keep and maintain records

Notice to Claim

Submission of Claim / Documents

Claim NegotiationPreparation/ substantiation of CLAIM

Procedures according to CONTRACT



TAISEI CORPORATIONCONTRACT MANAGEMENTPart IV: CLAIMS AND COUNTERCLAIMSVARIATION PROCEDURE

IT REPRESENTS:

Increase or decrease of the Work quantities

Deletion of a part of the Works

Changes in the specification, levels, dimensions

To PROPERLY COMPLETE the WORKS

The ENGINEER has RIGHT to make CHANGES of:

FORM QUALITY QUANTITY

- VARIATION are ONLY WORKS necessary for the Purpose of the Works

LIMITATION:



VARIATION shall be made IN WRITING

ISSUE of VARIATION:

IF made VERBALLY => CONTRACTOR shall confirm VERBAL VARIATION through AVI Form (AVOID VERBAL INSTRUCTION – explained before)

Under FIDIC: Variation shall be made in form of:

“INSTRUCTION BY ENGINEER”

Additional Cost / Expenses shall be VALUED Using:

A) RATES/ UNIT PRICES set in CONTRACT

B) PRO-RATA RATES from CONTRACT

RATES

C) NEW RATES



ISSUE of VARIATION:

Under FIDIC: Contractor execute Engineer’s Instruction

WITHOUT VARIATION ORDER

CONTRACTOR’s CLAIM on:

A) ADDITIONAL COST B) TIME EXTENSION

Contractor’s INTENTION: to contend the application of HIGHER RATES since in the CONTRACT RATES is included the DISCOUNT made during negotiation

ENGINEER’s INTENTION:

NOT to ADMIT VARIATIONS and ARGUES it is WITHIN the ORIGINAL SCOPE of the works.



CLAIMS by the EMPLOYER:

Cl. CLAUSE Name Remark

10.3 Performance Security

16.2 Engineers at Liberty to Object

22.1 Damages to persons and property due to Contractor’s fault

29.1 Interference with Traffic and Adjoining properties

30.1 Avoidance of Damage of Roads

30.3 Transport of Materials or Plant

39.2 Default of Contractor in Compliance

47.1 Liquidity Damages for Delay

49.4 Contractor’s Failure to Carryout Instructions

63.1 Default of Contractor




CONCLUSION OF PRESENTATION

THANK YOU VERY MUCH

FOR YOUR KIND ATTENTATION AND PATIENCE

WITHIN THE PRESENTATION OF:

CONTRACT MANAGEMENT

NEXT PRESENTATIONS:

RISK MANAGEMENT

LEGAL MANAGEMENT

contract management- fidic 1999

Documents

proper contract management

contract documents

contract administration

merit of contract management2

project execution

time of execution

time point of view

process of managing