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

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

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.)

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.