Internal Controls Agenda: Basics of Internal Controls – what are they ? COSO framework
Internal Controls at Construction Site
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Internal Controls at Construction Site
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Internal Controls at Construction Site
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1. 1. Internal Controls at the Construction Site 7th Jan, 2012, Hotel Inder Residency, Ellisbridge, AhmedabadFrom To Topic10.00 am 10.25 am Registration and Breakfast10.25 am 10.30 am MOC Overview and Relevance of Internal Controls at the Construction Site and Role of a Project Manager Statutory Compliances required at the10.30 am 12.00 am Construction Site under Labour Laws / VAT Laws / Other local requirements Control Points for Various Equipments like Transit Miller / Batching Plant / Concrete Pump / Crane / Excavator Understanding of Material & Labour Procurement Related12.15 pm 1.30 pm Controls required at the Construction Site01.30 pm 02.00 am Lunch HR Related Controls - Labour Colony / Mess / Attendance / Vehicle Management Stores Related Controls - Material Issue / Receipt /02.00 pm 03.30 pm Reconciliation Methods / Physical Verification Plan03.30 pm 03.45 pm Tea Break Basics of MIS Preparation for various Departments - Engineering / Stores / Accounts / HR / Safety Role of Site Accounts and Co-ordination with Head Office03.45 pm 05.15 pm [email protected] www.consultconstruction.com2. 2.Overview and Relevance of Internal Controls at the Construction Site and Role of a Project ManagerTendering Budgeting Site Mobilisation Role of a Project Manager Role of a Billing Engineer Material Reconciliation Project Completion Release of Retention Money [email protected] www.consultconstruction.com3. 3.[Tendering][email protected]. 4.Lets see how to approach the jobOf :- Study of Tender Terms Planning Budgets, Funds, Project Timeline through PERT, CPM Lining up various functions Engineering Stores HR Accounts Safety and Quality [email protected] www.consultconstruction.com5. 5.Understanding the conditions of the tenderS. Details sought for CatchN1 Work order Value? Qty Variation not more than 25-30%. Incentive / Penalty (0.5-5%)Clause.1a Physical visit of the work locations Material Rates / Terrain for Equipments / Labour colony area / Distance from city.2 FIM - RMC / Cement / Steel? Wastage Norms, Debit Rates, Location of Client Stores (From Loading / Unloading perspective)3 Work completion period Subject to drawings, front, resources4 Facilities from the Client - Labour colony, Land, Power & Free or Chargeable. Single / Multiple point Water supply. at site / At Labour Colony Mobilisation Advance and Time Limit % given and recovery rate5 Adhoc Payment against uncertified bills (75%) and Strict committment from client status of remaining bill.6 Check whether any prescribed format for client bill? Compliance with local laws7 Whether the job is new or left over one? Investigation required if its a left over job Impact of Margins8 Safety / Quality Norms [email protected] on Time and Money Impact Formatting system of FQP www.consultconstruction.com6. 6.Cont...S.N Details sought for Catch9 What are the requirements with each RA bill? Third Party Physical Certification Reconciliation Statement of FIM10 What are the rates of principal items (like Higher Margin in items to be executed Excavation, RMC supply, Shuttering etc.) first Apart from FIM, what are other items are kept in client scope (e.g. False Ceiling, Roofing, Aluminium Doors and Windows)11 What deductions shall be made by client from Only those agreed as per WO RA bill12 Service tax / VAT / WCT extra or inclusive? Exemptions Paper Work13 Whether running plant expansion or If in running plant Scarce area / construction of new plant building? Pollution Impact on Labour.15 Internal Logistics Location - Porta Cabin / Client office / Labour Colony / Batching Plant / Store16 Bank Guarantee Amt / Performance / Time Validity17 Always cry in front of the client, dont give any inputs about high margin items18 Statutory Compliance Insurance / PF / CAR - Whos scope?So proper Site Investigation Reports needs to be prepared at Tender Stage [email protected] www.consultconstruction.com7. 7.You have received a tender from theClient / consultant M/s XYZ for makinga 500 MW Thermal Power Plant in Gujarat. [email protected] www.consultconstruction.com8. 8.[Budgeting][email protected]. 9. Lets now come back to Planning [email protected] www.consultconstruction.com10. [email protected]. 11. Cost Oriented Planning Convincing the EIC to prepare the Budgets is the biggest task. Because the forces are so dynamic, actual scenario is expected to be different from the work orders, hence he is not in a position to do so. Most of the times he would argue that because of delay in submission of drawings by the client, planning is not very easy. But to meet the Project Deadline / it is in the best interests of the client to break the work order quantities into monthly quantities. Further an overall cap is required to be kept on the total quantities to be consumed for the project. Monthly requirements can then be prepared on the basis of monthly budgets. [email protected] www.consultconstruction.com12. 12.Congrats! You have got a work order from M/s XYZ Cement & Steel in the state of shall be FIM Gujarat. You have tomobilise 500 Value of thelabourers in job is20 Days from Rs.100cr today. Time deadline is 15 Months [email protected] www.consultconstruction.com13. 13. Manual for Compliance Verification Whenever a new site is about to begin:- [email protected] www.consultconstruction.com14. 14.Budgeting Lets see a sample budget [email protected] www.consultconstruction.com15. 15.Different types of contracts Item rate Lumpsum contract Cost-plus contract Turnkey contract engineering, inspections, erection, electrical. [email protected] www.consultconstruction.com16. 16.[Mobilisation and Role of Engg Dept] [email protected] www.consultconstruction.com17. 17.Mobilisation Checklist Statutory registration numbers / Good Local consultants Resource Mobilisation Equipments JCB & Loader, Batching plant capacity, Miller, Crane, etc. Vehicles Staff Bus, Sumo, Utility, Trailer, Tractor & Dumper, Bike etc. IT Computers/Printer/Scanner/Copier/Internet/Telecom Network Functional Heads PM / Store / HR / Accounts Office Stationery Reports / Registers / Blank Slips From client Power / FIM / Drawings / Work Front Staff Accomodation / Mess / Guest House Onsite office set up Lining up the labour Logistics Movement to site from various locations Local Survey Materials and Services [email protected] www.consultconstruction.com18. 18.Labour mobilisation Issues Special Points to be kept in mind for labour mobilisation Areas where labour is available Initial cost of mobilisation Stay Arrangements Facilities offered by competitors Watch for the sudden movement of labour [email protected] www.consultconstruction.com19. 19. The site is now mobilised and you have to commence the work. [email protected] www.consultconstruction.com20. 20.Role of Project Manager Work Planning Daily / Weekly / Monthly: When we plan for work we need to keep in mind client priority, availability of resources, availability of drawing & front, weather, Funds etc. Pre planning for FIM / Own Material: Pre planning (system and procedure) is required for FIM and Own material so as to make it available in time. Complete responsibility to ensure compliance of the functions by all the Dept.: Engineering, HR & Admin, Stores, Accounts Sub Contractor Work Order: Sub Contractor work order should be prepared on time with their acceptance. Timely submission of bills with due verification from QSD at HO, if any . If delay reasons need to be submitted to HO. Subcontractor bills are prepared in due time and are paid after pre-audit at HO. [email protected] www.consultconstruction.com21. 21.Role of Project Manager cont Understanding of Site Performance both in terms of actual execution and profitability and submitting regular MIS to head office. Ensuring proper back up in case if any employee leaves the organization. Weekly meetings with the Core team and ensuring due preparation of minutes for mailing the same to Head office. Checking all the records fortnightly viz. stores inflow, outflow, vehicle logbooks, and HR records. To focus on all areas where chances of cost overrun exist by ensuring regular monitoring. Maintaining employee morale under all situations. [email protected] www.consultconstruction.com22. 22.Reconciliation FIM & Principal Material Standard Consumption norms to be defined for every item in the WO. For e.g. For 1 CUM of M20 - concrete production Cement 140 Kg, Sand 875 Kgs, Agg 1100 Kgs Physical verification of Steel, Sand and Aggregate on the same day on which reco is prepared. Material scattered at various locations Consumption for unbilled extra items to be excluded. Stock records to be updated regularly. Shuttering Repetitions. If material consumption levels are found in excess of standards appropriate action needs to be taken for further control and identification of sub-contractor responsible for the same to enforce timely recovery. [email protected] www.consultconstruction.com23. 23.Materials Usage Standard Theoretical Qty * (1 + Normal Wastage Norms) Qty is derived from design and drawings Normal Wastage Norms also change from Project to Project depending on nature of work, method of application However Wastage from following is not a normal wastage Using Non-Standard Material Excess Purchase Wastage in Transportation Improper Storage [email protected] www.consultconstruction.com24. 24.Billing EngineerA. Client & Sub Contractor billing and Certification: Same Billing period for both client & sub contractor Match the Quantities Facilitate preparation of MIS Identification of Extra Items DPR should be generated. RA bill preparation on Time as any delay Affects Fund management MIS [email protected] www.consultconstruction.com25. 25.Sub Contractor Work Order:Sub Contractor work orders should be prepared: - Item code and language should as per client work order - Project Manager and Project commercial head / Project Director approval signs or mail required.For example:Item As per Item description UOM RateCode1234 Client Providing reinforcement including cutting, MT 4500 bending, binding, fixing in position including the cost of channels, bars (Binding Wire is in your scope)FIM or Raw Material shall be provided to contractor for work by Company:1234-A Contractor Reinforcement Cutting MT 7001234-B Contractor Reinforcement Bending MT 8001234-C Contractor Reinforcement Fixing MT 1200 Contractor Total Rate of item code-1234 is ----> MT 2700 [email protected] www.consultconstruction.com26. 26. Engineering MIS [email protected] www.consultconstruction.com27. 27.[Project Completion] [email protected] www.consultconstruction.com28. 28.Project Completion Checklist for Project Completion Final bill preparation and certification FIM and Raw Material Reconciliation with bill and balance qty. Fulfillment of client work completion procedure Receivable & Liability status & Clearance Statutory compliances Demobilization Delayed in project completion Work completion certificate [email protected] www.consultconstruction.com29. 29.Project Completion cont.Final bill preparation and certification: Cumulative Executed Quantity. All pending extra item claims should be included, if pending. Necessary follow up for W.O amendment if Actual Qty > WO Qty. Release of Qty on Hold for want of various reasons. Fight for the incentive clause. If any company asset is given on rental / hire basis to other party as per instruction from client, the same should be claimed in final bill . If resources like equipment / manpower have remained ideal due to non availability of front, it should be claimed in the final bill. NOC shall have to be obtained from various departments of the client [email protected] www.consultconstruction.com30. 30.Project Completion cont.FIM and Raw Material Reconciliation with bill and balance qty.:Formula: Total Material Inward Less: Material Returned / Transferred Less: Standard Consumption = Balance Quantity at Site / Store In case this quantity is not available at site / store, there are following possibilities: Excess consumption as compared to standard Theft / Pilferage during the project In case of excess consumption, some portion can be recovered from measurement contractor if not recovered till date. Proper justifications are required from project manager and appropriate action should be taken in case of abnormal difference between actual balance and standard balance Balance FIM material started to returning and take its documents with receiving sign and stamp from client. [email protected] www.consultconstruction.com31. 31.Project Completion cont. Fulfillment of client work completion procedure: In case of project completion client have checklist for same so you have to ask same from client and compile each point. Receivable & Liability Status & Clearance: Get status of project liability with break up of nature of creditor and special remark for local creditors. Follow up for payment receivable from client after bill certification Clear local liabilities to avoid any demobilization harassment from them. Statutory compliance: Follow up and get pending WCT & TDS receivable certificates from client. Give all necessary details for VAT return filing to local sales tax consultant and other details, if any required for audit. Get any pending forms like C & F from the department, also reconcile with the forms issued till date. Clear o/s local pending liabilities like Road tax, Entry Tax, Employee Professional Tax etc. [email protected] www.consultconstruction.com32. 32.Reasons for Delay in preparation of Final RA BillS. N. Points Corrective Action1 Non updation of FIM data with stores. Physical verification of FIM with stores records2 Reconciliation of FIM Required with each RA Bill3 Work order Amendment Little foresightedness Strong Followup4 Change in Project Manager / Billing Engg. Documentation-JMR/BBS/Stores Good Back up at HO Handing over Checklist5 Proper compilation of Hard and soft copies of all the Data Control and Regular Audit Running Bills6 Insistence to satisfy requirements of Labour Inspector Clarity in Work Order Terms If you are under EPC7 Quality compliance after defect liability You should argue that it is client responsibility8 Idling Claims depending on locations like Orissa / Record / Emails to client on regular basis Kerela - Local problems9 Direct Payments by the client Documentary Evidence [email protected] www.consultconstruction.com33. 33.Project Completion cont. Work completion certificate: Dont forget to collect the work completion certificate from the client Demobilization: Dehire all types of equipment and machinery. Make proper plan for shifting of own material to other sites / Central Stores. Proper plan to shift staff. Dehire idle camp / mess and do not forget to recover the rent deposit or set off deposit against rent. Check, get and release Bank Guarantee from client after defect liability period is over Planning - Lalu [email protected] www.consultconstruction.com34. 34.Release of Retention Money Checklist compliance Certification of Final bill Completion of work upto Defect liability period No local liability Site and area clearance Return of all FIM Premature Release Against Bank Gaurantee Till Defect Liability [email protected] www.consultconstruction.com35. 35.Commercial Procurementi) Goods and ii) Services. [email protected] www.consultconstruction.com36. 36.Normally in a manufacturing set up we divide the material as :-a. Repetitive Items Raw Materials Storesb. Non Repetitive Items Capital Goods Major Repairs Primary purpose of classification is to Control:- - Quality - Cost - Timely Supply But how do we classify in the construction sector ? [email protected] www.consultconstruction.com37. 37.The most comonly used classification is ABC Analysis.But prerequisite is that the project should have a standardized bill of materialslisting the physical quantities, unit rate and total cost for each item.1. Identify the material required for the Project2. Determine Usage Value by multiplying the Qty required and its Unit rate.3. Calculate the percentage usage value with respect to the total material cost for the project.4. Arrange the Items in descending order of usage value5. Give Red Colour till 70% and thereafter Green Colour till 90%.6. Mark A class for Red Coloured Items / B Class for Green Colour and C Class for the balance.Lets see a small excel sheet on this. [email protected] www.consultconstruction.com38. 38.Use of ABC to Develop Policy GuidelinesPolicy A B CConsiderationDegree of Control Strict Moderate LooseForecast Accuracy Accurate Approximate RoughAuthority of Senior Level Middle Level At SiteOrderingPurchasesSuppliers to be Maximum 3 to 5 Reliable 2 to 3 Localcontacted suppliersSafety Stock Low Moderate AdequateOrder Frequency When Required EOQ BulkFollow up Maximum Moderate When NeccesaryMonitoring Weekly Monthly May not beMaterial requiredMovementMIS Reports Weekly Monthly Random [email protected] www.consultconstruction.com39. 39.Inventory Planning The construction material Inventory Plan aims at evolving materials stock-holding levels to meet project execution plan, with minimum investment on inventory. In typical project from Inventory point of view , we may classify the materials as follows:- [email protected] www.consultconstruction.com40. 40. Take the case of stocking of cement at the site :- Site Requirement 500 Bags / Month for 12 Months Order Cost Rs. 500 per order Carrying Cost 10% of unit rate Transport Capacity 100 Bags Lead Time 5 Days Safety Stock 100 Bags Material Life 2 Months Unit Rate - Rs. 250 per bag [email protected] www.consultconstruction.com41. 41. EOQ 1 / Unit Rate * {Square Root of (2*Order Cost*Unit Rate*Site Requirement/Inventory Carrying Cost)} 1/250 * {Square root of (2*500*250*6000/0.1)} = 500 Bags [email protected] www.consultconstruction.com42. 42. Reorder Level = Minimum Stock + (Lead Time * Daily Usage) 100 + (5 * 20) 200 Bags [email protected] www.consultconstruction.com43. 43.Commercial Procurementi) Goods cont Goods: Define a Purchase Policy Purchases to be sourced by Head office. Purchases to be sourced locally with approval from Head office. Purchases to be sourced locally with the approval from Project Manager. Material required for Project: Project Manager to calculate total project material requirement through Bill of Quantity (BOQ). This would be categorized as FIM , Raw / Principle Material, Consumable / Hardware / Tools Material, Capital goods - Plant / Machinery / Equipment Monthly Requirement [email protected] www.consultconstruction.com44. 44.Commercial Procurementi) Goods cont Placement of Order (PO): - Purchase order being the last document of procurement process, so it is necessary to take care before placing the order. Certain details which need to be mentioned Serially numbered Time & Place of Delivery Material Quality Description and specifications UOM Manufacturing date should be latest and not more than two months in case of certain items like Conplast / Admixture (To get maximum time of its utilization) [email protected] www.consultconstruction.com45. 45.Commercial Procurementi) Goods cont Materials Indents: Authorized person should be allowed to raise an indent. The status about present level of stock should also be given. Market Survey / Enquiry / Quotation: Relevant journals, yellow pages, market directories etc. Company can ask quotation / price list with detailed terms and conditions with its validity from various vendors. Purchase department can take right decision after comparison and analysis of rate, quality, terms & conditions with price escalation terms and service condition [email protected] www.consultconstruction.com46. 46.Stores Related Controls - Material Issue /Receipt / Reconciliation Methods / Physical Verification Plan At a Construction Site [email protected] www.consultconstruction.com47. 47.Store Team with Experience Store manpower depends on size of project, volume of material and stock movement and logistics. For a small site following if the ideal team Store Incharge 1 = Master Degree / Specialization of store course and 5 years work Experience Store Assistant 2 = B. Com / 12th passed and 2years work Experience (Material Chaser) Data Entry 1 = Bachelor / Certified Computer Course degree and 2 years work Experience Helpers 5 = Material loading & Un loading, Cleaning & maintenance Computer literate with basic knowledge of identification of item, UOM & inward / outward procedures [email protected] www.consultconstruction.com48. 48.Well Defined work Area Store personnel at Site should not be used for other works like Sourcing of Vendor Market survey Creditor payment Any other site functions like HR / Admin activity / Cash Mgmt / Taking measurements [email protected] www.consultconstruction.com49. 49.Store Cycle [email protected] www.consultconstruction.com50. 50.Stores Premises Stores Premises GI Sheets / PCC Structure properly covered Door and Window for Lights & Ventilation House keeping (cleanliness) Fire extinguisher Rack for stacking of material Weight machine (Capacity least 100kg) Power connection Computer system with Printer & UPS Security guards at various points of store locations across the site [email protected] www.consultconstruction.com51. 51.Setup of Stores It is suitable for proper control and supervision that stores should be near to Batching plant, Steel Yard, Contractor office Client store for best logistics Store Location should have adequate space to facilitate material storage and physical verification. Also open space near stores is required to park Equipments and Vehicles (JCB, TM, Tractor, etc.) [email protected] www.consultconstruction.com52. 52.Stacking & Labeling Stacking of Material: - - Material not to be kept directly on ground (1ft above surface) - Rain - Liquid Items should be tightly covered in order to avoid wastage - Cement / Wooden Items need to be covered by Tarpoline for safety against rains - Arrangement on the basis of frequency of usage and in order of priority - Single item to be put at single place instead of multiple locations - Easily countable (Proper policy for Bulk Items) Safety to be ensured:- - Heavy material on surface / lower height & light weighted material in rack Label should be affixed on rack on each items with Material code (Additionally item description would be preferable) [email protected] www.consultconstruction.com53. 53.Inventory Level & Local Procurement Inventory minimum and maximum level should be defined as per monthly Budget quantity, mainly for A Class Items. Store not to procure the material under normal cases . All local procurement department after approval from HO and as per defined policy. [email protected] www.consultconstruction.com54. 54.Relationship with supplier Mgmt to ensure and check from time to time the relationship of store personnel with supplier If Frequent visits to supplier premises Material Inwards to be checked by Site Engineer on Surprise basis Material Receipt in day time Quantity should not be left blank in supplier challan [email protected] www.consultconstruction.com55. 55.Security Agency / Guard Stores should be backed by security personnel Deployment of Guards as per requirement with proper uniform, stick, whistle & torch at store in two shifts. Duty register / Card duly signed by store Incharge Incident register (In case of theft) Surprised visit should be carried out by HR incharge, specially during night Surprised visit report required with monthly bill of external agency. [email protected] www.consultconstruction.com56. 56.Material Inward I) FIM Material Inward A) Steel : Challan should have our indent number / date / quantity with weight slip. Weight should be carried out at the time of material unloading. Qty should always be mentioned as per dia and as per no.s and it should be kept dia wise in steel yard. Dia wise steel record and no.s measurement will also help in cross verification of weight as per defined ISI standard Dia wise record will facilitate FIM reco Client should inform about the dispatch of FIM in advance [email protected] www.consultconstruction.com57. 57.Material Inward Continue.. B) Cement : (FIM Material) Inward should be on weight and challan also have quantity in numbers of bag. Weight should be carried out at the time of unloading (Powder form). This net weight quantity should be mentioned as received with mention of damaged bags in challan and the same should be conveyed to client / supplier store. Also in case of rain/fog, if material is received without proper cover, the fact needs to be mentioned on the challan Store should verify no. of cement bags and ensure proper stacking at time of unloading itself. Control on Empty bags is required [email protected] www.consultconstruction.com58. 58.Material Inward Continue.. C) RMC (Ready Mix Concrete): (FIM Material) Client may give RMC instead of cement Physical received and challan / slip quantity should be the same Any difference needs to be communicated to the client on a regular basis. This is the case when client has outsourced RMC production. Further monthly reconciliation should be done to resolve the dispute, if any. Special Precautions required if multiple agencies are working at the client location. [email protected] www.consultconstruction.com59. 59.Material Inward Continue.. II) Procured Material Inward: Sand & Aggregate / Boulder & Ruble: Sand & Aggregate preferably to be purchased on CFT basis. Also advisable in rainy season. CFT basis material should be measured every time by three point of vehicle and considered average area and this quantity mentioned as received in challan Boulder / Rubble on MT basis due to voids These items should be delivered by supplier with proper intimation Materials would be delivered during day time Location of Weigh Bridge In rainy season stock would be store of Sand & Aggregate for any short fall and avoid to pay more cost Royalty slips [email protected] www.consultconstruction.com60. 60.Material Inward Continue.. II) Procured Material Inward: Binding Wire should always be weighed at the time of inward and its thickness should be matched as per order. No. of Bundles should also be mentioned in the challan. Conplast / Admixture - Inwards with manufacturing & expiry date and number of drum and the same should be visible on each drum Wooden material: Plywood = This should be as per specification given in PO like thickness, weight per sheet, regular or water proof, size, qty. in numbers and sq.ft. Batten = Batten size should be as per specification of PO like thickness & length, Abnormal damage & short length pieces should not be allowed and the qty should be mentioned in CFT in challan [email protected] www.consultconstruction.com61. 61.Material Inward Continue.. III) Returnable Material Entry: If any material, equipment or items are to be sent out, client procedure and documents should be followed with all records to avoid any delay in project completion. Material entry gate pass Inward stamp with date and time and sign of authorized Material description with quantity etc.. Any improper inward could prove costly for the company in future. [email protected] www.consultconstruction.com62. 62.Material Inward Continue..IV) Loan Transaction: This happens, where more than one contractor work in the same client premises. This type of transactions should be done by site Project Manager in emergency case only and with approval from his higher authority. This is returnable basis so the same should not be outstanding for more than specified days and should not be a routine practise. Quantitative document should be generated and kept in record [email protected] www.consultconstruction.com63. 63.Material Inward Continue.. V) Basic documents at the time of Material Inward : Documents - Challan / Packing list / Inter-site Transfer Memo / Excise Gate pass / LR / Weight slip / Royalty Challan / Test certificates / PO copy or PO references / Tax Invoice / Statutory forms (If any). Authorized sign required if overwriting available. Mention of Short quantity & unmatched specification Material inward stamp & Entry in material inward register / system & Unique inward number on documents No material shall be dumped without pre intimation to store and presence of store person. Rejection Policy [email protected] www.consultconstruction.com64. 64.Material Outward Codification of materials Divide the materials into Capital Goods / Construction Materials / Consumables and Tools. Codes as per class of material. Material Issue Slip Duplicate Authorised from Site Engg. Basis of Computer Entry Watch on Missing serial numbers Steel, Sand, Agg., etc consumption entry should atleast be passed as per RA Bills certified quantity. In case of emergency /break down of batching plant if RMC procured from other sources, then FIM Cement can be issued to supplier and rate should be excluding cement. Returnable register to be kept separately. Material required in same form from receiver Computer System to have Alternate UOM provision E.g. Wooden Items, Sand, Aggregate. Free And Chargeable Materials List with stores. [email protected] www.consultconstruction.com65. 65.Non Moving material Store should not allow those material which are not requiredor excess quantity compare to required at site Disadvantage of non movement items Staff engagment Cost of logistics & Inventory carrying cost Space usage of store Problem to Handling / Take care [email protected] www.consultconstruction.com66. 66.Site visit by Store personal Store personal should visit site on every day for following purposes: Idle material Damage & Scattered material Ensure that no material is lying in mud or in excavated holes, before back filing (Especially scaffolding material like coupler, pipes & shuttering plate etc..)Lemon [email protected] www.consultconstruction.com67. 67.Physical Stock Verification Compliance to A Class routine audit verification every queries. quarter and System report other categories should not contain every six months. any negative items. System report System Print should be clear like A-B-C Bills received but after Updated Identification goods not received Data entry. Ensure that material Physical count movement is challenges restricted before taking Scaffolding / physical stock. Shuttering Proper Stacking Rough Idea and labelling Steel, Sand, Agg Expert estimate Multiple locations [email protected] www.consultconstruction.com68. 68.Control over Fuel ConsumptionFollowing points need to be taken care for Equipments - JCB, Miller, andCrane / Vehicles:- Store should have resources like Fuel pipe, Filter & pump to fill fuel from one to another can, Two standard size Barrels of 200Ltrs capacity, Fuel small Can of 1ltr, 5Lts, 10Ltrs Scale to measure balance stock of fuel (Rod) Lock and key - Fuel tank All vehicle and equipment Meters should be in working condition. MRN containing authorisation from Project Manager & HR Incharge for fuel issue with vehicle & equipment number. Physical meter reading should be verified and mentioned in log sheet at time of fuel issue. If vehicle permanently work at single location, name of location is compulsory. Vehicle Report - MIS. Tracking fuel given on chargeable / Free issue basis. [email protected] www.consultconstruction.com69. 69.BTN Whether such system exists at the client place [email protected] www.consultconstruction.com70. 70.Other Areas - Scrap Yard Items in Scrap yard should be properly segregated as per nature and length to enable re- use. Frequent Disposal of scrap Items required. Distribution of Scrap wood amongst labour [email protected] www.consultconstruction.com71. 71.MIS MIS report, its format and period should be defined.Following reports required fom store: Material Movement for the period Intersite Material Movement Fuel Transaction report with party wise Safety material movement Chargeable Material / Debit Note RMC Production & Principle items consumption Physical Stock Non Moving Material [email protected] www.consultconstruction.com72. 72.Human Resource [email protected] www.consultconstruction.com73. 73.HR Related Controls - Labour Colony / Mess / Attendance / Vehicle Management [email protected] www.consultconstruction.com74. 74. Sub Contractor Management Sub-contractor Data bank on the basis of skill set and past performance. Incentive scheme for time bound completion [email protected] www.consultconstruction.com75. 75.Human Resource cont. Master Details of Sub Contractor: Two passport size color photograph Name with firm name Copy of PAN card without which TDS liability shall be @ 20% in place of regular rate Identity poof Address proof (Election Card, Latest light bill or Panchayat certified letter) Communication details (Like, Landline / mobile with contact person & Fax number, mail ID, Web site) Bank name, Branch address, Account type, Account number and RTGS No., cancelled cheque or declaration letter from the bank Specimen signature of authorized person in absence of the main sub contractor . [email protected] www.consultconstruction.com76. 76.Human Resource cont.Labour Over time: There should be proper system to record the duty hours in the labour card:- Contractor name and labour name In time and out time Company supervisor sign for allowing OT who shall also be responsible to reply why OT was allowed. Track of supervisor sanctioning highest OT Labour / sub contractor sign is required Daily report & Control Labour: HO must ask for manpower report and work progress report from Site on a daily basis to assess the work performance. [email protected] www.consultconstruction.com77. 77.Human Resource cont. Gate Pass (GP) / Entry Card: Company must issue Gate Pass (GP) / Entry card for control and security purpose to sub contractors and all employees and labours. The same can be cross checked with daily manpower report to catch discrepancy if any. Following details are required in the gate pass: Unique serial number and area / Period wise color if any Name of labour Sub Contractor name Type of skill (Helper, Carpenter, Mason, Fitter) Date of GP issued and validity (Validity would be three months) Blood Group Color photograph through Web cam and color printer Company may charge some nominal amount for GP Sign required of HR and sub contractor on Gate Pass HR should have details of gate passes issued in the manual register where GP receiver sign is required. HR should have GP wise status (Active, Cancel, Expired) Penalty should be charged If Gate pass is lost, expired but not renewed or not returned at time of leaving the job All Gate Passes should be destroyed which have been returned by workers / sub contractors after proper entry in manual register or system [email protected] www.consultconstruction.com78. 78.Human Resource cont. PF Records and Liability payment: If the sub-contractor is well organized, then he can pay PF and keep proper records and just deliver paid challan with its break up for your record. But where Sub contractor is unorganized, it is necessary to get sub contractor wise wages sheet to calculate PF liability and pay. Labour Colony / Water & Power supply: Labours are asset for the company and it should take care of their basic needs. This should be the responsibility of HRD to visit labour colony at fixed interval to find out if their living conditions are proper Basic aspects like PCC in flooring of room, Drinking & routine use Water, proper toilets and bath rooms, power supply, cleaning around labour colony to ensure it hygienic, monthly medical check up etc. This will result in improved performance in the labour output. [email protected] www.consultconstruction.com79. 79.Human Resource cont. Employees Salary Structure & Letter of Appointment: Salary Structure: Say Basic 40% of total salary Other Allowances 60% of total Salary, like: HRA Allowance Uniform PF Bonus Medical Allowance or Group Mediclaim policy Transportation Allowance Telephone / Conveyance Reimbursement Child Allowance Education Allowance Deductions: PF employee contribution 12% of Basic Professional Tax Employee, as per salary slab Tax Deduction at Source (TDS) as per Government rules on taxable salary Staff Welfare Fund as per Government rules If any bond amount decided, to deduct from salary on monthly basis [email protected] www.consultconstruction.com80. 80.Human Resource cont. Master Form - Employee: Branch / Site Transfer Letter: Salary Structure O/s Advances and Loans o/s Salary Dues with present days of last working days at previous site [email protected] www.consultconstruction.com81. 81.Human Resource cont. Daily Attendance - Staff: Daily attendance can be marked by manual records like - Register or Daily Sheet or Card or by Auto systems like Punch card, Thumb or Finger impression or based on any other online software, Over Time: There should be well structured Policy to regulate and monitor the over time payment. There are two options to maintain OT records a) Out time to be mentioned in Daily manual attendance sheet b) Separate Sheet to be maintained for OT HR needs to take sign from Project Manager on daily OT sheet or Daily attendance sheet. At the end of the month, OT hours shall be calculated on the basis of this record. [email protected] www.consultconstruction.com82. 82.Human Resource cont.Leave Policy: Leave policy needs to be defined Various types of leave and their number Carry forward or lapse in the year end Encashment Maximum accumulation etc. Further employee needs to fill a leave application form containing following details: Leave application vs. Daily / Monthly Attendance sheet Leave period and number of days Applicant signature required on form Approving authority depending on number of days leave applied Leave utilized mentioning clearly against which category (i.e. Paid Leave - PL, Casual Leave - CL & Sick Leave - SL) on application Status of leave balance category wise as per rules To avoid misuse of sick leave, medical certificate must be required on return from leave if the leave is more than say one or two days Absent should be marked for extension of leave beyond sanctioned HR should verify perfectly about leave balance before action on application [email protected] www.consultconstruction.com83. 83.Human Resource cont. Hired Camp Lease Agreement Distance from the Site Proper Planning to avoid Hotel Expenditure Mess - Staff: Self vs Contracted Fixed Payment to employees Policy should also be defined for other facilities of stay and in house entertainment by way of TV, reading materials, sports and club activities etc. Group Employee Health Insurance Policy: HRD needs to evaluate group medical policy v/s medical allowance. It is advisable to go for mediclaim Insurance for which policy should be well defined. Accordingly all concerned employees and officers should be covered as per policy which should be taken from General Insurance Company with full negotiation. There should be one officer in charge for claim settlement in time so as to get the benefit of the Insurance. [email protected] www.consultconstruction.com84. 84.Human Resource cont. Vehicle Report Admin Assets & Control Laptop Data Card CUG Mobile connections SIM card Mobile Instrument Camp / Guest House & Mess, Vehicles, Equipment etc. HR should have master data of details of all admin assets and this should be updated on regular basis (Monthly / Quarterly / Half yearly) like Name of asset Asset user name Location Insurance period and Service provider, if applicable Company can take undertaking from employee against asset given for use. There should be well designed policy in place about entitlement to regulate the use of such assets. [email protected] www.consultconstruction.com85. 85.Human Resource cont. HR MIS Level of Perfection [email protected] www.consultconstruction.com86. 86.Statutory Compliances required at the Construction Site Labour Law Requirements Labour License Minimum Wages PF / ESI Workmen Compensation Workers cess Minimum Wages Professional Tax VAT Provisions Documentary Requirements Difference between VAT and WCT What is Entry Tax? Check Post Related Issues CST Provisions Service Tax Provisions [email protected] www.consultconstruction.com87. 87.Labour License Two authorities to be approached Centre / State Any unit belongs to Central Govt, then license to applied to Central Government Form No. 4 to be applied for before commencement of work. It is applicable on client to client basis. After Initial Declaration, there is a provision to increase the number, but no provision to decrease. Security Deposit for Gujarat Govt is Rs. 270/- per worker and Centre is Rs. 90/- per worker. On completion of work Taken Work Compl. Cert from Client and submit to License Authority [email protected] www.consultconstruction.com88. 88.EPF Act Applicability i) Every establishment in which 20 or more persons are employed and But Across India, there is only one EPF Number. For ease of administration you may ask for a sub- code. No. of Labour on which EPF is paid should not be more than sanction as per Labour License [email protected] www.consultconstruction.com89. 89.Eligibility Any person who is employed for work of an establishment or employed through contractor in or in connection with the work of an establishment. Basic Salary more than Rs. 6,500/- not covered. [email protected] www.consultconstruction.com90. 90.ESI Act provides for certain benefits to employees in case of sickness, maternity and employment injury. It applies to all factories (including Government factories but excluding seasonal factories) employing ten or more persons and carrying on a manufacturing process with the aid of power or employing 20 or more persons and carrying on a manufacturing process without the aid of power [email protected] www.consultconstruction.com91. 91.Coverage and contribution The existing wage-limit for coverage under the Act, is Rs.15,000/- per month Currently, the employees contribution rate (w.e.f. 1.1.97) is 1.75% of the wages and that of employers is 4.75% of the wages paid/payable in respect of the employees in every wage period [email protected] www.consultconstruction.com92. 92. Construction Sites ESI does not apply But Insurance by way of WC Policy is advisable. [email protected] www.consultconstruction.com93. 93.Workmens compensation Act, 1923 The Workmens Compensation Act, aims to provide workmen and/or their dependents some relief in case of accidents arising out of and in the course of employment and causing either death or disablement of workmen. It provides for payment by certain classes of employers to their workmen compensation for injury by accident. [email protected] www.consultconstruction.com94. 94.Employers liability The employer of any establishment covered under this Act, is required to compensate an employee : Who has suffered an accident arising out of and in the course of his employment, resulting into (i) death, (ii) permanent total disablement, (iii) permanent partial disablement, or (iv) temporary disablement whether total or partial, or Who has contracted an occupational disease [email protected] www.consultconstruction.com95. 95.THE EMPLOYER SHALL NOT BE LIABLE In respect of any injury which does not result in the total or partial disablement of the workmen for a period not exceeding three days; In respect of any injury not resulting in death, caused by an accident which is directly attributable to- Place of occurrence is outside site premises and not in connection with the works Further two more issues need to be kept in mind subject to certification from the authority the workmen having been at the time thereof under the influence or drugs, or the willful disobedience of the workman to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of workmen [email protected] www.consultconstruction.com96. 96.Building and OtherConstruction Workers Welfare Cess Act,1996LEVY AND COLLECTION OF CESS. -(1) There shall be levied and collected a cess for thepurposes of the Building and Other Construction Workers(Regulation of Employment and Conditions of Service) Act,1996, at such rate not exceeding two per cent but not lessthan one per cent of the cost of construction incurred by anemployerIt is applicable to all contractors working for state or forprivate sector.Enforcement in the private sector is very poor. [email protected] www.consultconstruction.com97. 97.Minimum wages Act, 1948 Wages for Centre ( or Wages for State (Unskilled Rs. 135.40) Whichever is higher Every 6 Months, the govt declares special allowance which needs to be added Same Rate for Male and Female [email protected] www.consultconstruction.com98. 98.Professional Tax Corporation Level Subject Registration required for all the branches Whether Construction Site is a Branch? Payroll Generated from Head office For Casual Workers the provision does not apply [email protected] www.consultconstruction.com99. 99.Shop and Establishment Does not apply to construction site But it applies to establishment [email protected] www.consultconstruction.com100. 100.VAT Composition Format of Invoice / Charge of Taxation Input Tax Credit Check Post Related Issues TDS Forms from Department Inter-State Movement [email protected] www.consultconstruction.com101. 101.Types of composition For complete contract within 30 days of commencement of Work For Complete year Application within 30 days before to commencement of year For New Registered Dealer Within 90 Days from the effective date of registration No condonation of delay Matter Pending before Tribunal Non receipt is assumed as granted [email protected] www.consultconstruction.com102. 102.Format of Invoice Under Composition Retail Invoice Tax Invoice [email protected] www.consultconstruction.com103. 103.VAT Input Tax Credit ITC available on all inputs used in works contract other than composition method subject to fulfilment of conditions Broad Restrictions on ITC: CST purchases Capital goods used in works contract Some of the States Lease goods Goods purchased from Lump sum dealer Goods not connected with business Vehicles, equipments, accessories or spare parts Fuel used in motor vehicles Goods used as fuel in generation of electrical energy [email protected] www.consultconstruction.com104. 104.Entry Tax related issues under VATInward Movement1. Cement / Raw Steel / Motor Vehicle are liable to entry tax.2. Authenticated Form 403 is required.3. Invoice / delivery challan / LR to be made available at checkpost4. For normal Items, Form 403 without authentication is required.5. Scaffolding Pipes are not covered.Outward Movement1. Branch Transfers Work Order / Declaration Form / Form 402.2. Relevance of F Form Ambika Steel.3. Having registration / Work order from other state.Any checkpost related issues ? [email protected] www.consultconstruction.com105. 105.C Form / Way Bill / Entry Tax Transfer of materials from one state to another. Multi State VAT Compliance [email protected] www.consultconstruction.com106. 106.TDS Rate under GVAT Person responsible for payment exceeding Rupees 1 crore for works contract is responsible for deduction of tax at prescribed rates TDS Rate : 0.6% in case of construction contract and 2% in case of others Works Contractor is mandatorily required to obtain TDN No. from Commercial Tax Department. Application in Form 706 to get TDN No. within 30 days of agreement. TDS to be claimed in the year in which same is deducted and not in which the same is? paid. Form 702 under Gujarat VAT to be attached with Invoice for lesser deduction. [email protected] www.consultconstruction.com107. 107.Inter-State Movement of Material Movement of Raw Material Movement of Finished Goods Use in Works Contract Payment of CST / VAT [email protected] www.consultconstruction.com108. 108.Service Tax Concept of Centralised Registration Method to be opted Cenvat Credit Invoice Related Issues Service Tax vs VAT Point of Taxation Smart CA [email protected] www.consultconstruction.com109. [email protected]. 110.Control Points for Equipments Own vs Hire Transit Miller Scaffolding Pipes Batching Plant Shuttering Material Concrete Pump Walkway Jali Crane Clamps Excavator Other support structures Tractor Trolley [email protected] www.consultconstruction.com111. 111.Commercial Procurementi) ServicesEquipment / Machinery / Plant / Tools provide by Client: Condition of equipment Third party can be appointed Maintenance scope Operation of Equipment Round the clock Availability Advisable to clear the commercial aspects for supplies beyond the scope as this might result in recovery from the contractor. Transportation point for FIM & Transit risk within the site. [email protected] www.consultconstruction.com112. 112.Equipments - PurchasedAdvantages of buying - No dependence on others. Companys status & capacity as a contractor will be rated high . Equipment can be moved from place to place as per requirement. Bigger jobs can be obtained.Disadvantages of buying Working capital gets blocked. Repayment in time is big a responsibility. Resell value shall be negligible in case the same is not required Maintenance cost and expertise will be required to run the equipment smoothly. [email protected] www.consultconstruction.com113. 113.Equipment - Hired Hiring Agreement: The user pays fixed hire charges on daily or monthly basis as long as the equipment is held by him, Hire the equipment & machinery Minimum average commitment required in case of Vehicle and equipment & machinery Rate should be on hours basis excluding lunch / dinner hours to avoid OT over head.Advantages - Need not to invest the FUND Claim as expense for Income Tax purpose If service, maintenance and operational cost is in supplier scope, no any handling issue and cost and that means peace of mind In case of business close down, no headache except to return the equipmentDisadvantages - Company totally dependent on others Hired equipment does not enhance companys status In case of under utilization, it will result in big loss Company will depend for Service / repair & maintenance on supplier Without suppliers permission, equipment can not be moved to other site [email protected] www.consultconstruction.com114. 114.Buying or Hiring Buy Value * 4 Times should be the turnover. Future Planning Residential / Commercial / Industrial / Power Debt : Equity ratio should not be more than 2:1. Buy Own O&M Team, Driver [email protected] www.consultconstruction.com115. 115.Cost of owning an Equipment Depreciation Cost of Capital Equipment Operating Cost [email protected] www.consultconstruction.com116. 116.Hired Equipment Controls Equipment Chart [email protected] www.consultconstruction.com117. 117.Transit Mixture on HireEquipment control points in case of Hired:Transit Mixture 1 Make, Size / Capacity & other specification if any Example: a) Make - Schwing Setter, b) Capacity - 6 M3, 2 Age of equipment In Good working condition and less than 5years 3 Team - Qualified Operator / Driver, Crew member & Maintenance team Team: Qualified Operator / Driver - 1, Helper - 1 & Mechanic for Maintenance - 2 [email protected] www.consultconstruction.com118. 118.Transit Mixture on Hire 4 Testing / Calibration / Commission certificate - Required from third party whose Govt. approved person / agency? No, But Water Pump should be in working condition with water tank. 5 Insurance of Equipment / Chassis / Vehicle / Operational team & Third party YES 6 Guidelines / Manual for user with Equipment YES, Optional [email protected] www.consultconstruction.com119. 119.Transit Mixture on Hire 7 Self certified photocopies of RTO documents of Equipment YES 8 GPS System Recommendatory, However required if more than two millers at the site with wide area. 9 Equipment with Basic things Hours & Kms meters in working condition, Proper number Plate / identification mark, Front, Break lights in working condition with Mirrors, night radium plate / colors, First aid, Tools & tackles [email protected] www.consultconstruction.com120. 120.Transit Mixture on Hire 10 Minimum Expected Output per month Needs to be decided for each and every project - Suggestible Qty - 2000 CUM 11 Hiring approx. amount. Monthly Basis - Rs.1.25 Lacs (Excluding Fuel) 12 Minimum Working Duration in a month Flexible 260hrs in a month (Note 3) 13 Fuel & Power, Oil & Lubricants a) Its advisable to ask the supplier to quote his rate with Fuel. Oil and Lubricant should always be in supplier scope. b) If fuel is in our scope then avg consumption norms may be fixed. Fuel consumption per hour as per site experience. [email protected] www.consultconstruction.com121. 121.Transit Mixture on Hire 14 Daily Log Book / Records Supplier to maintain daily log book / records with sign of both - operator and Company authorized person. 15 Lock & key & Daily Records custody? If fuel is in the scope of company, Fuel Tank Key and Records should lie with the company. [email protected] www.consultconstruction.com122. 122.Transit Mixture on Hire 16 Minimum Output performance clause of equipment Depends on batching plant setup & destination of structure. For e.g. 18 M3 casting per hour If TM takes 20min for one trip. Then 3 trips in one hour = 6 M3 per TM x 3 trip in one hour. 17 Attendance The operating team should be available at the site during the working days. The bill shall be reduced proportionately in case of absence. (Monthly Billing Amt / 26 * Absent Days). 18 Overtime clause OT shall start after expiry of flexible hours limit in the month and shall be calculated on pro rata basis (Monthly Rate / 260 Hours). [email protected] www.consultconstruction.com123. 123.Transit Mixture on Hire 19 Incentive clause Volume based and other points like - lower break down, Safety during the work etc. 20 Equipment maintenance / Break down clause Permission for maintenance on any 4 half days in a month or as and when it is free after discussion with site PM. 21 Staff / Team Accommodation & Fooding clause Staff / team accommodation shall be provided by us But Food shall be in your scope 22 De Hiring Notice Period 7days on both sides to avoid any dispute. [email protected] www.consultconstruction.com124. 124.Transit Mixture on Hire III ) Billing & Payment: 23 Mobilization & Demobilization clause a) Mobilization = i) Within 10days from date of WO (mail or hardcopy) with all required resources. ii) One month mobilization advance to be recovered in six equal monthly installment. b) De Mob. Cost = If Contract is more than six months than in lessors scope. 24 Billing & Certification cycle [email protected] www.consultconstruction.com125. 125.Transit Mixture on Hire 24 Bill Submission = Billing on monthly basis. to site PM within 5days of previous month with sign, stamp & inward date from company. In case of failure to get inward stamp or received sign, Accounts shall not accept the same. b) Bill / Supporting = Main bill in triplicate copy with company name, address & site, WO number, Bill date, period, name & make of equipment. All statutory numbers, break up of taxes, OT with proper calculation, incentive if any. Original Log sheet (Duplicate copy must for your records). [email protected] www.consultconstruction.com126. 126.Transit Mixture on Hirec) Bill Certification = Bill shall certified within a week from the date of invoice / inward with stamp and authorized sign & name by company. 25 Payment cycle Payment shall be made within 20days from the date of bill certification 26 Debit / Recovery clause in case of break down or non performance / Any other damage Normally at time of certification or separately if issued by any other department or client for any non-compliance. 27 Local / RTO tax in scope of supplier All statutory (local / RTO etc.) liabilities in your scope, inclusive of rate. Service tax shall be paid extra. 28 TDS & any other Statutory deduction if any TDS or any other statutory deductions as applicable shall be deducted. D) Safety: 29 Clearance and data for Gate / Entry Pass Requirement of the principal client may be mentioned here. 30 Safety rules & regulation, violence & Penalty Requirement of the principal client may be mentioned here with the penal clauses, if any.IV ) Legal: 31 Clause - Child labour Strict Compliance 32 Clause - Termination of Contract In case of non compliance of any condition and delay in work performance, contract shall be terminated immediately without any cost. 33 Jurisdiction Jurisdiction is Ahmedabad only [email protected] www.consultconstruction.com127. 127.Role of Site Accounts and Co-ordination with Head OfficeChanging Defn - Democracy [email protected] www.consultconstruction.com128. 128.Model of Accounting Branch / Centralized The model most prevalent, provided you have good team of accountants with you is the HO and Branch Model. Branches maintain accounts at the construction site itself. Because if we have a smart accountant at the site that would serve as the best internal control measure. Integration of accounts and Inventory would then be possible. Complexity involved is you then need a perfect co-ordination between HO and Branches. Reconciliation between the two is required on a regular basis. As many a times HO would directly be making payment to Branchs creditors without routing the same through the branch. In case of centralised accounting the certification systems have to be perfect. You would need all the documents to be certified by the Site Incharge and respective area incharge before booking the same in accounts. [email protected] www.consultconstruction.com129. 129.Role of Site Accounts Preparation of cash vouchers and entry into the system. Maintaining Bank book with not more than one day transaction lag. Documentation of purchase bills after comparison with P.O and entry into the system. Entry of subcontractor bills Co-ordination with the engineering dept. Working out weekly cash requirements Entry of debit notes in contractor accounts: - Executory Debit notes from Stores. Debit notes from H.RFunctions: - Debit notes from Engineering Dept. Periodic entry and payment of statutory dues TDS self-assessment and monthly payment. PF Payment in co-ordination with H.R Service Tax Preparation of input credit details [email protected] www.consultconstruction.com130. 130.Role of Site Accounts cont. All vouchers need to be authenticated by the accountant. Vouchers carrying amount more than Rs.10K need to be authorized by PM. Comparison of sub-contractor bills with Work orders. Ensuring that Full and final payments are made to the contractors and employees only after getting a completely filled Work Termination Form. Making payments against bills only after getting them pre-audited. Control Ensuring that Subcontractor Master details are available before his first bill is entered in the system. Functions: - Sending backups to HO on a weekly basis. Ensuring periodic reconciliations in the following manner :- Intersite Reco on a fortnightly basis. Bank Reco on a monthly basis. Supplier Reco on a monthly basis. [email protected] www.consultconstruction.com131. 131.Role of Site Accounts cont. Preparation of Labour supply bills. Preparation of documents/letters as required. Submission of bills to the client. Sending Original Work orders / LOI / amendments to HO after keepingAdministrative copies. Ensuring original TDS certificates are sent to Head office. Functions : - Other site Co-ordination. Monthly profit centre performance reports.- 20 days Weekly Cash & Bank summaries.- 2 days Monthly liability statement. 20 days Monthly vehicle reports.- 5 days Report on TDS deduction every month. 25 days Reporting Quarterly Service Tax input credit details. 10 days Functions: - Pending sub-contractor bills on a fortnightly basis for the previous months duly authenticated by the project manager. 2 days [email protected] www.consultconstruction.com132. 132.Role of Site Accounts cont. Accounts MIS [email protected] www.consultconstruction.com133. 133.Role of Site Accounts cont. Onsite Integration Model for a Construction Site Using cloud servers, access can be given to multiple locations without buying any software / hardware. Stores Material Receipt entry can be passed from the site provided there is a proper internet connectivity. When the purchase Invoices are received the same are certified by the stores department and the printed MIN is then attached behind the invoices. Accounts then enters the rates of materials picking up the tracking number. Any deviations are settled by way of Debit / Credit Note. Materials are then issued by way of Delivery Note to either the client / sub-contractors. [email protected] www.consultconstruction.com134. 134. Payment Advice Format Site :_____________ Date :________________ B) Supplier of Capital D) Rent ( Labour Colony / Room E) Vehicle Hire / PetroleumSr.No. A) Supplier of Material Goods C) Sub-Contractors / House ) Suppliers 1 Purchase Order Purchase Order Work Order Rent Agreement Log sheet 2 Tax Invoice Tax/Retail Invoice RA Bill L.C. visiting Reports - HR Auth.-Commercial/H.R. Authorization from Authorization from 3 Authorization from Site EIC Project Director Commercial Dept. Authorization from H.R. Authorization from Site Incharge Authorization from Project Authorization from Authorization from Authorization from Commercial Authorization from Project 4 Director Commercial Dept. Project Director Dept. Director Stamp of Quality & Bill Entry in books of accounts Authorization from Commercial Installation from Site Authorization from Site Authorization from Project with Deduction (maintenance 5 Dept. Incharge Incharge Director /spare parts... ) Bill Entry in books of Debit notes receive & accounts with all entered from Stores Stamp of Quality & Qty. deduction (TDS / VAT & (Safety material) & Bill Entry in books of accounts Bill / Voucher / Supporting 6 verification from stores Other) H.R.D. (G.P.s) with Deduction (TDS ) Proper filing Bill Entry in books of accounts with all Reconciliation of Material Bill / Voucher / deduction (TDS / Bill / Voucher / Supporting Monthly Vehicle Report of 7 against Client Billing Supporting Proper filing Retention .) Proper filing payment month Bill Entry in books of accounts with all deduction (TDS/VAT & Receive partys Bill / Voucher / 8 Other) Confirmation Statement Supporting Proper filing Supplier master form Supplier master form Receive partys Confirmation Client vs. Subcontractor Authorization from Internal Authorization from Internal 9 Statement with Reco. Status of excise credit Qty. Auditor Auditor Whether Against "C" EIC Performance Report 10 Whether Against "C" Form Form for the site 13 Remarks required if On Account or Advance: - Amount Released [email protected] H. Details of Payment (chq no. etc.) www.consultconstruction.comO. use Remarks135. 135.Banking Whether centralized or Branch wise We are presently in a world where banks are all connected, so we may opt for a Centralized banking system, but then if you have a HO and the Branch Model, you need perfect controls in place before the HO releases funds. Payment Authorization Vouchers A system that can be implemented, similar to controls that we have in SAP. Further if we have to plan the funds and ensure that funds generated from a particular site are available for only that site after HO takes out its share of profit, then it is advisable to have separate accounts for the branches. [email protected] www.consultconstruction.com136. 136.Managing the Financing Needs of the business Limits with the Bank Fund Based / Non-Fund based. Non-Fund based Limits are of great importance in the construction sector, as for any Project that is about to begin, the client is willing to give Mobilisation Advances against Bank Gaurantees. Hence as a consultant you can fight hard with the bank to secure best terms in the Non-fund based limits. With a good order book you can get away by giving 25-30% collateral to some of the private banks in the market. [email protected] www.consultconstruction.com137. 137.[Internal Audit] Trust [email protected] www.consultconstruction.com138. 138.Lets have a look at an Internal Audit Report [email protected] www.consultconstruction.com
