nicmar assignment

Construction Contracts and ContractingReg. No. – 27-09-11-4192-292

ASSIGNMENT

NICMAR / CODE OFFICE

1. Name - Manish Kumar

2. Reg. No. - 27-09-11-4192-292

3. Course No. - NCP 23

4. Course Title - Construction Contracts and Contracting

5. Assignment No. - Three

of 17


ASSIGNMENT

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

Do you think the system is achieving results? Discuss.

of 17


Project Brief:

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. Recently our company had been awarded a contract of

Finishes and Wall Cladding Works for one of the most, prestigious commercial

buildings in Mumbai City. Attached herewith is a report giving briefs about

Administration and Monitoring done for the said project.

Project Details:

Project is about, Construction and development of Commercial premises for finance

companies at Bandra-Kurla Complex, Mumbai, and the new developing financial

center of Mumbai.

This project had been conceived by its owners when the finance market was at its

peak. Thus the investment involved at that particular time was enormous, since the

property market in Mumbai than was really very high. Thus the plot bought by these

owners was at real high price. But eventually somehow the clients decided to develop

the property in order to gain benefit from the investment already made.

Project involved top people from the field of design, Engineers, Consultants, and

Project Managers etc. This Building designed, consisted of 2 basements, stilt and

eight storied Superstructure. The building proposed was to be a high-tech building,

with all kind of modern facilities to be provided. But eventually, with financial crisis

being at its peak, it was not very feasible to tackle all the hi-tech, services within the

fixed budgets. But still the outlook of the building never changed, and the façade

remain as envisioned by the Architect at the start of the Project. Thus the Building

façade had to be finished with base (Podium Level.) in Granite and the top (Towers)

in Curtain Wall.

of 17


The contracts for all the above works was divided into number of agencies. The first

contract that they tendered was for “Construction of Diaphragm Wall”. Then came the

work of sub- structure, which consisted of “Construction of two Basements,” Then the

clients proceeded with the tendering for “Construction for Superstructure Work”.

Contractors involved in the work of Basements, were only finally considered for the

works of Super Structure. It was only towards the finishing of super structure work,

that Medium Size contractors like us were involved in the project. Since the structural

works for the building was done, it became necessary to invite tenders for finishing,

wall cladding and curtain wall tenders. Curtain wall falls under a special item and thus

special curtain wall contractors were invited for quoting for the above mentioned

project.

Medium sized civil contractors like ourselves were invited, to quote for finishing

works, which consisted of various items as given further in this project along with

carrying out work of dry and wet cladding of granite on the external wall surface as

per Architect’s requirement.

Given above was the brief history of the project, of which we also became a part

contractor.

Now being the project Engineer in Charge for the entire work to be carried out, it was

necessary for me to read through the entire contract document thoroughly and note

down any special clause, terms of payments and details which could become items of

conflicts later. So it was most important to read the contract thoroughly and if any

discrepancies see, to resolve prior to starting of work.

Some of the important items in the conditions of contract are as mentioned below:

of 17


Contract Conditions:

(I) Instructions to Tenderer

a) Earnest Money Deposit: Tender must be accompanied by E.M.D. in

the form of Demand draft in favor of “….” Or Bank guarantee in

approved format and shall be interest free and valid for a period as

given in Appendix TF to Tender Form from the date of submission of

tender or as extended by mutual agreement.

Items Included in Appendix TF

a) Validity of tender 90 days

b) Period of commencement from

Employer’s order 15 days

c) Time of Completion 7 months

(incld. Monsoon)

d) Amount for compensation for delays 05% per week

e) Maximum amount of Compensation 10% of Contract

value

f) Period of Maintenance 12 calendar

months

g) Amount of E.M.D. Rs. XYZ

h) Amount of Security Deposit And 7.5 % of Contract

Retention Money Value

i) Mobilization advance 5.0 % of Contract

Value

j) Interim Certificates monthly

k) Submission of Final Bill 30 days from date

of virtual

completion

of 17


k) Approval and payment of final bill 90 days from the

date of receipt of

certificate

l) Time within which R.A. Bill payment 75% in 10 days of

to be made after Certificate submission.

Balance 25%

within 30 days of

date of

submission.

m) Program Submission Within 7 days

from work order

n) Third Party Insurance Rs. 2 Lakhs per

person

Rs. 10 Lakhs per

accident

o) Mobilization 15 days

Besides the above there were certain special conditions also levied in the tender, which

also contained scope of work etc. as mentioned below:

Brief Scope of Work:

This tender is for finish work and providing, designing and installation of external

stone dry wall cladding. It shall be:

of 17


Finishing Work:

- R.C.C. work (where required)

- Masonry (where required)

- Plastering work (where required)

- Finishes

- Doors

- Railing

- False- ceiling

- Painting

- Plumbing works (Sanitary Fittings and Fixtures)

- Rolling Shutter

- Space Frame Canopy

- Water Proofing

External Cladding:

- Design to Indian and other International Standards

- Shop drawings and samples

- Installation

- Testing of permanent work as directed by Architect/EIC

- Performance

- Guarantee for 10 years

ITEM RATE CONTRACT

The contract is item rate and quantities set out in the B.O.Q. are tentative. Tenderers

shall quote for each item at the place given in the bills of Quantities. Cost evaluation

shall be based on these quantities and price quoted. Work shall be measured in actual

and paid as per terms set out in contract.

of 17


Firm Rate:

The rates shall be firm and shall not be subjected to any variation in cost of materials,

labor or due to any other condition except as ordered by the Architect and provided for

in the Contract. The description given in B.O.Q. shall include all items required to

complete a particular item. Anything not specifically stated shall not be taken as an

exclusion from the same item. Any claim for extra Item or variation on this ground

shall not be accepted.

Rate to include:

The rates quoted in the tender shall include all charges for tools, plants, temporary

water and electric connections ( if any), overhead reservoirs, sheds for material ( of the

contractor and as issued by the employer), hire charges if any, maintenance of all

services and equipment clearing the site etc. for the execution of the works. It shall

also include all taxes such as sales tax, octroi, excise, or any other duties of any public

body or corporation (duly authorized to collect)

Extra- item/ variations:

All additional items and variance from those given in B.O.Q. and accepted by the

architect shall be treated as extra items. These shall be expressly ordered by the E.I.C.

in writing with prior approval of the architect prior to start of work by the contractor.

The Contractor shall be paid as per similar item in B.O.Q. In absence, actual rate

analysis shall be prepared considering market rates of labor and materials with the

contractor’s overhead profit as 15 % added to such cost thus arrived. The contractor

shall have to produce vouchers to support the rate analysis. The architect reserves the

right to call additional quotations for material, labor/ workmanship if felt necessary

and rates approved by the architect shall be final. The architect’s decision shall not be

subjected to arbitration.

of 17


Execution of additional work:

The successful tenderer is bound to carry out any items of work necessary for the

completion of the job even though such items may not be part of his offer. He shall be

instructed in writing by the Architect/ EIC for such works and rates shall be settled as

detailed above.

Compensation by extension of time only:

The contractor shall not be entitled to any compensation for any loss suffered by him

on account of delays may be, including delays arising out of modifications to the

works entrusted to him or in any sub-contract agencies connected there with or delays

in awarding contracts for other trades of the project or in commencement or

completion of such works or in procuring government controlled or other building

material or in obtaining water or power connections for construction purposes or for

any other reasons what so ever and the employer shall not be liable for any claim in

respect thereof. The employer does not accept any liability for any such besides the

tender amount, subject to such variation as are provided for herein. However the

Employer shall compensate for the loss of time suffered by the contractor, by extension

of time as approved by EIC.

PROGRAM AND METHOD CARRYING OUT THE WORKS

As detailed above, the contractor shall prepare a detailed comprehensive program for

approval of the EIC within the time stipulated in the tender form. Program shall cover:

- Descriptive note explaining sequence of various activities.

- Network( Pert/ CPM)

(I) Design Submission

(II) Program of shop drawing

(III) Program of mock-up

(IV) Program of Testing mock-up

(V) Program of Fabrication

of 17


(VI) Program of Shipment

(VII) Program of Installation

(VIII) Program of Testing

- Cash flow based on program to be earmarked by the employer for the purpose of

the contract.

- Phased requirement of plant and equipment to be deployed by the contractor.

- Phased requirement of areas to be made available with stage of civil/ mechanical/

plumbing work needed to be completed by other agencies.

All these program and plans submitted by the contractor and approved by the E.I.C.

shall become part of the contract.

The acceptance of programmers as submitted by the contractor or with any

modification thereto in the opinion of the E.I.C., shall not relieve the contractor of any

extension of time unless delay, if any, is expressly sanctioned by the E.I.C.

Plant Requirements:

The contractor shall submit, with the program and method statement mentioned

above, a comprehensive plant schedule which shall include the dates of arrival on and

removal from site of each major item of plants.

Sufficiency:

The contractor shall take upon himself the full and entire responsibility for the

sufficiency of plants, centering, scaffolding, timbering, machinery, tools, or

implements and generally for all means used for the fulfillment of the contract. In the

event of any day of these means proving insufficient, the contractor even then shall be

fully and entirely responsible for the sufficiency of these means notwithstanding any

previous approval or recommendation that may have been given by the E.I.C.

of 17


Drawings:

Contractor shall receive from the E.I.C. two prints of the drawings approved for

construction.

Standards to be followed:

At various places throughout this specification and the B.O.Q., reference is made to

the standards, specifications and the bye-laws issued by the Indian Standard

Institution and other similar organizations. These references shall in every case be

deemed to include the latest edition or issue of such standards, specifications and bye-

laws including the revisions, amendments and addenda subsequently issued. Where

materials are not specified and standards exist in respect of such materials, then the

materials shall in all respects comply with the relevant and current I.S.I. In such cases

where I.S.I. do not exist, the specified manufacturers’ specification shall be followed;

in absence of all these, the architects’ instructions shall be followed.

Materials:

All the materials and manufactured goods are to be the best of their respective kinds

and as described in the specifications, drawings and the B.O.Q., cement used shall be

43 grade unless specified otherwise. The contractor shall submit for the approval of

the architect through the E.I.C. within a reasonable time after receipt of the

employer’s order to commence the Works, a list of the names and addresses of the

manufacturers, the trademarks and types of all materials and articles he proposes to

employ together with all specifications and descriptions and samples that may be

required in this connection before any orders are placed. Within a reasonable time the

E.I.C. shall issue written decision on the Contractor’s proposals. If any of the

manufacturers, materials etc., have been rejected then the contractor must propose

acceptable alternatives within one week of such rejection. The Architect’s decision

shall be final and binding on the contractor.

The contractor shall submit to the E.I.C. copies of all orders for materials.

of 17


Where a particular proprietary product, supplier or supplier’s catalogue is referred to

in this specification or in the B.O.Q., the material specified is for quality type etc.

Other equal and approved source shall be permitted in use.

If, during the course of the contract, certain materials required for use in the works

should be unobtainable despite the best efforts of the contractor, then the contractor

may offer substitute materials for the approval of the E.I.C. These substitute materials,

although not complying fully with the specification, must nevertheless be suitable and

appropriate for use in works.

Acceptance or refusal of such substitute materials shall be at the sole discretion of the

Architect/E.I.C. In the event of acceptance of the substitute materials a suitable price

reduction shall be made in respect of decrease in quality or value but no price addition

shall be made in respect of increase in quality or value. In the event of refusal of the

substitute materials, the contractor shall not be relieved of any delay or loss

occasioned by his failure to provide materials as specified.

Temporary Works:

The contractor is entirely responsible for the design, construction, and maintenance

and removal of all temporary works employed in carrying out the contract. Within a

reasonable time (and in any case not less than fifteen days) before he intends to

commence construction of any temporary works, the contractor shall submit full

particulars including drawings of the same, for the approval of the E.I.C. The E.I.C.’s

approval will in no way relieve the contractor of his responsibility for the safety of the

works, operators, adjoining property, structures or services and compliance with

appropriate regulations and codes of practice. Temporary works supporting adjoining

buildings, property and public utilities and roads shall also be submitted to the

appropriate authority for their approval if requested/required.

of 17


The temporary works shall be designed and constructed in such a manner as to enable

the permanent structures to be built around them without detriment to their

effectiveness and due allowance will be deemed to have been made for all necessary

adjustments thereto to enable the works to proceed.

Price escalation:

The rates quoted by the contractor shall be firm for the entire duration of contract and

no price escalation shall be allowed; with the exception or adjustment towards

difference in basic price for cement and steel.

Taxes, Levies, Duties:

The contractor shall be responsible to pay the appropriate authorities as applicable

taxes, levies, such as sewerage fees, royalties, octroi, sales tax, excise duty, income

tax etc. as applicable from time to time. Changes to statutory taxes, duties etc. during

period of depositing of tender till completion shall be paid by the contractor and no

escalation payable on account.

Like wise brief descriptions regarding facility for water and electric supply are briefly

given in the special conditions of contract.

It has also been recommended that the contractor who shall mobilize to site shall be

responsible for constructing and maintaining temporary structure for site office for

architect /E.I.C. Special mention has been made to site drainage/cleaning, safety codes

to be followed, fire precautions, accidents, labor accommodation site supervision etc.

After studying through the contract thoroughly there were certain discrepancies, and

clarifications required pertaining to design, Items and specifications mentioned in the

B.O.Q. etc and mainly for works contract tax. It was not very clearly mentioned who

would pay the works contract tax. These doubts were clarified at the time of pre-bid

meeting itself.

of 17


First of all we had to prepare a site-organization chart, indicating number of people to

be involved on the job and duty of each individual at site. As can be observed in the

diagram no. 2, where a comprehensive site-organization chart had been prepared, to

know the works of each engineer in charge.

The work mainly constituted of Civil finishing work, plumbing works, Metal works,

waterproofing works and external cladding work.

First of all we had a project manager, whose main responsibility is to arrange all input

such as material, labor, plant and equipment. This duty was given to me by my

company. Thus my other duty was to coordinate with the representative of the client,

get quality control carried out from time to time, work acceptance, measurement taken

and bills raised for payments.

Different engineers appointed had different tasks to perform. Some of these engineers

had to accomplish the task of completing the work for which they were appointed. It

was the duty of the plumbing engineer to ensure that all the plumbing work to be done

under scope of work is accomplished in the right way. Besides engineers in charge of

civil works had to ensure that works under their scope of work was completed in time.

Besides it was the duty of each of these engineers to check whether there has been any

deviation from contract, and if so to bring the same to notice of the project Manager.

There was a daily site record maintained of important noteworthy events. If there had

been any work stoppage or holdup, the same to be recorded in the hindrance book. An

extract of these records of hindrance register had to be the basis for future claims to be

established on account of work delay.

There were weekly meetings arranged, where a representative from the clients side,

representative from Architects, Consultants, and Contractors along with their team

members were expected to be present and discuss the progress of the work at site. This

was a platform where, problems faced by us as regarding any delays etc. could be

of 17


directly discussed in presence of everyone. Besides these were minuted and became

records for future claims if any. Clarifications for extra-items and the price escalations

if any were also discussed during these meetings.

Most of the work went ahead as per schedule, with of course some hindrances etc.

which generally are a part of a project. Only one big issue came up regarding paying of

works contract tax. It was right in the beginning we had brought the same to the notice

of the clients, that since the contract did not mention anything regarding the work

contract tax, it shall be the responsibility of the Clients to bear the same. After

continuous discussions, it was decided that the same shall be sorted out with the

architects since they are the once who have prepared the tender documents in

consultation with Project Managers. It was also decided that the same shall be

discussed towards the end of the project, and if required we should go in for

arbitration.

Towards the end, once again, the issue of Works Contract Tax rose, and a joint

meeting in the presence of the architects, Project managers and a consulting arbitrator

was called. After making a detailed study of the contract, finally arbitrator gave his

final verdict In favor of us. Except for the problem of works contract tax, no major

issues ever became a part of this contract.

The essence of our method of work was on emphasis on communication, particularly

in the lateral direction, among the teams and within the teams. In a way,

communication was the key to managing this gigantic project. To get the best from our

team members, being the person In-charge of the site, I spoke to them frequently on

the goals and objectives of the organization, emphasizing the importance of each

member’s specific contribution towards realization of these goals. At the same time, I

tried to be receptive to every constructive idea emanating from any sub-ordinates and

to relay it in an appropriate form for critical examination and implementation. I used

communication to promote understanding and to come to an agreement with

of 17


colleagues in defining the problems that existed and in identifying the action necessary

to be taken to solve them. Authentic communication was the tool used for managing

the project.

We learned the hard way that the biggest problem of the project management is to

achieve a regular and efficient interfacing between the different individuals

(Team members at site) and work centers i.e. the head office. Hard work can be set at

naught in absence of proper co-ordination. Close intervention with different work

centers create such harmony, that the fine threads of individual efforts were woven into

a mighty fabric of great strength.

It was here that the actual site execution work would really take off. It is the activity

through which all plans are transferred into reality. The completion of project and

realization of goal is achieved through the satisfactory conduct of this activity.

As it is said,” Proof of Pudding is in eating it” therefore execution only can determine

whether the project is going on well or otherwise. In site management operation, actual

execution is the important theatre activity. The planning process, organization,

agencies, material and equipment all come into play in execution.

It’s so truly said that emergencies and unforeseen problems might crop up. But they

should not upset or delay the normal activities planned for the day. Facing the pressure

with commitment, determination and positive approach, would certainly lead to

success in achieving the goal.

The main reason for our successfully accomplishing the given task without much

delays and problems, was a good communication set up amongst the team members

and the head office.

of 17


Another reason for the success was responsibility. My C.E.O. had put complete faith

on me and so did he give me the responsibility of handling the complete project. This

itself gave great confidence and independence towards handling of the project. The

same faith had to be entrusted upon my sub-ordinates by me and this also made them

responsible individuals.

Thus it was our group effort that made us accomplish our task.

References:

1) Course Material, NICMAR

2) Tender Documents of one of the prevailing projects.

of 17