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Case Study on Ambiguities in Conditions of Contract

Case Study on Ambiguities in Conditions of Contract

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Published by Rahul Sompura

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Categories:Types, Research, Law
Published by: Rahul Sompura on Nov 18, 2009
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STUDY OF CONTRACT CONDITIONS: CASE STUDY OF AMBIGUITIES & DISCREPANCIESRahul N.Sompura (UC2905) Kenan V.Viramgami (UC3205) , SBST , CEPT University , Ahmedabad 1
CASE STUDY ON CONTRACT AMBIGUITIES & DISCREPANCIES
INTRODUCTION
Project Name
:Adani Thermal Power Plant (Coal Based)
Total Capacity 
:4620 MW
Type of Project 
:Infrastructure/Industrial
End Use of the Project 
:Generation of Power and thereby meet the demands of various sectors
Package under Study 
:Phase III & IV (5 x 660 MW) Super-critical units
Total Cost of Packages
: Rs.1500 Billion
Type of Contract 
:Engineering, Procurement & Construction Contract (EPC)
Project start date
:1
st
January 2008
Project Duration
:36 months
Project completion date
:1
st
January 2011
Total Site Area
:735 acres (2.975 sq.km)
Notable Feature
:
 Asia’s Largest & World’s 3
rd 
Largest Coal Fired Power Plant.
 
PROJECTAdani Thermal Power PlantCLIENT:Adani Power LimitedFEASIBILITY STUDY & DPR:Desein Pvt. Ltd,DelhiPLANT DESIGN:NWEPDI,ChinaPHASE I & II (4X330 MW)Sub Critical Units
 
PHASE III & IV (5X660 MW)Super Critical Units
 
BTG CONTRACTSCMEC,ChinaEPC CONTRACTSEPCO III,ChinaUNIT 5,7,9 SUB-CONTRACTGannon & Dunkerley
 
UNIT 6,8 & CHIMNEY(EPC) SUB-CONTRACTSimplex Infrastructures
 
STRUCTURAL & DESIGN CONSULTANTS:Lahmeyer International IndiaSTEEL ERECTION SUB CONTRACTLarsen & Toubro, ECC DivisionCOOLING TOWER SUB CONTRACTPaharpur Cooling Towers LtdUNIT 5,6 SUB CONTRACT(C.W.PIPELINE)Jagdish Engineering Limited
 
UNIT 7,8,9 SUB CONTRACT(C.W.PIPELINE)Rukmani Infra Projects Pvt. LtdTRAINEE:Rahul N.Sompura
Figure 1: Project Breakdown Structure
CONTRACT DETAILS
DOCUMENTS FORMING PART OF THE CONTRACT 
Invitation for Bids
Instruction to Bidders
Pre-qualification Information, and other forms
The final accepted bid of the bidder after modifications, changes, additions and alterations after mutual agreementwith Employer.
General Conditions of Contract
Special Conditions of Contract
Contract Data
Technical Specifications
 
STUDY OF CONTRACT CONDITIONS: CASE STUDY OF AMBIGUITIES & DISCREPANCIESRahul N.Sompura (UC2905) Kenan V.Viramgami (UC3205) , SBST , CEPT University , Ahmedabad 2
STUDY OF CONDITIONS OF CONTRACT: CLAUSE NO.1
CONTRACT CLAUSE 
Instruction and Guidance
The Contractor shall, without any additional consideration from the Employer, provide instruction and guidance to Employer'sPersonnel in the operation and maintenance of the Goods to the extent specified in the Employer's RequirementsThe Contractor is required to provide an instruction plan for all operation and maintenance procedures within a period of 
30 months
from the Commencement Date which shall after the approval by the Employer form the basis of the instruction andguidance program.
 AMBIGUITY 
The Period of Boiler Startup of the Power Plant is
36 months
from the Commencement Date and the Operation andMaintenance department gets into execution
12 months
before the Boiler Startup Date. Hence it is necessary for the Supplier toprovide an instruction plan for all O&M procedures atleast before the O&M department begins their work.
REDRAFTED CLAUSE 
Instruction and Guidance
The Contractor shall, without any additional consideration from the Employer, provide instruction and guidance to Employer'sPersonnel in the operation and maintenance of the Goods to the extent specified in the Employer's RequirementsThe Contractor is required to provide an instruction plan for all operation and maintenance procedures within a period of 
24months
from the Commencement Date which shall after the approval by the Employer form the basis of the instruction andguidance program.
FIDIC CLAUSE 
Instruction and Guidance
The Contractor shall, without any additional consideration from the Employer, provide instruction and guidance to Employer'sPersonnel in the operation and maintenance of the Goods to the extent specified in the Employer's RequirementsThe Contractor is required to provide an instruction plan for all operation and maintenance procedures within a period from theCommencement Date which shall after the approval by the Employer form the basis of the instruction and guidance program.
STUDY OF CONDITIONS OF CONTRACT: CLAUSE NO.2
CONTRACT CLAUSE 
Fossils
All fossils, coins, articles of value or antiquity, and structures and other remains or items of geological or archaeological interestfound on the Site shall be placed under the care and authority of the Employer and the same shall be the property of theEmployer. The Contractor shall take reasonable precautions to prevent Contractor's Personnel or other persons from removingor damaging any of these findings.
 AMBIGUITY 
As per the
 Antiquities & Art Treasures Act 1972
 
,Government reserves the right of anything of geological or archaeological orother interest or articles of value or antiquity discovered from any part of the state. So, it is not the absolute property of theEmployer
REDRAFTED CLAUSE  As per the Antiquities & Art Treasures Act 1972
All fossils, coins, articles of value or antiquity, and structures and other remainsor items of geological or archaeological interest found on the Site shall be the
absolute property of the Government 
.TheContractor is to notify the Employer of such discoveries and carry out the Employer’s instructions for dealing with themwithout damages, thefts etc.
 
STUDY OF CONTRACT CONDITIONS: CASE STUDY OF AMBIGUITIES & DISCREPANCIESRahul N.Sompura (UC2905) Kenan V.Viramgami (UC3205) , SBST , CEPT University , Ahmedabad 3FIDIC CLAUSE 
Fossils
All fossils, coins, articles of value or antiquity, and structures and other remains or items of geological or archaeological interestfound on the Site shall be placed under the care and authority of the Employer and the same shall be the property of theEmployer. The Contractor shall take reasonable precautions to prevent Contractor's Personnel or other persons from removingor damaging any of these findings.
STUDY OF CONDITIONS OF CONTRACT: CLAUSE NO.3
CONTRACT CLAUSE 
Testing
The Contractor shall promptly forward to the Employer duly certified reports of the tests. When the specified tests have beenpassed; the Employer shall endorse the Contractor’s test certificate, or issue a certificate to him, to that effect.
If the Employer has not attended the tests, he shall be deemed to have accepted the readings as accurate
.
 AMBIGUITY 
This would be an act of neglect from the Employer’s side as it will motivate the Contractor to manipulate the final results andmight cause dire sequences.
REDRAFTED CLAUSE 
The Contractor shall promptly forward to the Employer duly certified reports of the tests. When the specified tests have beenpassed; the Employer shall endorse the Contractor’s test certificate, or issue a certificate to him, to that effect.
If the Employer has not attended the tests, he shall cross check the results before assuming it to be accurate.FIDIC CLAUSE 
TESTING
 The Contractor shall promptly forward to the Employer duly certified reports of the tests. When the specified tests have beenpassed; the Employer shall endorse the Contractor’s test certificate, or issue a certificate to him, to that effect.
If the Employer has not attended the tests, he shall be deemed to have accepted the readings as accurate
.
STUDY OF CONDITIONS OF CONTRACT: CLAUSE NO.4
CONTRACT CLAUSE 
Document error
If errors, omissions, ambiguities, inconsistencies, inadequacies or other defects are found in the Contractor’s Documents, theyand the Works shall be corrected at the Contractor’s cost, notwithstanding any consent or approval, under this Clause.
 
 AMBIGUITY 
No Point is mentioned as if to bring the errors to the Employer’s Notification if the Contractor is aware of the faults in thedocuments
REDRAFTED CLAUSE 
If errors, omissions, ambiguities, inconsistencies, inadequacies or other defects are found in the Contractor's Documents, theyand the Works shall be corrected at the Contractor's cost, notwithstanding any consent or approval under this Clause .
The Contractor shall promptly inform the Employer of any error, omission, fault and other defect in the design of, or specifications for, the Works, which he may discover in the Contractor’s Documents, or in the process of execution of theWorks.FIDIC CLAUSE 
Document error
If errors, omissions, ambiguities, inconsistencies, inadequacies or other defects are found in the Contractor’s Documents, theyand the Works shall be corrected at the Contractor’s cost, notwithstanding any consent or approval, under this Clause.
 

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