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Contract Payments & Variations: Training Programme On Construction Management & Supervision
Contract Payments & Variations: Training Programme On Construction Management & Supervision
CONTRACT PAYMENTS & VARIATIONS Training programme on Construction Management & Supervision
Eng. Rangith Kulanatha Project Director(WWDP -R/M &J/E) 28th January 2013
with a Contract Who are we Essence of live contract For what Contractors are Roles of the Engineer, Engineers Rep and Other officers in Engineer and Employer Out Line Contract Payments, Types Authority Levels Types of Payment Definition of Variation Orders ICTAD Document to be refer for VO
Authority for VO and contents of VO Valuation procedure for VO NWSDB procedure for VO Procurement Guile Lines Contract Payment - Definition All payment to the Contractor for the completion of entire scope of work(including Variations) Who has to authority to approve the payments -Engineer
The Engineer is the person named in the Contract Data( or any other competent person appointed by the Employer and notified to
Contractor) who is responsible for administrating and supervising the execution of the work. Such person may be Engineer, Architect or any other technical person . In the absence of such appointment the Employer himself( Defined under A. General, Section 3 of Condition of Contract ,ICTAD/SBD/01 - page no 36)
Authority of Engineers Representative - Written authority delegated by the Engineer (Clause 5.2, ICTAD/SBD/01)
Who are we? - Engineers Representative A Person appointed from time to time by the Engineer under sub clause 5.1 (ICTAD/SBD/01) Obligation of the Engineer Being impartial Fair in determinations Consistency in affairs Administrating and supervising the execution of the work Issuing decisions, certificates and orders Obligation of the Employer
Employs the Contractor to carry out the works. (The Contractor is carrying out works for the Employer) Shall give possession of all parts of the site to the Contractor. Timely payment
Delay Payment
Interest-free loan for mobilization, when the contractor submits a guarantee in a form by a Bank or a Company acceptable to the Employer. Advance payment(clause 51)
The Employer shall make advance payment to the contractor in an amount to 20% of the Initial Contract Price excluding provisional sums and contingencies, within 14 Days after furnishing of an unconditional guarantee in a form and by a bank or company acceptable to the Employer. The guarantee shall remain effective until the advance payment has been repaid(clause 51.1, ICTAD/SBD/01). The Contractor is used the advance payment only to pay for Equipment, Plant, Materials and Mobilization expenses required specially for execution of Contract(Clause51.2
ICTAD/SBD/01). The advance payment shall be repaid by deducting proportions and repaid in full when total certified value of work reaches 90% of the Initial Contract Price(clause 51.3, ICTAD/SBD/01).
On Account Payments
Authority for approval in NWSDB(General
Manager)
Final Certificate(clause 55) Upon completion of the Defects Liability Period the Contractor shall request the Engineer to issue a Final Certificate and the Engineer shall issue the Final Certificate upon being satisfied that the Contractor has rectified the Defects(clause 55.1, ICTAD/SBD/01). Retention
Retention money is warranty for hidden defects during construction, including the 1-year defects liability period after project
completion. Retention money is therefore released after the end of the 1-year defects liability period and when the certificate of acceptance is already issued. If the contractor wants the release of the retention money before the lapse of the 1-year defects liability period, replacement by the surety bond may be allowed.
Retention(clause 48) The Employer shall retain from each payment due to the Contractor the proportion stated in the Contract Data subject to the limit of retention stated in the Contract data(clause 48.1, ICTAD/SBD/01). When to release?
On Completion of the whole of the Works, first half the total amount retained shall be repaid to the contractor and second half when the Defects liability Period has passed(clause 48.2 ,ICTAD/SBD/01). Releasing against a Bond at the time of completion Reserving money to pay after D/L period How they are being practiced in NWSDB The Engineers Representative
has the authority to the extent what is specified in the BOQ in the Contract Variations (?) and Time extension is not delegated
Variations: To be certified by the Engineer and agreed upon by all parties(Engineer, Contractor and Employer. For the completion of works For improvements What happens when the quantity in the BOQ is not sufficient or no provision in the BOQ
Work needed to complete the entire scope(Remeasurements) Things that are nice to accompany( Variations)
Things that improves the longterm sustainability(Variations) Price Escalation & others There is BOQ provision but needs engineers approval to proceed Provisional sums
Remember to refer contractual provisions
A Variation may be an addition, omission or substitution to the design or specifications, discrepancy between any two or more contract documents or any statutory requirements, an error in or omission in the contract bills
of Works for Design and Build Contracts ICTAD/SBD/04 Recommended for use for works contracts where the contractor is responsible the design and construction of the specified approvals obtained from the Employer.
Document to be referred for variation procedure in local contract Who has the authority(Clause 39 of the ICTAD)
The variations may initiated by the Engineer at any time prior to issuing the Certificate of Completion of the works. As per the clause 39.4 ,ICTAD/SBD/01 each
Variation may include; Changes to the quantities of any item of work included in contract. 2. Changes to quality and other characteristics of any item of work 3. Changes to levels, positions and dimensions of any part of the Works 4. Omission of any work unless it is to be carried out by others 5. Any additional work, plant, material or services necessary for the Permanent Works.
1.
proceed with works and then DAB (clause 40.3, ICTAD/SBD/01). The Contractor shall not be entitled to additional payments for costs that could have been avoided by giving early warning(clause40.5 ,ICTAD/SBD/01). The value of work executed shall include the valuation of Variations and Compensation Events.(clause 42.5 ,ICTAD/SBD/01)
The Engineer, GM of NWSDB shall approve Net variation within 10% of the Contract Awarded Price. (Procurement Guide Lines).
iii. The quantity variation/s are marginal or are due to unforeseen situation/s; B: Net variation exceeds 10% of the Contract Award Price: a) HD/PD shall forward all the relevant documents together with a statement prepared in accordance with a) and b) above to the CAO; HD/PD shall also submit all the documents required for the revision of TCE. b) If the net variation is within 15% of the Contract Award Price and CAO is satisfied with the HD/PD statement CAO may approve it; c) If the net variation is more than 15% of the Contract Award Price or the net variation is below 15% and CAO is not satisfied with the statement submitted by HD/PD, CAO shall refer it to a the appropriate PC assisted by the TEC; In this situation the appropriate PC shall be decide on the basis of increased amount of the contract price and not necessarily the PC relevant to the revised contract price.
Reference:8.13.4 Variations to Contracts Conclusion Contract Payments, Types Authority Levels Types of Payment Definition of Variation Orders Valuation procedure for VO NWSDB procedure for VO Procurement Guile Lines THANK YOU