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TENDERS & CONTRACTS AND

CONTRACTS MANAGEMENT

Tenders & Contracts & Contract Management

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Chapter – 1
Fundamentals of Contract
INTRODUCTION
The word contract is derived from the latin word “Contractus” which means drawn together.
In construction major work is done through contract. Every time a contractor makes an offer to do
a construction work and every time the offer is accepted, a contract is formed. It determines the
obligations of the parties in their dealing with each other.
The parties to the contract are bound to each other for a certain period of time by a
unique and exclusive relationship which they have created for their mutual benefit.
This unique relationship called “Privity of Contract” gives them obligations which they
agree to accept so that they both may benefit.
This contractual relationship persists until the contract is discharged or terminated, i.e., until it is
performed or terminated because of impossibility, by mutual agreement, by bankruptcy or by
breach of contract.
An agreement without any obligation does not develop any contractual relationship. The court shall
not enforce an agreement which violates the provisions of law, or which is against the established
public policy which has adverse effects on the morale of the society as a whole.
A person cannot escape from the responsibility by simply stating that he entered the contract
unknowingly. It is the duty of the contractor to study the legality of the subject matter before
entering into a contract.
HISTORY OF CONTRACT IN INDIA

Introduction to law ,indian legal system

Law Anterior to Contract Act : (Introduction of English Law to India) The characters of the 18th
century which established the courts of justice for the three presidency towns of Calcutta, Madras
and Mumbai, introduced in their jurisdictions English Common Law and Statute Law. The
application of English law to the natives of India within the jurisdiction of the Supreme Court led to
many inconveniences. This is due to the fact that laws are created to stabilize a society. Each
society has a particular culture. So, to preserve the culture, laws are formulated accordingly. If the
laws of a culture are implied on another culture it will create chaos.
To obviate this, the statute of 1781 empowered the court at Calcutta (the then Supreme Court)
and statute of 1797 empowered the courts of Madras and Bombay (the then recorder’s court) to
determine all actions and suits against the inhabitants of the said towns, provided that their
succession and inheritance to lands, rents, goods and all matters of contract and dealing between
parties should be determined in case of Muslims, by the law and usages of Muslims and in case of
Hindus by the laws and usages of Hindus, and where only one of the parties should be a Muslim or
Hindu, by the laws and usages of the defendant.
This continued till the formation of the Indian Contract Act.

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THE INDIAN CONTRACT ACT : ACT IX OF 1872.
Section 1 :
Preamble : It is expedient to define and amend certain parts of the law relating to contracts, i.e.,
Law of religions.
Title : This act may be called as Indian Contract Act 1872.
Extent and Commencement : It extends to the whole of India except the state of Jammu and
Kashmir, and it shall come in force from September 1st, 1872.
Section 2 :
Following terms used in ICA 1872 which need to be understood :Interpretation Clause : In this act the following words and expressions are used in the
following senses, unless a contrary intention appears from the context.
Proposal : When one person signifies to another his willingness to do or to abstain from doing
anything, with a view to obtaining the assent of that to other such act or abstinence, he is said to
make a proposal.
Promise : When person to whom the proposal is made signifies his assent thereto, the proposal
is said to be accepted. A proposal when accepted become a promise.
Promiser and Promisee : The person making the proposal is called the “Promiser” and the
person accepting the proposal is called the “Promisee”.
Consideration : When at the desire of the promiser the promisee or any other person has done
or abstained from doing, or does or abstains from doing or promises to do or to abstain from doing
something, such act or abstinence or promise is called consideration for the promise.
Agreement : Every promise and every set of promises, forming the consideration for each other
is an agreement.
Promises which form the consideration or part of the consideration for each other are called
reciprocal promises.
An agreement not enforceable by law is said to be void.
An agreement enforceable by law is a “contract”.
An agreement which is enforceable by law at the option of one or more parties there to, but not at
the option of the other or others is a voidable contract.
A contract which ceases to be enforceable by law becomes void.

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e. The proof of notoriety is a matter of evidence. i.. A trade usage which is of general convenience to all the parties engaged in a trade will not be usually regarded as unreasonable. particular item of trade. executed (past) or present and all types of considerations are included in the law. This rule is essential in order to avoid inconvenience in business. iii) Reasonable : The TU must be reasonable in the eyes of law. It must be between parties standing in near relation to each other. the proposer and the acceptor must agree upon the same thing. to say so well known in the trade that any person who make the contract knows it. it may be executory (future). do not constitute a contract.. and leave no doubts in the minds of either party on the matter. is defined as an act or promise to do something by one party in return of an act or promise by the other party.e. A TU giving conduct or behavior which is illegal would not be entertained by law. In other words. although not expressly incorporated in the written or the oral agreements of the parties.r. It must be with the same degree of certainty as any other contractual term. As per ICA. These principles are based on the principles of equity. Following are the requirements to be satisfied by a trade usage to be made acceptable to the court. EVERY CONTRACT IS AN AGREEMENT BUT EVERY AGREEMENT IS NOT A CONTRACT Consideration. i) Certainty : TU must be certain. i) ii) iii) iv) The contract must be made in writing.t. etc. In all engineering contracts consideration is in the form of an amount of money and it is clearly mentioned in the contract. “The issue of certainty is the issue of law”. It must be registered according to the law of registration of documents. Trade Usage (TU): It is possible for trade customs or trade usage to form a part of the terms of contract.There must be an offer or a proposal which the person accepting has had an opportunity of considering and which when he accepts he knows will form a binding contract. in legal sense. Impossible promises or acts are not entertained by law because of the absence of a valid consideration. It may consist of paying definite amount or giving interests …. it must be fair and proper and such that a right minded and honest person would adopt. i. in the same sense. the court may be guided by the prevailing practice or custom of trade in the locality w. Where the contract is silent about a particular item or fact. iv) Well-Known : TU must be notorious. ii) Lawful : The TU must not be contrary to law. Tenders & Contracts & Contract Management -3- . Unless this is done. Section 25 of ICA provides for an exception to the general rule that agreement without consideration is void. It should proceed out of natural love and affection between the parties.

Offer and Invitation to Offer : The word “Proposal” is synonymous in English with “Offer”. to allot/not allot shares. invitation by a company to invest in shares. Tenders & Contracts & Contract Management -4- .Invitation of Tender (NIT). preliminary negotiations usually take place between them. Before the parties enter into a contract. Auction sales. A party may ask for some information or supply some information and invite the other party to make an offer is the intention of the party who is supplying the information. withdraw or postpone the auction sale. refuse to sell.g. But the language of these definitions confine “proposal” to an offer to be bound by promise.:. In such a case. the inviter retains the rights to some other Act (to accept/reject. The test for differentiating an offer from an invitation is that does the person who is making the statement intend to be bound by it as soon as it is accepted or does he intend to do some further act before he becomes bound by it – the former amounts to a proposal or an offer. As for e.

Explain how the contracts were governed before I. Trade usage d.ASSIGNMENT – 1 1. Privity of Contract b.A. 2. 1872 came into existence. Tenders & Contracts & Contract Management -5- . Offer and invitation to offer. Explain the following terms with examples:a. Consideration c.C.

7) The contract time or period of completion or specific date. The statements made in the agreements are of vital importance as they go to the root of the contract and the law says that anything which goes to the root is vital. and Drawings : B. The agreement is the heart of the contract and anything wrong with the heart jeopardizes life. 3) A list of contract documents as above. Thus. need of contract document Object The main objective of framing the conditions is to avoid dispute between the parties concerned and thus to keep them away from the court of law. I. Specifications: Control quality of materials and workmanship of items of work and generally reflects the class of the building. 8) The signature of the contracting party and the witnesses. and drawings control quantities of items of work and financial aspects of work. General Conditions : Definition Clauses which relate to the work as a whole are written in a separate contract document and are known as general conditions of the contract. the lawyers are entrusted to frame them. The Agreement : It is a brief of the project and appears to consist mostly of statements of facts. the designer decides which part of the contract governs.O. II. Importance These are framed in the legal phraseology and in the case of complicated contracts. it controls the method of operation of the contract. B.Q. It contains 1) The names of the contracting parties. 2) A description of the work and the address (sometimes not more than a title).O. Conditions : General and special. 6) The procedure of payment. It is the most important part both in law and in fact. they carry more weight and any breach of contract will lead to serious legal formalities. These parts are complementary to each other and they all go together as one. Tenders & Contracts & Contract Management -6- . 5) The contract sum or amount.Chapter – 2 Various Parts of Contracts A contract contains the following parts :1) 2) 3) 4) 5) Evaluation of contract documents Agreement : It controls the legal aspects of the contract.Q. 4) The name of the designer. If the contract says that a stipulated order of superiority is indicated. then in the event of a dispute.

Relating to Labour and Personnel : Accidents. i. of Clauses : There is no definite rule regarding the number of clauses to be included in each type of contract. Regularities 1) No. safety services. etc. those terms and conditions which have such a general nature that they apply to the work as a whole. Relating to default and non-completion. IS. Contractor’s representative. Bonus clause is very complex and needs separate discussion. Special Conditions : Equipments – nominated supplier. Is there a breach of contract? No! For a contract to be breached. etc. and payments : Method of mmts. Tenders & Contracts & Contract Management -7- .e. tensing. first aid. insurances. environmental awareness. Clauses which are suitable for one work may not be suitable for the other works. setting outs. bonus. protection. Relating to mmts. or not happen and it is not likely that owner could sue the contractor for breach of contract in these cases. etc. They are important because they are agreed to as requisites to do the work. sub-contracting. etc/ Relating to assignments and sub-letting. they must be carried out if the contract is to be performed and completed as a whole. payment to sub-contractors. General Obligations of Contractor : Access to the work acts. properly heated or A/c site office or serving chilled ice cream.III.g. Notices. etc. they should be placed elsewhere in the contract because they are not the true terms and conditions e. Few clauses may fit in either group and it is the engineers who decide whether a particular clause is to be inserted in the technical provisions or in the general provisions. as the name implies. byelaws. defective work. etc. The general conditions of the contract are. materials. Regarding Execution of Works : Alterations. Conditions generally related to :1) 2) 3) 4) 5) 6) 7) 8) 9) Documents : BOQ. It mainly depends upon the character of work. This is due to the fact that the situation for which it was framed may not have arisen during the contract period. If the conditions of the contract are obscure (not prominent) or of lesser requirements. 3) Use : Technical provisions are used at any stage of work but clauses in the general conditions may not be used at all during the contract period. extra items. The person framing the conditions must make a careful study of the work before framing the conditions of the contract. rates and wages. Relating to settlement of disputes. etc. damages. regulations. something important must happen. 2) Relation with the technical provisions : (Specifications) There is no sharp distinction between the technical provisions.. laws. drawings.

Instruction to bidders. BOQ should be completely filled (alternate items also) in ink. Specifications. If a breach of contract is from the owner’s side. Performance bond (blank).A breach of contract is defined as “failure without legal reasons to comply with the terms of contract”. they are called bidding documents which may or may not lead to a contract. as an owner is not bound to accept any of the bids he receives. documents cannot be called contract documents. Agreement (blank). (Bill of Quantity) : 1) 2) 3) 4) 5) 6) 7) Title of the project. title of sections.O. Special Conditions.Q. General Conditions. B. Modifications. Tenders & Contracts & Contract Management -8- . contractor’s usual remedy for such a breach is to place a “lien” (mortgage) on the property – the construction work and land on which it stands. To distinguish clearly between them. A lien is a statutory legal claim registered against real property or work done and materials supplied to the property. name and address of the Architect or Engineer (Designer). In case of discrepancy. Documents for contract are not the same as tender (bidding) documents. Addenda. The law provides for two common remedies for breach of contract : 1) Damages to be paid in money to the hurt party by the party in breach of contract or 2) Specific performance of the contract by a court order. we must know their uses and functions for which they are intended. This is one reason for a performance bond in which a surety guarantees contractor’s performance. Rates and amount of each item against the description. Quantities are provisional. IS references. No alterations to be made in BOQ unless authorized by the designer of the project. Tender documents are – Notice of tender (Invitation). When a contract is breached. Bid form (blank). Bid bond (EMD). the party not guilty of breach is relieved by law from his duties arising out of the contract. decrease or omission will have no extra claims for damages on these grounds. Rate column should be filled in both words and numerals. damages may be difficult to collect. The critical point is the time when a contract is made. words shall prevail. Documents for tendering are bidding documents and others are contract documents. Description of items. and he may seek remedy for the breach of law. Prior to this event. BOQ and Drawings. increase. The second remedy is difficult to apply because the breach is due to some kind of inability in the first place and who would want a contractor doing a construction job under a court order? If a construction contract is breached because of lack of money.

DISCUSSION ON BONUS CLAUSE : Introduction of Bonus Clause in Contracts In all civil engineering contracts. Drawings : The following types of drawings are prepared in the whole project life cycle :1) 2) 3) 4) 5) Preliminary drawings : These drawings help in preparing approximate estimate of the project in the conceptive stage for feasibility studies. Method of measurements shall be of IS 1200 or SP-27. The study of specifications is dealt in Chapter Nos.8) 9) 10) 11) In case of error in the amount column. Tender drawings : These drawings are prepared in the developing stage of the project. shall be corrected. the rate shall be firm and amount shall be amended. contractors and users. These drawings help contractor to execute the complex activities by his method statement. These drawings help the contractors to bid for the project.F. Even some enlightened and progressive owners consider it fair to have bonus provision. as the owner can benefit from the early use of the facility. 7 and 8. The Built drawings : All the variations of providing services designed during the actual execution of the project are recorded in this form. These drawings help in the maintenance of the project. Many committees set up by the government have gone into the depth of this question and they have recommended the acceptance of the principle of bonus. the contractor is subjected to liquidated damages and penalty provision if he delays the work which results in loss to the owner. Contract drawings : These drawings are prepared after the contract is executed and these drawings help contractor to build the project during the executive stage of the project. There are some valid points which are usually raised by the owners. Any errors in description. Contracts are not full turnkey and are usually divided into many parts so even if the particular part of the contract gets ready earlier it may not be useful and give returns to owners or users. V. All errors in totaling and C. Tenders & Contracts & Contract Management -9- . quantities or omissions of items shall not vitiate this contract but shall be corrected. These drawings are to be approved by a consultant or client before executing. 6. Workshop drawings : These are the detailed drawings basically prepared by a contractor during the executing stage. IV. The contractors and their associations are asking for a bonus clause. There is an argument that it is natural and fair that the contractor be entitled to bonus if he completes the work earlier than the scheduled date. Hence the bonus provision must be included in contracts.

Considering the present situation of resources. Contractor saves on his OHs. The user and owner also consider whether the bonus will create another point of dispute. he gets a better image. What should be the bonus? The question as to what could be the bonus quantum has also been taken up and discussed in committees. What would happen if the scope of the work changes. if prepared to put in extra resources and complete the work according to the original schedule. his resources become free for other works. give a thought to all possible problems and find out the possible solution in proper time. resources and technology to finish the work ahead of time? Is the contractor prepared to accept that bonus is payable only on the basis of the contracted date of completion and not revised due to extensions because of delay either on his side or on the owner’s side? With all the best planning there could be a delay on the contractor’s side and in such a case is he prepared or resourceful enough to achieve completion as per the original schedule? Similarly there may be a delay from the owner’s side in such a case where the contractor is getting time extension. commitment and performance the owner and contractor can complete on schedule. Can the owner expect such commitments from these indirect participants under the present environment? With all good intensions there may be some delays from the owner’s side and the date of completion may have to be extended. arbitration and court case? The owner and user wonder whether they can make the bonus question absolute and not an arbitrable item. So. Tenders & Contracts & Contract Management -10- . the benefits the contractor gets are considerable over and above the bonus. in such cases will not the contractor expect the extended date to be considered for bonus? Can a contractor be confident in his own capacity in terms of organization. Many views have been expressed. can any owner be confident of full-filling his obligations as per the contract in a satisfactory manner and in time? There are many other departments with whose co-operation. is he entitled to bonus? The user may consider that the contractor may scarifies quality to complete the work ahead of time to get a bonus. The users consider that even if the contractor puts extra efforts and resources to complete work according to original time schedule inspite of delays on his part on the part of the owner. the entire organization becomes more dynamic. quantities change and a new time schedule is adopted? Will bonus be due on a revised time schedule? There are many owners who consider bonus as a good incentive which makes both the department and the contractors to plan works and contracts in a better manner. he gets immediate cash instead of going for arbitration or court and get a devalued award amount after a considerable time.

i)
ii)
iii)
iv)
v)

Same as liquidated damages.
Savings in supervision cost of owner.
Savings in interest charges on finance and investment by owner.
Savings in escalation amount of the extended periods on owners failures.
Early revenue gain or benefit on use of the constructed facility.

Conclusions and Recommendations
The introduction of a bonus clause is not new. It has been introduced and implemented in many
government and private contracts.
From all angles it is to be concluded that reward for early completion in terms of bonus will
definitely improve the construction sector performance and fairness will be introduced into the
contracts.
It is worthwhile introducing the Bonus Clause on critical works and where the scope of the work is
definite.
i)
ii)
iii)
iv)
v)

Bonus to be substantial to make the proposal attractive and acceptable.
The original dates of completion be the criteria irrespective of extension either due to
contractor’s or owner’s fault.
It may be in terms of amount per day with or without ceiling.
It may be worthwhile to introduce even stage wise bonus with proper safeguard for
final completion. This will make both owner and contractor to plan better and be alert.
To safeguard and avoid disputes by making bonus clause not arbitrable on any ground.

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ASSIGNMENT – 2
1.

Differentiate between Tender and Contract documents.

2.

The general condition in Indian tenders is as under :
“The information & data shown in the drawings & mentioned here in are furnished for
information only & govt. will not be responsible for accuracy thereof & / or for any
deductions, interpretations or conclusions drawn there from the contractors. Contractor
shall deemed to have visited the site, obtain all information & satisfied himself before
submitting the tender”. Analyze critically the above condition.

3.

It was agreed in the contract that contractor shall never litigate for any claims which may
arise at a later stage. Will this condition prevent the contractor from going to court?

4.

A contractor sued an architect under the building contract for negligent measurements &
certifying for a much less sum then the balance due to the contractor. Can contractor
succeed in sueing & getting the due payment?

5.

In a contract of a multistoried building having basement for car parking, the total works
was handed over by the contractor to client after consultants approval. The specifications
did not show waterproofing to be done in the basement. The oxford dictionary meaning of
basement that is must be water proofed.
During defect liability period basement was flooded due to unprecedented rains & all cars
parked in the basement got damaged. Consultants recommended client to forfeit the
retention money of the contractor saying that which was a substantial amount. As a
contractor what will you argue?

6.

A contractor does not provide safe access to the engineer for checking the works & also he
does not serve engineer tea/coffee & snacks. If both are written conditions of contract is
there a breach of contract from contractor?

7.

Explain the characteristics of conditions of contract and BOQ (Bill of Quantity).

8.

Draft bonus clause acceptable by both (the client and contractor the parties) to contract.

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Chapter – 3
Various Types of Contracts
TYPES OF CONTRUCTION CONTRACTS

Direct Cost

Indirect Cost
Overhead Costs

Items of Work

Profit

Costs incurred
for specific
items of work

The Work

At the Job

Operating

Costs that can’t
be allocated to
specific items

Costs that can’t
be allocated to
specific items

Difference
between all
costs & all
incomes

The Site

The Firm

The Motive

Cost

Fee
Stipulated Sum

Cost Analysis of a Project
(Source : Contracts and Specifications by Glen M. Hardy)

Probably the best and the most direct method to understand the reasons for different types of
contracts is to examine and analyze the costs of construction.
The costs of all construction projects can be divided into two major categories 1) Direct costs and
2) Indirect costs.
Direct costs arise out of the fact of doing construction work.
Indirect costs are those which arise out of the fact of being in the business, whether any work is
being done there or not.
Direct costs are of two types; items of work and job O.H. of items.
Indirect costs are also of two types; i) Operating O.H. Costs and (ii) Profit.
All the direct costs are called cost and all the indirect costs are called fees.
We arrive at one type of contract, costs + fee and if we add costs and fee we come to the second
type of contract i.e. “Lump sum”.
These two types of contracts represent two extreme poles of contractual and financial relationship.
Most of the contracts lay in between these two.

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fixed price) : In this contract type. As for examples. The works that are indispensably necessary to complete the whole work are included by implication.The types of most common contracts are as follows :1) 2) 3) 4) 5) 1) TYPES OF CONSTRUCTION CONTRACTS Lump sum contract. demolition of existing structures. i.e. a small room for watchman etc. Some miscellaneous items which cannot be usually carried out under any other form of contract are given on L. basis. contract. usually in installments. Lump Sum Contract (stipulated sum. If no changes are made.g. in the agreed manner and at proper times.g. In this type. It is required by a contractor to provide and install work that is “reasonably inferable there from (the contract documents) as being necessary to produce the intended results”. the contractor would be obliged to install a staircase so that the intended result – a livable twostoried house was produced. it is the primary duty of the contractor to do the work as defined and required by the contract document. contract. ornamental doors. If the flooring is not specified. the contractor is required to provide and do everything necessary to complete the work for the purpose for which it is designed. the contractor stipulates (to make an expressed demand) the amount of money for which he is prepared to do the work. E. He can do this by the information given by the owner/designer in a correct and complete form. in the absence of anything to the contrary in L.S.. Cost + Fee contracts. this wording overrides any omissions. sanitary block for a school building. Unit price / Item rate contract Turnkey contracts. Contractor’s obligations in L. The important characteristic of L. Max. If a construction contract is for the building of a house and it says that the house is to be “completed and ready for occupation by April 1st 1990”. and the specifications made no mention of it.S.S. Information can be made available through tender documents. making an opening in the existing slab or beams etc. a compound wall. within the time stated in the contract document (Agreement). the contractor may provide and install whatever flooring is reasonable for that class of the house. The contractor’s primary right is to be paid the contract amount. Contracts : In this type of contract. Tenders & Contracts & Contract Management -14- .S. the final cost would be the original lump-sum offered This type of contract will be useful only when it is possible to workout the exact quantities of limited items. cost / Target contract. the contractor carries a greater share of financial risk as he knows the probable total extent of financial commitments. e.S. it means that even though the designer’s drawings for a two-storied house did not show a staircase. contract that affects the contractors duty is “the legal concept of a fixed sum for a completed job of work:. if not specifically in the L.

If blasting or dewatering is necessary. so he will quote fair rates. E. any specific risk can be isolated.S.In a L. contract by prescribing that contractor shall complete the work so that it will be completed and ready for use by a certain date. the extra cost will be paid for by addition to the contract sum. Classification of materials : Sometimes classification of materials results into a dispute. If it is necessary to go deeper.g. Final costs : It is practically impossible to know the exact final cost of the work in advance. precluded and provisions can be made to pay the extra costs if a contingency arises. . All in estimate and bid for excavating any material except for rock and water. e. Economical : As the payment is done on a unit bases only. quantities of all possible items of construction are worked out and put up in the tender form.g.S. This is the ultimate performance specification the contractor will consider as many possible risks as they can. calculate their effects and probabilities and make allowance for each risk in their estimates and bids. Is that what an owner would want? It is more sensible to limit contractor’s risks and therefore his prices. 2) Unit Price or Item rate Contract : In this type of contract the contractor quotes his rate per unit of each item of work. An owner or a designer acting on his behalf can remove practically all risk from himself in L. described. Absence of uncertainties : The contractor is not worried regarding the uncertainties in the plans and specifications as his rate is on unit bases for a particular specification. it will be at an extra cost to be added to the contract sum or Allow for foundations down to the depths shown on drawings. contract. This form of contract. the amount of actual work done by the contractor shall be paid by the owner and thus it may prove economical. is useful when the quality of the work is known but the exact quantities of items of work is not known previously. 1) 2) 3) Advantages Elasticity : The contract is elastic in nature and it is possible to make reasonable variations in the quantities of the tender as the rates of these items are known. If the final cost exceeds considerably from the estimate then the owner may have financial difficulty which may lead to the suspension of work. if earth is not available in the earth work contractor may claim it as loose rock. Tenders & Contracts & Contract Management -15- 1) 2) 3) Disadvantages Conflicting Interests : Owner will be interested in getting such items executed by the contractor for which his prices are less and contractor wants the opposite. They are also known as measured contracts. The approx. thus making it unnecessary for bidders to allow for contingencies in their bids. Most of the public works are done under this form of contract. which require blasting or dewatering.

This % usually varies between 15 to 10.000 + .000/-.20. This form of contract becomes very useful when the quality as well as the quantity of various items of construction are not known previously and in times of unsettled market conditions when no contractor is coming forward to carryout the work on unit-price basis.600/1.000 + 15. The % increases with the decrease in the actual cost from the estimated amount and it decreases with the increase in the actual cost from the estimated amount.000/1.800.This arrangement is adopted to induce the contractor to bring down the cost of construction lower than its estimated amount.49.shall be paid to the contractor. if the total cost of the work is Rs. Cost plus a fixed sum with a profit sharing clause :.000/89.000/-.40. estimated cost of work = 15.600/1.80.000/. estimated cost of work is Rs. Thus it determines the fixed amount instead of %.000/-. A target date is fixed for the completion of work and if the contractor is able to manage early completion of work. Rangwala) 3) Cost – plus Contracts : In this form of contracts. If the contractor’s fixed sum for fees is 150.50.000 12. E.00. Cost + fixed sum :.12.11.g.000 12.00. Various methods are used to adjust the fee of the contractor for his services in relation to the total cost of work.000 11.00. A sliding scale in relation to the cost of the work is prepared for contractor’s %.and contractor’s % is 10% at this amount the variable % scale can be as below :Actual Cost Contractors % 13. C. Cost-plus variable % :.000 6% 7% 9% 10% 11% 12% 13% Tenders & Contracts & Contract Management -16- Amount to be paid to contractors 78.00.g. 4) Damages due to changes : If the plans and specifications of some items of work are not ready. He shall be paid 12.60.000 11. the contractor agrees to complete the structure for a certain fee (for his services).In this arrangement the contractor is paid on a variable % base to the cost of the work done.25 X 3.80.In this arrangement.g.000. contractors fees @ 10% = Rs. 1) 2) 3) 4) 5) Cost + fixed % :. in addition to the total cost of material and labour.00.000/-. (Source : Estimating and Specification by S.80.12. E.00.39.00. the owner agrees to pay a definite amount to the contractor for his service.4) Starting of the work : The work can be started as soon as a contractor is fixed and it is not necessary to wait until the final plans of the work are ready.000 11.00. he is paid a certain amount per each day of early completion in addition to his normal fixed sum. then demolition of some done work shall have be done to accommodate the subsequent changes in the plan which will increase the cost.000/. Likewise a penalty clause is also adopted for late completion.000 12.29.500/- .A fixed % of the total amount spent by the owner is given to the contractor as his fees. The contractor is given a share in the amount thus saved. contractor completes this work in Rs. Usual % sharing in such cases ranges between 25% to 50%.200/1. Cost plus fixed sum with a bonus clause : This arrangement is adopted when the work is to be completed urgently.800/1. in addition to his fixed sum as agreed. E.

iii) Illegal for public bodies : For public bodies as the owners. an incentive is provided to the contractors to complete the work in time and cost.O. iii) Early completion of the work : The decisions can be taken earlier so it reduces the time of completion. It is absolutely necessary to state that these rates include use of contractor’s plants and equipments. ii) Extra work : Dispute arising due to extra works is totally eliminated since there are no extra items. Tender simply fill their prices for each item or the contractor quotes his rates in the tender by higher or lower % to the SOR rates. S. etc. The contractors then submit their own design and construction offer along with the conditions. This type of contract is useful in specialized contracting works such as thermal power plants.Thus the contractor gets more amount if he is able to bring down the actual cost lower than the estimated amount. ii) Inferior work : The work of inferior quality is demolished and replaced at the owner’s cost. Consequently. Labour Contract : Sometimes the owner is in a position to purchase the required material himself.R. Contract : Here the tender contains only the description of all possible items of construction. Overall responsibility of the work belongs to the contractor. contractor’s supervision and contractor’s profit. Negotiated Contract : Here there is no open competition and the owner carries out negotiations with selected contractors. Tenders & Contracts & Contract Management -17- . iv) Checking of the contractor’s amount. Advantages of Cost-plus contract :i) No conflicting interest : The contractor is guaranteed for a certain fixed profit even in unstable market he will normally act in the best interest of the client. all necessary false work. 4) Turnkey (All-in-one Package Deal) Contracts : Here the owner gives his requirements in a broad outline to contractors together with the site data. Owner is also fee to spend on the work as much as he likes. v) More supervision is needed. oil refineries. nuclear power plant. Also the changes after construction of an element cause extra money to the owner. It cannot be used in public works due to the absence of open competition. so he invites tenders for the labour work only. The owner has to see that the required material is available as and when required. However. in emergency or when the time of completion is a major consideration it can be given by the PWD through special laws. it becomes illegal in normal circumstances. Disadvantages : i) Final cost : Final cost cannot be predicted. important bridges. iv) Early starting of the work : The work under this contract can be started even before the final plans and specifications of work are ready.…. He should also see that wastage or pilferage of materials is minimum.

2.5 meter wide.ASSIGNMENT – 3 1. (b) Decoration of a shop. Tenders & Contracts & Contract Management -18- . (i) Donor is a contractor for building a grant in aid educational institute like SBST. (g) Client owns land in CBD area of a big city but does not have money to develop the land for building a commercial complex. Mention the types of the contract you will suggest for the works listed below. identical bungalows on uneven plot of land. away in sea. (h) There are unstable market conditions & PWD has to complete a job under emergency in a limited time. (k) Fixing a projector for city’s planetarium. Explain the “legal spirit” of lumpsum contract. Give reasons for your suggestions. Analyze the cost of a project and explain the two extreme types of contracts emerging out the analysis. (l) Constructing a Navigable bridge connecting an island at 25 km. (c) A prestressed concrete bridge. (f) 100 Nos. (j) For construction of a building with lots of architectural features. 3. (a) A school building with 16 class rooms. (d) A building with architectural requirements (e) A concrete road 1 km long & 3.

a family. a company. It can involve hundreds of people but they can be categorized into the following titles. Other services can be supervision and certifying payments on account of work done the designer will work as an agent of the Tenders & Contracts & Contract Management -19- . These are usually detailed working drawings. the owner must get involved in the contractual relationships with several parties. specifications sufficient to permit bidding for the work. a public body or government. The owner of the property may be an individual person. The exact extent of the service is described in the contract. The designer enters into a contract with the owner to provide a service. The owner may develop the land with his own resources. He can be any other person as specialist such as an interior designer. E. tunnels. but by law they are all viewed as individual legal entities like individual persons. it is possible for any individual to perform more than one function. the owner owns the development (building). The owner desires development and therefore initiates the design and contract process. To bring about the development of his land. 1) Owner 2) Designer ROLES AND FUNCTIONS OF PARTIES TO CONTRACT 3) Consultants 4) Contractor 5) Suppliers 6) Employees 7) Other parties In reality.g. He usually ensures the all the necessary permits to authorize all works are secured to the satisfaction of the local authorities. bridges. There is a great scope for flexibility of thought and imagination in the possible arrangements through manipulation of the functions indicated by the given title. The owner of the property is obliged to ensure that all the work done on his property confirms to all the local ordinances and regulations.Chapter – 4 Parties to the Contract A construction contract involves specific relations between specific people to perform specific functions. etc. husband and wife. The owner often passes this responsibility to the contractor but the liability rests with the owner of the project and property. 2) DESIGNER The designer is a person or a party retained by the owner to design the project contemplated (considered) by the owner. He may use his own money or use ownership rights as security to raise money. He can be an architect if functions and appearance predominate or he may be an engineer if the project involves design where engineering principles predominate. dams. He also pays for the process as it progresses upto completion. 1) OWNER The owner is a person or a party who owns the rights of the land and who presumably has the means to develop the land.

the contractor and the sub-contractor have to enter into a contract with the suppliers of materials.g. 5) SUB CONTRACTORS These also fall under two categories those who contract directly with the contractor E. E. “the owner contracts with the designer because the designer has the access to the means of design in the form of experience. ducting insulation. Moreover. etc. equipments. inspection services. those who directly contract with the designer and those who contract directly with the consultant. man power. m/c. services system. i) ii) 4) Direct Consultants : These are the consultants who specialize in a particular aspect of construction. 6) SUPPLIERS The owner.g. structural system. so the consultant requires the services of many other specialist consultants to assist him to complete the project on time. staff. regional or national level. computer services. CONTRACTORS The contractor is a person. Indirect Consultants : These consultants contract with direct consultants to provide highly specialized services. thermal controls. The owner can sue him for his carelessness.owner and he will look after the work as if it was his own. 3) CONSULTANTS The consultants as a group comes under two categories. staff.g. 7) EMPLOYEES Persons employed in the above heads will come under this category. funds and business connections that enable him to undertake construction work. service contractor are the direct sub-contractors and those who contract with the subcontractors are known as indirect sub-contractors. He has experience. equipments. fans and motors. In short. Now-a-days buildings are becoming too complicated to handle single-handedly by a consultant. employees of the organizations concerned with safety.g. guidance in cost control production of specifications and contracts. The owner contracts with the contractor because the contractor has an access to the means of construction. E. Tenders & Contracts & Contract Management -20- . equipments and relationship with specialists. systems. health and welfare of public inspects of tests the supplies and contractor work under legislation at the local. Time schedule is also very tight. otherwise he will put the owner in a very bad position. a firm or a party who contracts with the owner to build the building. quantity surveying. E. He is known as the main contractor. He should be very careful in designing and estimating the project.

services Site work Struc. Specialist testing. C. 1) 2) 3) Traditional Arrangement Management Arrangement Package Arrangement. It is important to realize that contractual relationship exists among some of the parties or persons but not necessarily among all of them. others Suppliers Tenders & Contracts & Contract Management -21- . Specialist inspection Spec. Manu. lawyers. Others Contract for Services Others Contract for Implementation Designer Contractor Architect Engineer Generalist Specialist Direct Consul Direct S.C. services Indirect Consul Indirect S. Site work Struc. bankers. etc.8) OTHERS In every construction project there will be several other parties who get involved in contract with the owner depending upon the circumstances. real estate people. 1) TRADITIONAL ARRANGEMENT : Owner Individual Corporation Public Dept. E. mortgage men. RELATIONSHIP AMONG THE PARTIES Although infinite flexibility is the key aspect of the relationship. this can be represented in three patterns.g.

In a traditional arrangement. There is a vertical pattern with the establishment of a hierarchy of power and responsibility. Finishes Const. a relatively rigid structure of the relationships is exists. Contr. Privity of contract exists between the parties as shown in the figure. U T Manager Contracts S N Contr. Services Sub. All the parties identified here will have a special relationship with their employees and with a variety of firms or companies who may provide particular goods or services. 2) MANAGEMENT ARRANGEMENT : O C N S U L Designer T A Others Contracts S for Services Owner for implementation Contra. Work P P L I E R Reference : Contracts by Keith Coiller Tenders & Contracts & Contract Management -22- S . Site Work Cont.

Justify their titles. Tenders & Contracts & Contract Management -23- .ASSIGNMENT – 4 1. 2. Design “Privity of Contract” for BOT contracts. Explain the various “titles” of the parties to the contract.

Chapter – 5 Specifications DEFINITIONS 1) 2) 3) The act or process of specifying.e.(Rate Analysis). The specifications of poor quality causes delay and arbitration. Following are the alphabetically listed Ten-Commandments (laws) of writing good specifications:1) Be Complementary : Relate all the parts of the contract without any omission and minimum overlapping (repetitions). Written description of an invention for which a patent is sought. i. In style. 5) Be Current : Eliminate out-of-date references. Specifications is a legal document and it should be prepared with great care and skill. to name or to state explicitly (in detail). use numeral abbreviations and list out materials and products. attitude and firmness. 2) Be Concise : Say only what has to be said. which helps the contractor to quote correct rates at the time of filling the tender. 3) Be Consistent : 4) Be Correct : Check for errors and inaccuracies. well organized connotations (suggestions by a word or a thing). Object :1) The main object is to state the information to fulfill the quantitative and qualitative needs of the design for the project. of words. use least no. The detailed and precise presentation of plan or proposal of something. The nature of specifications varies with the type of the contract. These terms have very definite. Plans and specifications are the tools prepared by the designer which the contractor uses to build a building. It is also required in case of arbitration or contract cases. Specifications is a very important contract document because the law recognizes specifications as a part of a legal contract between both the parties. Tenders & Contracts & Contract Management -24- . 2) The specifications defines the quantity and the quality of materials and quality of workmanship of construction items. 3) The information and instructions contained in the specification will help the contractor and the supervising staff during the execution of works. It is not possible to furnish data regarding the quality and the quantity of materials and quality of workmanship and the methods of measurements of construction items. INTRODUCTION Various proportions and relative positions of various parts of a structure are shown on the drawings.

a.” Instead of “one point five meter”. The general conditions of contract apply to the works of this section.5 mts.. use prevailing materials and methods of that locality. 3) Be Consistent : In style and attitude. A list of it can be attached in the contract document. 7) Be Objective : 8) Be Organized : Use standard formats wherever possible. i. easier to correct or change. division of contract documents in sections. (Drawings show the scope of work and dimensions and specifications show quality). Use only one type throughout. wealthy. Fewer the no. stupid or dishonest. an. E. 9) Be Practical : Contractors are not magicians. specifications. Select correct words and then put them into correct context in the specifications. particularly drawings and specifications. 2) Be Concise : Say only what has to be said. Use numerals instead of writing nos. BOQ and drawings) should be complementary. Also fewer words save the time required to type. so there can be better co-relation between drawings and specifications. Tenders & Contracts & Contract Management -25- . 10) Be Specific : Do not talk in generalities or use ambiguous words and phrases. lower the chances of misinterpretation. Each word should be examined w. Also use abbreviations instead of writing out full titles of well known things. because drawings are made in numerals. It is unnecessary and dangerous to duplicate or repeat information and instructions in more than one part of the document because of the chance of making a mistake in one or the other place.t. in words.g. Use simple present tense and imperative mood. printing and paper. Many words have optional meaning and spellings. these are quicker to type. because each word has to be interpreted legally. “1. 1) Be Complementary : The job is to bid and built. and simple to read and to understand. proof read. of words. e.e. Moreover. the contractor shall be. of words. Use the least no. it should be made to fit each other with no omissions and minimum overlapping.r. All the parts of the contract documents (agreement. conditions.g. all possible meanings. the ……….6) Be Fair : The contract should be a bargain to both the parties. Listing of materials and products often helps to eliminate unnecessary words or phrases.

E. In one contract a 500 mts.. manufacturers’ literatures which are in present use and easily available should be specified. one must keep in touch with these moves. Following are the escape clauses which frequently occur in contracts but these should never be used. accepted. to the satisfaction of the architect. dates.L. drawings. regulations. specifications. Tenders & Contracts & Contract Management -26- . Reference records should be updated. the more smoothly the job will run. contract portion. Graphical conventions and abbreviations are understood in particular regions only. and constructed. 5) Be Current : Titles. where directed by the engineer. Clauses taken from previous jobs must be reviewed to make certain that they fit in the new project.4) Be Correct : Check and double check the names of manufacturers. Industry practices and procedures are changing from time to time. confirm nos. the other party will try to get around these conditions and thus cause problems to all concerned. It should be such that the offer can be made. Present project specifications are mainly divided into following technical categories :1) Recognition of main elements 2) Organizing as per the sequence of work. The more fair and equitable the specifications. amounts. to improve services or to take advantage of new technology. at the discretion of the owner. road was typed as a 500 km road. Regconition of main elements : Front and Back Cover. If the writer includes unfair clauses which give an advantage to one party. 6) Be Fair : Do not put undue responsibility and financial risk on any one party.g. are examples of unfair clauses. bidding portion. products and local suppliers. govt. So.. unless otherwise directed from an approved source. Excavation in all types of soils and conditions or provide and apply two coats of asphalt paint on the external surfaces of a foundation wall below G. Flysheets to identify the project table of contents. standards. 8) Be Organised : Several portions and parts of the contract have to be put together in an organized manner. proportions of mixes and spellings. model nos. quantities. 7) Be Objective : The objective is to bid and build.

Organizing as per the sequence of work :
i)
General Work.
ii)
Civil Works : earthwork, concrete, masonry, metals, wood and plastics, thermal and
water protection, doors – windows and glazing, finishing and painting, site
development.
iii)
Services.
iv)
Specialties.
v)
Equipments and M/c.
vi)
Conveying systems.
vii)
Mechanical Installation.
9)

Be Practical :
Contractors are not mind readers. They cannot guess what is in the owner’s or the
designer’s mind. They have to do what is indicated in the contract documents.
Contractors are equally emotionally involved in the construction.
Contractors are not stupid. They probably know the ins and outs of their trade more than
anyone else in the locality and the designer should utilize their expertise.
Contractors are not dishonest. Majority of the disputes involving contractors arise from the
difficulty in interpretation of specifications. The more care taken to eliminate these
difficulties, the harder it becomes for crooks to operate, and easier for the honorable
contractors to do their work. It is advisable to adopt local industry techniques and practices
wherever possible.

10)

Be Specific :
Include only those things in the contract that pertain to the contract and which can and will
be enforced. Don’t write ambiguous words or phrases as these cause problems due to
misinterpretation.
1)
2)
3)
4)
5)

6)

“Any” – This word introduces choice. E.g. “Patch any crack in the plaster”.
“Either” – This word is confusing. E.g. Paint either side of the door.
“Or equal” – This expression should be avoided as it gives choice and opinion to the
contractor. Designer should reserve such decision and write “or other approved”.
“And/Or” Avoid this phrase. Use “and” or “or” but not both. E.g. remove tools
and/or debris. Which thing should the contractor remove?
“ETC” This should never be used. It is impossible to tell which the next item is and
upto what nos. E.g. remove tools, rubbish, equipments, etc. What is the next and
how many?
“Use” This word does not mean “provide”. Contractor may use the things provided
by the owner.

Tenders & Contracts & Contract Management

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ASSIGNMENT – 5
1.

Explain through examples “Principles of Good Specification Writing”.

2.

Take one sample specification from any contract you are involved and redraft the
specification by applying principles of good specification writing.

Tenders & Contracts & Contract Management

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Chapter – 6
Types and Sources of Specifications
TYPES OF SPECIFICATIONS
1)
2)

Brief Specifications and
Detailed Specifications
a) General or Standard
b) Particular

Brief specifications are used only at the time of preparing the estimate. They do not form the
part of the contract document. Detailed specifications describe technical requirements of each item
of construction. They provide detailed instructions regarding the quality of the final project.
They also describe tests to be performed for the approval of materials and to check the
consistency of the supply. These should be concurrent with the drawings.
Detailed specifications are of two categories a) General
Particular or Special Specifications.

or

Standard

Specifications

b)

GENERAL OR STANDARD SPECIFICATIONS :
These are formulated in a manner such that it can be used on any project. Care should be taken to
(i) Use it on a particular job and (ii) For variable requirements blank spaces can be provided and
can be filled up as per particular requirement.
These are prepared by various public authorities or trade associations for the use throughout the
country. Equality and reliability of these specifications will depend upon the interests, abilities and
biases of the persons preparing them. For their use in the contract, care must be taken for the
reasons, purposes and even motives of the organization issuing such general specifications. These
should be updated regularly. It simplifies the control on the quality of the work.
SOURCES OF SPECIFICATIONS
i)

Govt. Departments : CPWD, PWD, MES, ISI, Railways IRC, etc.

ii)

Others : Client’s requirements, previous specification, drawings, site investigation, etc.

iii)

Professional Associations : Like Architects, Consultants like EIL, Tata Consulting
Engineers and Contractors produce well researched, reliable, fairly unbiased and uniform
information for use in the construction contracts.

Tenders & Contracts & Contract Management

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Other factors are deliberate or accidental suppression of negative features of the product and the extent to which the information about the product’s superiority to the actual facts related to the product is correct. In short. (b) It’s potential reliability. Some of them are excellent but these show inclination towards protection of affairs of the member of the association. vi) Manufacturing Companies : Many reputed and reliable companies produce promotional literature of one type or the other for their products. a few unreliable companies also make products and their specifications. PARTICULAR SPECIFICATIONS : These are prepared for specific projects and they may include general specifications either in fact or in reference. Although there are good reliable companies. Specifications are also classified as under :a) b) c) d) e) f) Open Restricted Closed Prescription Performance Proprietary Tenders & Contracts & Contract Management -30- . v) Manufacturer’s Associations : They also produce specifications on products or systems that have been well proved in the market. Such literature will be varying in quality as per the knowledge. factors to be considered while selecting the specifications from various sources are : (a) Nature of the source of information. (d) Updating by removing obsolete specifications. So while using them care should be taken to protect the interest of the other party. These are intended to be used on one job only. These can be used as a guide to enable member companies to manufacture products within known and acceptable tolerances. So this point must be carefully surveyed before specifying a particular company’s products. (c) Motive of the persons or the bodies preparing specifications. vii) Text and Reference Books : It is an excellent source available. although may be applicable in parts or full to similar jobs. experience and ability of the person or the firm preparing the information and the budget available to research the product and to print and distribute the literature.iv) Trade Associations : The service trade personnel like roofers and painters produce manuals and pamphlets of practice for use in the construction contracts.

made by one or two companies only. provided they function properly and economically for adequate life. E. If the price cannot be negotiated. b) Closed Type : Sometimes the owner or the designer require a specific item or a system. E. ducting insulation and grills is left to the contractor. If the desired results are not obtained. If there is substantial amount involved.a) Open Type : These are desirable from the owner’s point of view as these permit the widest possible amount of competition in price. Tenders & Contracts & Contract Management -31- .g. In this type the writer has to survey all the products he wants to specify. BK. model no. flow of air. the detailed description of the end result is given. This can be restricted or closed. using toilet partitions for use in school or public buildings. A more common example is brick masonry where everything is mentioned. d) Performance Specifications : In contrast to prescribed specifications. c) Prescription Specifications : The method to be followed by the contractor is described in detail. The owner may pay inflated price. it might not be the fault of the contractor. Many companies make such products and all are able to bid for supply and installation of these partitions.O. the company will not like to build this building with the bricks of their competitors. The contractor follows the described method to arrive at the required results. it is better to negotiate a good price for that item or system in advance before using it for the specification.g. it is not adopted because i) monopoly is created ii) doubt of favorism is put on the specification writer iii) it is possible that other manufacturers may be able to supply the same article of better quality and at cheaper rates. style and accessories. then funds should be arranged for or the project should be scrapped off. temperature. The owner or the designer do not care which product is used. having a new H.g. a roofing contractor who followed the prescribed specifications to put a roof on the building. installing a major projector for a city planetarium. Manufacturing Co. in A/c system. so there is a financial benefit to these companies. Another example.g. E. Method to achieve this end result is left to the contractor although there are some suggestions given. E. In PWD. provided it meets with the requirements of the specifications. It usually does not matter which company makes the partitions. The problem in this type is that what will be the useful life and maintenance cost? e) Proprietary Specifications : This specification writer mentions manufacturers by name. These is no competition. Any company that makes a product or a system that meets the parameters specified can bid for the job. noise levels are specified but the system of m/c. and describes optional features like colour. the roof blew away in a storm. designed. The contractor can be instructed to include that amount of money in his bid and then special sub-contract is arranged to ensure delivery and installation of that item or system.

there are barriers to clear communications which are interruptions. A slope or inclination. legal relationship. To become proficient in writing specifications. any word that has more than one meaning should be placed in a context where the intended meaning expresses only one interpretation. distractions. To set-down and erect a tent. but drawings are to be accompanied by written notes describing many abstract quantities such as time. contracts. To throw underhand. codes. A reserved portion of the ground. which is often used in the construction communications. procedures. of words 3) Arrange words to command attention. 4) Eliminate distractions and diversions. costs and the like. Tenders & Contracts & Contract Management -32- . value and other technicalities that cannot be graphically represented. methods. consider the word “Pitch”. Thus. A screw convolution. A musical tone. E. The sounds are interpreted as spoken words and shapes are interpreted as written words. 1) Meaning of the words : In construction contracts. i) ii) iii) iv) Earth or Soil Paving Stone A quantity as in the pitch fork. To fall headlong. such words can be misinterpreted very easily and they require very careful consideration. Drawing is the main language for engineers. systems. Some general principles of specification writing can be developed as : 1) Choose words carefully 2) Use least no.LANGUAGE OF SPECIFICATIONS Language is one of the basic modes of human communication w.g.t the world of ideas. Important things to be observed in this context are: 1) Meaning of words 2) Form of words 3) Categories of words 4) Punctuation and 5) Verbs. The highest point in the falconry. The specification writer does not want to loose the attention of the persons who will be reading them. A point on a scale. faulty interpretations. There are 10 current and 4 obsolete meanings of this word. Learning building technology is like learning another language. Building technology has its own vocabulary or terminology and it has its own forms of syntax and grammar. In both these patterns. it is necessary to learn this particular language by studying construction materials. Fancy sales talks. diversions and other filters between the source and the terminal in the communication chain. a) b) c) d) e) f) g) h) i) j) A distillate of tar.r. Language is a pattern of both shapes and sounds.

They give verbs more specialized meaning.g. “Paint” can be either noun. Some words appear in several categories.g.g You. E. verb or adjective. tense and mood. and.g.g. “He builds well” and compare with “He builds wells”. E. a short time and result of motion about an axis. Some words in one category can have several meanings. who. case. “Perform work to Architect’s direction” – singular “Perform work to Architects’ direction” – plural “Perform work as directed by architect” – preferred..g. E. she. Different words can have identical sounds. vi) Conjunctions : These are used to link the phrases or sentences together. he. Punctuations : i) Apostrophes (‘) usually proceeds or follows the “possessive” S either in singular or in plural.2) Forms of words : In construction specifications most important are forms and nos. places. “ah” have no place in the construction specifications except when the job runs over the budget. One must be very careful about quantities. construct. The word “Pitch” after the word roof makes roof an adjective. Tenders & Contracts & Contract Management -33- . iv) Adverbs : Quality or limit of verbs. E. that. They can be usually avoided. Now compare with “Flies Time” here Noun-Flies and Verb –Time. v) Adjectives : They qualify or limit nouns. “Time Flies” here Noun-time Flies –Verb. ii) Pronouns : These are substitutes for nouns. things. Their use should be avoided in specifications as they are general. sight. E. They can usually be avoided. supply. E. vii) Interjections : Such as “on”. cite. not specific. site. but. E.g. moment means. it. 4) i) Nouns : Denotes persons.g The roof pitch is steep/soft. Specifications’ writers must develop extensive vocabulary of construction nouns by studying construction materials and methods. iii) Verbs : Expresses occurrence of an action or existence of a state. etc.g. and this is the largest category of words in the language. 3) Categories of words : There are 8 categories of words i) Nouns ii) Pronouns iii) Verbs iv) Adverbs v) Adjectives vi) Prepositions vii) Conjunctions viii) Interjections. They give nouns more specialized meaning. E.g. etc. E. selecting the correct verb and tense and mood to achieve desired actions by parties to whom specifications are to be read. E. what. E. putting words in the right context. this.g. notify.

Cement : Type 1 Portland Grout : 1 part cement. They replace the word “shall be” or “shall” e. 3 parts sand.g. ought to. provide and install “Cera” sanitary fitting.) : In place of periods where two statements suggest closely linked activities. and clothes”. must. Division : Avoid contractor. are. Compare with “provide. Joining : rust – resistant. may can. x) Question Marks (?) : Should never be used in specifications. iv) Commas (. 3 parts gravels. Tenders & Contracts & Contract Management -34- . Normally select present tense and imperative mood. e. brushes and clothes”.g. e. Mortar for external use shall consist of 1 part cement. could have. have to. xiii) Semi Colons (. 1 part times and 6 parts sand. could. E. * do not use antifreeze chemicals in the mortar.) : These are the full stops. should. E. ¼ part lime. rather than. ix) Periods (. ladders. vi) Exclamation Marks (!) : Never required in specifications. built-up.g. ¾. and 4 parts sand (ASTM type ‘M’) xii) Quotion Marks (“ ”) : Inverted commas are used to denote model nos. Install fixtures which will be supplied by the owner OR Install fixtures supplied by the owner. tools. xi) Parenthesis ( ) : Are generally used for secondary insertions. or contract-or. But are also used to denote decimals. shall. contract-tor use (preferable) con-tractor. iii) Colons (:) : Usually suggest an elaboration of the things just stated. and/or. “provide ladders. E.g. tools. Mortar for internal use * shall consist of 1 part cement. v) Dashes (-) : Should not be used in specifications. are to. e. Install fixtures to be supplied by owner.g. not pose them. Verb Section : Will. have got to. E.) : Used to separate phrases or words occurring in lists. (except in connection with the price) vii) Hyphens (-) : are used either to join words together to make their meaning more precise or used to divide lengthy words at the end of the lines. would have. etc.5) ii) Asterisks (*) : Usually signify a footnote or a word of warning. The project manual should answer the questions. brushes. viii) Slashes (/) : These should be used with particular care as they can mean either add or multiply or divide.g.g.g.

Tenders & Contracts & Contract Management -35- . Through examples explain various types of specifications stating their advantages and disadvantages.ASSIGNMENT – 6 1.

Since about 50% of the national plan outlays are allotted to the construction sector even the slightest improvement in the productivity of this sector which could be achieved by efficient management of contract. Departmental execution is generally resorted to the special cases only. and retention money. Terms of payment and settlement of disputes are not equitable. mechanization. Powers of supervisory staff to suspend work. labour co-operatives and govt. sponsored private bodies is comparatively small. construction process and system. the spirit of the contract act remains the same. will be a great boon to the national economy. the spirit underlying them has not materially altered. conditions of contract must not be unreasonable or vague and open to argument. Consequently. technological innovations in construction techniques. Although these conditions are modified from time to time. Financial arrangements should be equitable and payments prompt. Even though the contract is between the owner and the contractor. have a considerable influence on construction costs.Chapter –7 Fair and Equitable Contracts NEED TO EVOLVE FAIR. The volume of construction handled by voluntary organizations. depts. in favour of the owner. even though there are changes in it. Tenders & Contracts & Contract Management -36- . Contract forms in use in govt. It is essential that all the factors which contribute towards an avoidable increase in cost are eliminated. Factors like planning. The contract documents lay down the relationship and contracts are governed by ICA 1872 which was prepared under the colonial rules. SD. contractors cater for all these eventualities in their quotations and raise them correspondingly.e. Although there are a no. General conditions of contract which are at present in vogue in govt. Capital gets unduly locked up in the form of EM. The present day developmental activities under which the magnitude of construction is large and more technical in nature. i. departments were drawn upon in the pre-independence days when the magnitude of construction was small and the approach to the contractor’s problems was vastly different. If the rates quoted by the contractors are to be fair to both the parties. construction is largely executed through the agency of private contractors. Till to date. but an aspect which is equally important is the mode of execution of works. necessitates a different approach and a fuller appreciation of contractor’s problems. would have to pay less if the conditions were more equitable. The need to evolve fair and efficient construction management system is the need of today. to order deviations and to reject work should be clearly defined. The present contract agreement form is not fair and equitable. Govt.. throw on contractor an undue share of risk of unforeseen conditions. EQUITABLE and EFFICIENT CONTRACT MANAGEMENT SYSTEM Construction work is generally carried out through contracts. there are many direct and indirect participants who also influence the contract. use of a variety of new materials etc. These reasonable and essential conditions cannot be said to prevail at present. of construction departments and organizations under the central ministries and states which execute works financed from public funds.

NEED FOR EVOLVING FAIR and EQUITABLE CONTRACT DOCUMENTS Many improvements are needed in contract documents which are initially tender documents and when accepted and signed by both the parties make contract. This is the characteristic of the origin of a contract bond associated with the construction industry in all countries at all levels of development. This is quite unlike the manufacturing industry where the product’s cost is known. The scope. the final product must be described and qualified in unequivocal terms. are all embodied in form of contract. of participants with differing requirements and attitudes. there is a complicated process of written documents which elaborately detail and define contractual obligations of the parties concerned. Negotiations were done across the table. the contract agreement used to be a document of only a few pages. Thus.a building. There is distrust between the owner and the indirect participants. Because of this special nature. and their obligations. delays. This is possible when all parties to the contract are made equal parties in sharing responsibilities and obligations are not one-sided. say is sold before it is built. non-fulfillment of obligations by the owner. A major complexity is the contractual obligations linking the participants. In the documents. have put a ban on procedures of settling disputes by arbitration. Tenders & Contracts & Contract Management -37- . instead of analyzing the causes for the state of affairs and finding the remedies. For the improvement of the construction industry. There has arisen a vicious circle of mutual suspicion and differing objectives.ORIGIN OF CONTRACT Construction is a complex process involving a no. without whose cooperation the owner cannot fulfill his contractual obligations. whereas the contract is supposed to have been entered into with the object of constructing a facility in time. this mistrust must change into a relationship of mutual trust. to enable the contracting agency to offer a firm price for the product envisaged. variations. Growing Difficulties due to mistrust: Earlier. a bridge or a power station. All actions were based on mutual trust. but now these are based on mutual distrust between the owner and the contractor. It is worthwhile looking at the views of the parties to the contract. The construction industry is one where the product . quality and substance of information exchanged among the participants. at a reasonable cost and quality by both the parties for the benefit of the community. unforeseen subsoil conditions. There was no protracted procedure to sign the agreement. the disputes have increased for extras.

but the conditions of the contract do not hold owner responsible nor does it allow compensation to the contractor on the above grounds. skill and equipment for such changed conditions. and ultimately society and nation suffer. depts. any delay on the part of the owner will cause to heavy losses to him. as the responsibilities are not specific and pinpointed. 7) Since the contractor has to invest heavily on labour. 6) Construction drawings are never ready in time and changes in them are an accepted privilege of the owner. This causes the officer in-charge to play safe. investigated and planned by the owner. This imposes too much strain and risk on the contractor who has to bid for many works in a short time. After the work has started. vague or incomplete data provided by the owner in the contract specifications. 4) The requirement of construction materials and their availability are not estimated.CONTRACTOR’S VIEWS 1) The tender documents should be standardized for a state or the country as a whole. steel. the entire scope of work may be changed. making the contractor’s plight extremely difficult. as the contractor may not have the technical knowhow. projects are sanctioned without proper investigations or model studies. even for the items of materials to be supplied by him. 2) The conditions are loaded in favour of the owner and the contractor’s position is weakened. Checks and counterchecks. Tenders & Contracts & Contract Management -38- . in an unfair and one-sided system. This situation leads to disputes and claims and a vicious circle appears. in a state has its own contract form. land. The resources arranged according to the earlier needs of the work thus become redundant. The delay in supply of cement. lack of understanding of the problems involved and uncoordination. and proper scrutiny and understanding of each contract becomes difficult. hydrology materials. the contractor is only a part of the entire system. it is after all the contractor who will suffer. even within a department are based on mutual distress. 5) In most of the cases. retards progress. an additional list of conditions could be included while the rest could be according to a standard format. Often. The situation again leads to claims and disputes. the attitude. Often this is not given and the contractor is asked to do his own investigations. should change. Further. quarry rights. sub-soil conditions. The procedures for approval are complicated. Delays on projects due to the owner not fulfilling his obligations are on the increase everywhere. affect the work. etc. electricity. At present each dept. Most of the disputes on contracts arise due to wrong. are not properly investigated and sufficient data are not available in the tender document. resources etc. equipments and funds. 3) The types of soil. 8) Any construction work involves the coordinated efforts of many govt. This is not a practical proposal. The authorities and powers of various officials entrusted to operate a contract are limited and not well-defined. There is often non-fulfillment of obligations in time on the part of the officer on the owner’s side. and other public utility services. For special types of works. The project should have been undertaken after careful investigation by the owner and he is expected to have detailed and accurate information. In reality.

nor do they have qualified men to manage. if adopted. 10) Another important matter that affects a contract is a change in the labour wages and benefits that are introduced for many reasons – social. Escalation based on the construction cost indices. Even though in some big contracts these conditions are being accepted of late. settles rates of extra items and stops unilateral deductions.G. there is almost no fair chance with banks and financial institutions to serve the construction activity in the country. and proper phasing of the recoveries. 11) In the absence of any credit policy applicable to this industry. The owners or clients share their own problems with the contractors. 13) Another problem is financing the contract itself. all affect the prices. Proper advance against plant. cement which demand 20% to 30% advance against the order. and insurance instead of deposits. banks and financial institutions should be able to help in these by adopting uniform codes for B.9) The contract conditions do not provide for any fluctuations in the cost of wages and materials. This would help reduce locking up of funds. or political. Tenders & Contracts & Contract Management -39- . 12) At present. 14) Financial problems can to a great extent be eased if the owner makes timely payments. suitable compensation models need to be introduced in a contract. will also help to a great extent. There are three stages at which the contractor needs funds i) Registration – EMD ii) SD and RD iii) procurement of plant and equipment and working capital for contract execution. machinery and materials by the owners. 2) Technical personnel are not employed and contracts have to specify employment of technical persons and enforce this. will ultimately help the owner in reducing the total costs. some manufacturers enjoy the facility of IDB Schemes to sell machinery on a deferred payment basis with reasonable rates of interest. Construction. economic. stores and spares. Tight money conditions deprive contractors of the facilities of even short-term credits from suppliers and manufacturers of construction materials. This provision is particularly necessary for the projects of duration of more than one year. OWNER’S VIEWS The views of the owner are yet the other side of the picture. as it is seen that policies of the govt. This is particularly so with nationalized industries like oil. steel. The owners. being labour intensive. have no organization at all. has a great effect on cost. private contractors except the few who are well organized. they are not followed in all contracts. on taxation imports and export priorities and inflation. These are :1) Normally. This should be extended to other construction equipments and vehicles to help improve the methods of working of medium and small size contractors. With the present day tight money conditions such methods. This facility is available to certain earthmoving machinery only on a differed payment basis. So.

So. Even if there is any. With the result. if the industry has to improve by better contract conditions to suit the ever changing national and international situation and technological developments. It is also true that many of the owners as well as the contracting agencies do not understand and appreciate the problems they will be facing from the attitudes and actions of various indirect participants. they do not pass it on to their workers.3) Haphazard construction practices are adopted which become responsible for failure of structures during construction. 5) Many contractors quote very low bids and try to make it up with bad workmanship and use of sub-standard materials. 6) Contractors do not pay attention to the welfare of the workers. Escalation and extras the general contractor gets are not passed on proportionately to the sub-contractors. particularly in BKWK. 7) Contractors do not treat their sub-contractors or labour contractors justly and contract conditions between them are not fair. Even when escalation is allowed on these items. in fulfilling the contractual obligations. 8) The construction agency often acts merely as a middleman and sublets large portions of work and earns profits without making any proportional contributions. associations are not able to enforce it. 9) There is no code of ethics among contractors. The margins kept are large and the sub-contractors are forced to adopt malpractices. unhealthy practices are adopted by many contractors to detriment the contracting industry and profession. COMMON PROBLEMS There are problems on both sides which are the causes of dissatisfaction between the owner and the contractor. sub-standard work and the use of sub-standard materials. efforts have to be made by both sides to improve their images and eliminate distrust. 4) Quality is at stake always. concrete and asphalt works as the contractors do not employ qualified persons who understand specifications and codes of practice. their wages and amenities. It so happens that in many states contractors’ associations are not active and united. Many bids are not balanced in rates of individual items. Tenders & Contracts & Contract Management -40- . They themselves do not know what they want.

whose quality. local employment. etc. tools. equipments. water supply and communication services who are to supply these facilities in time in quantity required and keep continuity. v) Financial institutions who are to arrange for overdrafts. but are very vocal in public forums to criticize the construction sector for the delays and cost escalations which are many times due to their unaccountable actions. land acquisition. rehabilitation and other matters. vii) Technical Advisory Committee who takes away all the initiatives from the project incharge and who unknowingly contributes to delays of the project and cost escalation. viii) New environmentalists and ecologists. iii) The manufacturers and suppliers of utilities. Tenders & Contracts & Contract Management -41- . discounting. affect the construction schedule and process. delivery schedule. etc. transfer of funds. iv) Electricity. vi) Labour unions : Particularly the leaders who become unreasonable. stores. ii) Actual user who may not have a clear concept of what he wants and may many a time change his mind during the actual execution of construction. etc. ix) Local politicians of various parties trying utmost to delay on matters of project investigation sanction. erection services.INDIRECT PARTICIPANTS and THEIR INFLUENCES Some of these are: i) The sanctioning authorities at different levels whose decisions delay implementations.

ASSIGNMENT . Tenders & Contracts & Contract Management -42- . Analyse the contracts of the projects governed by ADB or World Bank and critically comment on their fairness and equitability.7 1.

Since the contract form is used internationally. They are based on the guidelines/ examples for clauses given in Part 2. Any contract form containing several conditions. It also contains certain blank spaces to be filled in. FIDIC form has been practice for a long time yet many seminars have been organized to educate the professionals about the applicability and interpretations of the conditions of FIDIC form in context to various issues of construction. such as the name of ruling language. English language has been considered as the official language. The secretariat is situated in Switzerland.Chapter –8 Comparision of FIDIC and MES General Conditions of Contract FIDIC and CONVENTIONAL INDIAN CONTRACT FORMS The conventional contract forms used by various govt. MES is an organization under the Ministry of Defence and provides engineering services for the armed forces both in peace and war. while Part 2 is a tailor-made extention of Part 1 and gives full and detailed meanings and interpretations to various conditions. Due to globalization of the economy. each linked with another is not easily understandable at first reading. departments in India are one-sided and in favour of the client. If having two parts. These companies do not consider this conventional form of contract as suitable but prefer the global contract form such as FIDIC. of amendments have been issued from time to time to keep pace with the new requirements. The present FIDICA form is in the 4th edition having 2 parts. etc. This is also true with the FIDIC form in India. many MNCS contract for various infrastructure and development projects in India. In the globalizing economy. The comparision of MES (Military Engineering Services) form and FIDIC (Federation International des Ingeniews Conseils) (International Federation of Consulting Engineer) is given below. In UK and other European countries. security deposits. deviation limits. why Part-III In Part III conditions of particular application have not been standardized and they require to be drafted separately for individual contracts. FIDIC was formed in 1913 and has 60 member countries now. except to the practical and experience persons. Tenders & Contracts & Contract Management -43- . the country or state whose law is applicable to the contract. The World Bank or the Asian Development Bank while awarding loans for any project also insist upon the FIDIC form. Part 1 contains general conditions. It had prepared the contract form in 1947 and no. the FIDIC form of contract is more equitable as it defines clearly the role and responsibility of both the parties to the contract.

Extension of time 2. Delay and Extension : Default of owner If the delay is caused due to non-availability of Govt. OR Non-availability of or breakdown of Govt. Default of Contractor : If the delay is caused due to any default of the contractor. elaborately but the conditions of owners’ obligations are not expressed clearly. if challenged within the stipulated time. then the contractor is liable to pay compensation at the rate of 1% of the contract value for every week of delay subject to max. Procurement of all materials. limit stated in contract. Default of Contractor : If the delay is caused due to any default of the contractor. the contractor shall be entitled for the “extension of time” only. including MES. . if delay is caused due to any failure or inability of the engineer to issue any drawing or instruction for which notice has been given by the contractor OR Failure on the part of the employer to give possession of the site. However. . equipment and all other things required for execution of work is the responsibility of the contractor. Stores shown in the respective schedule.Decisions taken by the engineer/ accepting authority are final and binding to the contractor. Engineer : Engineer is an employee of the department who administers the contract and works as a representative of the owner to settle all matters which arise in relation to the construction of the project. -44- .Decision / opinion taken by the engineer may be opened up. plant. the In FIDIC obligations of contractor as well as obligations of contractors are spelled out owner and engineer are set out clearly. then the contractor is liable to pay to the employer relevant sum stated in the appendix to contract as liquidated damages for every day for the period of such delay subject to the applicable limit stated in the contract. Remedy for non-issue of drawings or not handing over the site on time is not emphasized anywhere. reviewed or revised by the arbitrator. Tenders & Contracts & Contract Management Engineer may be the employee of the department but is not a signatory or party to the contract between the employer and the contractor. duties in particular. He has to perform as an interpreter of the contract and as a judge of its performance by both the parties. Then the contractor shall be entitled for 1. Additional amount which the contractor has incurred due to delay.The differences between MES and FIDIC forms are as given below : MES FIDIC Obligations : In all Indian contracts. tools and plants listed in the respective schedule.

if the suspension is ordered for the reasons 2 and 3 stated above. Tenders & Contracts & Contract Management Prior to making any claim under the S. The institution providing such a guarantee shall be subjected to the approve of the employer. Suspension of Work : The engineer for any of the following reasons can order suspension of progress of work or part thereof : 1. 2.D. Owner’s lien on withheld amount : Any sum of money due from the contractor or any account whatsoever may be deducted from. no time limit has been specified for such refund. Generally the employer uses unconditional and irrevocable BG. The engineer can order suspension of progress of entire or part of the work for any reason. Necessary by reasons of some default or by breach of contract by contractor or for which contractor is responsible. Bill” first and has rendered a “No demand certificate”. Necessary for proper execution of work or for safety of the works (Except the default of engineer or employer) -45- . Contractor shall not be entitled for any compensation if the suspension is 1. For improper execution of the work for reasons other than the default of the contractor. however. the employer shall notify the contractor stating the nature of defect with respect to which the claim is made.D. Although in practice prior notices are given. Otherwise stated in the contract. shall be in the form annexed to these conditions or in such other form as may be agreed between the employer and the contractor. S.MES FIDIC Performance Security : S. or paid by the sale of a sufficient part of SD.D. However. Generally guarantees are conditional and can be encashed for certain stipulated reasons. Necessary by reasons of conditions on site or 4.D. may be refunded to the contractor after S. shall be refunded to the contractor within the expiry of defect liability period provided that 14 days of the issue of defect liability the contractor has always been paid the “Final completion certificate. 3. For the safety of the work. 2. Bank Guarantee Format : The BG shall be executed for a period and on a form as directed by the employer. then the contractor shall be entitled for extension of time equal to the period of every such suspension plus 25%.. On account of any default on the part of the contractor. 3. no clause expressly states about the requirement of any notice regarding the claim. 1 stated above. While no compensation or extension of the time is admissible for reason no.

If such permission is not granted then the contractor may elect to treat the suspension as an abandonment of work. A sum being the amount of any expenditure reasonably incurred by the contractor in expectation of completing the work.MES If the total period of all such suspensions exceeds 60 days. However. -46- . . The engineer can make any variation of the form. if the sum of the price of all deviations exceeds 15% of the contract price then in such an event the contract price shall be adjusted. then the contractor may elect to terminate the work as an event caused by employee default. then the contractor after 60 days gives a notice to the engineer requiring a permission within 15 days from the receipt thereof. Deviation in items of individual trade should not be more than 25% of the value of the contract sum as a whole or half the deviation limit whichever is less.extension of time equal to the period of every such suspension plus 25%. then the contractor is entitled to . 1) The sum of all deviations should not be more than twice the deviation limit. give a notice to the engineer requiring permission within 28 days from the receipt thereof to proceed with the suspended work then. to proceed with the suspended work. If the suspension exceeds 84 days. In the event of such termination the contractor is entitled to (1) The amount of any loss or damage to the contractor arising out of or in connection with or by consequence of such termination. if such permission is not granted. Tenders & Contracts & Contract Management FIDIC If the suspension is ordered due to the default of the engineer or employer then the contractor shall be entitled to 1) Reasonable extention of time. Deviation Limit : Such deviation (+ and/or -) should not change the contract sum by more than the % setout in the tender subject to following restrictions. In such a case. Such adjustment shall be based only on amount exceeding 15%. be entitled to a reasonable compensation with respect to salaries and wages paid to labour. He shall. the contractor shall not have any claim on account of any profit or advantage which he may have derived from the execution of work.A reasonable compensation If the suspension exceeds 120 days at a time. (3) Such proportion of the cost as may be reasonable for the removal of contractor’s equipments. (2) The reasonable cost of return of contractor’s staff in connection with the work at the time of such termination. however. then the contractor may after 84 days. No deviation limit is specified. Provided that if the deviation is ordered as a result of some default of the contractor or a breach of contract by the contractor or for which he is responsible the cost of such deviation shall be borne by the contractor. which remain idle due to such suspension including 5% overhead. The value of addition of any individual item not included in contract  10% of deviation limit. Deviation : Work that radically changes the original nature and scope of contract should not be ordered as a deviation and in the event of disagreement the engineer’s decision shall be final and binding. 2) An additional amount as per the cost incurred by the contractor due to such suspension. quality or quantity of the work or any part thereof that may in his opinion be necessary.

employer before such valuation. revolution. Such works shall be valued as deviations or as prescribed for payment. 5) AOG perils : earthquake lightening. hostilities. plant or temporary works on or near the site or in transit sustains destruction or damage by a special risk. In case of under this condition. 4) Damage from aircraft. military workers) power. invasion act of foreign 3) Riots. invasion act of foreign responsibility for all other risks. radioactive toxic explosives. which are necessary for the completion of the work. insurrection. .If any of the contractor’s equipment. The accepted 2) Rebellion. provided that the Such works shall be treated as variations and contractor shall not be entitled to payment shall be valued accordingly. the contractor shall if and to provisions of contract. plants or temporary buildings on the site.MES FIDIC Sharing of Risk The employer accepts “accepted risk” only and Employer’s Risks are : the contractor is required to take the 1) War. 1) War. the contractor shall be responsible to make good such damages. civil war 4) Pressure waves caused by aircraft or 3) Riots (except among the contractor’s other aerial devices traveling at sonic or employees). . 5) Any operations of forces of nature. the extent required by the engineer rectify the loss or damage. The compensation to make good such damages is however not mentioned anywhere and it creates disputes. 6) Loss or damage due to the use or tornado. risks are civil war. then the contractor shall be entitled to payment for replacing or rectifying such equipment. military power. but not being incorporated in the work sustains damage even due to accepted risks. Tenders & Contracts & Contract Management -47- . till the handing enemies. commotion or disorders (except enemies. in respect of so much loss combination of owner’s and other’s risks the or damage as has been incurred by any failure engineer shall take into account the proportional on his part to perform his obligations under the responsibilities of the contractor and the contract. shift the articles and/or waste. hostilities. occupation by the employer of any section or part of permanent works. supersonic speed. floods. Loss or Damage due to Employer’s Risks : 7) Loss or damage due to defective design In the event of any loss or damage from any of provided by employer or engineer. the accepted risks the contractor shall 8) Ionizing radiations or contamination by 1) Remove from site any debris and radioactivity from any nuclear fuel or damaged works.If any equipment. over of the works to the engineer. materials to engineer’s stores or as directed by the engineer. among contractor’s or subcontractor’s 2) Rebellion. revolution. If the loss or damage happens from any of the 2) Proceed with the work as per the employer’s risks.

No time frame is given in the contractor to process the RA bills and for pay to the contractor. Contractor to keep contemporary records to support claims. The engineer shall within 28 days of receiving such statement give to the employer an interim payment certificate and the payment has to be made by the employer within 28 days after receiving certificate from the engineer. Payment of Bills : RA Bill Contractor may submit claims for payment on account of work done at an interval of < 30 days. then the contractor shall be entitled to extension of time and the amount of any cost which may be incurred by the contractor due to such obstruction or conditions.6 month. Inspection of such records by engineer. The contractor is deemed to have satisfied himself about all matters affecting the completion of work. Notice of claims by the contractor.4 months. Termination of contract due to delayed Contractor is entitled to receive interest on payments : delayed payments and to terminate the No such provision. contract. The final Bill shall be paid within 1.No such clause regarding unforeseeable physical obstruction or conditions is given. The final bill shall be paid within 56 days after the receipt of the final payment certificate from the engineer. Substantiation of claims. FIDIC If during the execution of works the contractor encounters physical obstructions or conditions. 2. 5. 3.MES Unforeseeable physical obstruction or condition: . Interest on the delayed payment : Contract is silent on paying interest on delayed payments to the contractor. Payment of claims. 4. Final Bill : The contractor shall submit the final bill within 3 months (90 days) from the date of physical completion of work. FIDIC describes the procedure for additional Additional Claims : claims as given under :MES contract is silent on the procedure to be 1. adopted for claims involving additional claims. which an experienced contractor cannot foresee. if contract value is > 5 lakhs. if contract value is < 5 lakhs and 2. The contractor shall submit the final bill within 56 days from the date of issue of defect liability certificate. Tenders & Contracts & Contract Management -48- . The Contractor shall submit to the engineer after the end of each month a statement showing the amount to be claimed. He will not be paid any extra charge in this regard.

the reference to arbitration shall not take place before completion of work or termination of contract. No time frame is stated for issue of such certificate. From the above comparison it can be observed that MES contract form does not elaborately define the obligations of owners or contractors as compared to FIDIC form. If either the employer or the contractor is dissatisfied with the engineer’s decision or if the engineer fails to give his decision within 84 days dispute may be referred to Arbitration. it can be concluded that FIDIC form of contract is well balanced. The engineer shall give his decision within 84 days after receipt of such reference. while there are numerous reasons on account of which the employer can terminate or cancel the contract but there is not a single reason for which the contractor can terminate his contract. reference to arbitration may be made during execution of work or after completion of work. Tenders & Contracts & Contract Management -49- . if the work is substantially completed in his opinion. then the decision of the engineer shall become final and binding. then both the parties loose their entitlement to commence arbitration. The Engineer shall issue a certificate to the contractor if the work is completed to his satisfaction. If the contract is cancelled for contractor’s default such reference cannot be made unless alternative arrangements are finalized. In FIDIC form. All disputes shall be first referred in writing to the engineer. the contractor shall give a notice thereof to the engineer. 2) FIDIC form also lists out the default of the employer and entitlement of the contractor to terminate his employment and receive compensation in the event of such default. Unless the parties otherwise agree. Dispute Resolution : All disputes (other than those for which the decision of accepting officer to be final and binding) shall be referred to sole arbitrator to be appointed by the authority mentioned in the contract. various clauses have been subdivided into sub clauses to make it easy to understand while clauses in MES contract are lengthy and hence difficult to interpret. If the engineer fails to give a decision and either party does not intend for arbitration. In MES contract. the contractor shall give notice to the engineer accompanied by a written understanding to finish outstanding work during defect liability period. more fair and equitable and user friendly. If the dispute is not referred to arbitration within 70 days after the day on which the engineer gives his decision. FIDIC On substantial completion of work. Unless both parties agree in writing. Hence. Some of the additional obligations of the contractor which are not found in MES contract : 1) Programme and Method statement to be submitted by the contractor. Engineer shall issue a taking over certificate within 21 days after receipt of contractor’s notice and undertaking.MES Taking over of completed works : On completion of work.

ASSIGNMENT – 8 1. Compare between FIDIC contracts and PWD contracts of your state. Tenders & Contracts & Contract Management -50- .

bold and attractive and also it should contain :- 1. PURPOSE : Advertisement to inform those interested in doing the work. Special requirements. 2.e. 11. 10. designation. Official designation of person giving Notice Inviting Tenders (NIT). 13. Price of tender documents./Size and Character of job. Mag. 8. Condition of award – reserving right of owner.Analyze NIT of a project. 12. locality. WHEN : Well in advance of the date of opening of tenders – to prepare realistic estimates. Completion time of work and date of handing over the site to contractor by client. Name. 6. Name. HOW : It should be conspicuous. 9. 5. quantities. 14. 3. Amount and mode of EMD. Name of the owner. and address of person authorized to give tender. 7. 15. 17. Principal items of work with approx. Date of Signing Contract. Note on Alternative Quotation. designation and address of person authorized to receive tenders. Type of Contract. i. 4. 16. Tenders & Contracts & Contract Management -51- . Name and Kind of job. Way of submitting tender. State lacunas for its contents and redraft the NIT to make it ideal NIT. time and place of opening of tender. Amount and mode of SD/ PB. Chapter –9 Tendering Procedure NOTICE INVITING TENDERS This is the starting point of tendering procedure.

CEPT.C.in form of B. CEPT on 7th Jan. 11) Tenders shall be opened at the office of the Director. CEPT.00 pm. 17) EMD shall be submitted along with the “technical bid” for Rs. Navrangpura. for construction of SBST Building having following details :1) Name of the Project : Construction of Building for SBST.’04.000 M2 Exposed R. Ahmedabad.G. School of Building Science and Technology (SBST).30 am.50.00 pm at the Office of Registrar.(Non Refundable). Campus.’03 upto 5. CEPT Tenders & Contracts & Contract Management -52- .5 lakhs in form of B. CEPT from 1st Dec.C.NOTICE INVITING TENDER : A Case Study :Sealed tenders in 2 bid system are invited from reputed contractors working with designers of Architectural Projects by the Director. L. from a Nationalized Bank. 16) Type of contract Item Rate. 12) Tenders can be withdrawn before the time of opening the tenders. from a Nationalized Bank. 1200 M2.00 am to 05. Stein Doshi and Bhalla. Ahmedabad. the EMD must be valid.000/. work  2.’04 at 11. Centre for Environmental Planning and Technology. SBST. L. “Sangath”. ’03 between 09. 6) Location of the Building 7) Major Items of Works 8) Tenders can be collected from the Office of Registrar. 9) Cost of Tender Documents 10) Duly filled tenders are to be submitted on or before 30th Dec. 3000/. 18) Performance Bond to be submitted at the time of signing the contract. 3) Total Built-up Area : Approx. Ahmedabad. Navrangpura. shall be Rs.’03 to 7th Dec. for a period of 90 days. Campus. 5) Estimated cost of the Project : Rs. 14) Date of Starting the works : 21st Jan. Drive in Road. 50 Lakhs. 13) Date of Awarding Contract : 15th Jan. having basement of full floor and some class rooms with double height. 15) Date of Completion of the project : 20th Jan. Signed By Director.500 M2 Rs. SBST. 2) Designer : M/s. K. Alternative Quotations shall be rejected. : : : i) ii) Exposed Brick work  10.’05. K. 29’ and 36’.’04.G. 4) Type of the Building : Mainly load bearing structure with spans of 36’.

Organizing capacity. 9. 10. Reputation for fair and punctual performance. Available working capital : value of works completed out of works in hand in the current year minus value of uncompleted works in progress 12. Size of the projects he can handle. evidence of lack of ability. They are : (A) either send straight-away to the contractors who are specifically qualified for the job or (B) advertise the job and invite the contractors. Quality and experience of his permanent staff. who are either already qualified or are eligible for such qualification. There are normally two ways of selling tender documents. Tenders & Contracts & Contract Management -53- . 4. 2. So. The default of a previous contract is sufficient ground. Locality where he can work. 6. 7. 8. 5. Disqualification of a contractor is a serious action and it must be taken by the owner for well established reasons. 3. It is essential to invite contractors of equal standing. management and co-ordination of work of sub-contractors. Type of the projects he can handle. to buy. Available plant and equipment for the project. 13. Attitude towards arbitration. Jobs on hand. Litigation with previous contract will generally disqualify the contractor for future tenders. 11.QUALIFICATION OF CONTRACTORS Selection of Contractor for inviting tenders : Suitability of contractor is muct more important than the technical competence or legal formalities of the agreement. insufficient working capital and evasion of income tax payment are the grounds of disqualification. Dishonesty. 1. Financial status. it is necessary to provide all contractors with identical particulars. Average value of work done per year. Income tax clearance.

Ltd. Ltd. 30 Yrs Adequate Pvt. 5. Strength 52 Yrs. Technical Staff Sufficient Sufficient 5. 7. C. Patan. Yrs. Work Executed Solvency Certificate (Rs. Not Adequate Just Adequate Adequate Not Sufficient Just Sufficient Sufficient No Very Few Yes 25 Lakhs 25 to 50 Lakhs Above 50 Lakhs 2 2 3 5 5 5 5 4 6 10 4 6 10 5 8 15 2 3 5 Works executed Private/ Govt. 6. Ltd. Sufficient PREQUALIFICATION COMPARISION Sr. In Business Equip. B. Govt. Work Executed 5 5 5 5 5 5 5 10 10 10 10 10 10 15 15 15 5 5 5 A B C D E F G H I J K L 5 3 3 2 5 2 3 2 2 2 2 2 5 3 3 3 5 5 5 5 5 5 5 5 10 10 10 10 10 4 10 10 6 6 10 4 10 10 6 10 10 4 10 10 10 10 10 4 15 15 15 8 5 15 5 5 5 5 5 5 5 2 3 3 2 5 5 2 3 2 8 3 5 5 5 4 4 3 2 4 2 3 2 4 4 5 5 55 55 50 43 39 40 36 40 40 36 34 39 Conclusion – we will select contractor’s above 40 marks. Name of the Co. 4. 6. Above 10 Yrs. of Marks Out Of Solvency Certificate (Rs. E. 2. 10 Yrs Adequate 4. 10 Yrs Adequate Partnership 10 Yrs Adequate Ltd. A B C D E F G H I J K L Ltd. H are qualified for bidding. Private Private Govt. Parameters  Type of Org. Sr. Tenders & Contracts & Contract Management -54- 2 24 . Name of the Co. Pvt. Building. Semi Govt.) Works executed Private/ Govt. Semi Govt. Semi Govt. So Contractors A. North Gujarat University.  Parameters  1. Govt. 38 Yrs Adequate Partnership 19 Yrs Adequate Sufficient Sufficient Sufficient Partnership 18 Yrs Just Adequate Sufficient Partnership 18 Yrs Just Adequate Sufficient Proprietorship 24 Yrs Adequate Sufficient Very Few 30 lakhs No Partnership 24 Yrs Not Adequate Not Sufficient Yes No No No No 50 lakhs 25 lakhs 100 lakhs 150 lakhs Very few 30 lakhs Proprietorship 29 Yrs Not Adequate Not Suffcieint No 20 lakhs 35 lakhs 10 lakhs Govt. Private Govt. G. Strength Technical Staff Arch. No. Type Org. 7. In Business Equip. 3.  1.A Case Study of evaluation of qualification document:Prequalification Comparision for Admn. No. Arch. Both 2 3 4 5 Yrs. 3. Yes Yes Just Sufficient Yes 100 lakhs 100 lakhs 25 lakhs Both Private Private 2. Public 5 Yrs. Ltd. Pvt.) Properitor Partnership Pvt. Adequate Pvt. 10 Yrs.

TYPES OF TENDERS and BIDDING METHODS Open Tenders : Open Tenders are adopted for public works executed by govts. Any hard and fast rule that the lowest tender must be accepted will often put the engineer or the architect in difficulty. bank solvency certificate. General and Special Conditions of Contract. attested copy of the valid I. Volume 2 : Financial Bid = Envelop B. Limited Tenders : This method overcomes the drawbacks of open tenders. name of the selected sub-contractors. proposed construction and resources schedules. EMD. as the invitation to tender is restricted to a small number of equal ranking contractors.T. attested copy of registered power of attorney.. the system of limited tendering is advantageous. Any one of them can be relied upon to co-operate professionally with engineers or architect. Tender Forms. Balance Sheet of the earlier year. details of turnover. etc. Keen competition is assumed by the use of this method. in the execution of the job and in proper interpretation of the contract drawings and specifications. experience in similar works. Two Envelop System : Tender documents are normally prepared in 2 volumes. Open tendering ignores the likely different qualities of work from good to not so good contractors. detailed organization structure. attested copy of partnership deed. They are executed through negotiations where the price and quality of work is decided mutually without a written contract. performance certificates. details of works in hand. It contains specifications for materials and workmanship and Bill of quantity Technical Bid of the contractor should normally contain : Attested copy of the valid registration certificate. Single/Negotiated Tenders : Sometimes works of very small value are undertaken without tenders. Based on the above criteria. Clearance Certificate. Various performas and formats. municipalities. method statement. This method is normally adopted in private sector. It contains Tender Notice. For more complex or specialized work requiring skill and experience and where high quality construction is needed. Tenders & Contracts & Contract Management -55- . List of drawings and EMD. Instructions to Tenderers. a marking system is carried out and tenders are evaluated. because in open tendering contractors of unequal standing may quote and the comparison may not be realistic. Volume 1 : Technical bid = Envelop A. where there is a statutory obligation to advertise and invite competitive tenders.. It also keeps the door open for new entrants in the business.

14) Type of Contract. min. Bills towards retention. PRE-BID MEETING : Before the submission of tenders. The doubts may be following :1) a) b) Corrections in the quantities of items.Q. Tenders & Contracts & Contract Management -56- . 17) Method of resolving disputes. 5) % deduction from R. 15) Escalation Clause. 13) Details of Insurance. 8) Value of any advance to be paid against consumables delivered at the site and method of its recovery.O. Method and stages of refund of retention amount. 3) Value and form of EMD. 2) Corrections in estimate made by client. 9) Terms of payment. 7) Method of accounting and value of materials supplied by the client. a pre-bid meeting is normally held at the consultant’s/Client’s office to clarify the doubts of the contractors regarding the tender.Three Envelop System : Volume 1 : Prequalification bid = Envelop A1 Volume 2 : Technical Bid = Envelop A2 Volume 3 : Price Bid = Envelop A3 Filled up B. 4) Initial Security Deposit (Value and Mode).A. 10) Procedure of final bill and settlement of A/c. 16) Supply of drawings. 12) Whether labour-camp will be permitted on site. 11) Whether water and electrical services will be supplied at the site free of cost. 6) Value and mode of mobilization advance and value and mode of refunding or recovering at what % of interests.value and intervals of interim bills. Corrections in sub-soil conditions.

000 to pay their overhead expenses (which include salary) and make a reasonable profit.000 profit on my job. TENDER SUBMISSION Tender has to be submitted in a sealed cover and to be marked on the left hand top comer “Tender for the construction of . Public contract policy dictates that all bids are to be opened publicly and read aloud. It is attended by all the bidders.50 markup (which is reasonable for a remodelling contractor). the sealed envelope marked as above. The date and time for receipt of envelope containing the tender shall strictly apply. "Oh. In private sector. Tender offered or received after the date and time is over. look at that crook. Markup process We frequently confuse Markup with Profit. shall be enclosed in another cover properly addressed and shall be sent by Registered Post Acknowledgement Due. Tenders & Contracts & Contract Management -57- .”. He is making $5..Now many people who know little about business and even less about the costs of running a business will say. that means that if the estimated cost for a job is $10.000 sales price. If submitted by post.MODE OF COLLECTION OF BLANK TENDER DOCUMENT  By post  By collection in person RECORDS MAINTAINED REGARDING SALE OF TENDER (Normally followed by Government Department)      Mode of payment by each bidder. this may sometimes be reduced to 2 weeks. The time interval between the date of sale of tender and the last date of submission of tender should normally be 4 weeks." Nope. The full name and address of the tenderer and the name of the authorised agent delivering the sealed cover containing the tender. This is as adopted in the Government departments. Tender sale register (List of those who have purchased the tenders) Tender opening register Tender finalization register Numbering of tender booklets before sale. will either not be accepted or if inadvertently accepted. they'll multiply the $10. shall be written at the bottom left hand corner.50 and arrive at a $15. It is the amount a business charges above their direct cost. in all cases.Your contractor gets $5. Markup isn't profit.000 x 1. which may be reduced to 3 weeks in case of emergency.000. and we want to set the record straight. not true. will not be opened and shall be returned to the tenderer unaccepted.If your contractor has a 1.. It varies considerably in the private sector. Markup is a general term that applies to the overhead and profit that any business needs to realize if the business wants to stay in business. TENDER OR BID OPENING The time interval between the time of the tender submission and the time of the tender opening should be minimum 5 minutes.

amounted to 'buying trouble'. The total number of corrections is given at the end of the page. The owner makes a final selection of the successful contractor only after extensive negotiations. At the written request of the owner. Count the number of envelopes and number them. Right is reserved to reject any item. Procedure for opening of bids in the private sector: Sealed bids are normally received in the office of the owner/client in the custody of the project Manager. It is essential to examine and compare. they could be received in the office of the architect/consulting engineer. Signed by all members of the tender committee. so that the work reaches its completion without any trouble and to the satisfaction of all concerned. Selecting a contractor on price alone has. any tender or all tenders. These sealed bids are opened on the scheduled date and time at the office of the owner/ architect/ consulting engineer. without assigning any reason thereof.Procedure. The purpose of this exercise is to select the right contractor for the right job. the amount and value of the bids are not disclosed. in many cases. Sealed bids are kept in the custody of the Project Manager or an equivalent responsible person. before selecting a contractor for the work. as adopted by Government departments : • • • • • Activities carried out by the tender opening committee : Open the box where the tenders are deposited. the client and/or the architect/engineer analyse each bid thoroughly and compare them with the equivalent standard bid. Closed bidding (For projects in the Private sector) :In closed bidding. the following aspects: • Contractor's financial capacity • Contractor's organizational capacity • Experience in execution of similar type of jobs • Plants and machinery available to execute the job • Works in hand at present Tenders & Contracts & Contract Management -58- . After delivery. Bid Analysis and Comparative Statement (Scrutiny) After the bids are received. Amount and mode of payment List of variations given by the tenderers Final total value of the bid Marking made on each tender: Circle all rates Note the conditions having financial implications Note any erasures/ overwriting Do not leave any space for somebody to make any alterations. in the presence of a responsible authorised person. Points read out by the representative of the tender committee: Name of the tenderer Earnest Money Deposit (EMD). the owner uses the bids in any way that fits to serve their own best interest.

the selected contractor is the one quoting the lower price. To have an ease of cash flow. with names of the persons present • Name and position of the accepting authority • Discrepancy of the bids (if any) to be noted • Reasonableness of the rates. suitability of rates. Briefing note normally includes. • Validity of the offers (with remark on whether extension of validity will be necessary) • Period specified by client for completion of the job • Period asked by the bidders • Name of the office opening the bids. • Technical data i. the selected contractor may not necessarily also be the lowest. But. with value of the same • Availability of the materials. So. If over-done. Tenders & Contracts & Contract Management -59- . down the line. During the tender evaluation. PREPARATION OF BRIEFING NOTE The word brief is misleading in this context and this is standard government nomenclature referring to the recommendation by the authorized person. financial implications of the conditions • Complete details of similar works. it must be kept in mind while considering the tenders that ‘the lowest rate may not necessarily be reasonable and may lead to absurdly higher or lower costs’. such as earthwork and this practice is called “front loading”.• • • General behavior and temperament of the contractor Tendered rates and amount and workability of the same Important document of vigilance department with remarks against any bidder. • Nature and name of work • File no. unless there is some solid reason for not selecting the lowest. etc. quantities. In the private sector. escalation formula. the winner is usually the lowest. rates and amounts quoted by each bidder. of bids sold and received • Income-tax clearance certificate indicating the financial position of the bidders • Credentials of the tenderers • Financial implication of the bids. • NIT no.e. if any This involves preparation of a tabulated statement of items. etc. These can be manipulated through unbalanced bids. with respect to the estimates (namely percentage higher/lower) • Variations reduced to monetary values i. • Tender opening place and time • No. many contractors quote higher rates for the initial items of tenders. based on remarks by persons. Normally in the Government and Public sector. the estimator who produces the lowest estimate has a better chance of winning. In the competitive bidding process. it may act as a ‘dis-incentive’ to the contractor to execute the latter items of work. though justification has to be given in case of such a decision. this aspect should be given due attention.e.

The tender committee will be the final authority for selecting the bidder (normally the lowest. CIRCULATION ROUTE OF THE BRIEFING NOTE Briefing Note Executive head Accounts officer For checking & bringing out their observations. if any Return back to the Executive head Put for clarification of discrepancy. Income Tax Clearance Certificate (ITCC). Tenders & Contracts & Contract Management -60- .The above mentioned is the procedure in Government departments. Assets. Balance sheet (latest and earlier years). unless justified other wise). Scale of business. • All credentials are checked • Undue emphasis should not be laid only on experience. there is no such procedure of noting. In the private sector. Books of account. at tender committee meeting Fig. 1 : Shows the circulation route of the briefing note. Solvency certificate. if any. • Certified credentials like : Financial credentials. General criteria for acceptance of bid by the tender committee : • Reasonable / viable / workable rates. The comparative statement with the covering letter and annexure conveys all that is essential to the client and to the highest authority in the architect's/consultant’s office. Turnover. Bank account.

(Not encouraged normally.) Accepting authority will decide on further negotiations (if any). Tools and plants. When negotiation starts. Manpower. Bench marking and ability to complete the work on time. under the Tender Committee recommendations. as it could lead to suspicion. Experience Capacity Quality • • • • • - Prior works with names of clients and other details. This could be a routine operation in the case of the private sector but it would be exceptional Government tenders and may involve recommendation of the concerned authority.Resource credentials. Quality assurance facilities and ISO certificate. The contractor coming for negotiation should come thoroughly prepared and should preferably someone who can take a decision. site. Negotiation. underhand dealings. During negotiations the tenderer is given the option to reconsider and revise the rates tendered by him in response to public invitation of tenders. after the bids are opened. Information system. minimum two bidders and all valid tenderers.. like the Tender Committee. negotiations are also held sometimes with some selected bidders. offer once rejected cannot be accepted. in the case of a Negotiated tender. land.C.if the rates are higher than the estimated rates. etc. to manipulation. For negotiations. Factory. Tenders & Contracts & Contract Management -61- . All members of the Tender Committee (T. etc. Machinery. NEGOTIATIONS In addition to that. The contract negotiations are best when conducted at the highest level rather than at lower levels. the law says that.) are equally responsible.

) 1 CONTD. ON NEXT PAGE Tenders & Contracts & Contract Management -62- PREPARE DESIGN.O. QUANTITIES & COMPARE WITH BILL OF QUANTITIES TURNKEY PERCENTAGE RATE QUOTE THE PERCENTAGE OR FIXED FEE TO BE ADDED OR SUBSTRACTED FROM THE COST BILL OF QUANTITIES (B. FINANCE & OPERATE . DRAWING AND DRAFT SPECIFICATION BUILD.Q.BIDDING PROCESS FLOW CHART (From Contractor’s point of view) LEARNING ABOUT NOTICE INVITING TENDER (NIT) NO DECISION TO BID YES IS PREQUALIFICATION REQUIRED YES FURNISH INFORMATION CHECK IF PREQUALIFIED NO STOP NO GET BID DOCUMENTS STUDY BID DOCUMENTS MAKE A SITE VISIT PRE-BID MEETING CLARIFICATION TO THE QUERIES RAISED BY THE CONTRACTORS INITIAL APPRAISAL OF WHETHER TO GO IN FOR THE BIDDING NO TYPE OF BID ITEM RATE COMPUTE APPROX. OPERATE & TRANSFER PREPARE DESIGN. BUILD.

1 PLAN OF ACTION SUB-CONTRACTOR OR DEPARTMENTALLY SELECTION OF A SUB-CONTRACTOR INVITE QUOTATION RECEIVE & COMPARE SUBCONT. ETC. ON NEXT PAGE Tenders & Contracts & Contract Management -63- STOP 3 . CONDITIONS MANAGEMENT APPRAISAL CONDITIONS LAST MOMENT CHANGES CONDITIONS REVISED FINAL BID CONDITIONS SUBMISSION OF BID CONDITIONS OPENING OF PRE-QUALIFICATION ‘A-I’ PART OF THE TENDER CHECK IF PRE-QUALIFIED CONDITIONS SUBMISSION OF EVALUATION SHEETS TO CLIENT 1 OPENING OF THE TECHNICAL BID ‘A-II’ PART OF TENDER 2 CONTD. TAX. ESTIMATION OF MATERIAL/MANPOWER/PLANT-EQUIPMENT REQD. DUTY. INVITE QUOTATION RECEIVE & COMPARE RATE ANALYSIS PROFIT SPECIAL CONTRACT CONDITIONS SITE VISIT & LOCATION CONDITIONS COST ESTIMATE CONDITIONS BANK & INSURANCE COSTS CONDITIONS RISK. OVERHEAD % AGE CONDITIONS OCTROI.

1 3 YES CHECK QUALIFIED 2 NO OPENING OF PRICED BID VOLUME – II OF TENDER SELECTED YES FINAL SELECTION FOR NEGOTIATION NOT SUCCESSFUL NEGOTIATIONS SUCCESSFUL FINAL DECISION ON COST AWARD OF CONTRACT & BID ANALYSED AND ‘BRIEFING NOTE’ PREPARED BY TENDER COMMITTEE CHART – 1 : SHOWS THE BIDDING PROCESS FLOW CHART (BY CONTRACTOR) Tenders & Contracts & Contract Management -64- .

3. Through an example explain the “Scrutiny of Tenders” for a tender for deciding the winning bidder. 4. State lacunas for its contents and redraft the NIT to make it ideal NIT. Explain in detail through an example the “Prebid Meeting” process. Analyze NIT of a project.ASSIGNMENT – 9 1. Explain in term “Markup” in the bidding process for contractors. Tenders & Contracts & Contract Management -65- . 2. Explain its importance in completing the project successfully through examples of failures of projects because of not following qualification process. 5. What is the importance of Qualification document.

b) Accordingly. International Development Association (IDA) : Established 1960. Multilateral Investment Guarantee Agency (MIGA) : Established 1988.  To provide policy advice and technical assistance. and b.Chapter – 10 World Bank Group (Introduction) The World Bank Group :    International Bank for Reconstruction and Development (IBRD) : Established 1945. Impartial administration of procurement among all eligible bidders is essential to maintain the Bank’s ability to raise financial resources from it’s member countries in the capital markets. Tenders & Contracts & Contract Management -66- . MIGA : MIGA promotes private investment in developing countries. and consultancy. Same procedures apply for selection of consultants. Projects must meet the same criteria to qualify for financing. good public procurement practices on a global scale. c) Bank is a co-operative institution and equal business opportunities have to be provided to all the member countries of the Bank. works. Same procedures apply for the procurement of goods and works. accumulated experience of Bank/IDA. represents : a. IFC : IFC promotes economic growth by lending directly to the private sector in developing countries. the bank has developed guidelines for procurement of goods. IBRD Loans and IDA Credits :    Administered by the same staff. INTRODUCTION a) The Articles of agreement require the Bank to ensure that the proceeds of Loan/Credit are used for the purposes intended with due attention to economy and efficiency. International Finance Corporation (IFC) : Established 1956.  To promote investment in developing countries. FUNCTIONS OF THE WORLD BANK  To provide funds for developmental projects.

the full benefits of the project cannot be realized. It is a critical element in project implementation and unless it is carried out efficiently and promptly. “Corruption hampers economic growth. g) Role of Procurement : It is critical for :  Ensuring satisfactory implementation. The Bank supports the clients developing capacity for the above.  Ensuring speedy transfer of resources by way of disbursement  Achieving economy and efficiency  Ensuring success of the project. Anti-corruption strategies need to be an integral part of a development framework designed to help countries eradicate poverty”. e) Good procurement practices alone cannot assure that the Bank assisted projects will achieve their developmental goals.d) Procurement is an important aspect of the Bank’s operation. but it will definitely enhance the developmental effectiveness.  Bank’s interest as a development institution in encouraging the developing of domestic contracting and manufacturing industries. burdens the poor disproportionately. poor procurement practices virtually guarantee that these goals will not be fully achieved. and  The importance of transparency in the procurement process. Bank loans/credits are normally disbursed as expenditures are incurred. and undermines the effectiveness of investment and aid. The Bank supports all steps in the above direction. The World Bank President has observed. However. i) Four Considerations for Procurement in Bank Financed Projects :  Need for economy and efficiency in the execution of the project. (Sound public procurement is a valid arm for promoting good governance and better fiscal management of projects.  Bank’s interest as a co-operative institution in giving all eligible bidders from developed and developing countries an opportunity to compete. Tenders & Contracts & Contract Management -67- .) h) Corruption : The Bank firmly believes that corruption is a major factor impeding development. f) The responsibility for the execution of the project and for the award and administration of the contracts under the project rests with the borrower.

Differentiate exhaustively the complete bidding process followed conventionally and through World Bank. Tenders & Contracts & Contract Management -68- .ASSIGNMENT – 10 MAJOR ASSIGNMENT 1.

Chapter – 11 Introduction to World Bank Procurement IMPORTANCE OF PROCUREMENT     Critical to project implementation Large amounts involved Member countries’ expectation by way of exports Perception of fairness CONSIDERATIONS THAT GUIDE WORLD BANK PROCUREMENT POLICIES     Economy and efficiency Equal opportunity for all eligible bidders Development of local industries in borrowing countries Transparency of the procurement process ROLE OF PROCUREMENT Critical for  Project Implementation  Transfer of Resources  Economy and Efficiency  Success of the Project PROCUREMENT POLICY Bank Articles  Lend for specific projects  Use funds for purposes intended  Economy and efficiency  Promote competitive international trade BANK’S PROCUREMENT RULES EVOLUTION 1945 None 1951 ICB open to everyone 1956 ICB open only to member governments (and Switzerland) 1964 Procurement Guidelines published for the first time 1965 Introduction of Domestic Preferences 1972 Introduction of Regional Preferences 1974 Introduction to Works Preferences Tenders & Contracts & Contract Management -69- .

1996 Inclusion of provisions on fraud and corruption 1997 Inclusion of provisions in Bid forms on fraud and corruption 1999 Amendment for “Euro” BANK’S PROCURMENT RULES Main Considerations :    Transparency Simplification Logical Presentation New Initiatives  Private Sector Projects  Social Sector Projects  Guidance to Bidders  Fraud and Corruption Revisions in New Guidelines :Major: Transparency as objective  Eligibility/ boycott  Public Sector eligibility  Reserved Procurement – Redefined  Regional Preference – Deleted  Management Contractor – Introduced  Private Sector Projects (BOT/BOO/BOOT)  Community participation  Procurement rules under guarantees  Dispute Resolution Board  Fraud and Corruption PREFERRED PROCUREMENT PROCEDURES  ICB.1975 Inclusion of Non-ICB Procedures 1985 Revisions in Transport/Insurance etc. open to all eligible bidders with an element of domestic preferences. 1995 Mandatory use of Bank SBD’s Use of any three foreign currencies plus local Deletion of regional preference Inclusion of BOT etc. Tenders & Contracts & Contract Management -70- .

FEATURES OF BANK’S MODEL PROCUREMENT DOCUMENTS      Sharing of risks between the parties of the contract.THRUST OF BANK’S CURRENT PROCUREMENT POLICY  Stronger focus on the development function and on increased borrower accountability.  Delays in resolving issues during contract implementation. Tenders & Contracts & Contract Management -71- . Ensure transparency by public bid opening. Delays in bid evaluation and award of contracts.  Subcontracting  Enforcing Specifications  Timely Responses to Issues  Management meetings  Lack of timely availability of counterpart funds. BUSINESS COMMUNITY’S PERCEPTION     Timely and accurate information on business opportunities. Delays in releasing of advances and other payments during execution.  Emphasis on upfront project work. absence of negotiations. Inadequate engineering leading to wide variations at the time of implementation and consequent disputes. stressing better procurement planning and client capacity analysis to ensure good quality at entry. Incorporation of non-discriminatory/broad technical specification. and  An integral approach to supervision of procurement that strengthens post review of contracts and sets prior review thresholds on the basis of borrower’s procurement capacity and past performance.  Award to the lowest evaluated responsive bidder meeting the specified qualification criteria. and  Weak contract administration. pre-disclosure of qualification and evaluation criteria. Predictable procurement system. Delays in signing of contracts after obtaining no objection from Bank. Level playing field. Incorporation of precise and fair evaluation criteria. Incorporation of suitable qualification criteria. SPECIFIC CONCERNS IN INDIA      Delays in finalization of procurement planning and compilation of bidding documents. and Open competition. and  Incorporation of a suitable dispute resolution mechanism and market oriented payment terms.

76 24.16 -72- .86 24.26 19.98 17.38 18.WORLD BANK DISBURSEMENTS (Value in Billion Dollars) FY FY FY FY FY FY FY FY FY 1994 1995 1996 1997 1998 1999 2000 2001 Tenders & Contracts & Contract Management DISBURSEMENT 15.50 15.72 19.

51 11.77 13.76 5.75 18.00 19.26 19.76 24.77 15.74 33.44 28.647 0.41 0.95 1.820 0.40 .820 1.46 16.63 6.561 0.45 12.81 9.72 IDA 5.771 0.38 18.10 5.40 9.07 0.80 25.72 19.86 24.44 27.46 16.57 15.17 4.20 0.05 12.009 0.67 13.08 in FY 2002] 1.50 15.12 6.65 6.34 18.69 33.89 5.11 IDA 27.21 14.37 14.51 11.WORLD BANK DISBURSEMENTS (Value in Billion Dollars) FY FY 1994 FY 1995 FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 IBRD 10.043 -73- TOTAL 56.23 18.53 5.684 0.29 LARGEST BORROWERS IN 2001 (Value in Billion Dollars) COUNTRY CHINA INDIA ARGENTINA TURKEY MEXICO INDONESIA PAKISTAN BRAZIL RUSSIA KOREA Tenders & Contracts & Contract Management TOTAL 1.98 12.455 0.16 WORLD BANK LENDING Cumulative – upto FY 2001 (Value in Billion Dollars) COUNTRY INDIA CHINA MEXICO INDONESIA AGRENTINA TURKEY KOREA PAKISTAN RUSSIA PHILLIPINES IBRD 28.98 17.61 35.44 TOTAL 15.516 [2.05 5.

375 US $ 1.080 US $ 8. Tenders & Contracts & Contract Management -74- FY 98 – $ 6.505.506 . Contributions from Government TERMS 15-20 years with 3-5 year grace 35-40 years with 10 year grace period. M M M M M M M M M M IDA earnings. . ELIGIBILITY Member countries with annual per Member countries with an annual capita GNP between $ 1. 6.445 RECIPIENTS Governments.526 US $ 2. and Private Enterprises lease to state or private with GOVERNMENT GUARANTEE. 2002) FUNDING : : : : : : : : : : : US $ 1. 0% Interest.026 millions IBRD Borrowings.116 US $ 1. retained paid-in capital.783 US $ 1. COMMITMENTS FY 99 $ 22. organizations. Service charge of 0.INDIA Disbursements FY 1993 FY 1994 FY 1995 FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 Current Undisbursed Commitments in India : (on June 30.563 US $ 1.950 US $ 1.309 US $ 1.18% interest period.698 US $ 1.437 US $ 1. but funds may be on Agencies.2 Billion for projects.$ per capital GNP below $ 1.8 Billion for projects. 5. Government Governments.75% on the disbursed balance.

RESPONSIBILITIES Borrower World Bank JOINT Identification Preparation Appraisal Negotiations Board Approval Signing & Loan Effectiveness Implementation Supervision Project Evaluation CO-FINANCING Bank’s Official Sources  Other Development Banks  Governments  Export Credit Institutions  Investment Banks  Private Sector Investors Tenders & Contracts & Contract Management -75- .

IMPLEMENTATION / SUPERVISION  Implementation is the responsibility of the borrower. Bank is responsible for :a) Monitoring progress b) Advising c) Ensuring loan proceeds are used for purposes intended d) Ensuring procurement is economic and provides fair opportunities SUPERVISION METHODOLOGY a) b) Field Visits Review and Approve :  Consultant Selection  Bidding Documents  Contract Awards  Changes in Scope and Costs Tenders & Contracts & Contract Management -76- .

. No objection to the bidding document has been issued by the Bank vide letter of March 5...Chapter – 12 World Bank Model Evaluation Report MODEL EVALUATION REPORT FOR CIVIL WORKS (Prior Review) Note: This is a hypothetical case for illustration only. Name of Newspaper Level Date of publication 1 GGGGGGGG (English Daily) National 31-05-1994 2 HHHHHH (Hindi Daily) National 02-06-1994 3 IIIIIIII (Hindi Daily) State 02-06-1994 4 JJJJJJJ (Hindi Daily) Local 01-06-1994 Tenders & Contracts & Contract Management -77- .000). specifications was by the Bank. The dates of publication of the invitation for bid in the press are as follows: SL.. The packaging of the work has been cleared with the Bank....... the bidding document along with the drawings. Bidding document: The bidding document is as per the model cleared with the Bank... 1... Salient points of the bidding document: (a) Stipulated period of completion: 24 months including rainy seasons. 1994.... 3. 2.. The estimated cost of the work is Rs..03....No..... (c) Prebid conference: Provided.000..1994.. Bid invitation process: Bids were invited by the Chief Engineer. A copy of the invitation to bid is enclosed (Annexure I). The copy of the invitation to bid was also sent to..00....... Scope of contract and estimated cost: The work covered under this bid is for the construction of X kilometers of approach road to agriculture marketing centers in Y District of Z State (Package 12)... The invitation for bid was also sent to all the information of the Z State Public Works Department for wide publicity.... Departments for publication in their office notice boards and wide publicity. Since the value of the work is more than the equivalent of US$200. (b) Price adjustment : Provided since the period of completion of work is more than 12 months....000 (say Rs...60... Roads AAA on May 16.. The invitation for bid was also sent to the Director of Publicity for arranging press publicity...202..

The date of bid opening was July 16. 4.1994 at 1530 hours as stipulated. M/s. {Copy of the minutes of pre-bid conference and the copy of the corrigendum is enclosed (Annexure II)}. Engineers and Contractors and one ‘Modification’ envelope from M/s. E Const Co. The bid of M/s. 5. Bid opening: The bids were opened on July 16. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) M/s. J.2 of ITB. All are Indian. B and Company. H.1994. M/s. Prebid conference was held on June 30. M/s. Thus a minimum bidding period of 35 days was provided.1 of ITB. G Constructions. 1994. M/s. Bid response: In all. The bidden or their representatives attended the bid opening. The following prospective bidders purchased the bidding document. A and Company. the bid of M/s. The copy of the minutes of the pre-bid conference and the corrigendum was sent immediately to all the bidders who had purchased the bidding document and was incorporated in the bidding documents sold afterwards. Engineers and Contractors was opened and read out first as per Clause 23. rates of the bidders. D Construction Company. received 15 minutes late) 10 In addition to the above one ‘Withdrawal’ envelope from M/s. The balance eight bids as well as the ‘Modification’ envelope were opened one by one. which is more than the stipulated minimum period of 30 days.The bidding documents were made available for sale from June 10 to July 15. M/s. H. No objection to the draft of the prebid minutes and the draft of the corrigendum was issued by Bank on July 5. Construction Company were received. The bid security furnished by the bidders.1994 as scheduled. All the above purchasers are of Indian nationality. Engineers and Contractors was not opened as per Clause 23. The envelope marked ‘Withdrawal’ received from M/s. Since the withdrawal notice was received before the date and time for submission of the bids. H Engineers and contractors. and K Enterprises Ltd. M/s. the discounts offered by Tenders & Contracts & Contract Management -78- .2 of ITB. E Construction Company which was received late. M/s. J Construction Company. E Construction Company. C and Company. ten bids were In time : Late : Total : received. 1994. M/s. was returned unopened account to the terms of Clause 21. Details are as follows: 9 1 (Bid of M/s. H. M/s. F Construction Company.

267 Remarks as read out(Rs. 6.651 Offered an unconditional discount of Ten percent of offered price in the ‘Modification’ envelope.them. Enterprise Ltd. Indian 271. the corrections and conditions if any. M/s.119 Offered a discount of five percent of the bid amount if the award is made within 45 days of opening of bid. They were asked to produce the same duly authenticated by the Employer/Engineer within 10 days. Tenders & Contracts & Contract Management -79- .345 2. Clarifications obtained: M/s.No.) Offered a discount of one percent if the award is made within a period of 60 days. Table of Bid prices as read out at the time of bid opening is as follows: Sl. C and Company had not submitted the details of outstanding works with them. M/s.221 4. J Construction Co. Vide its letter of July 18.492 5. G Constructions Indian 231. M/s. Name of Bidder Nationality Bid Price 1. Indian 229.82. Indian 237.416 3. F Construction and company had submitted the quantities of work done calendar year-wise and not financial year-wise. C and Company Indian 265.89. The financial year-wise breakup was obtained to facilitate evaluation with reference to the stipulated post qualification criteria. D Construction Co. K Enterprises Ltd. M/s. 8.46.56. K. 6. M/s. Similarly M/s. M/s. 1994 offered an unconditional suo-moto discount of 12% on their quoted price. Indian 241. The minutes of the bid opening were prepared (Copy of the minutes is enclosed Annexure III). were read out at the meeting. B and Company Indian 216. M/s. [Copies of the letters requesting for the clarification/information and the replies received from the bidders are enclosed (Annexure IV)].64. M/s. M/s. which was promptly submitted by them. F Construction Co. A and Company Indian 232.527 7.24.89.32.

e. A and Company did not accept the corrected amount of the bid. C and Company has stated in the bid that its bid is valid for 60 days after the date of bid opening. M/s. Since they have signed the bidding document and not given any condition. The bids were opened on July 16. Preliminary examination of bids: 7.2 Completeness and Legal validity: All the bids are duly signed by the bidders. Co.1 of Instructions to the Bidders (ITB).7.3 Bid Validity: As per Clause 15. Neither has any condition been given by any of the other bidders nor have they stated specifically that their bid is valid for 90 days after the bid opening.2 of Instructions to Bidders.1994 and hence the bids are to be valid upto October 14.416 230. M/s. They have quoted for all the items and are thus complete. F Const. it is taken for granted that all these bids are valid for 90 days after the bid opening.81.24.776 (by taking the rate expressed in words as correct for item no.82.64. F Construction Company gave the concurrence for the correction in writing.1994. A and Co.2 of ITB.1 Arithmetical errors : The following are the arithmetical errors found in the bids: As quoted(Rs. 16) (ii) Bid of M/s.1994. 7. Bids are signed by persons holding proper power of attorney and hence are legally valid.697 (by correcting the total) The concurrences of the bidders were requested in writing for the above corrections in terms of Clause 27. Tenders & Contracts & Contract Management -80- . M/s. 232. Hence its bid is rejected and the Bid Security submitted by it has been forfeited in accordance with Sub-Clause 16. the bids shall remain valid for a period of not less than 90 days after the deadline for the submission of the bid.) As calculated (Rsr) (i) Bid of M/s. 229.6 and Clause 27. valid upto October 14. 7.492 216. i.

000 450. B. 8.G.G. J Construction Co. 30.4.G. 5. M/s. 31. 6. A and Company B and Company C and Company D Const Co.000 425. The other bidders have not stipulated any condition. 94 Oct. M/s. M/s.000 405.000 404.G.) 1.4 Bid Security : As per Clause 16. B. B. F.000 410. Tenders & Contracts & Contract Management -81- .000 M/s. Name of Bidder No. 15. 404. 7. 95 Bank guarantees are in the prescribed format and there are no additional remarks making them conditional and unacceptable.1994.5 Responsiveness to commercial aspects: M/s.3 of ITB. B and Company has stipulated that the department has to supply bitumen. 94 Dec.04.G. 30. 94 Nov.e. B. 94 Dec. G Const.D. 3. F Const Co. the bid security should be Rs.D. F. Co. 7. 10.1 and 16. 14. upto November 28. Amount Type Bank Security (Rs. 31. 94 Mar. K Enterprises Ltd. i. 29. The bid securities furnished by the various bidders are as follows: Sl.000 405. B. M/s. Validity Bank of Baroda Canara Bank Citi Bank Canara Bank Vysya Bank Punjab National Bank Union Bank of India State Bank of India Nov. 7. B. 4. M/s. 2. cement and steel at fixed rates. They have signed the contractor's bid form as well as bidding documents stipulating no reservations and hence it is understood that they are agreeable to the commercial conditions. 94 Oct. 94 Nov. It has also given an alternative formula for price adjustment. M/s. M/s.G.6 Responsive to technical aspects: None of the bidders have stipulated any condition regarding the technical aspects.000 350.000 and bank guarantees and other instruments of fixed validity shall be valid for 45 days after the validity of the bid.7.

Construction Co. Construction Company. 229. The loading of the prices is therefore NIL. Bid Price(Rs. cement and steel at fixed rates. Bids rejected as non-responsive to the bidding documents: Sl. 9. Const. Substantially responsive bids : In view of the above the bids of the following bidders are determined as substantially responsive to the provisions in the bidding documents. F. No other specific evaluation criteria have been stipulated in the bidding document.89345 Brief reasons for rejection (i) (ii) 2. J. (i) (ii) (iii) (iv) 10.3 of ITB The details of all the bids are furnished in Annexure V.2 and 16.3 of ITB. M/s. and K Enterprises Ltd. G. M/s. Construction Co. Tenders & Contracts & Contract Management -82- . Inadequate bid security and hence non-responsive in terms of Clause 16.A. M/s. Bank Guarantee of bid security is not secured 45 days beyond the bid opening and hence nonresponsive in terms of Clause 16. M/s. Bank Guarantee of bid security is not secured 45 days beyond the validity of the bid and hence non-responsive in terms of Clause 16. D.) M/s. B and Company 216. Name of Bidder 1.1 of ITB. M/s. Proposes new P. C and Company 265.8. contrary to bidding document stipulations. M/s.416 (i) (ii) Requires departmental supply of bitumen.82.3 of ITB . Co. which is unacceptable. clause. Evaluation of the substantially responsive bids : There are no conditions which warrant loading of the bid prices.119 (i) (ii) 3.No.32. Bid valid for only 60 days and hence non-responsive in terms of Clause 15.

Since the bidder has offered the discount of 12% after the deadline for submission of the bids.527 Third lowest responsive bidder. G.870 is proposed to project against the financial loss in the event of default of the successful bidder.5 of the ITB.267 Second lowest responsive bidder. the discount has not been taken into consideration for evaluation.35. The bids of other bidders are balanced and no additional security is required. Since the bidder has offered a conditional discount of one percent for award of the contract within a period of 60 days.221 Lowest responsive bidder 2.24. the discount has not been taken into consideration for evaluation of the bids. Constructions and the bid price is Rs. J. It has been scrutinized and found that the information furnished is not convincing. M/s.89. 3. Comments on the unbalanced item bids :M/s.986 Fourth lowest responsive bidder.56. Detailed item-wise comparative statement is furnished in Annexure VI.221/-. M/s. Additional performance security of Rs. Constructions 231. Constr. K. 11. Enterprises Ltd. 241. M/s. G.24. after taking into account the unconditional discount of 10% offered in the ‘Modifications’ envelope received before the deadline for submission of the bids. M/s.Evaluation table showing ranking of the bids is as follows :Rank Name of Bidder Bid Price Remarks 1. G.231. in terms of Clause 29. Construction Co.4.31. Tenders & Contracts & Contract Management -83- . The bidder was requested to furnish breakdown of unit rates for these items. Company 244. 4. 237. D. The lowest evaluated responsive bid is that of M/s. Constructions has quoted unbalanced rates for BOQ item numbers 3 and 4.

9. Executed the following qnty.041 Sq. D. Bidder satisfies the criterion fully 3.68 million.041 Sq.m. No.8 million (started in the year 1991-92 and completed (95%) in the year 1992-93) The updated cost of the above work at 1994-95 rates is Rs. of value Rs. Post-qualification/verification of the lowest evaluated responsive bidder : The qualification criteria to be satisfied for the award of this particular contract.5 A (a) Annual financial turnover : Rs.0 M at 94-95 price level.33 say 2 BT Mixer : (3)/3 = 1 Water Tankers : 3 Tenders & Contracts & Contract Management 1.m.e. of works : (i) WBN : 80.12.2 M Rs.5 A (b) Satisfactory completion of one similar work Rs.12. Rs. Constructions is lowest responsive bid for Package 12 and M/s. 4. Bidder satisfies this criterion. in this criterion.12.3 M at 90-91 price level i. in 1990-91 1. 4. 4. Sl. Clause No. ZZZ State.12. The following check is made for the post qualifications of the lowest responsive bidder for Package 12.. in 1990-91 Available eqpt. 4.10 M One similar work namely Bidder satisfies XXX in YYY Division.m.18. 2.m. In this IFB bids were invited for two packages 12 and 14.12. Roller : 7 BT Boiler : (4)/3 = 1. (ii) BT : 80. O H P Total 6 1 0 7 2 - - 2 0 1 - 1 2 1 - 3 -84- Bidder satisfies the requirement . Package 12 is stipulated in Clause 4.5 B (a) Availability of critical eqpt. Reference Minimum qualification Required for Package 12 Qualification of the lowest bidder Remarks 1.000 Sq. G. M/s.000 Sq. Construction Company is lowest responsive bidder for Package 14.5 of the ITB.

4.e. Subcontractor’s experience and resources have not been taken into account in determining the Bidder’s compliance with the qualifying criteria. 14. 23.e. the lowest evaluated responsive bidder for this Package (12) must demonstrate having experience and resources sufficient to meet the aggregate of the qualifying criteria for the individual contracts i. : Available : Mr. L B. Rs. 24 months – 2years.5 B (b) Availability of Project Manager of not less than five years exp. Value at 1994-95 price level of existing commitments and on-going works to be completed in the next 2 years i. Constructions is = 18 * 2 * . G. O : Owned. The proposed contract value of the Package 12 is Rs. 2. Tenders & Contracts & Contract Management -85- .0 M at 1994-95 rates.5. 59 M. Check for Bid Capacity : The assessed Bid capacity of the lowest responsive bidder is computed as follows : Assessed available Bid Capacity = (A * N * 2 – B) A= N= B= Maximum value of civil engineering works executed in any one of the last five years i. BT : Black Topped.E. Assessed available bid capacity of M/s. Bidder satisfies the requirement 6. who is incidentally the lowest evaluated responsive bidder in Package 14. (Packages 12 and 14).59 = Rs. 1. 13 M. Hence as per Clause 4. P : To be purchased out of Advance. Thus the lowest evaluated responsive bidder for Package 12 M/s. with 15 years experience. 4. D Construction Company. H : Hired or Leased. Rs.75 M Rs. verification is made for the next lowest evaluated responsive bidder.5 C of ITB. M/s. The resources and experience of the Bidder in his name has only been considered.e.5 B (c) Liquid assets and/or credit facilities : Rs. 18.12 M. 13.e. G. The assessed Bid capacity is less than the proposed value of the contract to be awarded.1 (b) of ITB. Constructions does not satisfy the Bid capacity criteria and thus cannot be awarded the contract in terms of the Clause 31. Number of years prescribed for the completion of works of this package i.5 M from Canara Bank Bidder satisfies the requirement Note : WBM – Water Bound Macadam. Post qualification verification of the next lowest evaluated responsive bidder : Since the lowest evaluated responsive bidder does not meet the qualification criteria.

659 Sq. Rs. Reference Maximum Qualification of the qualification lowest bidder required for Package 12 and 14 Remarks 1. The updated costs of the above works at 1994-95 rate are Rs. in 1990-91 Available eqpt. 4. 14. 14 : 13. in 1990-91 2.4 M Rs.5 million (started in the Year 1991-92 and completed (90%) in the year 1993-94).m. For package 14 KKK in LL Division MM state of value Rs.2 M Pack.000 Sq.1 M Total : 22. Bidder satisfies the criteria fully 3.659 Sq. Clause No. O H P Total 10 3 1 14 3 - - 3 2 1 - 3 7 - - 7 -86- Bidder satisfies the requirement .12. 12 : 12.7 say 3 BT Mixer : (3+3)/3 = 2 Water Tankers : 3+3=6 Tenders & Contracts & Contract Management 2. 39..13.1 M at 94-95 price level Bidder satisfies this criterion 2. of works : (i) WBN : 80.e.5 B (a) Availability of critical eqpt.m.7 M at 90-91 price level i.0 M Pack.10.5 A (a) Annual financial turnover : Pack.07 million and Rs. 4. No.Sl. 14 : 12.1 M Following similar works Bidder satisfies namely for Package 12 this criterion PPP in QQQ Division RRR State of value Rs. Roller : 7+7=14 BT Boiler : (4+4)/3 = 2.12.2 M Total : 25.5 A (b) Satisfactory completion of similar works: Pack.000 Sq. 4.26.85 million respectively. (ii) BT : 80.13. 12 : 10.m. 4. Executed the following qnty.m.8 million (started in the year 1991-92 and completed (95%) in the year 1992-93).

1.E.62 = Rs. Rs.32 = 49. the assessed Bid capacity is more than the proposed value of the contract to be awarded. 4. : One each for both packages Available : Mr.e.e. N B. 39. Check for Bid Capacity : The assessed Bid capacity of the lowest responsive bidder is computed as follows : Assessed available Bid Capacity = (A * N * 2 – B) A= N= B= Maximum value of civil engineering works executed in any one of the last five years i. L Retd.1 * 2 * 2 . 5. 62 M.M B. with 35 years experience. 92.5 B (b) Availability of Project Manager of not less than five years exp.5 B (c) Liquid assets and/or credit facilities : Rs.5.5 M from Canara Bank Bidder satisfies the requirement Note : WBM – Water Bound Macadam. with 12 years exp. Rs. Hence. 24 months – 2years.9 = Rs. The resources and experience of the Bidder in his name has only been considered. 3. BT : Black Topped. 4. 23.75 M+1. Bidder satisfies the requirement 6. S.12 + 26.65 M for both packages. Mr. Tenders & Contracts & Contract Management -87- . Number of years prescribed for the completion of works of this package i. D. Thus the second lowest evaluated responsive bidder for Package 12 M/s.e.E. P : To be purchased out of Advance. Assessed available bid capacity = 39.1 M at 1994-95 rates. Mr. Value at 1994-95 price level of existing commitments and on-going works to be completed in the next 2 years i. O : Owned. The proposed contract value of the Package 12 and 14 is Rs. 15.E.4 M. Rs. Subcontractor’s experience and resources have not been taken into account in determining the Bidder’s compliance with the qualifying criteria. with 15 years exp.44 M. H : Hired or Leased. Constructions Company satisfies the Bid capacity criteria also.

The bid of M/s.  Initial Performance security (5% of contract value plus additional Security for unbalanced bids) – Rs.3. 1994.870.  Mobilization advance (5% of contract value) : Rs. The bid amount is Rs.18. 11.935.56. It is eligible in accordance with Clause 3 of ITB and meets the qualification requirements prescribed in Clause 4 of ITB.935. D Construction Company is thus determined to be substantially responsive to the bidding document and it has offered the second lowest evaluated bid price.75.75.  Stipulated period of completion 24 months inclusive of rainy season. The award is being made well within the period of 60 days. He has offered a discount of one percent if the bid is awarded within 60 days.  Retention money 6% of the gross amount of each running bill subject to a maximum of 5% of the contract amount. Though the discount was not considered for evaluation. Recommendation : The Government of XXX proposes to award the contract for Package 12 to the second lowest evaluated responsive bidder M/s.  Price adjustment as per Clause 47 of bidding document and formula as given in the Contract Data. 11. being conditional. : Annexures I to VI Tenders & Contracts & Contract Management -88- . and  Bid validity October 14. The bid amount is Rs. 237. D Construction Company.705 (after availing of the discount of one percent offered by the bidder) with the following important features of the bid. Signature of the Evaluating Officer Encl.51. it is proposed to avail the same as the bidder happens to be the lowest responsive qualified bidder. 235. We seek the no-objection of the Bank for award of the Contract. 2.267. 16.  Equipment advance (10% of contract value) : Rs.

....... the bidding document along with the drawings... The estimated cost of the work is Rs..... The copy of the invitation to bid was also sent to... The following prospective bidders purchased the bidding document..000...1994.MODEL EVALUATION REPORT FOR CIVIL WORKS (Post Review) Note: This is a hypothetical case for illustration only. The date of bid opening was July 16. 1994.1994.. (b) Price adjustment : Provided since the period of completion of work is more than 12 months. Scope of contract and estimated cost: The work covered under this bid is for the construction of X kilometers of approach road to Agriculture marketing centers in Y District of Z State (Package 12). 2. The invitation for bid was also sent to the Director of Publicity for arranging press publicity. specifications was reviewed by the Bank. Salient points of the bidding document: (a) Stipulated period of completion: 24 months including rainy seasons... 1994... Roads AAA on May 16. Bid invitation process: Bids were invited by the Chief Engineer. (Departments for publication in their office notice boards and wide publicity)... Bidding document: The bidding document is as per the model cleared with the Bank. The invitation for bid was also sent to all the information of the Z State Public Works Department for wide publicity.. 1....03..32. (c) Prebid conference: Provided.. Name of Newspaper Level Date of publication 1 GGGGGGGG (English Daily) National 31-05-1994 2 HHHHHH (Hindi Daily) National 02-06-1994 3 IIIIIIII (Hindi Daily) State 02-06-1994 4 JJJJJJJ (Hindi Daily) Local 01-06-1994 The bidding documents were made available for sale from June 10 to July 15.No. Since the value of the work is more than the equivalent of US$200.... A copy of the invitation to bid is enclosed (Annexure I).. Tenders & Contracts & Contract Management -89- . 3.60..000 (say Rs...00... The dates of publication of the invitation for bid in the press are as follows: SL. Thus a minimum bidding period of 35 days was provided.000)... which is more than the stipulated minimum period of 30 days... The packaging of the work has been cleared with the Bank.... No objection to the bidding document has been issued by the Bank vide letter of March 5.....

H. 5. Engineers and Contractors was not opened as per Clause 23. {(Copy of the minutes of pre-bid conference and the copy of the corrigendum is enclosed (Annexure II)}. The minutes of the bid opening were prepared (Copy of the minutes is enclosed Annexure III). Engineers and Contractors and one ‘Modification’ envelope from M/s. The bid of M/s. ten bids were In time : Late : Total : received. Details are as follows: 9 1 (Bid of M/s. E Const Co. was returned unopened account to the terms of Clause 21. M/s. Bid opening: The bids were opened on July 16. Tenders & Contracts & Contract Management -90- . D Construction Company. received 15 minutes late) 10 In addition to the above one. H.1994 at 1530 hours as stipulated.1 of ITB. the bid of M/s. and K Enterprises Ltd. The bidden or their representatives attended the bid opening. the corrections and conditions if any. rates of the bidders. M/s. M/s. M/s.2 of ITB. M/s.1994 as scheduled. were read out at the meeting. the discounts offered by them. M/s. No objection to the draft of the prebid minutes and the draft of the corrigendum was issued by Bank on July 5. All are Indian. G Constructions. ‘Withdrawal’ envelope from M/s. Engineers and Contractors was opened and read out first as per Clause 23. F Construction Company. M/s. B and Company. Prebid conference was held on June 30. A and Company. E Construction Company which was received late. C and Company. E Construction Company. The balance eight bids as well as the ‘Modification’ envelope were opened one by one. H Engineers and Contractors. H. Bid response: In all. J. M/s.(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) M/s. All the above purchasers are of Indian nationality. M/s. 1994.2 of ITB. Construction Company were received. J Construction Company. The copy of the minutes of the pre-bid conference and the corrigendum was sent immediately to all the bidders who had purchased the bidding document and was incorporated in the bidding documents sold afterwards. The bid security furnished by the bidders. Since the withdrawal notice was received before the date and time for submission of the bids. 4. The envelope marked ‘Withdrawal’ received from M/s.

B and Company Indian 46. M/s.No. They were asked to produce the same duly authenticated by the Employer/Engineer within 10 days. Indian 52. K Enterprises Ltd. C and Company had not submitted the details of outstanding works with them.527 7. which was promptly submitted by them. Indian 49.24. D Construction Co. M/s. F Construction Co. A and Company Indian 52. Clarifications obtained: M/s. M/s.221 4.89.32. J Construction Co.345 2. M/s. Indian 53. M/s. M/s. Similarly M/s. K. F Construction and company had submitted the quantities of work done calendar year-wise and not financial year-wise. C and Company Indian 55.56.651 Offered an unconditional discount of Ten percent of offered price in the ‘Modification’ envelope. M/s.89. 6.267 Remarks as read out(Rs. Enterprise Ltd.46. Vide its letter of July 18. M/s. Name of Bidder Nationality Bid Price 1. [Copies of the letters requesting for the clarification/information and the replies received from the bidders are enclosed (Annexure IV)].119 Offered a discount of five percent of the bid amount if the award is made within 45 days of opening of bid.82.64. 8.416 3. The financial year-wise breakup was obtained to facilitate evaluation with reference to the stipulated post qualification criteria.Table of Bid prices as read out at the time of bid opening is as follows: Sl. 6. 1994 offered an unconditional suo-moto discount of 6% on their quoted price. Tenders & Contracts & Contract Management -91- . M/s.492 5.) Offered a discount of one percent if the award is made within a period of 60 days. G Constructions Indian 51. Indian 61.

2 Completeness and Legal validity: All the bids are duly signed by the bidders.64.1994 and hence the bids are to be valid upto October 14. 49.e. it is taken for granted that all these bids are valid for 90 days after the bid opening. Hence its bid is rejected and the Bid Security submitted by it has been forfeited in accordance with Sub-Clause 16. the bids shall remain valid for a period of not less than 90 days after the deadline for the submission of the bid. Neither has any condition been given by any of the other bidders. A and Company did not accept the corrected amount of the bid. M/s. Bids are signed by persons holding proper power of attorney and hence are legally valid.1 of Instructions to the Bidders (ITB). M/s.1994. 16) (ii) Bid of M/s. valid upto October 14. Co.1 Arithmetical errors : The following are the arithmetical errors found in the bids: As quoted(Rs.3 Bid Validity: As per Clause 15.24.6 and Clause 27.2 of ITB. C and Company has stated in the bid that its bid is valid for 60 days after the date of bid opening.416 50.697 (by correcting the total) The concurrences of the bidders were requested in writing for the above corrections in terms of Clause 27. The bids were opened on July 16.82. F Construction Company gave the concurrence for the correction in writing.776 (by taking the rate expressed in words as correct for item no.492 46. i. F Const. M/s. A and Co. 7.7.2 of Instructions to Bidders.1994. 7.) As calculated (Rsr) (i) Bid of M/s. Preliminary examination of bids: 7. They have quoted for all the items and are thus complete.81. Since they have signed the bidding document and not given any condition. 52. Tenders & Contracts & Contract Management -92- . nor have they stated specifically that their bid is valid for 90 days after the bid opening.

They have signed the contractor's bid form as well as bidding documents stipulating no reservations and hence it is understood that they are agreeable to the commercial conditions. 94 Dec. M/s.000 and bank guarantees and other instruments of fixed validity shall be valid for 45 days after the validity of the bid i. B.G. 94 Oct. J Construction Co. F Const Co.) 1. Amount Type Bank Security (Rs. 10. M/s. the bid security should be Rs. M/s.5 Responsiveness to commercial conditions : M/s. 7. 6. G Const. 2. B and Company has stipulated that the department has to supply bitumen. M/s. B. 64. 31.G.e.3 of ITB. K Enterprises Ltd.000 64. 94 Oct.7.D. 30. A and Company B and Company C and Company D Const Co.1994.G.000 70. M/s. 8. 5. M/s. Tenders & Contracts & Contract Management -93- . 94 Dec.D. 31. 15. 94 Mar.000 65.G.4 Bid Security : As per Clause 16. M/s.1 and 16. 94 Nov. F. upto November 28. 7. cement and steel at fixed rates.000 M/s.G.000 50. 30.000 70. B. 94 Nov. 95 Bank guarantees are in the prescribed format and there are no additional remarks making them conditional and unacceptable. 4. F. 14.64.G. Validity Bank of Baroda Canara Bank Citi Bank Canara Bank Vysya Bank Punjab National Bank Union Bank of India State Bank of India Nov. B.000 65. 29. 7. 3. Name of Bidder No. The other bidders have not stipulated any condition. Co. The bid securities furnished by the various bidders are as follows: Sl. B. B.6 Responsive to technical aspects: None of the bidders have stipulated any condition regarding the technical aspects.000 65.

J. Bank Guarantee of bid security is not secured 45 days beyond the validity of the bid and hence non-responsive in terms of Clause 16.3 of ITB.3 of ITB The details of all the bids are furnished in Annexure V. F. C and Company 55. The loading of the prices is therefore NIL. D. Construction Company.8.345 (i) 2. M/s.1 of ITB.32.) Brief reasons for rejection 1. M/s. Name of Bidder Bid Price(Rs. and K Enterprises Ltd. Bank Guarantee of bid security is not secured 45 days beyond the bid opening and hence nonresponsive in terms of Clause 16.119 (i) (ii) 3. Construction Co.89. M/s.3 of ITB . Evaluation of the substantially responsive bids : There are no conditions which warrant loading of the bid prices. M/s. M/s. Const. Co. cement and steel at fixed rates. (i) (ii) (iii) (iv) 10.81. No other specific evaluation criteria have been stipulated in the bidding document. Bid valid for only 60 days and hence non-responsive in terms of Clause 15.697 (i) (ii) Requires departmental supply of bitumen. Bids rejected as non-responsive to the bidding documents: Sl. Inadequate bid security and hence non-responsive in terms of Clause 16.No. B and Company 46. G. Substantially responsive bids : In view of the above the bids of the following bidders are determined as substantially responsive to the provisions in the bidding documents. 50. Tenders & Contracts & Contract Management -94- . contrary to bidding document stipulations. Construction Co. 9. M/s. M/s.

The bids of other bidders are balanced and no additional security is required. 51. the discount has not been taken into consideration for evaluation of the bids.527 Third lowest responsive bidder. The bidder was requested to furnish breakdown of unit rates for these items. Detailed item-wise comparative statement is furnished in Annexure VI. Since the bidder has offered the discount of 6% after the deadline for submission of the bids. M/s. Constructions has quoted unbalanced rates for BOQ item numbers 3 and 4. Additional performance security of Rs.45.986 Fourth lowest responsive bidder. It has been scrutinized and found that the information furnished is not convincing.267 Second lowest responsive bidder.870 is proposed to project against the financial loss in the event of default of the successful bidder. Enterprises Ltd. Tenders & Contracts & Contract Management -95- . Constr. Comments on the unbalanced item bids :M/s.5 of the ITB. J. Company 55. G. 3. G. 53.56. in terms of Clause 29. the discount has not been taken into consideration for evaluation. M/s.31. Constructions and the bid price is Rs.24. 11. G. The lowest evaluated responsive bid is that of M/s.221/-. M/s. Since the bidder has offered a conditional discount of one percent for award of the contract within a period of 60 days. D. K. Construction Co. Constructions 51.89. 52. after taking into account the unconditional discount of 10% offered in the ‘Modifications’ envelope received before the deadline for submission of the bids. M/s.221 Lowest responsive bidder 2.24. 4.Evaluation table showing ranking of the bids is as follows :Rank Name of Bidder Bid Price Remarks 1.

e.5 M at 90-91 price level i. 9 M. 2. Rs. Post-qualification/verification of the lowest evaluated responsive bidder : The qualification criteria to be satisfied for the award of this particular contract. * The illustration is for a work valued less than Rs. Check for Bid Capacity : The assessed Bid capacity of the lowest responsive bidder is computed as follows : Assessed available Bid Capacity = (A * N * 2 – B) A= N= B= Maximum value of civil engineering works executed in any one of the last five years i. Bidder satisfies this criterion.1. 9 months – 0. D.75 years i.5 of the ITB.e.3 million where only two criteria are specified.75 years.e. 13. Reference Minimum qualification required for Package 12 Qualification of the lowest bidder Remarks 1.2.12. In this IFB bids were invited for two packages 12 and 14. 6.5 A (b) Satisfactory completion of one similar work Rs. 4.6 M One similar work namely Bidder satisfies XXX in YYY Division.4. Tenders & Contracts & Contract Management -96- .4 million. In cases of works valued over Rs. of value Rs. 3 million where additional criteria is specified. similar assessment should be due for all the criteria specified in the document.6. 4.5 M at 94-95 price level. No.0 M Rs.5 A (a) Annual financial turnover : Rs. ZZZ State. Sl. The experience of the Bidder in his name has only been considered.8 million (started in the year 1991-92 and completed (95%) in the year 1992-93) The updated cost of the above work at 1994-95 rates is Rs.4. Sub-contractors’ experience have not been taken into account in determining the Bidder’s compliance with the qualifying criteria. Clause No. Number of years prescribed for the completion of works of this package i. M/s. G. Constructions is lowest responsive bid for Package 12 and M/s. Rs. The following check is made for the post qualifications of the lowest responsive bidder for Package 12.5 M at 1994-95 rates. Construction Company is lowest responsive bidder for Package 14. Rs. in this criterion.e. Package 12 is stipulated in Clause 4. 3. Value at 1994-95 price level of existing commitments and on-going works to be completed in the next 0.

12 : 4. No. Constructions does not satisfy the Bid capacity criteria and thus cannot be awarded the contract in terms of the Clause 31. 4.7 million (started in the Year 1991-92 and completed (90%) in the year 1993-94).2.9 = Rs. G.7. G.7 M at 90-91 price level i. Hence as per Clause 4. For package 14 KKK in LLL Division MMM state of value Rs. The assessed Bid capacity is less than the proposed value of the contract to be awarded. Reference Maximum Qualification of the qualification lowest bidder required for Package 12 and 14 Remarks 1. (Packages 12 and 14).5 A (b) Satisfactory completion of similar works: Pack. Thus the lowest evaluated responsive bidder for Package 12 M/s. D Construction Company.2 M Total : 2. Tenders & Contracts & Contract Management -97- . The proposed contract value of the Package 12 is Rs.5 A (a) Annual financial turnover : Pack. Constructions is = 6.e. 12 : 1.4 M Rs. 14 : 2.4 M Total : 8. Clause No.6 M Pack. who is incidentally the lowest evaluated responsive bidder in Package 14.1. 14.2.75M. 4.e. 0.75 * 2 . 14 : 4. the lowest evaluated responsive bidder for this Package (12) must demonstrate having experience and resources sufficient to meet the aggregate of the qualifying criteria for the individual contracts i. 11. Post qualification verification of the next lowest evaluated responsive bidder : Since the lowest evaluated responsive bidder does not meet the qualification criteria verification is made for the next lowest evaluated responsive bidder M/s.1 M. 5.5 C of ITB.0 M Pack.8 million (started in the year 1991-92 and completed (95%) in the year 1992-93).1 (b) of ITB.2 million and Rs. Sl. 2.3 M at 94-95 price level Bidder satisfies this criterion 2.97 million respectively.8 M Following similar works Bidder satisfies namely for Package 12 this criterion PPP in Q Division RRR State of value Rs.5 * 0. Rs. The updated costs of the above works at 1994-95 rates are Rs.Assessed available bid capacity of M/s.

the assessed Bid capacity is more than the proposed value of the contract to be awarded.Note : The above illustration is for a work valued less than Rs.75 years i. The bid of M/s. Check for Bid Capacity : The assessed Bid capacity of the lowest responsive bidder is computed as follows : Assessed available Bid Capacity = (A * N * 2 – B) A= N= B= Maximum value of civil engineering works executed in any one of the last five years i.75 * 2 – 11 = Rs.8 M. Thus the second lowest evaluated responsive bidder for Package 12 M/s. Value at 1994-95 price level of existing commitments and on-going works to be completed in the next 0. Hence.e. similar assessment should be due for all the criteria specified in the document. Rs. 16. it is proposed to avail the same as the bidder happens to be the lowest responsive qualified bidder. Though the discount was not considered for evaluation. 52.e.705 (after availing of the discount of one percent offered by the bidder) with the following important features of the bid.75 M. Tenders & Contracts & Contract Management -98- . It is eligible in accordance with Clause 3 of ITB and meets the qualification requirements prescribed in Clause 4 of ITB. 5.e. 52. Rs. 62 M. The bid amount is Rs.56. 15. 3 million where only two criteria are specified.2 + 5. Sub-contractors’ experience have not been taken into account in determining the Bidder’s compliance with the qualifying criteria. being conditional.267.03. Constructions Company satisfies the Bid capacity criteria also.75 years. 3 million where additional criteria is specified.3 * 0. 11. Number of years prescribed for the completion of works of this package i. D Construction Company. Recommendation : The Government of XXX proposes to award the contract for Package 12 to the second lowest evaluated responsive bidder M/s. In cases of works valued over Rs. The experience of the Bidder in his name has only been considered. Assessed available bid capacity = 11. He has offered a discount of one percent if the bid is awarded within 60 days. The proposed contract value of the Package 12 and 14 is Rs. 9 months – 0. The award is being made well within the period of 60 days. 12. D. D Construction Company is thus determined to be substantially responsive to the bidding document and it has offered the second lowest evaluated bid price. The bid amount is Rs.6 = 10.3 M at 1994-95 rates.

: Annexures I to VI Tenders & Contracts & Contract Management -99- . Signature of the Evaluating Officer Encl.870 = 3.185 + 45.  Stipulated period of completion 9 months inclusive of rainy season.797.  Retention money 6% of the gross amount of each running bill subject to a maximum of 5% of the contract amount. We seek the no-objection of the Bank for the final Contract as awarded. 1994.06. Mobilization advance (5% of contract value) : Rs. 2.60. and  Bid validity October 14. 58.17. 1.055.594.  Equipment advance (10% of contract value) : Rs.  Initial Performance security (5% of contract value plus additional Security for unbalanced bids) – Rs.