CONSTRUCTION CONTRACTS &

CONTRACTING
COURSE NO- NCP 23
ASSIGNMENT - 2

SUBMITTED BY
Aniket Mahashabde
Course- GPCPM
National Institute of Construction Management and Research
School Of Distance Education, Pune

ASSIGNMENT
NICMAR / CODE OFFICE

1. Course No.

NCP 23

2. Course Title

Construction Contracts &

contracting

3. Assignment No.

Fourth

Assignment- Construction contracts management

Contract administration and monitoring is the most important area
of construction management.

Contract administration process

should start right from the day work is assigned to the company.
Discuss any project contract currently in progress with your
company and how administration and monitoring is being done.
Draw the organization chart for this activity and explain all the
functions carried out. Do you think the system is achieving results?
Discuss.

PROJECT FACTS

NAME OF PROJECT -

Kirloskar showroom / workshop at

Akola.
SITE LOCATION -

Akola, Maharashtra

SITE AREA -

66500.00 sq.ft.

PROPOSED COVERED AREA -

45600.00 sq.ft.

SCOPE OF WORK
Scope of work covers following points:

Civil works as per BOQ and drawings for the proposed work at Akola.

Familiarization with site: inspection and examination of the site and

its surroundings thoroughly. Study of the nature of the ground, subsoil
means of access to the site, the facilities available at site etc.

Planning and control

Providing information and data: providing complete set of information

which includes tender documents, tender drawings and contract
document complete in all respects, to the contractors

Inviting tenders

Tendering and award of works: processing of tenders, award of work

to the contractor, and signing contract with concerning parties.

Selection of project manager and his team, giving possession of site

and setting up of communication network.

Supplying working drawings.

Payment of Progress Bills.

Checking the progress of the work at site through timely inspections.

Settlement of variations and claims.

Filing and Records- Maintaining proper files and records of construction

works Progress record, field dairy, daily reports, feedback reports,

inspection reports, misc. reports.

Settlement of fees and claims.

IMPORTANT DETAILS OF CONTRACT, COST, TIME, TYPE

ETC,
The contract documents' typically contain the notice inviting tender,
information and instructions to the renderers, general conditions of
contract, special conditions of contract, schedule of quantities and cost,
tender drawings, specifications for work forms of bank guarantee in respect
of earnest money, performance guarantee, mobilization advance etc.
Important details of the contract for the construction of BAJAJ SHOWROOM/
WORKSHOP areA. TYPE OF CONTRACTThe above-said contract is ITEM RATE CONTRACT In this contract,
payment for work done is made on the basis of the quantities of work
actually executed and measured, materials supplied and used by the
contractor on the project, each such quantity being multiplied by the
contractor's corresponding unit rate given his tender for that unit. The
mode of measurement shall be as specified in the specifications at
the materials. However for items for which no mode of measurement
given for any item, same shall be taken as IS-1200. For a contractor
to submit an item rate tender, it will be necessary to provide him
general specification designs and drawings together with estimates of
quantity.
B. DEFINING FOLLOWING TERMS:
Contract, means the documents forming tender and acceptance
thereof and the formal agreement executed between the owner and
the contractor. Contractor, means individual or firm or company
undertaking the works in this case contractors are
Owner, means - PATNI AUTOMOBILES

Clerk

of

Works/Engineer-in-charge

means

the

authorized

representative of the owners who shall sup-'i-vise and be in charge of

the work on behalf of the owner. He shall be employed and paid by
the owners.
Architect/Consultant means, in this case means S.D.ASSOCIATES PVT.
LTD., NAGPUR.
C. TIME LIMIT
Time allowed for carrying out the work shall be 16 months from the
contractual date of start of work
Time is the essence of the contract and the contractor is required to
complete work in all respects within stipulated lime of completion
strictly as per the applied PERT/BAR chart and hand over the same
complete in all respects to the satisfactions of the architects.
D. COST OF THE WORK
Cost of the work is arrived upon by the bid by the contractor who
have been awarded the work is 86 - lakhs. (Only civil works)
Total cost of the project however will take into account.

Final bills of each and every item submitted by the contractors

Consultancy fees of the architects.

Salaries of the Project Manager and his team.

Cost of tendering

Cost of subsequent site visits of owners, architects, project

managers.

Site supervisors etc. during various stages of execution.

Costs of maintain backup office.

E. PAYMENT TERMS/ RUNNING ACCOUNT BILLS

Submission of running bills at regular interval keeping a minimum

interval of 15 days between two bills
The owner shall make the payment of running bills within 7 days after
getting certified from the architects and the architect shall certify the
bills within 7 days after submission of each bill by the contractors.
F. MOBILISATION ADVANCE
Interest free mobilization advance @2% of the contract value against
bank guarantee of equivalent amount.
G. SECURED ADVANCE
Secured advance @75% of the cost of the material brought from
outside for construction.
H. LIQUIDATED DAMAGES
A sum equal to 0.5% of the total value of incomplete works for every
weeks delay subject to a maximum of 5% of total contract value.
I. DEFECTS LIABILITY PERIOD
The defect liability period in respect of works executed under this
contract shall be nine months or one rainy season, whichever is later
from the date of handing over of the works to the owner
J. QUALITY NORMS
All civil works shall be executed, measured and paid as per standard
latest CPWD specification included up-to-date correction slips. In case
specifications of any item are not covered under above specifications,
relevant IS code shall be followed.
All materials are specified to comply with IS code, when required
proper testing of materials should be done.
Mode of measurement shall be in accordance with IS: 1200

IMPORTANT POINTS FROM CONTRACTOR'S POINT OF VIEW

TO BE MONITORED/ RESOLVED
1. FAMILIARISATION WITH SITE
The contractor is advised to inspect and examine the site and
surroundings thoroughly and satisfy himself before submitting the
tender as to the nature of ground and subsoil, means of access to the
site, the facilities available at the site etc. In general, they shall
themselves obtain all required information as to risks, contingency
and all other

circumstances which, according them may influence or

affect the rates. The Contractor shall be deemed to have full

knowledge of the site.
2. COMPLETE THE WORK
The first and foremost obligation of a contractor is to carry out and
complete the works in accordance with the contract. The obligation
has two facets,-the first is to carry out the work and complete it in
time, and the second facet is the maintenance and rectifying defects
during

defect

liability

period

winch

starts

immediately

after

completion of the work.

3. SELECTION OF RESOURCEFUL SUB-CONTRACTORS
In most cases, the prime contractor entrusts different work packages
to various sub-contractors. The selection of sub-contractors is very
significant to the success of the project. It is desirable that subcontracts should be awarded to a resourceful sub-contractor on
workable rates. The prime contractor must satisfy himself whether
the resources committee would be available for deployment and
whether the equipment committed to other projects by the subcontractor would be made available in time
4. PLANNING AND CONTROL

Planning and control is very important for a successful project. Time,

Cost and Quality are always the critical targets for the contractor in
implementation of construction project The contractor shall adhere to
the construction programmes as instructed by the architects from
time to time by deploying extra labor, equipments etc. The contractor
shall submit to the architects, the weekly bar charts showing the
progress of works achieved as per the programme and projected
progress to be achieved in the next week. The contractor shall also
give daily/weekly report of labor and equipments deployed at the site
as per the Performa prescribed by the architects,
5. QUALITY ASSURANCE
It is seen from the experience that wherever adequate attention is not
paid by the contractor to quality assurance requirements, this has not
only led to delays and extra cost to the contractor but had created
friction in relations between employer and contractor. Hence quality
assurance is very important to the contractor. If it shall appear to the
architect that any work has been executed with unsound, imperfect,
or unskillful workmanship or with materials of any inferior description,
it is contractors responsibility to rectify or remove and reconstruct
the work materials or articles at his own cost.
6. PROCUREMENT OF LATERIAL
The contractor shall provide at his own cost all materials, except
specified.

Innumerable

projects

get

delayed

due

to

delay

in

procurement of material. Effective planning and control of material

procurement system is essential to avoid delay in implementation of
the project and to avoid wastage of material and extra expenditure
due to loss of labor.
Control on waste of material within the prescribed limits is of ultimate
importance for achieving the planned profitability Level. Excessive
wastage of material caused due to imperfection in the workmanship,

imperfect storage system, improper handling, absence of bar bending

schedule/ shop drawings, improper checking of quantities while
delivery from the supplier can be reduced by having a regular system
of wastage accounting and to advise measures for reducing it by
eliminating the causes. Occasional surprise checks should be carried
out for ensuring the proper use of material and for checking the
wastage limit.
7. LABOUR WELFARE
The contractor shall obtain a valid license under the Contract Labor
(Regulation and Abolition) Act, l970 and the Contract Labor
(Regulation and Abolition) Central Rules, 1971 before the
commencement of the work. No labor below the age of eighteen
years shall be employed on the work.
The contractor shall pay to labour employed wages as defined in the
Contractor's Labour Regulation or as per provisions of the above
mentioned acts. The contractor shall comply with the provisions of
the Payment of Wages Act, 1936, Minimum Wages Act, 1948,
Employee's Liability Act, 1938, and Workmen's Compensation
Act, 1961.
The contractor shall provide ft his own cost with a sufficient number
of huts inside the site, adequate water supply for the use of labourers,
sufficient arrangements for draining away silage water so as to keep
the camp neat and tidy, sufficient lighting arrangement, proper
arrangements for conservancy and sanitation in the labor camps
according to the rules of the Local Public Health and Medical
Authorities.
8. MAINTENANCE OF CONSTRUCTION EQUIPMENT
Effective operation and maintenance of construction equipment is
very important for the contractor. It is duty of the contractor to check
the maintenance costs of the various equipments, finding ways to

check these costs, providing adequate work sheds to store these

equipments, tools and accessories, proper oiling of all the machinery
etc. so that the maintenance cost and hence the operating costs
could be reduced
9. FILES AND RECORDS
Construction records

Daily progress report

Telephone calls recording
Records of Tests of Materials
Daily Diary or Log

Construction site Office Files

Copies of all Correspondence

Job Drawings
Shop drawing Submittals
Copies of all approved Requisitions for payment
Copies of Reports of all Types
Record of all approved Samples
Files of all Operating Tests
Deviation Requests

Construction Progress Record

Daily Progress Record

Field Diary or Log
Special Feedback Reports
Report of Field Correction
Concrete Batch Plant Daily Reports
Plant Inspection Reports
Field Inspection Report
Documentation of Safety Hazard Warnings
Misc. Records
Recording the proceedings of Job Conferences
Construction photographs

ORGANIZATIONAL CHART WITH FUNCTIONS

As a part of the architectural organization, the Organizational Chart
as conceived by me is as follows:
ARCHITECT
(Head of the organization)
(Functions Dealing with owners, contractors, consultants Overall control
and monitoring)
STUDIO STAFF

ENGG. STAFF/ CONSULTANTS

ADMIN

STAFF
Astt. Architect (2 no.)

Structural consultant

Accountant (1no.)

Draughtsman ( 1 no.)

Plumbing/sanitation

CLERK (1 no)

Electrical Consultants
Landscape consultants
Civil Engg. (1 Nos.)

Functions of each and every member of the above chart are well defined
and those are as follows:

Astt. Architects

(Draughtsman to work -under them- actual preparation of the

drawings).
Preparation

of

tender

drawings,

deciding

materials

and

its

specifications to be used for the project, providing information and

drawings to civil engineer. for the preparation of tender documents &
BOQ, assigning work to the draughtsman, attending all me meetings
related to the project, release of the working drawing, communication
with various consultants, owners, representatives, project managers &
contractor, visiting the site as required, proper feedback to the
architect, making site visit reports etc.

Engg. Staf

Consultants to provide drawings and information of their respective

field of work, visit site as directed by the architect to check the
progress/quality of the work along with the Astt Architects/ Project
Manager.
Civil engineer's functions are preparation

of tender documents

preparation of BOQ, filling up of quantities, checking all the final

submitted tenders, checking of actual measurements of various works
on site, checking of quality of construction at site, proper feedback to
architect/asst. architect.

Administrative Staf

Clerk's job is to maintain all records of letters/communication with the

either party, maintain record of progress reports from the site, to draft
letters of communication to various party, to make sure that the
letters, samples, drawings etc. has been delivered to the right party, to
maintain, as far as possible, record of all the telephonic communication
with the either party

Accountant's job is to maintain all the accounts bills of consultancy,

bills of site visits, and other misc. spending related with the project.
Organizational Structure of the contractor, in brief, is as
follows:
1) Contractor- The Head-Overall Control and Monitoring.
2) Sub-contractors- Handling construction works of their respective
fields, arranging materials and equipments.
3) Site engineers/site supervisors- Qualitative and Quantitative check
at site.
4) Administrative staff- Filing and Recording, Accounting and Billing.
Organizational Structure of Owner, in brief, is as follows:
1) Owner-The Client-The money Spender.
2) Representatives of owner-Overall planning, meetings with architects
and contractors, time scheduling, feedback to owner, handling misc.
matters.
3) Project Manager-In this case employed by the owner for the project
only- completes control and monitoring.
Points of disputes, ambiguity arising out of various levels of the
organization are resolved by face to face meeting between the
concerning persons. The disputes are however tried to be minimized
by keeping open a proper communication channel which includes the
clean instructions given by the superiors to the juniors and proper
feedback given by the juniors to the seniors
However, the disputes arising between the various parties involved in
the project have been tried to be minimized by clearly mentioning all
the important and sensitive points in the tender/contract document

and keeping the communication network open as planned in the

tender document.

METHODS

FOLLOWED

FOR

ADMINISTRATION/MONITORING
Methods followed for the proper administration and monitoring of the
project are as follows:
a) Maintaining proper communication with the concerning parties
through telephones and letters.
b) Making it very clear the duties of the contractor in the tender
document itself.
c) Clearly specifying all the materials specifications in the tender
document.
d) Timely site visits by architect/asstt. Architect to monitor the
construction work.
e) Proper preparation of tender and working drawings.
f) Demanding site progress reports weekly from the contractor
g) Sending site visits report to the clients/owners for their
feedback.
h) Asking for manufacturer's report, testing reports of various
materials used for construction from the contractors.
i) Arranging timely meetings to discuss and reschedule the
progress of the work.

CONCLUSION
Thus, we can see that how important is a contract and contract
management to carry out a project to the satisfaction of all the
parties. Contract defines me duties of

contractor, it provides

guidelines to proceed for the work, and also provide a system of

control and management so that the project is completed in time.
Instruction from the concern parties, feedback reports from the
contractor help in establishing a proper communication network that
ultimately helps in timely completion of the project. And this system
is achieving result in the farm house project as a proper overall
control and management is possible because of the Contract
Management.

BLIOGRAPHY/ READINGS
1. Contract Management in Civil Works ProjectV. A. Prakash NICMAR
Publication.
2. Tender document of Kirloskar showroom/ workshop, Akola.
3. Suggestions from Mr. Sanjay Kulkarni, project manager client side.