National Institute of Construction Management and Research, Pune

School of Distance Education

ASSIGNMENT 2

ON

CONSTRUCTION CONTRACTS & CONTRACTING

NCP 23
____________________________________________________________________

SUBMITTED BY:

Arunashish Mazumdar

GPPM,

REG NO: 212-06-14-10687-2141

____________________________________________________________________
DEPARTMENT OF GPPM
NATIONAL INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH
SCHOOL OF DISTANCE EDUCATION
25/1, BALEWADI, N.I.A. POST OFFICE, PUNE – 41104

Date of dispatch: 27/08/2012 Date of receipt: _____________

Assignment on construction contracts and contracting NCP 23 Page 1 of 17

 National Institute of Construction Management and Research, Pune
School of Distance Education

v CASE

_______________________________________________________________________________

1. 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.

______________________________________________________________________

Assignment on construction contracts and contracting NCP 23 Page 2 of 17

 National Institute of Construction Management and Research, Pune
School of Distance Education

v PROJECT FACTS

The proposed project is to develop a New Building for ITM University at Gurgaon.

The New Building is (G+3) storeys with Two level basement and organized open spaces, with

summative built-up area of about 85,000 Sqft. Amenities and facilities like elevators, power

back-up, water supply and sanitation, fire-fighting, electronic security, intercommunication etc.

will be provided in the Building.

The present work pertaining to this tender consists of Civil, Structure, Finishing and

External Development Works for the New Building.

v SCOPE OF WORK

Scope of work covers following points:

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

• 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

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 National Institute of Construction Management and Research, Pune
School of Distance Education

• 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.

v 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 ITM university building are-

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 National Institute of Construction Management and Research, Pune
School of Distance Education

A. TYPE OF CONTRACT-

The 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 - ITM UNIVERSITY

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 SABYASACHI SEN AND ASSOCIATES,

NEW DELHI.

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 National Institute of Construction Management and Research, Pune
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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 10 – Crores. (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

Assignment on construction contracts and contracting NCP 23 Page 6 of 17

 National Institute of Construction Management and Research, Pune
School of Distance Education

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 week’s 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.

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 National Institute of Construction Management and Research, Pune
School of Distance Education

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

v 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.

Assignment on construction contracts and contracting NCP 23 Page 8 of 17

 National Institute of Construction Management and Research, Pune
School of Distance Education

It is desirable that sub-contracts 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 sub-contractor 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 programs as instructed by the architects from time

to time by deploying extra labor, equipment’s etc. The contractor shall submit to the

architects, the weekly bar charts showing the progress of works achieved as per the

programmer and projected progress to be achieved in the next week. The contractor shall also

give daily/weekly report of labor and equipment’s 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 contractor’s responsibility to rectify or remove and

reconstruct the work materials or articles at his own cost.

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 National Institute of Construction Management and Research, Pune
School of Distance Education

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.

Assignment on construction contracts and contracting NCP 23 Page 10 of 17

 National Institute of Construction Management and Research, Pune
School of Distance Education

The contractor shall provide for his own cost with a sufficient number of huts inside the site,

adequate water supply for the use of laborers, 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

equipment’s, finding ways to check these costs, providing adequate work sheds to store these

equipment’s, 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

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 National Institute of Construction Management and Research, Pune
School of Distance Education

• 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

v ORGANIZATIONAL CHART WITH FUNCTIONS

As a part of the architectural organization, the Organizational Chart as conceived by me is as

follows:

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 National Institute of Construction Management and Research, Pune
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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.

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 National Institute of Construction Management and Research, Pune
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• Engg. Staff

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 Staff

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 equipment’s.

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 National Institute of Construction Management and Research, Pune
School of Distance Education

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.

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 National Institute of Construction Management and Research, Pune
School of Distance Education

v 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.

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 National Institute of Construction Management and Research, Pune
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v 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 Project—V. A. Prakash NICMAR Publication.

2. Tender document of ITM University, Gurgaon.

3. Suggestions from Mr. Joydev Karmakar, project manager client side.

Assignment on construction contracts and contracting NCP 23 Page 17 of 17