SUBCONTRACT

MANAGEMENT FRAMEWORK

September 2019
Contents
1. General ................................................................................................................................................ 2
1.1. Introduction ................................................................................................................................... 2
1.2. Key factors that affect the success of a Subcontracting ......................................................... 2
1.3. Practice of Subcontracting .......................................................................................................... 5
1.4. Objective of the Subcontracting Management Framework .................................................. 6
1.5. Scope and Goals ............................................................................................................................. 7
2. Overview of Subcontracting ............................................................................................................ 7
2.1. Why sub­contracting?................................................................................................................... 7
2.2. Types of Subcontracting .............................................................................................................. 8
3. Subcontract Management ................................................................................................................ 8
3.1. Mandatory Subcontracting .......................................................................................................... 8
3.2. Time for Proposing Subcontractor .......................................................................................... 11
3.3. Evaluation criteria and Qualification Requirement ............................................................. 13
3.3.1. Selection Criteria ..................................................................................................................... 14
3.3.2. Selection Method ..................................................................................................................... 15
3.3.3. Multiple Awards ...................................................................................................................... 16
3.4. Employer Involvement on subcontracting............................................................................. 19
3.5. Standard Conditions of Contract for subcontracting ........................................................... 21
3.5.1. Approach to sub­contract formulation:­............................................................................. 22
4. Amendments recommended on the existing bidding document of the Main Contract ..... 28
5. General Remarks as a conclusion ................................................................................................ 29
6. Reference ............................................................................................................................................ 0

Table 1 Trend of Subcontracting in ERA road projects (raw data from September 2018)................. 5
Table 2 Selection Criteria at Pre-Qualification Stage ........................................................................... 34
Table 3 Selection Criteria at Pre-Contract Stage................................................................................... 35
Table 4 Selection criteria at construction stage...................................................................................... 35
Table 5 Selection of Subcontractor after Construction Stage .......................................................... 36

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1. General

1.1. Introduction

Subcontracting is a project delivery business strategy to deal with uncertainties in the

construction market and to transfer risks (such as financial risks, completion risks and quality
risks) to building local Contractors’ capacity and for wealth distribution. Subcontracting reduces
direct costs and overheads and allows main contractors to use more competitive smaller firms
with lower overhead costs and better knowledge of the specific assignment, practices and
procedures. It also facilitates to build local Contractor’s capacity by distributing the total capital
income share so that the local construction sector can be handled by home grown builders.

The primary goals of the subcontractor management framework are based on the subcontractors'
ability of management skills, technical expertise, and knowledge of contract administration in
comparison to project specific criteria, financial stability and current workload.

1.2. Key factors that affect the success of a Subcontracting

The construction industry of Ethiopia is playing a key role for the country in general and for
investors (those participating as Contractor/Builder or Consultant) in particular in both growing
public capital and private wealth/income respectively. Ayalew, et al. (2016) mentioned that the
GDP contribution of the Ethiopian construction industry has been raised to 5.6%. The Ethiopian
Government through Ethiopian Roads Authority (ERA) has placed increased emphasis on
improvement of the quality and extent of road infrastructure in the country by allocating massive
amount of budget and resource to expand and rehabilitate the existing road network. With this
intention, the government has spent more than ETB 111 Billion in the last 20 year in for the road
sector.

At the initial stage, the numbers of local contractors who can participate on the road construction
sector were very limited. To enhance the participation of local contractor in the road sector, the
government through the Ethiopian Roads Authority has implemented different initiatives and one
of the initiatives is development of local contractors through subcontracting. Even if
subcontracting has contributed a lot for the development of the industry and for equity allocation,
it is not properly handled and facing difficulties to achieve its objectives. These problems might
emerge both from the main contractor or the subcontractor. Some of the main issues are
discussed below as noted from study and literature reviews.

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1. Main Contractor related Issues

a. Unfairly drafted subcontract agreement

Basically the subcontract agreement is drafted by the Contractor and with this
opportunity; the contractor makes it more favorable for him rather than making it fair
for both parties. If a subcontract document is not well prepared and it doesn’t fairly
treat both particles, it will be burden for subcontractor instead of achieving its
objective.

b. Selection of the right Subcontractor

There should be better subcontractor selection criteria, apart from the price.
According to Lavelle et al. (2007) the common criteria for subcontractor selection
should be Price, past performance, Health and safety record, Financial capability,
Current workload, Reputation, past relationships, Resources (both physical and
human), Technical/ managerial capability, Number of years the firm has been
working in the market, References, Location of firm, Appropriate insurance cover.
However, the contractor’s intention is to get a subcontractor with low price instead of
focusing on its compatibility for the assignment and it’s also done based on a personal
relationship with a subcontractor.

c. Subcontractor Management

According to Yong (2015), a research made on highway subcontracting in china, poor

subcontract management is one of the major factors that affect road construction
subcontracting. Okunlola (2015) listed the major problems caused by the contractor in
managing subcontractors as: main contractors’ financial problem; delay in contract
progress payment; interruption and termination of work by contractor and Lack of
coordination of the different subcontractors. The contractor therefore needs to
coordinate and share resources properly effectively and efficiently among the
subcontractors through the project time period.

2. Subcontractor related

a. performance of the Subcontractor

A subcontractor with poor performance of works at project level could not meet
schedules and the quality standard. Subcontractors need to deploy the required
resources for the project according to their subcontract agreements. Sufficient skilled
labor need to be available on the subcontractor’s team. Substandard work of

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 subcontractors is the main problem area as per the study conducted in Pakistan by
Choudhry et al. (2012).

b. Non-Adherence to the contract

The subcontractor is expected to properly understand and excurse the subcontract as

per the subcontract agreement. As per Yong (2015), Non­Adherence to the contract is
one of the major factors that affect subcontracting on road construction projects.

3. Cooperation

Cooperation is recommended by different researchers besides solving the different

problems faced in the subcontracting process. According to Citi (2013) six important
benefits were noted form proper cooperation. Those are; collaboration encourages
teamwork; develops cooperation between team members; stimulate information sharing;
improves quality and timely project completion; enhance service quality; and better
communication among project members. Absence of long term Partnership; Poor
communication and Lack of Team Work are the major causes of cooperation problems.

a. Poor communication

Subcontractor­contractor relationship needs mechanisms for getting solutions at early

stages. Meetings are helpful to address subcontracting issues at early stage. Weekly,
monthly, quarterly and other performance reports can also be used to understand the
existing subcontracting problems in detail. Verbal and written communications
facilitate the subcontracting process as per Mudzvokorwa (2017).

b. Lack of teamwork

Stakeholders should work towards their common goal of executing project works as a
team. According to the study conducted by Mudzvokorwa (2017) in Zambia: lack of
cooperation, limited trust, and ineffective communication between the contractor and
the subcontractor are studied as the main causes of subcontracting problems.

c. Absence of Partnership

Partnership is a long term commitment between two or more organizations to

implement a structured collaborative approach that facilitates team work across
contractual boundaries for the purposes of achieving specific business objectives
(California Department of Transportation Division of Construction, 2013.Through
this the development of trust and shared goal there is an increase in the likelihood of
project success. According to Mirawati et al. (2015) partnering has a positive impact
on project performance, not only with regard to time, cost and quality, but also
improvement in profit margins and reducing litigations.

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1.3. Practice of Subcontracting

To achieve the benefits of subcontracting (from the Employer and the main Contractor point of
view) on construction projects, ERA has incorporated contractually binding subcontracting
clauses under its contracts for a minimum of 20% from the contract value at least for two local
subcontractors. However, subcontractors are engaged on very limited projects and even this
limited subcontracting is being implemented with improper manner like inappropriate selection
and approval process, unfairly drafted subcontract document which favor the main contractor,
lack of proper payment to the subcontractor, unpleasant management of the subcontractors and
so on. To the extreme, there might be no formal agreement between main contractor and
subcontractor at all. Besides, the subcontractors' failure to understand or not being fully aware of
the main contract also contributes for the failure of subcontracting.

The data collected from Contract Project Management Directorates shows that there is no
consistency and a single standard for selection of subcontractors. For instance, in labor­only
subcontracts, there is no formal contract. In addition, from sample of subcontract agreements, it
has been observed that important aspects of the contract such as workmanship standards, co­
ordination and payment schedule has been undermined. The collected data has also confirmed
that the badly drafted subcontract document by the contractor has affected the subcontract
management and performance and this has been a reason of disputes between contractors and
subcontractors.

The following table shows the actual number and value of subcontract works under ERA projects
in comparison with the minimum expected number of subcontractors and value of subcontract
amount.

Table 1 Trend of Subcontracting in ERA road projects (raw data from September 2018)

I., CMD No of Maximum Maximum Number of Amount of

No projects at Contract amount number of subcontrac subcontracting
hand of subcontracting subcontractors tors (ETB,
(ETB, excluding can be employed including VAT)
VAT and employed
Contingency)
1 East 17 7,126,365,789.23 34 3 335,743,133.53
2 North 16 7,756,448,989.72 32 1 96,013,037.85
3 South 8 2,064,017,658.50 16 3 529,992,276.33
4 Central 18 5,378,186,633.99 36 ­ ­
5 West 15 4,513,497,590.51 30 8 648,887,146.83
6 DB 16 6,944,971,841.90 32 2 186,987,123.23
7 Express 3 ­ 6 ­ ­
way

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The data from the directorates shows that the practice of subcontracting at ERA is not only
minimal but also mainly dominated by labor­only works which are usually much lower in
amount than expected.

To summarize, poor performance of subcontractors (quality and execution problems) had a

significant effect on time, cost and quality dimensions of subcontracting performance.
Subcontractors with substandard works had negative impact on subcontracting performance of
ERA projects on quality dimension. Lack of Cooperation (absence of team work between the
contractor and subcontractor, failure of communication between the contractor and subcontractor
in resolving progress issues and absence of long term partnership) was the other identified
determinant which has affected subcontracting performance on time, cost and quality
dimensions. Delay of progress payments by the contractor and inadequately drafted subcontract
document are the other significant determinants those affected the subcontracting.

However, as mentioned herein there are no standard conditions in ERA to address the
subcontracting. This area necessarily needs focus so that the subcontractors may not suffer due to
the exacting contractual conditions imposed by the main contractor. Hence, in order to overcome
all these challenges, ERA definitely needs to produce subcontract management framework
standard conditions of subcontract keeping the benefit of all parties and considering important
documents like Ethiopian CIVIL Code, PPPA directives proclamation and other standard
conditions of contracts.

Therefore, this Subcontracting management framework is meant to provide a standardized

Subcontracting arrangement that is in line with both the Ethiopian procurement and contract laws
and the commonly used conditions of contract by the Authority with the main contractor.

1.4. Objective of the Subcontracting Management Framework

The main objective of this framework is to examine the current subcontracting management
practice and performance on ERA projects and design a framework for subcontract management
in lieu of capacity building, equity, and justice and transparency structure. More specifically the
study is expected to achieve the following objectives.

 To provide standard selection criteria through a clear and transparent process in order to
ensure a fair competition among competitors involved in the subcontracting business.
 To assist the capacity building of the local Subcontractors in the road construction sector in
a controlled and transparent manner with a clear pathway towards main contracting
capability;
 To develop standard conditions of subcontract applicable for the subcontract works that
keep fair benefit of the contractor and the subcontractor.

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  To make sure that local subcontractors are joining the road industry in a profoundly
manner.
 To increase the contracting capacity of the main contractors and sub­contractors especially
the local capacity of the home grown contractors in performance and contract
administration.
 To make sure that equitable opportunities for all subcontractors are in place.

1.5. Scope and Goals

The framework will cover all subcontracting under ERA's Projects. The framework seeks to
provide as much guidance as is necessary through making a clear and transparent process in
selection of subcontractors in order to ensure a fair competition among competitors involved in
the construction business.

In general, the aim of the framework is to set a consistent standard for the selection and
management of subcontractors across ERA and thereby drive the behaviors required to operate to
the benefit of the contracting parties by ensuring value for money at every level.

2. Overview of Subcontracting

2.1. Why sub­contracting?

There may be different reasons for engagement of subcontractor beyond the basic objective of
this proposal to create compatible contractors in the industry and equity allocation among
citizens. To mention some:

 Giving additional resources or support to the main contractor:

 To engage professional appointments: for instance the Geotechnical Engineer,
Environmental Engineer, Safety Engineer, Sociologist, specialized for coordination of
specialized in relation to health, safety and gender issues, etc;
 For specialized activates: The need to acquire specialist subcontractors to perform certain
aspects of the works and/or to satisfy the need for acquiring a more specialized
consultants such as design consultants, traffic management consultants, project
management consultants, etc;

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2.2. Types of Subcontracting

Different literatures have their classifications of Subcontracting in relation to construction

contract. However, the major types of subcontracting are:

 Selected Sub-contractor; and

 Nominated Sub-contractor.

1. Selected Sub-contractor a subcontractor who contracts with the main contractor to

supply or fix any materials or goods or execute work forming part of the main contract.
Essentially this contractor is employed by the main contractor at his discretion or as per
the contract requirement. The selection will be in consultation with the employer and/or
employer's representative in terms of the requirements of the contract.

2. Nominated Sub-contractor is a subcontractor nominated by the employer which the

contractor is obliged to appoint as a subcontractor.

3. Subcontract Management

The aforementioned sections implies that due to the absence of standard rules and procedures for
selections of subcontractors, standard conditions of contract and other determinant requirements,
the industry didn’t achieve the expected result from the subcontracting instead; it is going down
and leading the subcontractors to be collapsed and affecting the quality of works. Therefore, it
needs rules and procedures and development of standard documents to make it healthy and
transparent keeping the interest of all the parties:

The sections bellow discuses about the rule and procedures, standard documents and other
determinant requirements to be practiced on the subcontracting under ERA projects with the
detail assessment and approach how those rules, procedures and standards are recommended.

3.1. Mandatory Subcontracting

To meet the intention of subcontracting for the development of the local construction industry
and for equity distribution among the citizens, it is not enough to depend on the subcontractors
proposed by the Contractors on its own intention; rather, there should be some mandatory
requirement which enforce the contractors to engage subcontractors on their projects. On the
current contracts, ERA has already introduced a mandatory subcontracting of 20% of the total
contract value for at least two domestic subcontractors contractors form the main components of
the road construction item to consider the subcontract work as experience for the subcontractors

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for participation on upcoming tenders. As mentioned in the earlier section, the already
introduced mandatory requirement is not also properly implemented due to different reasons.
One of the reasons is that Contractors are not interested to give subcontract from the main
component of the construction works like earth work, sub base, base, asphalt and other and there
is no proper management of subcontractors.

One of the reasons for the subcontracting is to increase the number of contractors in the road
sector. The contractor who could come to the road sector should fulfill the minimum
requirements requested for each project especially construction turnover and specific
construction experience. Therefore, contractors who are expected to be a sole or JV member
contractor through subcontracting should participate on an activities which should be consider as
specific experience for their future participation and it is the reason why recommended to
subcontract earthwork plus one structural layer which may be sub base, base course or asphalt
surfacing for the mandatory subcontracting. Except the earthwork, the structural layers are
optional and the contractor shall subcontract at least one of the structural layers plus the
earthwork. Furthermore, the contractor is at liberty to subcontract other elements of the works to
the same subcontractor in addition to the minimum requirements.

On the other the mandatory subcontracting may not be feasible on small sized projects due to the
following reasons.

The contractor can’t manage to buy heavy duty equipment like crusher plant, asphalt
plant and the like with the current higher cost of machineries keeping its cash flow if it is
forced to subcontract 20 % of the work from this amount.
The 20% mandatory requirement may be a smaller component from each item or it may
be total value of a single item. Therefore, subcontracting from the main component of the
works may be difficult because of the size of the main items.
The amount of subcontracting from such contract price is low and it doesn’t help the
subcontractor as experience in the future unless it is as considered for equity sharing.

Example:

For a project value of less than 500 million Birr, the 10% subcontract will be 50 million birr and
it is not sufficient to be considered as experience on any road construction projects under ERA.
In addition, it may be difficult to subcontract earthwork plus other structural layer of the road to
a subcontractor.

Therefore, taking in to consideration the aforementioned facts, the following is set as rules and
procedure are set on mandatory subcontracting for domestic subcontractors.

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A domestic bidder is one that meets the following criteria:

(a) for an individual firm:

(i) is registered in Ethiopia;

(ii) has more than 50 percent ownership by nationals of the country of the Employer ;

(iii) does not subcontract more than 10 percent of the Contract Price, excluding Provisional Sums,
to foreign contractors.

(b) for a joint venture (JV) of domestic firms:

(i) individual member firms shall satisfy (a) (i) and (a) (ii) above;

(ii) the JV shall be registered in the country of the Employer; and

(iii) The JV shall not subcontract more than 10 percent of the Contract Price, excluding Provisional
Sums, to foreign firms.

Table 2: Rules and procedures on amount and items of mandatory subcontracting:

Mandatory
Main Contract Mandatory number Mandatory Items to be
I.No. %age to be
Project Value of subcontractors subcontracted
subcontracted
A Greater than or One subcontractor Minimum of earthwork
equal to ETB 1 for the 20% or two and one pavement
billion subcontractors each structural layer (sub
20%
for a minimum of base, base course,
10% asphalt or gravel
surfacing)
B less than ETB 1 One subcontractor Can subcontract any
billion and for the 20% or two components of the
greater than or 20% subcontractors each works as per the
equal to ETB for a minimum of contractor interest
500 million 10%
C less than ETB No mandatory N/A N/A
500 million Requirement

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3.2. Time for Proposing Subcontractor

The existing ERA’s standard bidding document has the following condition on engagement of
subcontractors.

Any subcontracting more than 10 % should be informed to the Employer during the
tendering stage
Any subcontracting need prior consent of the Engineer
The maximum amount of subcontracting is 40% of the contract price
There is 20% mandatory requirement of subcontracting (within the maximum 40%) for
two local subcontractors for capacity building and equity distribution purpose from main
component of the works

However, the actual practice of the subcontracting is not in line with the above conditions and
the following are facts of the existing subcontract management.

Contractors didn’t propose subcontractor for a value more than 10% of the contract price
during tendering stage
There is engagement of subcontractors without prior consent of the Engineer
Engagement of subcontractors for more than 40% of the contract price,
Contractors didn’t comply the mandatory requirement of 20% subcontracting for two
local contractors keeping the minimum mandatory requirements
No proper selection method and standard conditions of subcontract

The practice implies that allowing the contractor to propose subcontractor during the tendering
stage gives liberty for the contractor not to propose the mandatory subcontracting during
implementation stage time using the opportunity that the Employer will not be in a position to
terminate the contract or to take other contractual action because of the contractor inclination not
to propose a subcontract until the contractor is executing the works. Therefore, one of the options
is to enforce the contractor to propose the subcontractor during the tendering stage and makes it a
qualification requirement for the contractor. If qualification of the subcontractor couldn’t be a
requirement for qualification of the contractor, it leads to request for replacement during the
negation or implementation of the project and this leads to the already practiced enforcement
problem of subcontracting whatever condition we have in the contract document even as a
termination clause. Furthermore, selection of the subcontractor with the main contractor reduces
involvement of others in the selection process and it reduced any conflict of interest.

Given that ERA is administrating number of projects at a time, assessing the subcontractor
during the tendering stage will be an additional burden on the procurement process further to the
high workload. As a matter of solution the following two options were raised and discussed.

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 1. to propose during contract negation before contract signing and
2. to propose before collecting the advance payment

However, those situations may delay the contract signing or affect execution of the project.
Therefore, it is advisable to be selective based on the value or other parameters for which the
selection of subcontractors to be carried out during the tendering stage with the main contractor.
Regarding Design and Build (DB) Projects, there is no design at the tendering stage and that
could be a difficult scenario for the contractor to propose subcontractor during the tendering
stage. Under such circumstances, it is better to allow the contractor to propose the subcontractor
during the projects implementation stage. However, for all the options of proposing
subcontractors during the project implication time, a binding clause should be set in the contract
for enforcement of subcontract at the right time.

Table 3: Rules and procedures on mandatory subcontracting for timing of subcontractors’

selection:

Project Time for Evaluati Remark

I.No. qualification
Value selection on
A Greater During the Carried  The Only for 2012 EFY,
than or tendering time out by subcontractor Contractors could propose
equal to with the main the Criteria will be the mandatory
ETB 1 contractor Employer part of the tender subcontractors until the
billion with the document request of advance
main payment. Selection and
contract  Qualification of signing of the mandatory
the subcontractor subcontract is a
will be pass/fail precondition for request of
criteria for the advance payment.
contractor
Will be a performance
issue for tendering purpose
for the main contractor
and the contractor will be
considered as non
performing for upcoming
tender if the contractor
couldn’t engage the
mandatory subcontractor
until half time of the
original contact period

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 Project Time for Evaluati Remark
I.No. qualification
Value selection on
B less than At least Carried  The  Will be performance issue
ETB 1 During the out by subcontractor for tendering purpose for
billion projects the Criteria will not the main contractor and
and implementatio Engineer be part of the the contractor will be
greater n (The and to be tender document considered as non
than or contractor may reviewed but referred to performing for upcoming
equal to propose either by the the subcontractor tender if the contractor
ETB 500 during the Employer management couldn’t propose until half
million construction/i framework time of the original contact
mplementation  The period
phase and/or subcontractor
during the should qualify
tendering the minimum
stage) requirement of
the framework
C less than N/A N/A N/A
ETB 500
million

Exceptions:

Subcontracting on any value of DB projects may be proposed during the contract

implementation stage and the rules and procedures under Table 3 Item “B” will apply.

3.3. Evaluation criteria and Qualification Requirement

Subcontractors directly influence the success of a project and the overall reputation of the main
contractor in the eyes of Employer through the quality and timing of the work performed. As
the selection of qualified subcontractors stimulates the overall quality of projects, the
incorporation of value creation initiatives into the subcontractor selection model is paramount
to achieving success for both the project and future of the firm itself.

The selection process of subcontractors is also important because the nature of the main
contractor­subcontractor relationship is project based and therefore a proper selection and
management of subcontractors should be one of the key issues for contractors who want to
maintain good performance and reputation. It is equally important for ERA too to support local
subcontractors to provide an enabling environment in order to succeed in building their
performance and capacity.

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 3.3.1. Selection Criteria

Two selection methods are proposed as optional method of selection of subcontractors.

1. Performance based selection process

2. Formula method selection criteria

1. Performance based selection process

 Advantage
o Good to prepare long list of subcontractors
o Consider performance of the contractor at different stages and with different
parameters
 Disadvantage
o Has subjectivity
o May be barrier for new comers after the long list
o Less transparent

(The Performance based selection criteria is attached as Annex 1 to the framework-)

2. Formula method selection criteria

 Advantage
o Mechanical, less subjective and easy for evaluation
o transparent
o Can be used for evaluation at any time
 Disadvantage
o Less consideration of performance and other determinant parameters

Though the two optional criteria has been identified and the performance based system is most
relevant for selection based on price, performance, quality, safety and environment; the formula
method is preferred taking into account that the disadvantages of the performance system are
most serious issues of procurement(subjective and less transparent) and the existing local
practice of selection of contractors is based on the formula method as released by the Public
Procurement and Property Administration Agency (PPPAA). However, for the future, ERA can
prepare long list of subcontractor or invite interested contractors to upload their data on ERA
website for subcontract works and ERA can do detail assessment and ranking of contractors
interested to work as subcontractors based on performance based procedure. Accordingly, and
contractors as well as a newly coming contractor can easily get the available subcontractors list
from abroad or anyone from ERA website.

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For the purpose of this framework, the formula is derived based on the Public Procurement and
Property Administration Agency (PPPAA) criteria framework to keep the consistency and
awareness of the contractors.

The basic intention of the mandatory subcontracting is to capacitate the road sector with number
of local contractors to meet the demand and for equity distribution. Therefore, with this
intention, it is not reasonable to request experience from the subcontractor especially specific
experience related to the works. On the other hand, giving this opportunity of high value
subcontracting for any subcontractor with no exposure of the construction sector is not also
recommended as it may affect the quality and performance of the works. Therefore, there should
be some basic criteria for the selection process. Accordingly, it is proposed to have General
Experience (years in the industry and annual construction turnover) and legality as requirement.

General Experience (years): it is common requirement in any selection framework to judge

how long the contractor is in the industry. This is important to know the subcontractor’s
awareness of the industry.

Annual turnover: the amount of the construction works handled by a subcontractor indicates
the subcontractor capacity how much work he can accommodate at a time. Even if this
requirement has a nature of capacity criteria and not considered in some countries subcontracting
procedure, it is considered for this framework as it is not specific to the road works and it
guardant the Contractor and the Employer to some level on performance and quality of the
subcontractor. The detailed criteria are shown in table 5 below.

3.3.2. Selection Method

The mandatory subcontracting is on items for which the contractor has already provided its rate
and responsible for any loss or gain with respect to its offer. In addition to enforcing the
mandatory subcontracting on the contractor’s offer, it is not fair to dictate the contractor to select
the subcontractor through open tendering or other recommended method of selection. If ERA has
an intention to make it transparent through open tendering or other procedure, the works to be
subcontracted need to be a Provisional Sum (PS) item and the selection could be done as
nominated or selected subcontractor following the government tendering procedure (Equal
opportunity for all subcontractors). For that reason what ERA can do on the mandatory
requirement is developing a standard requirement, standard conditions of contract and having
some level of involvement and regulatory action from the selection time until the execution of
the mandatory subcontracting as this framework discussed about.

However, for nominated subcontracting and for subcontractor to be assigned for other
Provisional Sum (PS) amount of the contract document, ERA can apply open tendering or other
procedure following the government tendering procedure (Equal opportunity for all

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subcontractors). On the other hand, selection of both nominated subcontractor and for other PS
amounts of the contract document will be addition burden for ERA further to the existing
workload. Therefore, the following procedures are recommended for selection of nominated
subcontractor and subcontractor for the PS amount.

Table 4: Rules and Procedures for selection of nominated subcontractor and subcontractor
for other PS amounts

Nominated subcontractor Selected subcontractor for other PS

ERA should prepare the bidding
document
The criteria should be prepared based
on the nature of the service under the
subcontract
PS amount should be allocated in the
bidding document
The procurement should follow the
PPPAA procedure
Minimum requirement: legal status and
performance
amounts of the contract
This is for services like Geotechnical
investigation
The criteria should be developed by the
contractor/consultant in consultation
with the Employer
The contractor/consultant should be
responsible for the procurement process
The procurement should follow the
PPPAA procedure
Minimum requirement: legal status and
performance

3.3.3. Multiple Awards

Selection of the subcontractor is based on the interest of the main contractor since it is on his
own rate and therefore the contractor has the opportunity of proposing his friend and relatives. If
ERA has an intention to make it transparent through open tendering or other procedure, the
works to be subcontracted need to be a PS item and the selection could be done as nominated or
selected subcontractor following the government tendering procedure (Equal opportunity for all
subcontractors). Otherwise, it is the main contractor's right in choosing his subcontractor as long
as the subcontractor meets the minimum qualification requirement & evaluation criteria of this
framework.

With this approach what ERA can do is developing standards and regulates the subcontracting
not to be monopolized by few bidders and reduced the impact of interference or reduces conflict
of interest by any of the contracting parties. One of the mechanisms is to select the subcontractor
during the tendering stage with the main contractor, which is well discussed under the above
sections of this framework. The second most important mechanism is to limit the number of

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subcontract projects awarded to single bidder taking in to account it impact on the
subcontractors’ future and their capacity.

As per the PPPAA qualification and evaluation criteria framework of contractors, contractors can
be qualified for a tender by summing up two or three projects as specific construction
experience depending on the value of the construction works. For a project value of less than
ETB 1 Billion, one or two projects will be considered as specific experience. To be qualified for
a project value of ETB 1 billion; a bidder need to have one project with value of ETB 700
million or two projects each with a value of ETB 350 million.

Therefore, if a subcontractor is allowed to have a subcontract up to a total sum of ETB 700

million, it can be qualified to participate on tenders as JV partner or sole contractor according to
the above criteria while their progress reaches at least 70%. Therefore, a maximum of mandatory
subcontract projects with a total value of ETB 700 Million is recommend for a subcontractor to
handle at a time from the mandatory requirements and a project at hand could be considered as
complete when its progress reaches 80% and the subcontractor can go for other project keeping
the maximum value of subcontracting on the mandatory subcontracts.

The proposed procedure of subcontracting limits a single subcontractor (whether it is friend or

family of the main contractor), not be propped on more than a total value of ETB 700 Million
subcontract value of projects from the mandatory requirement. In addition, since ERA is
administrating more than 200 projects, it gives opportunity for more than 100 subcontractors
because of the limitation even only from the mandatory subcontracting.

Table 5: Qualification Criteria Framework for subcontractors

Sub-Contractor
Criteria Requirement Compliance as Single
Entity
I. Certificate of Registration from Ministry of Must meet requirement
Urban Development and Construction
1. Legal Status
[grade and category of contractor should be as
per the requirement of the Directive related to
the subcontract amount]

Must meet requirement

II. Renewed trading License

Must meet requirement

III. Tax Clearance Certificate which states that the
sub­contractor is eligible to participate in any
public tender and valid at least at the deadline

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 Sub-Contractor
Criteria Requirement Compliance as Single
Entity
for submission of the bids, and VAT
Registration Certificate; and
Must meet requirement
IV. Registration as supplier in the list of the
mandated public body, i.e. Public Procurement
and Property Administration Agency (PPPAA).
2.History of Non­ If ERA found Non-performance or Poor Performance Must meet requirement
Performing history of a Sub Contractor at any stage of the
Contracts tendering process, the Sub­Contractor will not be
accepted and the bidder will be required to replace with
competent Subcontractor that fulfills the minimum
requirement specified in the bidding document.

3.Current Contract Subcontractors should be those having any kind of

Commitments projects with ERA within a maximum total amount
ETB 1 Billion Birr. Must meet requirement

4. Annual Peak annual construction turnover (AT)

Construction
AT(Peak )= Estimate of the subcontract amount* F Must meet requirement
Turnover
Contract period in yrs(main contract)

F=0.5

Peak annual construction turnover is calculated as total

certified payments received for contracts in progress or
completed within the last Five (5) years.

Eg. For three years and 1 Billion Birr main contract, 10%
subcontracting, the required peak turnover requested
for the subcontractor is ETB 16.6 Million ETB, which
seems reasonable.

Note: The subcontractor peak turnover will also be

adjusted by Cn/Co factor.

5. General Experience under construction contracts in the role of

Construction Contractor, Subcontractor or Joint Venture Partner for at
Experience least the last Two (2) years for the main contract value Must meet requirement
greater or equal to 1 billion birr and one (1) ) year for
the of main contract value less than 1 billion birr.

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 Sub-Contractor
Criteria Requirement Compliance as Single
Entity
6. Multiple Award Maximum of subcontract projects with a total value
of ETB 700 Million are recommended for a
Must meet requirement
subcontractor to handle at a time from the
mandatory subcontracts. A Project at hand could be
considered as complete when its progress reaches
80% and the subcontractor can go for other project
keeping the maximum value of subcontracting on
the mandatory subcontracts.
Applicability of the Criteria:

1. For subcontract value > 10% of the contract price

 must satisfy all the above criteria

2. For subcontract < 10% of the contract price

 Must fulfill at least the following requirement(must meet)

 Legal Status:
 grade of the subcontractor (if required),
 trading license,
 tax clearance
 PPA registration
 History of Non­Performing Contracts: Non­performance or Poor Performance history
of a Sub Contractor

3.4. Employer Involvement on subcontracting

The Employer, while negotiating the main contract with the contractor, want to make sure that
the main contractor will meet the performance requirements set out in the main contract. The
main intention of engaging a mandatory subcontractor is to develop the local industry on the
road sector and to meet the equity requirement without affecting the expected performance of the
works.

From the sample subcontracts on ERA projects, it has been observed that the subcontract
agreement was extremely unfair. Important aspects of the contract such as scope of work, care
and diligence of work, approval of work, performance and payment guarantee, taxes, insurance,

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 permits and licenses, extra work, time and completion, defaults and termination, guarantee of
work, environmental and safety, way of solving disputes and etc has been undermined.

An effective contract with a subcontractor can save contractors a tremendous amount of time,
money and frustration. Unfortunately, far too often dealings with subcontractors are handled
informally and, as a result, exposing the contractor and the client in profoundly complicated
contractual implication situations. It is believed that fair and ethical treatment of subcontractors’
means having prompt payment practices, unbiased project supervision, and quality scheduling.
This has proven to be mutually beneficial to the contractor, subcontractor and the Employer.
Subcontractors should read the subcontract and the main contract agreement and assure specifics
to protect themselves from unfair risk.

As such, from the current adverse relation between the contractor and sub­contractor, Employer
should go one step to the subcontract management to protect the subcontractor as well as the
works. This doesn’t mean that the Employer should have over involvement on the subcontract
management but the Employer need to have involvement on very few issues which have serious
impact on the subcontractors, otherwise; the Employer itself will sink in the cases and conflicts
of the contractor and the subcontractor. In addition to the very limited engagement of the
Employer, the Employer can attain healthiness of the industry using its regulatory power.

Involvement of the Employer under subcontracting it therefore presented as contractual and

regulatory action. Since the Employer can’t handle all issues related to the subcontracting, the
Engineer should also be assigned on some regulatory and contractual issues of the subcontract.
The table below defines the contractual and regulatory tasks of the Employer and the Engineer.

Table 6: Rule and procedures on Employer and Engineer contractual involvement and
regulatory action on subcontracting

Employer
The Engineer
contractual involvement regulatory power
 To pay subcontractors  Any subcontracting more than  Review of subcontract
direct upon the 10 % should be informed to the selection and draft
certification of the employer during the tendering subcontract document based
Engineer, when the stage on the subcontract
Contractor has failed to  The maximum amount of management framework
pay after collecting the subcontract should be 40%  Any amount of subcontract
respective payment from  Appointment of Nominated should get prior consent of
the Employer or to pay subcontractors and the Engineer except the
directly to the subcontractors of other PS following exclusions:
subcontractor as per the amounts (FIDIC sub clause 4.1)
subcontract agreement  Giving approval on the selection
and assignment of the process and on the draft contract (a) the provision of labour,

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 Employer
The Engineer
contractual involvement regulatory power
main contractor document of subcontracts (b) the purchase of materials
 Taking contractual amounting > 5 % of the main which are in accordance
action for not or late contract price with the standards
deployment of  Giving consent on the selection specified in the Contract,
mandatory process and on the draft contract or
subcontracting, document of subcontracts (c) the subcontracting of any
assignment of amounting < 5 % of the main part of the Works for
subcontractor without contract price which the Subcontractor
prior consent/Approval  Evaluation of subcontractors is named in the Contract.
of the Employer and on during tendering stage with the
subcontracting of the Main contractor  The Engineer shall have full
works beyond 40% of  Control workload of control of the contractor’s
the contract price Subcontractors action on site in relation of
 Drafting the standard conditions the involvement of
of subcontract subcontractor
 Ascertain Provision of Quarry
sites and borrow areas to the
subcontractors by the main
contractor
 Ascertain Subcontractors’
knowledge of the main contract
 Ascertain Access of the
Subcontractor to the site
 Ascertain provision of access,
quarry site and the main contract
document to the subcontractor

3.5. Standard Conditions of Contract for subcontracting

The main failure for subcontractor and subcontracting is lack of proper Conditions of
Subcontract. The existing conditions are drafted by the Contractor which:

 Unreasonably favor the Contractor or

 Unreasonably demerit the subcontractor

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From the sample subcontracts on ERA projects, it has been observed that the subcontract
agreement was extremely unfair. Important aspects of the contract such as scope of work, care
and diligence of work, approval of work, performance and payment guarantee, taxes, insurance,
permits and licenses, extra work, time and completion, defaults and termination, guarantee of
work, environmental and safety, way of solving disputes and etc has been undermined.

From the main contractor’s perspective, it will be important that the terms of the main contract
are reflected in, or stepped down to, the sub­contract. This avoids ‘gaps’ in the main
contractor’s obligations under the main contract and the sub­contractor’s obligations under the
sub­contract. Any gaps are likely to mean liability sitting with the main contractor (full
responsibility relies on the main contractor in fulfilling its obligations as per the main contract).

3.5.1. Approach to sub­contract formulation:­

There is no fixed approach to sub­contracting, and different approaches have their advantages
and disadvantage:

Option -1 using standard forms sub-contract:

 There are many different standard forms of sub­contract which are recognized in the
construction industry. These seek to provide an “off the shelf” contract for the parties to
use:
 The main advantage of using this method is avoiding the need to draft the sub­contract
from scratch and hopefully saving time negotiating it. Standard forms can also be useful
if the same parties are involved on repeat projects:
 The main disadvantages are:
They will not reflect project­specific risks or unusual provisions in the main
contract;
They will usually be drafted to benefit one party more than the other. It is
important to remember that it will still be necessary to review the sub­contract
and it is possible that amendments will be needed:
Some obligations cannot be stepped down to the sub­contract:
The same standard form will not suit all sub­contractors on all projects, and
should be reviewed regularly to ensure that changes in the law and lessons learned
on previous projects can be taken into account.

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Option -2 Incorporating the terms of the main contract by reference in to a framework
contract:

 This is commonly a short sub­contract obliging the sub­contractor to identify and comply
with the relevant terms of the main contract:
 Advantages of using this method are:
There is no need to amend or redraft the sub­contract if changes are made to the
main contract, as these changes will simply be incorporated by reference;
 Any issues caused by having to cross­reference between the two documents will be
reduced or eliminated;
 This method also encourages the sub­contractor to focus on and carry out a proper review
of the provisions of the actual main contract;
 The main disadvantages are;
The risk that the sub­contractor will not identify everything and creating ‘gaps’
between the main contract and sub­contract (see above);
Having to determine the contractual effect of main contract terms if these are not
clearly drafted – it is not always clear how certain terms would have been stepped
down to the sub­contract;
Some terms are only relevant to the main contract and should not be stepped
down to the sub­contract. This could lead to ambiguities and disputes about
whether or not the sub­contractor should or should not have done something;
Certain clauses which are unique to the sub­contract will still need to be drafted

Option -3 Bespoke sub-contract:

 This is the most common approach, particularly on complex projects;

 Each main contract clause will be reviewed to consider whether the obligations in that
clause should be stepped down to the sub­contractor. Amendments and additional
drafting will be required to ensure that the clauses work correctly in the sub­contract;
 The main advantage of using this method is that it allows the parties to address any
unique issues.
 The main disadvantages are:
They will take longer to complete;
Sub­contract redrafts are generally necessary each time the main contract is
amended.

In line of the above and to make the subcontracting agreement fair across the road
construction industry, this framework has design a subcontract agreement document based on
option 1 to be used across ERA road projects. The standard subcontract agreement document
contains General conditions of subcontract with the corresponding particular conditions of
contract and appendix to bid to reflect the project specific issues. Furthermore it contains

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 forms of offer and agreement for the subcontract works. The standard sub contract document
is prepared for all works subcontracts except specialized subcontracting like geotechnical
investigation and material production.

The Standard subcontract document is prepared for ERA Projects based on the following
standard documents, directives and proclamations to be bounded under the procurement
regulations:

 FIDIC conditions of Subcontract for Works of Civil Engineering Construction

 Ethiopian Civil Code
 PPPAA Directive
 Back to Back application with the main Contract

General conditions of contracts are those that apply to all types of contracts. They are generally
based on the conditions that have been formulated in light of provisions of FIDIC, while.
Particular/Special conditions are a tool to amend the clauses of general conditions of contract as
per the requirement of a specific project. These conditions of contract should only be a mean to
address the specifics of the project and the fundamentals of general conditions of contract
including the risk allocation.

As such, from the current adverse relation between the contractors, sub­contractor, Employer and
supervision consultant, the following contractual relationships has been emphasized in designing
subcontract contract agreement.

I. Back-to-Back application of the main contract to subcontract [Subcontractors

knowledge of the main contract]

The subcontractor shall be deemed to have full knowledge of the main contract less details of
the main Contractor's price [subcontractors Right].

The importance of the Subcontract being read together with the applicable Main Contract,
putting in mind that the main contract and subcontract are independent contract documents.

The Subcontractor is required to "promptly" give notice of any ambiguity or discrepancy

which the Subcontractor discovers in reviewing the Subcontract and the Main Contract. The
Subcontract does not expressly deal with the consequences of a discrepancy if there is any.
The Subcontractor will have no obligations in respect of Main Contract since; it is the main
contractor's obligation to comply with the main contract requirements.

II. Payment to subcontractor under subcontract

The payment terms of the subcontract includes "pay­when­paid" clauses. This “pay­when­
paid” provision applies both when the amounts are not certified by the Engineer under the

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 Main Contract and when they are not paid by the Employer. When the amounts are not
certified, the Contractor is, however, prevented from relying on this failure if it was due to his
act or default. In addition, where payment has not been made by the Employer, the Contractor
takes the risk for Employer insolvency, with the insolvency of the Employer not being a
ground for the Contractor withholding payment.

With respect to the payment for works executed by the subcontractor, the following risks were
identified:

a) Non-certification risk: This is related with the power of the Engineer under the main
contract. The Engineer is the one, under main contract, to certify payment to the Employer.
This certification process is conducted by the Engineer after the monthly statements
[including the subcontract works executed by the subcontractor] submitted to the Engineer by
main contractor, under the procedure established under main contract. In such case, the non­
certification risk can be happened, when the Engineer being late in certifying the main
contractor's monthly statement or when the Engineer is no certifying the monthly statement
of the main contractor in whole or in part. The reason for non­certification may or may not
relate to the subcontractor. The risk, however, is shared by the subcontractor in question.
b) Non-payment risk by the Employer: This may arise from the side of the Employer. Any
certified payment has to be paid by the Employer to the main contractor under the main
contract. The Employer might be late in paying the certified amount or refuse to paying the
certified amounts in full or in part; due to disagreement with the Engineer's certification or
inability to pay the certified amounts by reason of its financial difficulty, insolvency,
bankruptcy or bad faith. What so ever is the reason for any late payment and/or inability to
pay on part of the Employer may not have any connections with the subcontractor. However,
the subcontractor shares such kind of non­payment risk under its subcontract.
c) Non-payment risk form the main contractor: which may arise from the side of the main
contractor [even if paid by the Employer] under the subcontract. This may be the case, if a
dispute between the subcontractor and the main contractor arises, or if the main contractor
suffers financial difficulty, insolvency, bankruptcy, or is in bad faith. Having noted all the
possible risks, the subcontract condition of contract have been prepared to cover the possible
risks as much as possible. For instance, as long as the subcontractor make to the Engineer
that it has not been paid in accordance the payment terms of the subcontract, the Engineer
can make a determination the main contractor is not in compliance with the subcontract and
promptly advise the Employer to effect the payment for the subcontractor after deducting
from the main contractor's certified amount as appropriate.

III. Interest [Payment due; Paying interest to subcontractor]

The subcontractor is entitled to the payment of interest, where the Employer has failed to pay
any amount the Engineer has certified or the main contractor has failed to pay any amount

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 that is due and payable to the subcontractor, the main contractor will be liable to interest on
the overdue amount at the rate payable by the Employer to the main contractor under the
main contract.
The Main contractor shall upon receiving a written notice of claim for interest from the
subcontractor, pay interest to the subcontractor at the rate payable by the Employer to the
main contractor under the main contract.

IV. Access to site

The main contractor shall, from time to time, make available to the Subcontractors much of
the Site and such access Provision of quarry sites and borrow areas shall also be the
obligation of the main contractor.

The Subcontractor shall permit the Contractor, the Engineer, and any other authorized person
to have reasonable access to the Site.

V. Sharing of materials on site and construction equipment, plant

The main contractor shall provide for the subcontractor the exclusive use of the main
contractor's equipment and/or other facilities including sharing of laboratory and Use of
Temporary Works. Provision of explosives and detonators for use of the subcontracting
works is the obligation of the main contractor.

The subcontractor shall indemnify the main contractor against any damages arising from the
misuse by the subcontractor, his agents, servants, or workmen, of the temporary works,
equipment and other facilities.

VI. Liquidated damage

The general conditions of the subcontract contain no clause on liquidated Damages, since the
financial consequences of a subcontractor's delay are often unpredictable. However, a general
breach of the subcontract provision on the general conditions of the subcontract is included
under the provision of sub­clause 4.4 "possible effects of subcontract's breaches of
subcontract", which deals with breaches by the subcontractor of the subcontract that cause
damage to the main contract under the main contract. If the subcontract commits any
breaches of the subcontract, he shall indemnify the contract against any damage.

VII. Termination and replacement

Termination of the subcontract could be because of failure of any of the parties or by

termination of the main contract as discussed in the conditions of subcontract. In any event

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 of termination of the subcontract, the contractor should inform the Engineers as well as the
Employer in writing by stating the ground for termination.

Termination of subcontractor's employment due to termination of the main contract

The Subcontract contains quite standard provisions on termination with the Contractor
having the right to terminate whenever the Main Contract is terminated, but with the perhaps
not­so­standard entitlement of the Subcontractor to both costs and loss of profit. It is the right
of the main contractor to terminate the subcontract by notice upon termination of the main
contract.

Termination of subcontract due to the default of the subcontractor

The main contractor has a right to terminate the subcontractor on notice in relation to the
time, quality and other breaches or defaults of the subcontractor. Grounds for termination can
be: Bankruptcy or insolvency; Repudiation of the subcontract; Failure to commence or
proceed with the subcontract; Failure to commence or proceed with the subcontract; Failure
to remove defective materials or remedying defective works; Neglecting to comply with any
of its obligations under the subcontract; Removal of the site as per the request of the
Engineer.

VIII. Dispute resolution/settlement of Dispute

The Subcontract contains its own dispute resolution procedures as stated in the conditions of
subcontract.

If a dispute of any kind arises, the main contractor and the subcontractor are recommended
attempting amicable settlement before they submit their respective claims against the other,
to arbitration or other dispute settlement procedure. However, any dispute arising between
the contractor and the subcontractor and the agreed dispute settlement procedure shall not
have any impact or implication on execution or any other activities of the main contract.
Accordingly the subcontract agreement should obey the rights and obligations of the main
contract.

As guidance, the following dispute settlement procedures are recommended on the

subcontract agreements.

For Disputes arising between both Locals (main contractor and Subcontractor) or
Foreign and Local (main contractor and subcontractor):

 If not been settled amicably within the time stipulated in the subcontract, then the case
can be referred to an adjudicator.

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  If not again settled by adjudicator, then the case can be referred to the Federal Court of
Ethiopia or local Arbitration for its final settlement as the parties agreed.

For Disputes arising between foreign main contractor and foreign subcontractor:

 If the dispute is not settled amicably, then the case may be referred to adjudicator(s), or
DRE or DRB.
 If any of adjudicator(s), DRE or DRB has not become final and binding, and then the
dispute will be settled by Arbitration under the rules of Arbitration as to be agreed by
both parties.

IX. Extension of time clause and its enforcement

The main contractor shall give extension of time (EOT) to the subcontractor due to:
 EOT under the main contract (not more than given under main contract to the main
contractor. It is main Contractor's obligation to notify such case to subcontractor.
 Instruction given by the main contractor even if Main Contractor may not be entitled for
EOT in relation to this instruction under the main Contract
 Breach of the subcontract by the main contractor

The subcontractor shall submit to the main contractor notice of circumstances and detailed
particulars to justify the EOT. Interim EOT may also be granted to the subcontractor in case
of an event has a continuing effect as stated in the subcontract conditions.

(The Standard subcontract document is attached as Appendix A of this framework)

4. Amendments recommended on the existing bidding document of the

Main Contract

In line with the preparation of the subcontract management framework, some amendments
are also required on the main contract document to meet the Back­to­Back applications and
to reflect the Contractor obligation and the Employer right on subcontracting. Accordingly,
amendments are carried out on the following section of the main contract document/bidding
document.

 Amendment on the bid datasheet

 Amendment on the post qualification submission sheet
 Amendment on the bid submission sheet
 Consideration of the subcontractor evaluation and qualification criteria
 Impact of subcontractor qualification on the main contractor

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  Amendment on bidding forms (additional & amendment)
 Amendment on Appendix to Bid (items to be subcontracted)
 Amendment on Conditions of Contract (protection and support)

(Amendments of the main contract is attached as Annex 2 of this framework)

5. General Remarks as a conclusion

It is very important to put in mind the following critical/special issues in subcontracting:

 Assignment is only possible for rights, but not for obligations

 In principle, there is no privity of contract between the employer and subcontractor. But, a
direct legal relationship may be created by way of the assignment of rights of the main
contractor, under the main contract, to the employer, as it is regulated as per the provision of
Article 1962 of the Civil code­Assignment of Rights.
 The main contractor is not allowed to subcontract the whole of the works.
 The main contractor is only allowed to partly to subcontract up to a maximum of 40% of the
main contract amount, out of which the 20% of the contract sum is a mandatory requirement
for projects of ≥ ETB 500 million.
 The partial subcontracting of the works by the main contractor shall be based on the prior
consent or approval of the Engineer and/or the employer.
 The consent or approval of the subcontractor(s) by the Engineer/employer shall not be a legal
ground for the main contractor to escape liability arising out of any acts, defaults or neglects
of the subcontractor(s).
 The main contractor shall be responsible, to the employer, for acts, defaults of any
subcontractor, his agents, servants or workmen as fully as if they were the acts, defaults or
neglects of the main contractor.
 The Subcontract is intended to be "back to back", with the Subcontractor generally under an
obligation to perform all duties and obligations of the Contractor under the Main Contract
 No liquidated damage[LD] clause in the General Conditions of contract of the subcontract
document (since the financial consequences of the sub­contractor’s delay are often
unpredictable and may depend on whether the subcontractor’s work is on the critical path of
the actual main contractor’s actual progress of work]
 Payment terms include "paid when paid" provisions
 The subcontractor may be entitled to the payment of interest, where the Employer has failed
to pay any amount the Engineer has certified or the main contractor has failed to pay any
amount that is due and payable to the subcontractor, the main contractor will be liable to
interest on the overdue amount at the rate payable by the Employer to the main contractor
under the main contract.
 The subcontractor should ask the interest from the main contractor, formally, in writing.

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 The subcontractor is obliged, under the subcontract, to commence, proceed and complete the
subcontract works, as stated in the subcontract agreement. Executing and completing the
subcontract works and remedying any defects therein shall be an obligation of the
subcontractor.
 The subcontractor might be entitled to an extension of time
 Making the main contract [less the details of the main contractor's prices] available for
inspection for subcontractor up on request shall be the obligation of the main contractor.
 Availing site to subcontractor including permission to have access to site is obligation of the
main contractor. The Subcontractor shall also permit the main contractor, Engineer,
Employer, and any other person to have an access to the subcontract works or materials on
the site where any work or materials are executed, prepared or stored.
 Subcontractor shall make variations of the subcontract works, as may be instructed by the
main contractor and/ or as may be instructed by the Engineer ( provided such variation
instruction of the Engineer be notified and confirmed by the main contractor)
 Giving Notices, consents, approvals, certificates, confirmations & determinations all in
writing [Obligations of both the main contractor & subcontractor]
 Instructing the subcontractor in writing [Main contractor’s obligation]
 Obligation of the main contractor as stated in both main contract and sub contract
 Subcontractor’s General Responsibility & its obligations as stated in subcontract
 The Subcontract contains its own dispute resolution procedures as stated in the conditions of
subcontract.

The following factors would be useful in decision making for domestic subcontractor selection.

 ERA should enforce the main contractor’s to sublet some portion works as per the works
contract agreement.
 All Directorates of ERA especially Construction Management Directorates [CPMD] shall use
this frame work in consultation with their project consultants on selection of subcontractors
by contractors.
 Price should not be taken as a major selection factor. Experienced and financially stable
subcontractors should have good chances of winning tenders more than those who attract
contractors’ attention by lowering tender prices or giving discounts.
 Past performance of subcontractor’s through delivery of good quality work, should secure
subcontractors a place in the selection process.
 Contractor should have a willing to work with subcontractors who can carry their work
professionally and confidently.

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Appendix A - Standard Subcontract Document

Page 31 of 106
Annex –1 Performance based selection criteria

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 Annex -1: Performance based selection process [Prequalification process]

A prequalification process is a normal practice to produce a short­list of potential subcontractors

for a work package, based on the subcontractor's relationship management skills, technical
experience in comparison to project specific criteria, financial stability and current work load.

Even though it is easy for ERA to make sure that the enforcement is implemented as soon as
possible, the unmethodical selection of subcontractors by the contractor is very complex,
widespread, leading to poor performance of subcontractors (quality and execution problems). It
is therefore imperative that a certain selection criteria framework be developed in the interest of
ERA’s policy (building performance of subcontractors) and road construction industry.

However, on the other hand, a selection process which emphasis price (lowest bidder) can easily
ignore competent subcontractors in the selection process. A lower tender price does not equate to
competency nor does it guarantee good performance and therefore other factors should be taken
into consideration. Haksever et al, 1995, Kerfoot, 1994, Latham, 1994 and Oluwoyee et al (1996)
recommended that when the contractor is rating subcontractors, account should be made for the
ability of the subcontractor to meet the following criteria

 Produce project schedule

 Produce quality work
 Employ skilled trade people
 Cultivate goodwill between parties
 Ability to allocate resource, and
 Safety and environmental management

Therefore, on this framework we have prepared subcontractors’ qualification and evaluation

criteria based on performance factors other than price (the standard selection criteria is attached
on ANNEX II). This may not only improve the main Contractors’ unmethodical selection of
subcontractors but also ERA’s target to build the performance of local subcontractor’s in order to
have homemade big contractor’s in Ethiopia.

Those factors are identified at different stages of the construction process, such as pricing,
financial, technical and managerial ability. The stages are:

1. Pre­qualification stage
2. Pre­contract stage(negotiation and on boarding)
3. Construction stage (management and performance Monitoring)
4. Post construction stage(Exit or Subcontract closure)

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1. Pre-Qualification Stage

This is the starting point of the process to evaluate whether the subcontractor may be short listed.
Technical and managerial competency, workforce skills, mobilization ability to site, competitive
rates, past records, work and financial capacity are among the factors. A demonstration by
subcontractors that they have adequate capacity may land them on the shortlist. The factors
should be adequately met by domestic subcontractor to ensure selection and could be used in the
framework to eliminate unsuitable domestic subcontractors.

Table 1 Selection Criteria at Pre-Qualification Stage

Levels of influence: very influential = VI(5), Influential = I(4), Somewhat Influential= SI(3), Less Influential= LI(2)
and Not Influential= NI(1), TR= Total Response, MR= Mean Rate
Contractor’s needs from subcontractor’s at the pre­qualification Level of influence in TR MR Rank
stage the selection process
VI I SI LI NI
5 4 3 2 1
Legal Status of the Sub­Contractor Business license
Article of
association/memorandum
of understanding
Power of attorney
Relevant professional
practice certificate issued
by ministry of
construction, association
and etc.
Technical and managerial competence and experience in the job at
hand
Size and resources: skills, experience and strength of own
workforce
Current workload, commitment and ability to mobilize on site when
needed
Competitive rates and lowest tender overall
Past records of working relationship with current contractor and/ or
reference from previous employers and financiers
Ability to provide own attendance needs: possession of special tools
and equipment that could reduce main contractor’s P&G costs
Financial capacity to undertake the job successfully
Compliance with statutory regulations: gender equality, workman’s
compensation act, tax regulation
Health and safety record
Location of the subcontractor and knowledge of the project
environment: local labour laws, site condition, material supplies, etc
Experience with the present contract form, terms and conditions

Page 34 of 106
2. Pre-Contract Stage(Negotiation and On-Boarding)

Before the contract is signed, the contractor needs to be sure of certain requirements. At pre­
contract stage, it can be seen that the efficiency of the domestic subcontractor’s programing and
readiness to mobilize on site are influential. However, bond provisions and discounts are
relatively not viewed as influential. It can be seen from table 3 that at this stage, the contractor is
focusing more on how the subcontractor would be able to be in congruent with the overall
objectives as set by contractor and reflected in project main work programe.

Table 2 Selection Criteria at Pre-Contract Stage (Negotiation and on Boarding)

Levels of influence: very influential = VI(5), Influential = I(4), Somewhat Influential= SI(3), Less Influential= LI(2)
and Not Influential= NI(1), TR= Total Response, MR= Mean Rate
Contractor’s needs from subcontractor’s at the pre­contract stage Level of influence in TR MR Rank
the selection process
VI I SI LI NI
5 4 3 2 1
Efficient programming of subcontract work and proper fit with
main contractor’s main work program for efficient coordination
purpose
Readiness to mobilize on site on schedule
Ability to submit error and omission on free bids that are reasonable
and comparable
Well­articulated health and safety and environmental plan
Provision of necessary bonds or specific insurance requirements
Reasonable rates and discounts

3. The Construction Stage (Management and Performance Monitoring)

The Construction stage is the stage at which the Contractor and subcontractor interact the most.
At this point they have already entered into an agreement and are carrying out work and if any
part is doing the contrary, consequences might lead to conflicts. Thus, for both contractors and
subcontractors the stage of the actual carrying out of the project is every influential. It is not a
surprise that all the requirement in this stage are viewed as very influential, notably quality, time,
and productivity as shown in Table 4 below:

Table 3 Selection criteria at construction stage(Management and Performance Monitoring)

Levels of influence: very influential = VI(5), Influential = I(4), Somewhat Influential= SI(3), Less Influential=
LI(2) and Not Influential= NI(1), TR= Total Response, MR= Mean Rate
Contractor’s needs from subcontractor’s at construction stage Level of influence in TR MR Ran

Page 35 of 106
 the selection process k
VI I SI LI NI
5 4 3 2 1
Good quality of work consistent with general quality level of the
main job
Time performance
High productivity level
Good control of own workforce
Good working relations with main contractor’s team: good
tolerance, loyalty and minimum adversarial relation
Efficient management of own workforce
Scope management ability to manage changes without
unnecessary claims
Zero or minimal defects and rework
Compliance with specification for materials and methods

4. Post Construction Stage (Exit or Subcontract Closure)

The domestic subcontractor’s ability to work quality works and complete maintain defects, the
offer of services within the defects liability period and keeping the site tidy are influential as
shown in Table 5. This means that what domestic subcontractors would do even after they have
carried out the actual construction work in terms of the agreement with the contractor has
influence on subsequent selection of the subcontractor for subsequent projects.

Table 4 Selection of Subcontractor after Construction Stage(Exit or Subcontract Closure)

Levels of influence: very influential = VI(5), Influential = I(4), Somewhat Influential= SI(3), Less Influential= LI(2)
and Not Influential= NI(1), TR= Total Response, MR= Mean Rate
Contractor’s needs from subcontractor’s after construction stage Level of influence in TR MR Rank
the selection process
VI I SI LI NI
5 4 3 2 1
Efficient and quick maintenance of defects
Zero defects within and beyond defects liability period
Readiness to partner with main Contractor on future jobs
Ability to be patient to be paid when the Contractor is paid
Provision of maintenance manual (such as built drawings) if needed
Quick disbandment from site on practical completion

Page 36 of 106
Page 37 of 106
Annex –2 Amendments on the Main Contract Document

Page 38 of 106
 Requirement for the Main Contractor

Joint Venture Submission

Requirements
No. Single Entity All Parties Each One Party
Subject Requirement
Combined Party

1.4 Proposal for a) Any proposals for subcontracting elements of the works such Has to meet Has to meet N/A N/A Qualification and
subcontracting that the total of Subcontracting is at least 10 percent of the requirement requirement bid Submission
Bid Price; and Sheets
b) The Contractors shall propose two domestic Subcontractors
with a minimum of 10% of the contract price for each Must meet
subcontractor or one subcontractor with a minimum of 20% requirement
of the contract price who have any kind of projects with ERA Must meet
within a maximum total amount ETB 1 Billion Birr [grade [for 2012 EFY, requirement Qualification and
and category of contractor should be as per the requirement until advance bid Submission
of the Directive relative to the subcontract amount]; N/A N/A
collection and Sheets
precondition
c) The proposed Subcontractors will be evaluated and shall for advance
fulfill the requirements for subcontractors listed under this collection]
section of the bidding document
d) Detail proposals for subcontracting any highly specialized
elements of the Works to named specialist subcontractors; Must meet
requirement
The sub
contractors’
Has to meet qualification
requirement documents
enclosed with
Chida – Sodo Road Upgrading Project 12 - 2
Must meet the contractors
requirement application
N/A N/A

Has to meet
requirement
N/A N/A

Bidding Documents
 Amendment of forms

Bidding Documents
 QUALIFICATION SUBMISSION SHEET

Date: _____________________

NCB No.: __________________

To: ___________________________________________________________________

We, the undersigned, apply to be qualified for the referenced --------------------Road Project and declare
that:

(a) we, including any subcontractors or suppliers for any part of the contract subject to this
qualification do not have any conflict of interest, in accordance with ITB Sub-Clause 3.1 (b) of the
Bidding document

(b) we are not a publicly owned entity, and if we are, we meet the requirements of ITB Sub-Clause
3.3 of the Bidding document

(c) we, in accordance with, Section XII, Qualification Criteria, Sub-Factor 1.4 plan to subcontract the
following elements of the works:
_____________________

_____________________

(d) we, in accordance with, Section XII, Qualification Criteria, Sub-Factor 1.4 plan to subcontract two
subcontractors with a minimum of 10 % of the contract price for each or one subcontractor with
a minimum of 20 % of the contract price to the following subcontractors from the activities
listed under item (C) above:
_____________________

_____________________

_____________________

(e) We, in accordance with, Section II, Instructions to Bidders, Clause 4, plan to procure Materials,
Plant, Supplies, Equipment, and Services from eligible sources as follows:
 _____________________

_____________________

_____________________

(f) we agree to abide by this bid until the date 120 days from the date of bid submission specified in
the Bidding Data and it shall remain binding upon us and may be accepted at any time before
that date.

Signed _______________________________

Name ____________________________ In the Capacity of ________________

Duly authorized to sign the Qualification for and on behalf of:

Bidder’s Legal Name

________________________________________________________________

Address ________________________________________________________________

________________________________________________________________

Dated on ________ day of _____________________.

Bidding Documents
 FORM QUA – 1.2

BIDDER INFORMATION SHEET

FOR EACH JV PARTY/SUBCONTRACTOR AS PER SECTION XII QUALIFICATION CRITERIA
1.4(C)

Date: _____________________

NCB No.: __________________

Page _______ of _______ pages

Subcontractor’s legal name:

Subcontractor’s legal name:

Subcontractor’s country of constitution:

Subcontractor’s year of constitution:

Subcontractor’s legal address in country of constitution:

Subcontractor’s authorized representative information

Name:
Capacity:
Address:
Telephone:
Fax numbers:
E-mail address:

Attached are copies of original documents of:

Articles of Incorporation or Documents of Constitution of the legal entity named above, in

accordance with Section XII, Qualification Criteria 1.1

In case of government-owned entity, documents establishing legal and financial autonomy

and compliance with commercial law, in accordance ITB Sub-Clause 3.3 of the Bidding
document.

Bidding Documents
 FORM FIN – 3.1(B) (II)
FINANCIAL SITUATION
(A) SUMMARY SHEET: CURRENT CONTRACT COMMITMENTS / WORKS IN PROGRESS

Subcontractor’s Legal Name: _______________________ Date: _____________________

Page _______ of _______ pages

To be completed by the Subcontractor

Average monthly
Value of Estimated
Name of Employer, contact invoicing over last six
outstanding work Completion
contract address/Tele/fax months
(ETB) date
(ETB/month)

1.

2.

3.

4.

5.

etc.

N.B: Information related to value of outstanding work with regard to each project above shall be
accompanied by confirmation of the respective Supervising Engineers of the projects.

Bidding Documents
 FORM FIN – 3.2.2

AVERAGE ANNUAL CONSTRUCTION TURNOVER

Subcontractor’s Legal Name: ___________________ Date: __________________

Page _______ of _______ pages

Year Amount in ETB

2015 / 16 _____________________________________

2014 / 15 _____________________________________

2013 / 14 _____________________________________

2012 / 13 ____________________________________

2011 / 12 _____________________________________

* the annual construction turnover calculated as total certified payments received for work
in progress or completed.

Bidding Documents
 FORM OF BID

Name of Contract: ---------------------------

To:

The Director General

Ethiopian Roads Authority

Post office Box 1770,

Tel. No. 51-71-70/79

Fax No. 251-1-514866

Addis Ababa, Ethiopia

Gentlemen:

1. In accordance with the Conditions of Contract, Specification, Drawings, and Bill of Quantities
and Addenda Nos. [insert Addenda nos.] for the execution of the above-named Works we, the
undersigned, offer to construct and install such Works and remedy any defects therein in
conformity with the Conditions of Contract, Specifications, Drawings, Bill of Quantities, and
Addenda for the sum of [insert amounts in numbers and words] as specified in the Appendix to
Bid or such other sums as may be ascertained in accordance with the Conditions of Contract.

2. We acknowledge that the Appendix to Bid forms part of our Bid.

We attach our Bid Security in the sum of [Insert amount], taken out with [Insert name and
3.
address of Bank or Insurance company].

4.
We undertake, if our Bid is accepted, to commence the Works as soon as is reasonably possible
after the receipt of the Engineer’s notice to commence, and to complete the whole of the
Works comprising the Contract within the time stated in the Appendix to Bid.

Bidding Documents
5.
We undertake, if our Bid is accepted, to deploy the following two sub contractors with a
minimum of 10 % of the contract price for each or one subcontractor with a minimum of
20 % of the contract price for sub contracting works stated in the Appendix to Bid sub clause
4.3.
1.---------------------
2. ---------------------
6. We agree to abide by this Bid until the date 120 days from the date of bid submission specified
in the Bidding Data and it shall remain binding upon us and may be accepted at any time before
that date.

7. Unless and until a formal Agreement is prepared and executed, this Bid, together with your
written acceptance thereof, shall constitute a binding Contract between us.

8. We understand that you are not bound to accept the lowest or any bid you may receive.

We certify/confirm that we comply with the eligibility requirements as per ITB Clause 3 of the
bidding documents.

9. Commissions or gratuities, if any, paid or to be paid by us to Agents relating to this bid, and to
contract execution if we are awarded the contract, are listed below:

Name and Amount and Purpose of Commission

Address of Agent: Currency: Or gratuity:

_______________________ ________________________ ____________________________

_______________________ ________________________ ____________________________
_________________ __________________ __________________

(if none, state “none”)

10. We hereby certify that we have taken steps to ensure that no person acting for us or on our
behalf will engage in bribery.

Dated this day of_____________ [ year ] ________

Bidding Documents
 Signature in the capacity of

duly authorized to sign bids for and on behalf of

[in block capitals or typed]

Address:

Witness:

Name:

Address:

Occupation:

Signature :

Bidding Documents
 APPENDIX TO BID

Bidders should fill in all the appropriate blank spaces. Bidders are required to sign each page of the
Appendix to Bid.

Conditions
of Contract
Sub-Clause

Limit of 4.3  The percentage of Subcontracting shall be maximum 40%

Subcontracting of the Contract price.
 The Contractors shall propose two domestic
Subcontractors with a minimum of 10% of the Contract
price for each Subcontractor or one Subcontract or with a
minimum of 20% of the Contract price who have any kind
of projects with ERA within a maximum total amount ETB 1
Billion Birr as mandatory Subcontracting [grade and
category of Contractor should be as per the requirement of
the Directive of Ministry of Construction related to the
Subcontract amount and the mandatory Subcontract
requirement is for projects with value greater than or equal
to ETB 500 million]
 The portion of Subcontract works to be Subcontracted for
mandatory Subcontracting requirement shall be at least
earthworks and sub-base or earthworks and road base or
earthworks and gravel wearing course or earthworks and
bituminous work [the above combinations of items to be
Subcontracted is for main contracts with value greater than
1 billion Birr and will be amended considering the main
Contract amount as discussed in the Subcontract
Management Framework].
 The Subcontractor proposed for mandatory Subcontract
requirement shall not have a total sum ETB 700 million
Subcontracts on ERA projects from the mandatory
Subcontract.
 The proposed domestic Subcontractors for the mandatory
Subcontract requirement shall fulfill the definition of
Domestic bidders as defined under ERA’s Subcontract or
Management Framework.
Sub­Clause 4.4 and 4.5 The Contractor shall follow ERA’s Subcontract or Management
Subcontracting Framework from the selection process until administration of
Selection Procedure the Subcontractors.
and Subcontract
Agreement

Bidding Documents
 Biding data

Sub contracting Requirements:

It is a must meet requirement to propose at least one local Subcontractors who fulfill
the minimum qualification requirement started under section 3 of this bidding
5.3 document. The Subcontract Agreement shall, as a minimum contain the type of
works to be subcontracted, the minimum amount of subcontract works, the
Subcontractor consent for execution of the works and the authorized representative
of the sub contractor.

Bidding Documents
 Conditions of Contract

Bidding Documents
 Add Sub­Clause 1.1 (h):
Sub-Clause
1.1Definition Mandatory requirement of sub contracting refers to the contractor's
s obligation by the employer to sub contract part of the main works as
a mandatory requirement of the contract.

Add the following to Sub­Clause 2.1:

Sub-Clause 2.1
Engineer’s Duties
and Authority
(a) consenting to the sub­letting of any part of the Works under
Clause 4;

Sub-Clause 4.1 Amend the first paragraph of the Sub­Clause as follow:

Subcontracting

“The Contractor shall not subcontract the whole of the Works. Except
where otherwise provided by the Contract, the Contractor shall not
subcontract any part of the Works without the prior consent/approval
of the Engineer and the Employer. Any such consent or approval
shall not relieve the Contractor from any liability or obligation under
the Contract and he shall be responsible for the acts, defaults and
neglects of any Subcontractor, his agents, servants or workmen as
fully as if they were the acts, defaults or neglects of the Contractor,
his agents, servants or workmen.”

Add the following at the end of the sub clause

“The Contractor shall submit a sub­contract plan including a clear

description of the percentage of the work the Contractor wants to sub­
contract out and shall also inform the Engineer before assigning any
Subcontractor.”
Sub-Clause 4.3 Add Sub­Clause 4.3:
Limit of
Subcontracting
“Subcontracting shall be confined to the minimum and maximum
value, type of the works and minimum number of Local

Bidding Documents
 Subcontractors set out in the Appendix to Bid.”

Sub-Clause 4.4 Add Sub­Clause 4.4:

Subcontracting
selection
procedure Subcontractors employment shall be carried out as per the evaluation
criteria and procedures set out in the Appendix to Bid.

The Engineer shall evaluate and give consent to all subcontracts

except for the Subcontractors which are already approved and listed
in the main contract.

Selection of all subcontracts with a subcontract amount above 5% of

the main Contract Price shall obtain approval from the Employer.

Sub-Clause 4.5 Add Sub­Clause 4.5:

Subcontract
Agreement
The Contractor shall use standard Conditions of Subcontract and
procedures set out in the Appendix to Bid when entering into a
Contract with the Subcontractors. To this end, the Contractor shall
submit for the Engineer's consent the draft subcontract agreement of
all subcontracts. The draft subcontract document of all subcontracts
with a subcontract amount above 5% for the main Contract Price
shall obtain approval from the Employer.

Sub-Clause 4.6 Add Sub­Clause 4.6:

Payment to
Subcontractor
The Contractor shall pay to the Subcontractor when paid by the
Employer for the works executed by the Subcontractor that are
measured and certified by the Engineer. Alternatively, the parties (the
Contractor and Subcontractor) may agree that the Subcontractor to
collect the payment directly from the Employer with submission of

Bidding Documents
 written agreement to the Employer.

In the case of payment to the Subcontractor by the Contractor; before

issuing, under Clause 60, any certificate, the Engineer shall be
entitled to demand from the Contractor reasonable proof that all
payments, less retentions, included in previous certificates in respect
of the work such Subcontractors have been paid or discharged by the
Contractor. If the Contractor fails to provide such proof then, unless
the Contractor satisfies the Engineer in writing that he has reasonable
cause for withholding or refusing to make such payments as per the
subcontract agreements, the Employer shall be entitled to pay such
Subcontractors direct, upon the certificate of the Engineer, all
payment, less retentions, provided for in the Subcontractors, which
the Contractor has failed to make to such Subcontractors and to
deduct by way of sett­off the amount so paid by the Employer from
any sums due or to become due from the Employer to the Contractor.

Provided that, where the Engineer has certified and the Employer has
to pay direct as aforesaid, the Engineer shall, in issuing any further
certificate in favor of the Contractor, deduct from the amount thereof
the amount so to be paid, direct as aforesaid, but shall not withhold or
delay the issue of the certificate itself when due to be issued under the
terms of the contract.
Sub-Clause 4.7 Add Sub­Clause 4.7:

Eligibility of
Subcontractors
“Subcontractors named in the Contract shall comply with the
eligibility rules and requirements of the Government financed
Projects and the Contractor shall be required to ensure that their
contracts include all the conditions applicable to the main contract”

Sub-Clause 4.8 Add Sub­Clause 4.8:

Performance of
Subcontractors
“The Contractor, from time to time, shall evaluate the performance
of its sub­Contractors based on pre­determined key performance
indicator.”

Bidding Documents
Sub-Clause 4.9 Add Sub­Clause 4.9:

Termination and
Replacement of
“The Contractor shall only be entitled to terminate the Subcontract
Subcontractors
agreement based on Subcontract agreement termination procedure.
The Contractor shall notify the Engineer any termination of
subcontract agreements. If the terminated Subcontractor is a
Subcontractor engaged as Mandatory Requirement, the Contractor
shall replace same following the Subcontractors selection procedure
stipulated in this contract.”

Sub-Clause 4.10 Add Sub­Clause 4.10:

Provision of
Quarry sites and
“The Contractor shall provide to the Sub­Contractor such portion of
borrow areas to
the quarry and borrow areas whereby the Sub­Contractor shall
the
produce, process and stock pile materials required for the Sub­
subcontractors
Contract Works in such manner as the Sub­Contractor is able to
achieve the production required in accordance with the Sub­Contract
Work Programme”

Sub-Clause 4.11 Add Sub­Clause 4.11:

Sharing of
laboratory with
“The Contractor shall allow the subcontractors to use the contractor's
the
laboratory and the laboratory technicians for its sub contract work.”
subcontractors

Sub-Clause 4.12 Add Sub­Clause 4.12:

Subcontractors’
knowledge of the
“The Sub­Contractor shall be deemed to have full knowledge of the
main contract
provisions of the Main Contract and the Main Contractor shall
provide the Sub­Contractor with a true copy of the Main Contract.
(Other than the details of the Contractor's prices stated in the bills of
quantities or schedules of rates and prices as the case may be) ”

Bidding Documents
Sub-Clause 4.13 Add Sub­Clause 4.13:

Access of the
Subcontractor to
“The Main Contractor shall from time to time make available to the
the site
Sub­Contractor such part or part of the Site and such means of access
thereto within the site as shall be necessary to enable the Sub­
contractor or execute and complete the Sub­contract Works in
accordance with the sub­Contract agreement. ”

Sub-Clause 4.14 Add Sub­Clause 4.14:

Construction “The Master Work Programme shall be established and forwarded to

Programme for the Sub­Contractor by the Main Contractor when approved by the
Sub-Contract Employer’s Representative/the Engineer. The Master Work
Works Programme shall be the basis for the production of the Sub­Contract
Work Programme. The sub contract program shall be submitted for
the Engineer's information. ”

Sub-Clause 4.15 Add Sub­Clause 4.15:

Engagement of Unless the Mandatory Subcontract is signed after having the

Mandatory consent/approval of the Employer and the Engineer on the selection
Subcontractor process and the draft contract, the advance payment will not be due to
the Contractor. [the forgoing statement will be part of the Contract
for projects with an estimated value of more than ETB 1 billion] The
Contractor shall be considered as non­performing for upcoming
tender if the Contractor couldn’t propose and engage the mandatory
Subcontractor until 50% of the original contact period is elapsed.

Sub-Clause 34.11 The Contractor shall arrange for the provision of a sufficient supply
of suitable food at reasonable prices for all his staff and labour for
Supply of the purposes of or in connection with the Contract.

Bidding Documents
Foodstuffs

Sub-Clause 63.1 amend Sub­Clause 63.1 (e) to read as follows:

Default of
Contractor
(e) has contravened Sub-Clause 4.1 and Sub-Clause 4.3

Bidding Documents
 Annex –2 Standard Subcontract Agreement and Conditions of Contract

Bidding Documents
CONTENTS

PART I: GENERAL CONDITIONS

18
1. General ................................................................................................................................................ 2
1.1. Introduction ................................................................................................................................... 2
1.2. Key factors that affect the success of a Subcontracting ......................................................... 2
1.3. Practice of Subcontracting .......................................................................................................... 5
1.4. Objective of the Subcontracting Management Framework .................................................. 6
1.5. Scope and Goals ............................................................................................................................. 7
2. Overview of Subcontracting ............................................................................................................ 7
2.1. Why sub­contracting?................................................................................................................... 7
2.2. Types of Subcontracting .............................................................................................................. 8
3. Subcontract Management ................................................................................................................ 8
3.1. Mandatory Subcontracting .......................................................................................................... 8
3.2. Time for Proposing Subcontractor .......................................................................................... 11
3.3. Evaluation criteria and Qualification Requirement ............................................................. 13
3.3.1. Selection Criteria ..................................................................................................................... 14
3.3.2. Selection Method ..................................................................................................................... 15
3.3.3. Multiple Awards ...................................................................................................................... 16
3.4. Employer Involvement on subcontracting............................................................................. 19
3.5. Standard Conditions of Contract for subcontracting ........................................................... 21
3.5.1. Approach to sub­contract formulation:­............................................................................. 22
4. Amendments recommended on the existing bidding document of the Main Contract ..... 28
5. General Remarks as a conclusion ................................................................................................ 29
FORM QUA – 1.2 ....................................................................................................................................... 2
FORM OF BID ............................................................................................................................................... 5
The Director General .................................................................................................................................... 5
Fax No. 251-1-514866 ............................................................................................................................ 5
Sub­Clause 1.1Definitions ...................................................................................................................... 11
Add Sub­Clause 1.1 (h): ............................................................................................................................. 11
Sub­Clause 2.1 Engineer’s Duties and Authority ................................................................................... 11
CONTENTS ............................................................................................................................................... 18
PART I ­ GENERAL CONDITIONS ............................................................................................................... 24
Definitions and Interpretation ............................................................................................................ 24
Definitions ........................................................................................................................................... 24

19
 Headings and Marginal Notes ............................................................................................................. 26
Interpretation...................................................................................................................................... 26
Singular and Plural .............................................................................................................................. 26
Notices, Consents, Approvals, Certificates, Confirmations and Determinations ............................... 26
Instructions in Writing ........................................................................................................................ 26
General Obligations ................................................................................................................................ 26
Subcontractor’s General Responsibility .............................................................................................. 26
Performance Security.......................................................................................................................... 28
Programme to be Submitted by Subcontractor.................................................................................. 28
Assignment of ..................................................................................................................................... 28
Subcontract ......................................................................................................................................... 28
Sub­ subcontracting ............................................................................................................................ 28
Subcontract Documents ........................................................................................................................ 30
Language/s .......................................................................................................................................... 30
Governing Law .................................................................................................................................... 30
Subcontract Agreement ...................................................................................................................... 30
Priority of Subcontract Documents .................................................................................................... 30
Main Contract ......................................................................................................................................... 30
Subcontractor’s Knowledge of the main Contract.............................................................................. 30
Subcontractor's Responsibilities in Relation to Sub­contract Works ................................................. 31
No Privity of Contract with Employer ................................................................................................ 31
Possible Effects of Subcontractor's Breaches of Subcontract ............................................................ 31
Temporary Works, Contractor's Equipment and/or Other Facilities (if A ny) .................................... 31
Subcontractor's Use of Temporary Works .......................................................................................... 31
Subcontractor’s use of Contractor’s Equipment and/or Other Facilities (if Any) in Common with
Other Subcontractors.......................................................................................................................... 31
Subcontractor's Exclusive Use of Contractor's Equipment and/or Other Facilities (if Any) ............... 31
Indemnification for Misuse of Temporary Works, Contractor's Equipment and/or Other Facilities(if
Any) ..................................................................................................................................................... 31
Material Testing Use of main contractor’s Laboratory by the sub­contractor ................................... 32
Free­issue Materials ............................................................................................................................ 32
Site Working and Access ....................................................................................................................... 32

20
 Working Hours on Site; Subcontractor’s Compliance with Rules and Regulations ............................ 32
Availability of Site to Subcontractor and Access to Site ..................................................................... 32
Subcontractor's Obligation to Permit Access to Subcontract Works ................................................. 32
Provision of Quarry sites and borrow areas for the subcontractors .................................................. 33
Commencement and Completion ........................................................................................................... 33
Commencement of Subcontract Works; Sub­ contractor’s Time for Completion.............................. 33
Extension of Subcontractor's Time for Completion ............................................................................ 33
Contractor's Obligation to Notify ........................................................................................................ 33
Instructions and Decisions ...................................................................................................................... 34
Instructions and Decisions under Main Contract................................................................................ 34
Instructions under Subcontract .......................................................................................................... 34
Variations ................................................................................................................................................ 34
Variations of Sub­ contract Works ...................................................................................................... 34
Instructions for Variations .................................................................................................................. 34
Valuation of Variations ........................................................................................................................... 34
Assessment of Value of Variations...................................................................................................... 35
Valuation by Reference to Measurement under Main Contract ........................................................ 35
Quantity Estimated and Quantity Executed ....................................................................................... 35
Daywork .............................................................................................................................................. 35
Notices and Claims .................................................................................................................................. 35
Notices ................................................................................................................................................ 35
Claims .................................................................................................................................................. 36
Effects of Failure to Give Notice ......................................................................................................... 36
Subcontractor’s Claim ......................................................................................................................... 36
Contractor’s Claim in Connection with the Subcontract .................................................................... 37
Incorporation by Reference ............................................................................................................. 37
Indemnities ............................................................................................................................................. 37
Subcontractor’s Obligation to Indemnify............................................................................................ 37
Contractor's Obligation to Indemnify ................................................................................................. 37
Outstanding Work and Defects............................................................................................................... 39
Subcontractor's Obligations before Taking­Over................................................................................ 39
Subcontractor's Obligations after Taking­Over................................................................................... 39

21
 Defect Caused by Contractor's Act or Default .................................................................................... 39
Insurances ............................................................................................................................................... 39
Subcontractor's Obligation to Insure .................................................................................................. 39
Contractor’s Obligation to Insure; Subcontract Works at Sub­ contractor’s Risk .............................. 39
Evidence of Insurance; Remedy on Failure to Insure ......................................................................... 40
Payment .................................................................................................................................................. 40
Subcontractor's Monthly Statements ................................................................................................. 40
Contractor's Monthly Statements ...................................................................................................... 40
Payment Due; Payment Withheld or Deferred; Interest .................................................................... 42
Payment to the Subcontractor by the Employer ................................................................................ 44
Payment of Retention Money ............................................................................................................. 44
Payment of Sub­contract Price and Other Sums Due ......................................................................... 44
Advance Payment ............................................................................................................................... 44
Cessation of Contractor's Liability....................................................................................................... 45
Termination of Main Contract ................................................................................................................ 45
Termination of Subcontractor's Employment .................................................................................... 45
Payment after Termination................................................................................................................. 45
Termination of Main Contract in Consequence of Breach of Subcontract ......................................... 45
Contractor’s and Subcontractor's Rights and Liabilities upon Termination ....................................... 48
Contractor's Powers ............................................................................................................................ 48
Default of Contractor .............................................................................................................................. 48
Default of Contractor .......................................................................................................................... 48
Removal of Subcontractor’s Equipment ............................................................................................. 48
Payment on Termination .................................................................................................................... 48
Subcontractor’s Entitlement to Suspend Work .................................................................................. 48
Resumption of Work ........................................................................................................................... 49
Settlement of Disputes ........................................................................................................................... 49
Amicable Settlement and Arbitration ................................................................................................ 49
Dispute arising between locals or Local and foreign contractor and subcontractor.......................... 49
Dispute arising Between Foreign contractor and subcontractor ....................................................... 50
Dispute in Connection with or Arising out of Main Contract Touching or Concerning Sub­ contract
Works .................................................................................................................................................. 50

22
 Notices and Instructions ......................................................................................................................... 50
Giving of Notices and Instructions ...................................................................................................... 50
Change of Address .............................................................................................................................. 50
Changes in Cost and Legislation.............................................................................................................. 50
Increase or Decrease of Cost .............................................................................................................. 50
Base, Current and Provisional Indices ................................................................................................. 51
Subsequent Legislation ....................................................................................................................... 51
Currency and Rates of Exchange............................................................................................................. 51
Currency Restrictions .......................................................................................................................... 51
Rates of Exchange ............................................................................................................................... 51
PART II ­ CONDITIONS OF PARTICULAR APPLICATION CONTENTS.......................................................... 52
PART II ­ CONDITIONS OF PARTICULAR APPLICATION CONTENTS.............................................................. 53
Rules and Regulations ............................................................................................................................. 55
SUBCONTRACTOR'S OFFER ..................................................................................................................... 56
APPENDIX TO SUBCONTRACTOR'S OFFER ............................................................................................ 59
SUBCONTRACT AGREEMENT .................................................................................................................... 0
6. Reference ............................................................................................................................................ 0

23
 PART I ­ GENERAL CONDITIONS

Definitions and Interpretation

1.1 In the Subcontract (as hereinafter defined) all words and expressions shall have
Definitions
the same meanings as are respectively assigned to them in the Main Contract
(as hereinafter defined), except where the context otherwise requires and except
that the following words and expressions shall have the meanings hereby
assigned to them:

(a) (i) "Employer" means the person named as such in Part

II of the Conditions of Subcontract and the legal
successors in title to, or assignees of, such person, as the
Contractor shall notify the Subcontractor from time to
time.
(ii) "Contractor" means the person named as such in Part II
of the Conditions of Subcontract and the legal successors in title
to such person, but not (except with the consent of the
Subcontractor) any assignee of such person.
(iii) "Subcontractor" means the person whose offer has been
accepted by the Contractor and the legal successors in title to such
person, but not (except with the consent of the Contractor) any
assignee of such person.
(iv)
(v) "Engineer" means the person appointed by the Employer to
act as Engineer for the purposes of the Main Contract and named as
such in Part II of the Conditions of Subcontract.
(b) (i) "Main Contract" means the contract entered into
between the Employer and the Contractor, particulars of
which are given in Part II of the Conditions of
Subcontract.
(ii) "Subcontract" means the Conditions of Subcontract (Parts I and II),
the Subcontract Specification, the Subcontract Drawings, the Subcontract
Bill of Quantities, the Subcontractor's Offer, the Contractor's Letter of
Acceptance, the Subcontract Agreement (if completed) and such further
documents as may be expressly incorporated in the Contractor's Letter
of Acceptance or Subcontract Agreement (if completed).
(iii) "Subcontract Specification" means the specification of the
Subcontract Works included in the Subcontract and any modification
thereof or addition thereto made pursuant to Clause 9.
(iv) "Subcontract Drawings" means all drawings, calculations and
technical information of a like nature under the Subcontract.
(v) "Subcontract Bill of Quantities" means the priced and completed
bill of quantities forming part of the Subcontractor's Offer.
(vi) "Subcontractor's Offer" means the Subcontractor's priced offer to
the Contractor for the execution and completion of the Subcontract
Works and the remedying of any defects therein in accordance with the
provisions of the Subcontract, as accepted by the Contractor's Letter of
Acceptance.
(vii) "Contractor's Letter of Acceptance" means the formal acceptance

24
by the Contractor of the Subcontractor's Offer.
(viii)"Subcontract Agreement" means the subcontract agreement (if any)
referred to in Sub­Clause 3.3.
(ix) "Appendix to Subcontractor's Offer" means the appendix comprised
in the form of Subcontractor's Offer annexed to the Conditions of
Subcontract.

(c) (i) "Subcontractor's Commencement Date" means the date

upon which the Subcontractor receives the notice to
commence issued by the Contractor pursuant to Sub­
Clause 7.1.

(ii) "Subcontractor's Time for Completion" means the time for

completion of the Subcontract Works or any Section thereof as stated in
the Appendix to Subcontractor's Offer (or as extended under Clause 7)
calculated from the Subcontractor's Commencement Date.

(d) "Subcontract Price" means the sum stated in the

Contractor's Letter of Acceptance as payable to the
Subcontractor for the execution and completion of the
Subcontract Works and the remedying of any defects
therein in accordance with the provisions of the
Subcontract.
(e) (i) "Main Works" means the Works as defined in
the Main Contract.
(ii) "Subcontract Works" means the works described in Part II of the
Conditions of Subcontract.
(iii) "Subcontractor's Equipment" means all appliances and things of
whatsoever nature (other than Temporary Works) required for the
execution and completion of the Subcontract Works and the remedying
of any defects therein, but does not include Plant, materials or other
things intended to form or forming part of the Subcontract Works.

25
 1.2 The headings and marginal notes in the Conditions of Subcontract shall not be
Headings and deemed part thereof or be taken into consideration in the interpretation or
Marginal Notes construction thereof or of the Subcontract.

1.3 Words importing persons or parties shall include firms and corporations and any
Interpretation organization having legal capacity.
In the Subcontract, expect where the context requires otherwise;
If it is stated that a sub­clause or provision of the Main Contract shall apply then
that sub­clause or provision of the Main Contract shall be read with necessary
changes, including that any reference to the Employer and/or the Engineer shall be
read as reference to the Contractor, any reference to the Contractor shall be read
as a reference to the Subcontractor and any reference to another Main Contract
Clause or defined term therein shall be read as a reference to the equivalent clause
or sub­clause or defined term of these Conditions.

1.4 Words importing the singular only also include the plural and vice versa where the
Singular and context requires.
Plural

1.5 Wherever in the Subcontract provision is made for the giving or issue of any
Notices, Consents, notice, consent, approval, certificate, confirmation or determination by any
Approvals, person, unless otherwise specified such notice, consent, approval, certificate,
Certificates, confirmation or determination shall be in writing and the words "notify", "certify",
Confirmations "confirm" or "determine" shall be construed accordingly. Any such notice,
and consent, approval, certificate, confirmation or determination shall not
Determinations unreasonably be withheld or delayed.

1.6 Instructions given by the Contractor shall be in writing, provided that if for any
Instructions in reason the Contractor considers it necessary to give any such instruction orally,
Writing the Subcontractor shall comply with such instruction. Confirmation in writing of
such oral instruction given by the Contractor, whether before or after the carrying
out of the instruction, shall be deemed to be an instruction within the meaning of
this Sub­ Clause. Provided further that if the Subcontractor, within 7 days,
confirms in writing to the Contractor any oral instruction of the Contractor and
such confirmation is not contradicted in writing within 7 days by the Contractor, it
shall be deemed to be an instruction of the Contractor.

General Obligations
2.1 The Subcontractor shall, with due care and diligence, design (to the extent
Subcontractor’s
provided for by the Subcontract), execute and complete the Subcontract Works
General and remedy any defects therein in accordance with the provisions of the
Responsibility Subcontract. The Subcontractor shall provide all superintendence, labour,
materials, Plant, Subcontractor's Equipment and all other things, whether
of a temporary or permanent nature, required in and for such design, execution,
completion and remedying of any defects, so far as the necessity for providing the
same is specified in or is reasonably to be inferred from the Subcontract, and
except as otherwise agreed in accordance with Clause 5 and set out in Part II of

26
the Conditions of Subcontract.
The Subcontractor shall give prompt notice to the Contractor of any error,
omission, fault or other defect in the design of or specification for the Subcontract
Works which the discovers when reviewing the Subcontract and/or the Main
Contract or executing the Subcontract Works.

The Sub­Contractor shall provide all necessary superintendence during the

carrying out of the Sub­Contract Works and shall be responsible for the accuracy
and correctness of the levels, dimensions and alignments of the Sub­Contract
Works. The Sub­Contractor shall appoint a competent and authorized
representative (The Subcontract Works Manager) who shall be constantly in
attendance on the Sub­Contract Works and give his whole time to the
superintendence of the same. Such authorized representative shall be in full charge
of the Sub­Contract Works and receive, on behalf of the Sub­Contractor, directions
and instructions from the Main Contractor.

The Sub­Contractor shall provide and employ on the Site such Technical
Assistants, Sub­agents and Foremen as are competent to give proper supervision
and such skilled, semi­skilled and unskilled labour as is necessary for the proper
and timely execution and maintenance of the Sub­Contract Works.

The Sub­Contractor shall ensure that no illegal immigrants are employed by it for
any work under the Sub­Contract.

The Sub­Contractor shall be responsible for arranging with the relevant authorities
for the provision of water, electricity, sewerage and other services required for the
purpose of executing the Sub Contract Works and the subcontractor’s staffs.

The subcontractor is required at all time to take reasonable steps to maintain the
health and safety of all personnel staffs at site in relation to the subcontract works.

At quarterly interval the subcontractor is required to produce a report to the main

contractor about its available personnel and equipment on site.

27
 2.2 If the Subcontract requires the Subcontractor to obtain security for his
Performance proper performance of the Subcontract, he shall obtain and provide to the
Security Contractor such security in the sum stated in the Appendix to Subcontractor's
Offer. Such security shall be in the form annexed to the Conditions of
Subcontract or in such form as may be agreed between the Contractor and the
Subcontractor. The institution providing such security shall be subject to the
approval of the Contractor. The cost of complying with the requirements of
this Clause shall be borne by the Subcontractor, unless the Subcontract
otherwise provides.
The performance security shall be valid until the Subcontractor has executed and
completed the Subcontract Works and remedied any defects therein in accordance
with the Subcontract. No claim shall be made against such security after the issue
of the Defects Liability Certificate in respect of the Main Works and such security
shall be returned to the Subcontractor within 28 days of the issue of the said
Defects Liability Certificate.
Prior to making a claim under the performance security the Contractor shall, in
every case, notify the Subcontractor stating the nature of the default in respect of
which the claim is to be made.
2.3 The Subcontractor shall, within the time stated in Part II of the Conditions
Programme to be of Subcontract after the date of the Contractor's Letter of Acceptance, submit to
Submitted by the Contractor for his consent a programme, in such form and detail as the
Subcontractor Contractor shall reasonably prescribe, for the execution of the Subcontract
Works. The Master Work Programme of the main contractor shall be the basis for
the production of the Sub­Contract Work Programme. The Subcontractor shall,
whenever required by the Contractor, also provide in writing for his information a
general description of the arrangements and methods which the Subcontractor
proposes to adopt for the execution of the Subcontract Works.

If at any time it should appear to the Contractor that the actual progress of the
Subcontract Works does not conform to the programme to which consent has been
given or in case where revision is required on the Master Work Programme of the
main contractor , the Subcontractor shall produce, at the request of the Contractor,
a revised programme showing the modifications to such programme necessary
to ensure completion of the Subcontract Works within the Subcontractor's Time
for Completion.

2.4 The Subcontractor shall not, without the prior consent of the Contractor
Assignment of (which consent, notwithstanding the provisions of Sub­Clause 1.5, shall be at
the sole discretion of the Contractor), assign the Subcontract or any part
Subcontract
thereof, or any benefit or interest therein or there under, otherwise than by:

(a) a charge in favour of the Subcontractor's bankers of any monies due

or to become due under the Subcontract, or
(b) assignment to the Subcontractor's insurers (in cases where the insurers
have discharged the Subcontractor's loss or liability) of the Subcontractor's
right to obtain relief against any other party liable.

2.5 The Subcontractor shall not subcontract the whole of the Subcontract Works, nor
Sub­ shall he subcontract any part of the Subcontract Works without the prior consent
subcontracting

28
of the Contractor and the Employer. Any such consent shall not relieve the
Subcontractor from any liability or obligation under the Subcontract and the
Subcontractor shall be responsible for the acts, defaults and neglects of any of his
subcontractors, including such subcontractor's agents, servants or workmen as
fully as if they were the acts, defaults or neglects of the Subcontractor, his agents,
servants or workmen. Provided that the Subcontractor shall not be required to
obtain such consent for:
(a) the provision of labour, or
(b) the purchase of materials which are in accordance with the standards
specified in the Subcontract and/or the Main Contract.
In the event of a subcontractor having undertaken towards the Subcontractor in
respect of the work executed, or the goods, materials, Plant or services supplied by
such subcontractor, any continuing obligation extending for a period exceeding
that of the Defects Liability Period under the Main Contract in respect of the Main
Works or of the Section or Sections or part or parts thereof in which the
Subcontract Works are comprised, as the case may be, the Subcontractor shall at
any time, after the expiration of such Period, assign to the Contractor, at the
Contractor's request and cost, the benefit of such obligation for the unexpired
duration thereof.

29
 Subcontract Documents
3.1 Unless otherwise stated in Part II of the Conditions of Subcontract:
Language/s
(a) the language or languages in which the Subcontract documents shall be
drawn up shall be the same as the language or languages in which the Main
Contract documents have been drawn up, and
(b) if the Subcontract documents are drawn up in more than one language,
the Subcontract shall be construed and interpreted according to the Ruling
Language of the Main Contract.
3.2 Unless otherwise stated in Part II of the Conditions of Subcontract, the law of the
Governing Law country or state which applies to the Main Contract and according to which the Main
Contract is construed shall also apply to the Subcontract and be the law according
to which the Subcontract shall be construed.
3.3 The Subcontractor shall, if called upon so to do, enter into and execute the
Subcontract Subcontract Agreement, to be prepared and completed at the cost of the Contractor,
Agreement in the form annexed to the Conditions of Subcontract with such modification as
may be necessary.
3.4 The several documents forming the Subcontract, listed in the Contractor's Letter of
Priority of Acceptance or the Subcontract Agreement (if any), are to be taken as mutually
Subcontract Explanatory o f one another. Unless otherwise provided in the Subcontract, the
Documents priority of the documents forming the Subcontract shall be as follows:
(1) The Subcontract Agreement;
(2) The Contractor's Letter of Acceptance;
(3) Minutes if pre contract award discussion (if any)
(4) Appendix to subcontractor’s offer
(5) The Subcontractor's Offer;
(6) Part II of the Conditions of Subcontract;
(7) Part I of the Conditions of Subcontract; and
(8) the subcontract specification
(9) Subcontract Drawings
(10) Priced Bill of Quantities or Price Schedule
(11) Any other document forming part of the Subcontract.

Main Contract
Subcontractor’s 4.1 The Contractor shall make the Main Contract (other than the details of
Knowledge of the the Contractor's prices thereunder as stated in the bills of quantities or schedules
main Contract of rates and prices as the case may be) available for inspection to the
Subcontractor and, if so requested by the Subcontractor, shall provide the
Subcontractor with a true copy of the Main Contract (less such details of the
Contractor's prices), at the cost of the Subcontractor. The Contractor shall, in any
event, provide the Subcontractor with a copy of the Appendix to Tender to the
Main Contract together with Part II of the Conditions of Main Contract and
details of any other contract conditions which apply to the Main Contract
which differ from Part I of the Conditions of Main Contract. The
Subcontractor shall be deemed to have full knowledge of the provisions
of the Main Contract (less such details of the Contractor's prices).

The subcontractor shall promptly give notice to the contractor of any ambiguity or
discrepancy which he discovers when reviewing the Subcontract and the Main
contract or executing the subcontract works.

30
 4.2 Save where the provisions of the Subcontract otherwise require, the Subcontractor
Subcontractor's shall so design (to the extent provided for by the Subcontract), execute and
Responsibilities complete the Subcontract Works and remedy any defects therein that no act or
in Relation to omission of his in relation thereto shall constitute, cause or contribute to any
Sub­contract breach by the Contractor of any of his obligations under the Main Contract. The
Works Subcontractor shall, save as aforesaid, assume and perform hereunder all the
obligations and liabilities of the Contractor under the Main Contract in relation to
the Subcontract Works.
No Privity of 4.3 Nothing herein shall be construed as creating any privity of contract between the
Contract with Subcontractor and the Employer
Employer
4.4 If the Subcontractor commits any breaches of the Subcontract, he shall indemnify
Possible Effects of the Contractor against any damages for which the Contractor becomes liable under
Subcontractor's the Main Contract as a result of such breaches. In such event, the Contractor may,
Breaches of without prejudice to any other method of recovery, deduct such damages from
Subcontract monies otherwise becoming due to the Subcontractor.

Temporary Works, Contractor's Equipment and/or Other

Facilities (if A ny)
5.1 Unless otherwise stated in Part II of the Conditions of Subcontract, the
Subcontractor's Contractor shall not be required to provide or retain any Temporary Works for
Use of Temporary t h e Subcontractor. However, the Contractor shall permit the Subcontractor, in
Works common with the Contractor and/or such other subcontractors as the Contractor
may allow, for the purpose of executing and completing the Subcontract Works
and remedying any defects therein, to use such Temporary Works as are from
time to time provided by the Contractor in connection with the Main Works.
No such permission shall impose any liability upon the Contractor in respect of
the use of such Temporary Works by the Subcontractor, his agents, servants
or workmen, nor relieve the Subcontractor of any statutory or other obligation
to test or inspect the Temporary Works to be used by his agents, servants or
workmen or to provide suitable Temporary Works for their use.
Subcontractor’s 5.2 The Contractor shall provide at the Site the Contractor's Explosives,
use of Equipment and/or other facilities (if any) specified in Part II of the Conditions
Contractor’s of Subcontract and shall permit the Subcontractor, in common with the
Equipment Contractor and/or such other subcontractors as the Contractor may allow, to
and/or Other have the use thereof for the purposes of executing and completing the
Subcontract Works but not of remedying any defects therein, upon such
Facilities (if Any) terms and conditions (if any) as are specified in Part II of the Conditions of
in Common with Subcontract.
Other
Subcontractors
Subcontractor's 5.3 The Contractor shall also provide for the exclusive use by the Subcontractor of the
Exclusive Use of Contractor’s Equipment and/or other facilities (if any) specified in Part II of the
Contractor's Conditions of Subcontract upon such terms and conditions (if any) as are specified
Equipment therein.
and/or Other
Facilities (if Any)
Indemnification 5.4 The Subcontractor shall indemnify the Contractor against any damages arising
for Misuse of from the misuse by the Subcontractor, his agents, servants or workmen, of
Temporary Temporary Works, Contractor's Equipment and/or other facilities provided for

31
Works, his use by the Contractor.
Contractor's
Equipment
and/or Other
Facilities(if Any)
5.5 The required quality testing as per the main contract for the subcontract works shall
Material Testing be carried out by the main contractor’s laboratory technicians at the main
Use of main contractor’s Laboratory on site on the written request of the subcontractor with no
contractor’s additional cost to the Subcontractor. All the tests shall comply with the requirement
Laboratory by the of the specification of the main contract and be approved by the Employer’s
sub­contractor Representative/ Engineer before proceeding to the subsequent works. The
subcontractor is responsible to request the tests required by the specification and
sampling of the materials.
5.6 The Contractor shall supply to the subcontractor, free of charges, the free­issue
Free­issue materials (if any) specified in Part II of the Conditions of Subcontract, at the
Materials place (s) specified in Part II of the Conditions of Subcontract and within the
times that shall be required to enable the Subcontractor to proceed with execution
and completion of the subcontract works in accordance with the Subcontract
programme. The supply of such free­issue materials shall be in accordance with the
detail and arrangements and upon the terms and conditions (if any) stated in Part II
of the Conditions of Subcontract.

When made available by the Contractor, the Subcontractor shall visually inspect the
free­issue materials and shall promptly give notice tot eh Contractor of any
shortage, defect or default in them. Unless the parties agree or the Contractor
instructs otherwise, the Contractor shal immediately rectify the notified shortage,
defect or default. After this visual inspection, the free­issue materials shall come
under the care, custody and control if the Subcontractor. The Subcontractor’s
obligation of inspection, care, custody and control shall not relive the Contractor of
liability for any shortage, defect or default not apparent from a visual inspection.

Site Working and Access

Working Hours on 6.1
Site;
Subcontractor’s
Compliance with
Rules and
Regulations
6.2
Availability of Site
to Subcontractor
and Access to Site
The Subcontractor shall observe the working hours of the Contractor as
contained in Part II of the Conditions of Subcontract, unless otherwise
agreed, and shall comply with all rules and regulations governing the execution
of the work, the arrival at and the departure from the Site of materials and
Subcontractor's Equipment and the storage of materials and Subcontractor's
Equipment on the Site.
The Contractor shall, from time to time, make available to the Subcontractor so
much of the Site and such access as may be required to enable the Subcontractor to
proceed with the execution of the Subcontract Works with due dispatch in
accordance with the Subcontract.

The Contractor shall not be bound to make available exclusively to the

Subcontractor any part of the Site, unless otherwise stated in Part II of the
Conditions of Subcontract.
6.3 The Subcontractor shall permit the Contractor, the Engineer, and any person
Subcontractor's authorised by either of them, 6.3 to have reasonable access, during working hours,
Obligation to to the Subcontract Works and to the places on the Site where any work or materials
Permit Access to therefor are being executed, prepared or stored. The Subcontractor shall also permit
Subcontract

32
Works or procure reasonable access for the Contractor, the Engineer, and any person
authorised by either of them, to such places off the Site where work is being
executed or prepared by or on behalf of the Subcontractor in connection with the
Subcontract Works.
6.4 The Main Contractor shall provide to the Sub­Contractor such portion of the quarry
Provision of and borrow areas whereby the Sub­Contractor shall produce, process and stock pile
Quarry sites and materials required for the Sub­Contract Works in such manner as the Sub­
borrow areas for Contractor is able to achieve the production required in accordance with the Sub­
the Contract Work Programme without interference.
subcontractors

Commencement and Completion

7.1 The Subcontractor shall commence the Subcontract Works within 14 days, or such
Commencement other period as may be agreed in writing, after the receipt by him of a notice to this
of Subcontract effect from the Contractor, which notice shall be issued within the time stated in the
Works; Sub­ Appendix to Subcontractor's Offer after the date of the Contractor's Letter of
contractor’s Time Acceptance.
for Completion
Thereafter, the Subcontractor shall proceed with the Subcontract Works with due
expedition and without delay, except such as may be expressly sanctioned or
instructed by the Contractor. The Subcontract Works and, if applicable, any Section
required to be completed within a particular time as stated in the Appendix to
Subcontractor's Offer shall be completed within the time for completion stated in
the Appendix to Subcontractor's Offer for the Subcontract Works or the Section (as
the case may be), calculated from the Subcontractor's Commencement Date, or such
extended time as may be allowed under Sub­Clause 7.2.
7.2 If the Subcontractor shall be delayed in the execution of the Subcontract Works or,
Extension of if applicable, any Section thereof by any:
Subcontractor's
Time for (a) circumstances in regard to which the Contractor
Completion is entitled to receive from the Engineer an extension of
his time for completion of the Main Works under the
Main Contract,

(b) a Subcontract variation or other substantial change

in the quantity of any item of work included in the
subcontract,
(c) a cause of delay giving an entitlement to an
extension of the Subcontract time for completion under
sub­clause of these conditions,
(d) instruction pursuant to Sub­Clause 8.2 to which
paragraph (a) of this Sub­Clause does not apply, or
(e) breach of the Subcontract by the Contractor or for
which the Contractor is responsible,
then in any such event the Subcontractor shall be entitled to such extension of the
Subcontractor's Time for Completion of the Subcontract Works or such Section
thereof as may in all the circumstances be fair and reasonable.
Contractor's 7.3 The Contractor shall promptly notify the Subcontractor of all extensions of time
Obligation to obtained under the provisions of the Main Contract which affect the Subcontract.
Notify

33
 Instructions and Decisions
8.1 Subject to Clause 9, the Subcontractor shall in relation to the Subcontract Works
Instructions and comply with all instructions and decisions of the Engineer which are notified and
Decisions under confirmed to him as an instruction by the Contractor, irrespective of whether such
Main Contract instructions and decisions were validly given under the Main Contract. The
Subcontractor shall have the like rights (if any) to payment from the Contractor in
respect of such compliance as the Contractor has against the Employer under the
Main Contract. Further, if any such instruction or decision notified and confirmed
as aforesaid is invalidly or incorrectly given by the Engineer under the Main
Contract, then the Subcontractor shall be entitled to recover such costs as may be
reasonable (if any) from the Contractor of complying therewith to the extent that
such costs were not caused or contributed to by any breach of the Subcontract by
the Subcontractor.
8.2 The Subcontractor shall take instructions only from the Contractor. The Contractor
Instructions shall have the like authority in relation to the Subcontract Works to give
under instructions as the Engineer has in relation to the Main Works under the Main
Subcontract Contract. The Subcontractor shall have the like obligations to abide by and comply
therewith and the like right in relation thereto as the Contractor has under the Main
Contract. The said authority of the Contractor shall be exercisable in any case
irrespective of whether the Engineer has exercised like authority in relation thereto
under the Main Contract.

Variations
9.1 The Subcontractor shall only make such variation of the Subcontract Works,
Variations of Sub­ whether by way of alteration, addition, or omission, as may be instructed by:
contract Works
(a) the Engineer under the Main Contract and
notified and confirmed as an instruction to the
Subcontractor by the Contractor, or
(b) the
Contractor.
Any instruction relating to the Subcontract Works which is given by the Engineer
under the Main Contract and constitutes a variation thereunder shall be deemed to
constitute a variation of the Subcontract Works, if notified and confirmed by the
Contractor in accordance with paragraph (a) of this Sub­Clause.

9.2 The Subcontractor shall not act upon an unconfirmed instruction for the variation of
Instructions for the Subcontract Works which is directly received by him from the Employer or the
Variations Engineer. If the Subcontractor shall receive any such direct instruction, he shall
forthwith inform the Contractor thereof and shall supply the Contractor with a copy
of such direct instruction, if given in writing. The Subcontractor shall only act upon
such instruction as directed in writing by the Contractor, but the Contractor shall
give his directions thereon promptly.

Valuation of Variations

34
 10.2 The value of all variations shall be ascertained by reference to the rates and prices
Assessment of (if any) specified in the Subcontract for the like or analogous work, but if there are
Value of no such rates and prices, or if they are inappropriate or inapplicable, then such value
Variations shall be such as is fair and reasonable.
10.3 Where a variation of the Subcontract Works, which also constitutes a variation
Valuation by under the Main Contract, is measured by the Engineer there under, then provided
Reference to that the rates and prices in the Subcontract permit such variation to be valued by
Measurement reference to measurement the Contractor shall permit the Subcontractor to attend
under Main any measurement made on behalf of the Engineer. Such measurement made under
Contract the Main Contract shall also constitute the measurement of the variation for the
purposes of the Subcontract and such variation shall be valued accordingly.

10.4 The quantities set out in the Subcontract Bill of Quantities are the estimated
Quantity quantities for the Subcontract Works, and they are not to be taken as the actual and
Estimated and correct quantities of the Subcontract Works to be executed by the Subcontractor in
Quantity Executed fulfillment of his obligations under the Subcontract.

No instruction shall be required for increase or decrease in the quantity of any work
where the cumulative increment of quantity doesn’t exceeds by more than 5% of
the total of the subcontract contract amount where such increase or decrease is not
the result of an instruction given under Clause 9, but is the result of the quantities
exceeding or being less than those stated in the Subcontract Bill of Quantities.

10.5 Where the Subcontractor has been instructed by the Contractor to carry out work on
Daywork a daywork basis the Subcontractor shall be paid for such work at the rates and
prices specified in the daywork schedule included in the Subcontract.

Notices and Claims

11.1 Without prejudice to the generality of Clause 4, and unless otherwise stated in the
Notices Conditions of Subcontract, whenever the Contractor is required by the terms of
the Main Contract to give any notice or other information to the Engineer or to the
Employer, or to keep contemporary records, the Subcontractor shall in relation to
the Subcontract Works give a similar notice or such other information in writing to
the Contractor and keep contemporary records as will enable the Contractor to
comply with such terms of the Main Contract. The Subcontractor shall do so in
sufficient time to enable the Contractor to comply with such terms punctually.

Provided always that the Subcontractor shall be excused any non­compliance with
this Sub­Clause for so long as he neither knew nor ought to have known of the
Contractor's need of any such notice or information from him or such contemporary
records.

Notwithstanding the Subcontractor’s and Contractor’s claim and the Contractor’s

claim, each party shall immediately give notice to the other party of any delay event
which has occurred, or specific probable future event(s) or circumstance(s), which
may adversely affect the other party’s activities, or delay the execution of the
Subcontract works and/or the Main Works. The Subcontractor shall immediately
give notice to the Contractor of any event which has occurred or specific probable
future event or circumstance(s) which may increase the subcontract price and/or the
contract price.

35
 11.2 Subject to the Subcontractor's complying with this Sub­Clause, the Contractor shall
Claims take all reasonable steps to secure from the Employer (including the Engineer) such
contractual benefits (including additional payments, extensions of time, or both), if
any, as may be claimable in accordance with the Main Contract on account of any
adverse physical obstructions or physical conditions or any other circumstances that
may be encountered during the execution of the Subcontract Works. The
Subcontractor shall, in sufficient time, afford the Contractor all information and
assistance that may be required to enable the Contractor to claim such contractual
benefits. On receiving any such contractual benefits from the Employer, the
Contractor shall pass on to the Subcontractor such proportion thereof as may in all
the circumstances be fair and reasonable, it being understood that, in the case of any
claim of the Contractor for an additional payment, the Contractor's receipt of
payment therefor from the Employer shall be a condition precedent to the
Contractor's liability to the Subcontractor in respect of such claim. The Contractor
shall notify the Subcontractor regularly of his steps to secure such contractual
benefits and of the Contractor's receipt thereof. Save as provided in this Sub­Clause,
or in Sub­Clause 7.2, the Contractor shall have no liability to the Subcontractor in
respect of any obstruction, condition or circumstance that may be encountered
during the execution of the Subcontract Works. The Subcontractor shall be deemed
to have satisfied himself as to the correctness and sufficiency of the Subcontract
Price to cover the provision and doing by him of all things necessary for the
performance of his obligations under the Subcontract. Provided always that nothing
in this Clause shall prevent the Subcontractor from claiming against the Contractor
for delays in the execution of the Subcontract Works, or other circumstances,
caused by the act or default of the Contractor.
11.3 If by reason of any failure by the Subcontractor to comply with the provisions of
Effects of Failure Sub­Clause 11.1 the Contractor is prevented from recovering any sum from the
to Give Notice Employer under the Main Contract in respect of the Main Works, then, without
prejudice to any other remedy of the Contractor for such failure, the Contractor may
deduct such sum from monies otherwise due to the Subcontractor under the
Subcontract.
11.4 If the subcontractor considers himself to be entitled to any extension of the
Subcontractor’s subcontract time for completion and/or any additional payment, under any clauses
Claim of these conditions or otherwise in connection with the subcontract, Main contract
clause on Contractor’s Claims shall apply to subcontractor’s claims with
appropriate interpretation with the subcontract. Save that:
a) the period of notice applicable to Subcontractor’s claims shall be not later
than 21 days after the subcontractor becomes aware (or should have
become aware) of the event or circumstance giving rise to the claim;
b) the period for submission by the subcontractor of a full detailed claim shall
be not later than 35 days after the subcontractor becomes aware (or should
have become aware) ) of the event or circumstance giving rise to the claim,
or within such other period as may be proposed by the Subcontractor and
approved by the Contractor.
Provided also that, where an event has a continuing effect such that it is not
practicable for the Subcontractor to submit detailed particulars within the period of
21 days referred to in this Sub­Clause, he shall nevertheless be entitled to an
extension of time provided that he has submitted to the Contractor interim
particulars at intervals of not more than 21 days and final particulars within 21 days
of the end of the effects resulting from the event.

36
 11.5 If the Contractor Considered himself to be entitled to any payment under any clause
Contractor’s of these conditions or otherwise in connection with the Subcontract, the contractor
Claim in shall give notice to the Subcontractor describing the event or circumstance giving
Connection with rise to the claim. The notice shall be given 28 days after the Contractor becomes
the Subcontract aware of the event or circumstance giving rise to the claim and shall specify the
basis of the claim.

Not later than 28 days after the Contractor becomes aware of the event or
circumstance giving rise to the claim, the Contractor shall send to the Subcontractor
detailed particulars of the claim which includes substantiation of the amount to
which the Contractor considers himself to be entitled. The Contractor shall consult
with the Subcontractor in an endeavor to reach to an agreement to this amount. If
agreement is not reached, the Contractor shall make a fair decision as to the
appropriate and applicable amount, taking due account of the Subcontractor’s
views, the extent to which the claim has been reasonably substantiated, and all other
supporting circumstances. The Contractor shall give notice, with reasons and
supporting particulars to the Subcontractor of this decision.

This amount may be deducted from sums otherwise due to the Subcontractor. The
Contractor shall only entitled to make a deduction or otherwise to claim against the
Subcontractor, in accordance with the sub­clause.
Subcontractor's Equipment, Temporary Works and
Materials
12.1 The provisions of Main Contract in relation to Contractor's Equipment, Temporary
Incorporation by Works or materials brought on to the Site by the Subcontractor are hereby
Reference incorporated by reference into the Subcontract as completely as if they were set out
in full therein.

Indemnities
13.1 The Subcontractor shall, except if and so far as the Subcontract provides
Subcontractor’s
otherwise, indemnify the Contractor against all losses and claims in respect of:
Obligation to
Indemnify (a) death of or injury to any person, or
(b) loss or damage to any property (other than the Subcontract Works),

which may arise out of or in consequence of the execution and completion of

the Subcontract Works and the remedying of any defects therein, and against all
claims, proceedings, damages, costs, charges and expenses whatsoever in respect
thereof or in relation thereto, subject to what is provided in Sub­Clause 13.2.
13.2 The Contractor shall indemnify the Subcontractor against all claims, proceedings,
Contractor's
damages, costs, charges and expenses in respect of the following matters to the
Obligation to like extent that the Contractor shall be indemnified by the Employer under the
Indemnify Main Contract, but no further:

(a) the permanent use or occupation of land by the

Subcontract Works, or any part thereof,
(b) the right of the Employer and/or the Contractor to
execute the Subcontract Works, or any part thereof, on,
over, under, in or through any land,

37
 (c) damage to property which is the unavoidable
result of the execution and completion of the Subcontract
Works, or the remedying of any defects therein, in
accordance with the Subcontract, and
(d) death of or injury to persons or loss of or damage
to property resulting from any act or neglect of the
Employer, his agents, workmen or servants or other
contractors, not being employed by the Contractor, or in
respect of any claims, proceedings, damages, costs,
charges and expenses in respect thereof or in relation
thereto.

The Contractor shall indemnify the Subcontractor against all claims,

proceedings, damages, costs, charges and expenses in respect of death of or
injury to persons or loss of or damage to property resulting from any act or
neglect of the Contractor, his agents, workmen or servants or other
subcontractors, not being employed by the Subcontractor, or in respect of any
claims, proceedings, damages, costs, charges and expenses in respect thereof or
in relation thereto or, where the said death, injury, loss or damage was
contributed to by the Subcontractor, his agents, workmen or servants, such part
of the said death, injury, loss or damage as may be just and equitable having
regard to the extent of the responsibility of the Contractor, his agents,
workmen or servants or other subcontractors for the said death, injury, loss or
damage.

38
 Outstanding Work and Defects
14.1 The Subcontractor shall remedy every defect therein from whatever cause
Subcontractor's
arising until a Taking­Over Certificate is issued in respect of the
Obligations Subcontract Works or such Section or Sections or part or parts of the sub
before Taking­ contract works. Subject to Clause 15, the Subcontractor shall not be
Over entitled to any additional payment for so doing unless such defect is
caused by the act or default of the Employer, his agents, servants or
workmen under the Main Contract or of the Contractor, his agents,
servants or workmen under the Subcontract.
14.2 After a Taking­Over Certificate is issued in respect of the subcontract
Subcontractor's
Works or of the Section or Sections or part or parts of the subcontract
Obligations after Works, as the case may be, the Subcontractor shall remedy such defects in
Taking­Over the Subcontract Works as liable to remedy under the subcontract for the
period and terms as agreed by the subcontractor and the Contractor under
Part II, the Special Conditions of Subcontract.
14.3 Provided always that if any defect remedied by the Subcontractor under Sub­Clause
Defect Caused by 14.l or 14.2 is caused by the act or default of the Contractor, his agents, servants or
Contractor's Act workmen, then, notwithstanding that the Contractor may have no corresponding
or Default right under the Main Contract, the Subcontractor shall be entitled to be paid by the
Contractor his costs of remedying such defect.
Insurances
15.1 The Subcontractor shall effect insurance against such risks as are specified in Part II
Subcontractor's of the Conditions of Subcontract and in such sums and for the benefit of such
Obligation to persons as are specified therein. Unless otherwise stated in Part II of the Conditions
Insure of Subcontract, the Subcontractor shall keep in force such insurance from the time
that so much of the Site and such access is made available to him as may be
required to enable him to commence and proceed with the execution of the
Subcontract Works in accordance with the Subcontract until he has finally
performed his obligations under the Subcontract.
Provided that the Subcontractor shall insure against the liability in respect of any
person employed by him on the Subcontract Works in such manner that the
Employer and/or the Contractor is indemnified under the policy.
15.2 The Contractor shall keep in force, until such time as a Taking­Over Certificate is
Contractor’s issued in respect of the Main Works or the Main Works have ceased to be at his risk
Obligation to under the Main Contract, the policy of insurance specified in Part II of the
Insure; Conditions of Subcontract.
Subcontract
Works at Sub­ In the event of the Subcontract Works, Temporary Works, materials or other things
contractor’s Risk belonging to the Subcontractor being destroyed or damaged during such period in
such circumstances that a claim is established in respect thereof under the said
policy, then the Subcontractor shall be paid the amount of such claim, or the
amount of his loss, whichever is the less, and shall apply such sum in replacing or
repairing that which was destroyed or damaged. Save as aforesaid the Subcontract
Works shall be at the risk of the Subcontractor until a Taking­Over Certificate is
issued in respect of the Subcontract Works or Section or Sections or part or parts of
the Subcontract Works. The Subcontractor shall make good all loss or damage
occurring to the Subcontract Works prior thereto at his own expense. The
Subcontractor shall also be liable for any loss or damage to the Subcontract Works
occasioned by him in the course of any operations carried out by him for the
purpose of complying with his obligations under Sub­Clause 14.2.

39
 15.3 Where by virtue of this Clause either party is required to effect and keep in force
Evidence of insurance, he shall if so required by the other party provide evidence of insurance
Insurance; and the receipt for the payment of the current premium.
Remedy on
Failure to Insure
If either the Contractor or the Subcontractor fails to effect and keep in force any of
the insurances required under the Subcontract, or fails to provide evidence of
insurance, when required, then and in any such case the other party may effect and
keep in force any such insurances and pay any premium as may be necessary for
that purpose and may from time to time deduct the amount so paid from any monies
due or to become due to the party in default, or recover the same as a debt due from
the party in default, as the case may be.

Payment
16.1 The Subcontractor shall submit to the Contractor, 7 days after the end of each
Subcontractor's
month (the "Specified Day"), 7 copies of a statement, in such form as the
Monthly Contractor may from time to time prescribe (the "Statement"), showing the
Statements amounts to which the Subcontractor considers himself to be entitled up to the
end of such month in respect of:

(a) the value of the Subcontract Works executed;

(b) any other items in the Subcontract Bill of Quantities including
those for Subcontractor's Equipment, Temporary Works, dayworks and
the like;
(c) the percentage of the invoice value of listed materials, all as stated
in the Appendix to Subcontractor's Offer, and Plant delivered by the
Subcontractor on the Site for incorporation in the Subcontract Works but
not incorporated in such Works;
(d) addition or deduction for the extra over items if applicable under
the subcontract
(e) adjustments under Clause 22; and
(f) any other sums to which the Subcontractor may be entitled under
the Subcontract or otherwise.

The value of work done shall be calculated in accordance with the rates and
prices specified in the Subcontract, but if there are no such rates and prices, or
if they are inappropriate or inapplicable, then such value shall be such as is fair
and reasonable.

16.2 Subject to the Subcontractor having submitted a Statement for any month to the
Contractor's Contractor, the Contractor shall include, unless inappropriate, the amounts set out
Monthly therein in the Contractor's next statement for payment under the Main Contract.
Statements
In any proceedings, whether arbitral or other, instituted by the Contractor against
the Employer to enforce payment of monies due under any certificate issued by the
Engineer in accordance with the provisions of the Main Contract there shall be
included all sums certified and unpaid in relation to the Subcontract Works, without
prejudice to the Subcontractor's rights under Clause 20.

40
41
 16.3 Within 77 days of the Specified Day or otherwise as agreed but subject as
Payment Due; hereinafter provided, the amounts included in a Statement shall be due and
Payment payable to the Subcontractor, subject to deduction of previous payments and of
Withheld or retention monies at the rate(s) specified in the Appendix to Subcontractor's Offer
Deferred; Interest until such time as the limit of retention money (if any) therein specified has
been reached.
The Contractor shall be entitled to withhold or defer payment of all or part of
any sums otherwise due pursuant to the provisions hereof where:
(a) the amounts included in any Statement together
with any sums to which the Subcontractor might
otherwise be entitled in the opinion of the Contractor, but
after all retentions and deductions, are less in the
aggregate than the minimum amount (if any) stated in
the Appendix to Subcontractor's Offer,
(b) the amounts included in any Statement together
with any other sums which are the subject of an
application by the Contractor under the Main Contract
in accordance with Sub­Clause 16.2, but after all
retentions and deductions, are insufficient in the
aggregate to justify the issue of an Interim Payment
Certificate by the Engineer under the Main Contract,
(c) the amounts included in any Statement are not
certified in full by the Engineer, providing such failure to
certify is not due to the act or default of the Contractor,

(d) the Contractor has included the amounts set out

in the Statement in his own statement in accordance
with the Main Contract and the Engineer has certified
but the Employer has failed to make payment in full to the
Contractor in respect of such amounts, providing such
failure is not due to the act or default of the Contractor,
or

(e) a dispute arises or has arisen between the

Subcontractor and the Contractor and/or the Contractor
and the Employer involving any question of
measurement or quantities or any other matter included
in any such Statement.

Any payment withheld under the provisions of paragraphs (c), (d) or (e) above
shall be limited to the extent that the amounts in any Statement are not certified,
not paid by the Employer or are the subject of a dispute, as the case may be.

In the event of the Contractor withholding or deferring any payment he shall notify
the Subcontractor of his reasons there for as soon as is reasonably practicable but
not later than the date when such payment would otherwise have been payable.

The provisions of paragraphs (a) and (b) of this Sub­Clause with regard to the
time for payment shall not apply to the amounts in any Statement by the
Subcontractor which are included in the Contractor's Final Statement to the

42
Engineer under the provisions of the Main Contract. In respect of any such
amounts payment shall be due 14 days after receipt by the Contractor of any
payment which includes a sum in respect of such amounts.

After certification of the Subcontractor payment by the Contractor, (i) the

Contractor shall pay to the Subcontractor or otherwise; (ii) the parties may agree
the Subcontractor to collect the payment directly from the Employer, as may be
defined under Part II, Special Condition of the subcontract. In case of payment to
the Subcontractor directly from the Employer, the orders for payments to the
subcontractor may be carried out only after submission of written agreement by the
Contractor to the Employer. The acceptance of an assignment of payment to the
subcontractor by the Employer shall not relieve the Contractor of his obligations for
payment to the subcontractor.

In the event of the Contractor failing to make payment of any sum properly due
and payable to the Subcontractor or in the event of payment being withheld or
deferred pursuant to paragraph (d) of this Sub­Clause, the Contractor shall,
upon receiving a notice of claim for interest from the Subcontractor, which
should be made within 7 days of the date when such sum became payable, pay to
the Subcontractor interest on such overdue sum at the rate payable by the
Employer to the Contractor under the provisions of the Main Contract.
Provided always that, in the event of the Contractor not receiving a notice of
a claim for interest within 7 days of the date when such sum became payable
as aforesaid, interest shall be payable by the Contractor on such sum at such
rate from the date of receipt of the said notice of claim.

Notwithstanding t he immediately preceding paragraph the Subcontractor shall

be paid any interest actually received by the Contractor from the Employer
which is attributable to monies due to the Subcontractor.

Notwithstanding the terms of this Clause or any other Clause of the Subcontract
no amount shall be due and payable to the Subcontractor until the performance
security, if required under the Subcontract, has been provided by the
Subcontractor and approved by the Contractor.

43
 16.4 In the event of the Contractor failing to make payment of any sum properly due
Payment to the and payable to the Subcontractor by the contractor within fourteen days (14) when
Subcontractor by paid by the Employer for the Works of the subcontractor that are measured and
the Employer certified by the Engineer, the subcontractor has the right to claim his payment to
be paid by the Employer.

The Contractor entitled the Employer to pay such subcontractor direct, upon the
certificate of the Engineer, all payment, less retentions, provided for the
subcontractor, which the Contractor has failed to pay to such subcontractor and to
deduct by way of set­off the amount so paid by the Employer from any sums due
or to become due from the Employer to the Contractor if the contractor fails to
supply such proof then, unless the Contractor;
(a) Satisfies the Engineer in writing that he has reasonable cause for withholding
or refusing to make such payments, and
(b) Produces to the Engineer reasonable proof that he has so informed such
subcontracts in witting.
16.5 Within 35 days of the issue by the Contractor of the Taking­Over Certificate with
Payment of respect to the whole of the Subcontract Works or, where the Subcontract Works are
Retention Money completed by Sections or parts, the Contractor shall pay to the Subcontractor one
half, or such other proportion as the Contractor reasonably determines having
regard to the relative value of such Section or part of the Subcontract Works, of the
retention monies under the Subcontract.

Upon the expiration of the Defects Liability Period for the subcontract Works the
other half of the Retention Money shall be certified by the Contractor for payment
to the Subcontractor. Provided that, in the event of different Defects Liability
Periods having become applicable to different Sections or parts of the Permanent
Works, the expression "expiration of the Defects Liability Period" shall, for the
purposes of this Sub­Clause, be deemed to mean the expiration of the latest of such
periods.

16.6 Within 91 days after the Subcontractor has finally performed his obligations under
Payment of Clause 14, or within 14 days after the Contractor has recovered full payment under
Sub­contract the Main Contract in respect of the Subcontract Works, whichever is the sooner,
Price and Other and provided that 35 days have expired since the submission by the Subcontractor
Sums Due of his statement of final account to the Contractor, the Contractor shall pay
to the Subcontractor the Subcontract Price and any additions to or deductions from
such sum as are provided for in the Subcontract, or are otherwise payable in
respect thereof, less such sums as have already been received by the
Subcontractor on account.
16.7 Upon the request of the Subcontractor and as agreed by the Subcontractor and the
Advance Payment Contractor under Part II, Particular Condition of the subcontract, the Contractor
may provide an interest­free advance payment to the Contractor exclusively for the
costs of mobilization in respect of the Works in an amount named in the Letter of
Acceptance of the Subcontract, payable in the agreed proportions of foreign and
local currencies of the Contract Price.

44
 16.8 The Contractor shall not be liable to the Subcontractor for any matter or thing
Cessation of arising out of or in connection with the Subcontract or execution of the Subcontract
Contractor's Works, unless the Subcontractor has given a notice of claim in respect thereof to the
Liability Contractor before the issue of the Defects Liability Certificate in respect of the
Subcontract Works.

Termination of Main Contract

17.1 If the Contractor's employment under the Main Contract is terminated, or if the
Termination of Main Contract is otherwise terminated, for any reason whatsoever before the
Subcontractor's Subcontractor has fully performed his obligations under the Subcontract, then the
Employment Contractor may at any time thereafter by notice to the Subcontractor forthwith
terminate the Subcontractor's employment under the Subcontract and thereupon the
Subcontractor shall, subject to Clause 12, with due expedition remove his staff and
workmen and Subcontractor's Equipment from the Site.

17.2 If the Subcontractor's employment is terminated as aforesaid, and subject to

Payment after Sub­ Clause 17.3, the Subcontractor shall be paid by the Contractor, in so far
Termination as such amounts or items have not already been covered by payments on
account made to the Subcontractor for:
(a) all work executed prior to the date of termination
at the rates and prices, if any, provided in the
Subcontract, or if there are no such rates and prices,
then such amount as may be fair and reasonable,
(b) all materials properly brought and left on the Site
by the Subcontractor, together with such proportion of the
cost as may be reasonable, taking into account payments
made or to be made for work executed, of removal of
Subcontractor's Equipment from the Site and, if required
by the Subcontractor, return thereof to the Subcontractor's
main plant yard in his country of registration or to other
destination, at no greater cost,
(c) the reasonable cost of repatriation of all the
Subcontractor's staff and workmen employed on or in
connection with the Subcontract Works at the time of
such termination, and
(d) any goods properly prepared or fabricated off the
Site for subsequent incorporation in the Subcontract
Works, provided the Subcontractor delivers such goods
to the Site or to such other place as the Contractor shall
reasonably direct.
Provided always that nothing herein shall affect the rights of either
party in respect of any breach of the Subcontract committed by the
other prior to such termination, nor any right which accrued to the
Subcontractor prior to such termination to receive any payment which
is not in respect or on account of the Subcontract Price.

17.3 If the Contractor's employment under the Main Contract is terminated, or if the
Termination of Main Contract is otherwise terminated, by the Employer in consequence of any

45
Main Contract in breach of the Subcontract by the Subcontractor, then the provisions of the
Consequence of preceding Sub­ Clause as to payment shall not apply, but the rights of the
Breach of Contractor and the Subcontractor hereunder shall be the same as if the
Subcontract Subcontractor had by such breach repudiated the Subcontract and the Contractor
had by his notice of termination under Sub­Clause 18.1 elected to accept such
repudiation.
Default of Subcontractor
Termination of 18.1 If:
Subcontract (a) the Subcontractor is deemed by law unable to
pay his debts as they fall due, or enters into voluntary or
involuntary bankruptcy, liquidation or dissolution (other
than a voluntary liquidation for the purposes of
amalgamation or reconstruction), or becomes insolvent,
or makes an arrangement with, or assignment in favour
of, his creditors, or agrees to carry out the Subcontract
under a committee of inspection of his creditors, or if a
receiver, administrator, trustee or liquidator is appointed
over any substantial part of his assets, or if any act is
done or event occurs with respect to the Subcontractor or
his assets which, under any applicable law, has a
substantially similar effect to any of the foregoing acts
or events, or if the Subcontractor has contravened Sub­
Clause 2.4, or has an execution levied on his goods,
(b) the Subcontractor has repudiated the
Subcontract,
(c) the Subcontractor, without reasonable
excuse, has failed to commence or proceed with the
Subcontract Works in accordance with Sub­Clause
7.1,
(d) the Subcontractor refuses or neglects to
remove defective materials or remedy defective
work after being instructed so to do by the
Contractor under this Sub­ Clause,
(e) the Subcontractor, despite previous warning
from the Contractor, in writing, is otherwise
persistently or flagrantly neglecting to comply with
any of his obligations under the Subcontract,
(f) the Subcontractor has contravened Sub­
Clause 2.5, or
(g) the Contractor is required by the Engineer to
remove the Subcontractor from the Main Works after
due notice in writing from the Engineer to the
Contractor in accordance with the Main Contract,
then in any such event, and without prejudice to any other rights or remedies, the
Contractor may by a notice to the Subcontractor forthwith terminate the
Subcontractor's employment under the Subcontract and thereupon the Contractor
may take possession of all materials, Subcontractor's Equipment and other things
whatsoever brought on to the Site by the Subcontractor and may by himself or any

46
other contractor use them for the purpose of executing and completing the
Subcontract Works and remedying any defects therein and may, if he thinks fit, sell
all or any of them and apply the proceeds in or towards the satisfaction of monies
otherwise due to him from the Subcontractor.

47
 18.2 Upon such a termination, the rights and liabilities of the Contractor and the
Contractor’s and Subcontractor shall, subject to the preceding Sub­Clause, be the same as if the
Subcontractor's Subcontractor had repudiated the Subcontract and the Contractor had by his notice
Rights and of termination under the preceding Sub­Clause elected to accept such repudiation.
Liabilities upon
Termination
18.3 The Contractor may in lieu of giving a notice of termination under this Clause take
Contractor's part only of the Subcontract Works out of the hands of the Subcontractor and may
Powers by himself or any other contractor execute and complete such part of the
Subcontract Works and remedy any defects therein and in such event the Contractor
may recover his costs of so doing from the Subcontractor, or deduct such costs from
monies otherwise becoming due to the Subcontractor.

Default of Contractor
19.1 In the event of the Contractor:
Default of
(a) failing to pay to the Subcontractor the amount due under any certificate within 28
Contractor
days after the expiry of the time stated in Sub­Clause 16.3, within which payment
is to be made, subject to any deduction that the Contractor is entitled to make
under the Subcontract,
(b) interfering with or obstructing or refusing any required approval to the issue of
any such certificate,
(c) becoming bankrupt or, being a company, going into liquidation, other than for the
purpose of a scheme of reconstruction or amalgamation, or
(d) giving notice to the subcontractor that for unforeseen economic reasons it is
impossible for him to continue to meet his contractual obligations, the
Subcontractor shall be entitled to terminate his employment under the Subcontract
by giving notice to the Contractor, with a copy to the Engineer. Such termination
shall take effect 14 days after the giving of the notice.
19.2 Upon the expiry of the 14 days' notice referred to in Sub­Clause 19.1, the Contractor
Removal of shall, notwithstanding the provisions of Sub­Clause 12.1, with all reasonable
Subcontractor’s despatch, remove from the Site all Contractor’s Equipment brought by him thereon.
Equipment
19.3 The Contractor shall pay to the Subcontractor the amount of any loss or damage to
Payment on the Subcontractor arising out of or in connection with or by consequence of such
Termination termination.
19.4 Without prejudice to the Subcontractor’s entitlement to interest under Sub­Clause
Subcontractor’s 16.3 and to terminate under Sub­Clause 19.1, the Subcontractor may, if the
Entitlement to Contractor fails to pay the Subcontractor the amount due under any certificate within
Suspend Work 28 days after the expiry of the time stated in Sub­Clause 16.3 within which payment
is to be made, subject to any deduction that the Contractor is entitled to make under
the Contract, after giving 28 days’ prior notice to the Contractor, with a copy to the
Engineer, suspend work or reduce the rate of work. If the Subcontractor suspends
work or reduces the rate of work in accordance with the provisions of this Sub­Clause
and thereby suffers delay or incurs costs the Contractor shall, after due consultation
with the subcontractor, determine:
(a) any extension of time to which the subcontractor is entitled under Clause 7, and
(b) the amount of such costs, which shall be added to the Contract Price, and shall
notify the Subcontractor accordingly, with a copy to the Engineer.

48
 19.5 Where the Subcontractor suspends work or reduces the rate of work. having given
Resumption of notice in accordance with Sub­Clause 19.4, and the Contractor subsequently pays the
Work amount due, including interest pursuant to Sub­Clause 16.3, the Subcontractor's
entitlement under Sub­Clause 19.1 shall, if notice of termination has not been given,
lapse and the Subcontractor shall resume normal working as soon as is reasonably
possible.
Settlement of Disputes
20.1 If a dispute of any kind whatsoever arises between the Contractor and the
Amicable Subcontractor in connection with, or arising out of, the Subcontract or the
Settlement and execution of the Subcontract Works, whether during the execution of the
Arbitration Subcontract Works or after their completion and whether before or after
repudiation or other termination of the Subcontract, then the Contractor or the
Subcontractor may give a notice of such dispute to the other party, in which
case the parties shall attempt for the next fifty-six days to settle such dispute
amicably before the commencement of arbitration or other agreed dispute
settlement procedure specified under Part II, Particular Conditions of the
Subcontract. Such notice shall state that it is made pursuant to this Clause.
Any dispute which has not been amicably settled within fifty­six days after
the day on which such notice is given shall be finally settled by one of the
following procedures as defined under Part II, Particular Conditions of the
Subcontract.

Disputes of any kind whatsoever arises between the Contractor and the
Subcontractor in connection with, or arising out of, the Subcontract or the
execution of the Subcontract Works, whether during the execution of the
Subcontract Works or after their completion and whether before or after
repudiation or other termination of the Subcontract shall not suspend or
impede and shall not have any impact execution or any other activities of
the main contract.
20.2 (A) Any dispute which has not been amicably settled within fifty-six days after
Dispute arising the day in which such notice is given where the Contractor and the Sub
between locals or
Contractor are both from the Country of the Main Contract (Ethiopia) or
Local and foreign
contractor and when one of the parties is from the country of the Main Contract, shall be
subcontractor first refereed to an adjudicator or Adjudicators to be appointed under the
Adjudication Rules of Addis Ababa Chamber of Commerce and Sectoral
Association Institute.
(B) Any dispute in respect of which the recommendation, if any , of the
Adjudicator or Adjudicators has not become final and binding shall finally
settled by court of the county of the main contract or Arbitration under the
Rules of Arbitration of Addis Ababa Chamber of Commerce & Sectoral
Association by one or more Arbitrators appointed under such Rules, as
agreed by the parties.
(C) Referral to Adjudication or Arbitration/court may be commenced prior to
or after completion of the Sub Contractor works provided that the
obligation of the Contractor or the Sub Contractor shall not be altered by
reason of the adjudication or the arbitration being constituted during the
progress of the Sub Contract works,

49
 20.3 (A) Any dispute which has not been amicably settled within sifty six days after the
Dispute arising day in which such notice is given where the Contractor and the Sub Contractor
Between Foreign are both from other countries which are/is not the country of the main contract,
contractor and the dispute may be referred to an Adjudicator/s, Dispute Review expert (DRE)
subcontractor
or Dispute Review Board (DRB) to be appointed under the Rules of any
institute or ad hock as the parties agree as indicated in Part II; the Particular
Condition of Contract .

(B) Any dispute in respect of which the recommendation if any, of the Adjudicator
Dispute Expert or Dispute Review Board has not become final and binding
shall be finally settled by Arbitration under the Rules of Arbitration as to be
agreed by the parties indicated in Part II; the Particular Conditions of Contract,

(C) Referral to Adjudication or Arbitration may be commenced prior to or after

completion of the Sub Contractor works provided that the obligation of the
Contractor or the Sub Contractor shall not be altered by reason of the
adjudication or the arbitration being constituted during the progress of the Sub
Contract works,

20.4 If a dispute of any kind whatsoever arises between the Employer and the Contractor
Dispute in in connection with, or arising out of, the Main Contract or the execution of the
Connection with Main Works, whether during the execution of the Main Works or after their
or Arising out of completion and whether before or after repudiation or other termination of the Main
Main Contract Contract, including any dispute as to any opinion, instruction, determination,
Touching or certificate or valuation of the Engineer, and the Contractor is of the opinion that
Concerning Sub­ such dispute touches or concerns the Subcontract Works and arbitration of such
contract Works dispute under the Main Contract commences, the Contractor may by notice require
that the Subcontractor provide such information and attend such meetings in
connection therewith as the Contractor may reasonably request.

Notices and Instructions

21.1 All notices to be given to either the Contractor or the Subcontractor and all
Giving of Notices instructions to be given to the Subcontractor under the terms of the Subcontract
and Instructions shall be sent by post, cable, telex or facsimile transmission to or left at the principal
place of business of the Contractor or Subcontractor, as the case may be, or such
other address as the Contractor or Subcontractor shall nominate for that purpose.

21.2 Either party may change a nominated address to another address in the country
Change of where the Subcontract Works are being executed by prior notice to the other party.
Address

Changes in Cost and Legislation

22.1 The amounts payable to the Subcontractor, in various currencies pursuant to Clause
Increase or 16, shall be adjusted in respect of the rise or fall in the cost of labour, Contractor’s
Decrease of Cost Equipment, Plant, materials, and other inputs to the Works, to the like extent that
such sums shall be added to or deducted from the Contract Price under the Main
Contract, but no further or otherwise as determined in Part II, the special conditions
of the subcontract.

50
 22.2 The base cost indices or prices shall be the base cost indices or prices of the Main
Base, Current and contract in the case where the subcontractor is assigned together with the Contractor
Provisional in the Main Contract or the current indices or prices of the Contractor under the
Indices Main Contract for the prevailing date on the day 28 days prior to the latest date for
submission of bids by the Subcontractor is considered as a base indices or price for
the subcontract. Current indices or prices shall be the Current indices or prices of
the main contract those prevailing on the day 28 days prior to the last day of the
period to which a particular Interim Payment Certificate is related.

22.3 If, on or after the date the Subcontract is executed, there occur in the country in
Subsequent which the Subcontract Works are being or are to be executed changes to any
Legislation National or State Statute, Ordinance, Decree or other Law or any regulation or bye­
law of any local or other duly constituted authority, or the introduction of any such
State Statute, Ordinance, Decree, Law, regulation or bye­law which causes
additional or reduced cost to the Subcontractor, other than under Sub­Clause 22.1,
in the execution of the Subcontract, such additional or reduced cost shall be agreed
between the Contractor and the Subcontractor, and shall be added to or deducted
from the Subcontract Price, to the like extent that such additional or reduced cost
shall be added to or deducted from the Contract Price under the Main Contract, but
no further.

Currency and Rates of Exchange

23.1 If, on or after the date the Subcontract is executed, the Government or authorised
Currency agency of the Government of the country in which the Subcontract Works are being
Restrictions or are to be executed imposes currency restrictions and/or transfer of currency
restrictions in relation to the currency or currencies in which the Subcontract Price
is to be paid, the Contractor shall reimburse any loss or damage to the
Subcontractor arising there from to the like extent that such loss or damage shall be
reimbursed to the Contractor under the Main Contract, but no further. Any other
rights or remedies to which the Subcontractor is entitled in such event shall not be
prejudiced.

23.2 Where the Subcontract provides for payment in whole or in part to be made to the
Rates of Exchange Subcontractor in foreign currency or currencies, such payment shall not be subject
to variations in the rate or rates of exchange between such specified foreign
currency or currencies and the currency of the country in which the Subcontract
Works are to be executed.

51
PART II ­ CONDITIONS OF PARTICULAR APPLICATION CONTENTS

52
PART II ­ CONDITIONS OF PARTICULAR APPLICATION CONTENTS

CLAUSE 1
Definitions 1.1 (a) (i) The Employer is (insert name)
(a) (ii) The Contractor is (insert name)
(a) (iv) The Engineer is (insert name)
(b)(i) The Main Contract between the Employer and the
Contractor is composed of the following contract documents
(insert particulars of the Main Contract)
( e) (ii) The Subcontract Works are (insert description,
including, 1f applicable, any matter of design or specification of
any part of the Permanent Works or of any Plant (as defined in
the Conditions of Main Contract) to be incorporated therein to
be provided in connection with any Provisional Sum (as
defined in the Conditions of Main Contract)

[If further definitions are essential, additions should be made to

the list.]

Performance 2.2 [Two example forms of performance security are given on pages
Security 6, 7 and 8 of Part II of the Federation Internationale des
Ingenieurs­Conseils' "Conditions of Contract for Works of Civil
Engineering Construction, Fourth Edition 1987 Reprinted 1992
with further amendments". The wording of the example forms
must be adapted to the Subcontract and may have to be varied to
comply with the law of the Subcontract which may require the
forms to be executed under seal.]

Programme to be 2.3 The time within which the programme shall he submitted by
Submitted by the Subcontractor shall be (insert number) days.
Subcontractor

CLAUSE 3
Language/s 3.1 The language is similar with the language of the mail contract

Governing Law 3.2 [If the governing law of the Subcontract is not the same as the
law of the country or state which applies to the Main Contract
and according to which the Main Contract is construed, this
should be indicated here as follows:]

The law is that in force i n (i nse rt t he n a me of t he c o unt ry )

53
Priority of 3.4
priority of part of the contract document is as follows:
Subcontract
Documents
(1) The Subcontract Agreement (if any);
(2) The Contractor's Letter of Acceptance;
(3) Minutes if pre contract award discussion (if any)
(4) Appendix to subcontractor’s offer
(5) The Subcontractor's Offer;
(6) Part II of the Conditions of Subcontract;
(7) Part I of the Conditions of Subcontract; and
(8) the subcontract specification
(9) Subcontract Drawings
(10) Priced Bill of Quantities or Price Schedule
(11) Any other document forming part of the Subcontract.

CLAUSE 4
Possible Effects of 4.4 If the Subcontractor is delayed in the execution of the
Subcontractor's Subcontract Works by circumstances which do not entitle the
Breaches of Subcontractor to an extension of the Subcontractor's Time for
Subcontract Completion then this would ordinarily be a breach of the
Subcontract. If as a result of such breach the Contractor became
liable for liquidated damages under the Main Contract the
Subcontractor would, under this Sub­Clause 4.4, be liable to
indemnify the Contractor against the same.

[The parties may wish to agree on a limit to the Subcontractor's

liability under this Sub­Clause].

CLAUSE 5
Subcontractor's Use 5.1
of Temporary
Works
Subcontractor's 5.2 The Contractor's Equipment and/or other facilities (if any) for
Use of Contractor's Subcontractor's use in common with other subcontractors are
Equipment and/or (insert description and specify terms and conditions of use, if
Other Facilities (if any)
Any) in Common
with Other
Subcontractors

Subcontractor's 5.3 The Contractor's Equipment and/or other facilities for

Exclusive Use of Subcontractor's exclusive use are (insert description and specify
Contractor's terms and conditions of use, if any)
Equipment and/or
Other Facilities (if
Any)

54
 CLAUSE 6
Working Hours on 6.1 The working hours of the Contractor, to be observed by the
Site; Subcontractor, is as per the main contract
Subcontractor's
Compliance with
Rules and
Regulations
Availability of Site 6.2 [If the Contractor is bound to give the Subcontractor exclusive
to Subcontract or control of any part of the Site, this should be stated here.]
and Access to Site
CLAUSE12
Incorporation by 12.1 [The parties may wish to agree on whether, and the extent to
References which, the Contractor shall assist the Subcontractor in respect of
customs clearance and re­export of Subcontractor’s Equipment.]

CLAUSE14

Subcontractor's 14.2 The period and terms as agreed by the subcontractor and the
Obligations after Contractor should be stated here.
Taking­Over
CLAUSE15
Subcontractor's 15.1 The risks insured (or the insurances effected) by the Subcontractor
Obligation to Insure are (insert description, including sums and names ( of
beneficiaries)

Contractor's 15.2 The Contractor's policy of insurance is (insert description)

Obligation to
Insure; Subcontract
Works at Sub­
contractor's Risk

CLAUSE20
Amicable 20.2/ [The Contractor and the subcontractor shall discussed and agreed
Settlement and 20.3 the dispute resolution procedure based on the Part I, the General
Arbitration Condition of Contract and the detail shall be discussed here.]

55
 SUBCONTRACTOR'S OFFER

NAMEOFSUBCONTRAC *--------------

Gentlemen,

1. Having examined the Conditions of Subcontract, the Subcontract Specification, the

Subcontract Drawings, and the Subcontract Bill of Quantities and Addenda Nos­­­
­­­­­­­­­­­­for the execution of the above­named Subcontract Works, we, the
undersigned, offer to execute and complete such Works and remedy any defects
therein in conformity with the Conditions of Subcontract, the Subcontract
Specification, the Subcontract Drawings, the Subcontract Bill of Quantities and
Addenda for the sum of _

or such other sum as may be ascertained in accordance with the said Conditions.

2. We acknowledge that the Appendix hereto forms part of our Offer.

3. We undertake, if our Offer is accepted, to commence the Subcontract Works within 14

days, or such other period as may be agreed in writing, after the receipt of your notice
to commence, and to complete the whole of the Subcontract Works comprised in the
Subcontract within the time stated in the Appendix hereto.
4. We agree to abide by this Offer for the period of * days from the date
fixed for receiving the same and it shall remain binding upon us and may be accepted at
any time before the expiration of that period.

5. Unless and until a formal Subcontract Agreement is prepared and executed this Offer,
together with your written acceptance thereof, shall constitute a binding contract
between us.
6. We understand that you are not bound to accept the lowest or any offer you may
receive.
Dated this Signature day of _ 199

in the capacity of _ duly authorised to sign offers for and on behalf of

_

(IN BLOCK CAPITALS)

Address _

Witness _

Address _

Occupation _
(Note: All details marked * shall be inserted before issue of Offer
documents.)
 APPENDIX TO SUBCONTRACTOR'S OFFER

Sub­Clause

Time for issue of notice to 7.1 ­­­­­­­­­­­­­­­­­­­ days

commence

Subcontractor's Time for 7.1 ­­­­­­­­­­­­­­­­­­­ days

Completion

Percentage of Retention ... 16.3 ­­­­­­­­­­­­ per cent

Minimum amount of 16.3 (a) -----------

Statement

Performance Guarantee (if -----% of the Sub-Contract Price

any)

Release of Performance Within 28 days after the issuance

Security (if any) of Defects Liability Certificate.

Repayment of Advance
Payment (if any)

Defect Liability Period

Percentage of Retention
 SUBCONTRACT AGREEMENT

This Subcontract Agreement made the­­­­­­­­­

day of­­­­­­­­­­­­­­­­­­­­20

Between _

(hereinafter called the

"Contractor") with its office in, Addis Ababa, Tel ______________, Fax
_________________ of the one part and of _
(hereinafter called the "Subcontractor") with its office in, Addis Ababa, Tel
______________, Fax __________ of the other part

Whereas the Contractor is desirous that certain Subcontract Works should be

executed by the Subcontractor, viz and has accepted a Subcontractor's Offer for
the execution and completion of such Subcontract Works and the remedying of any
defects therein

Now this Subcontract Agreement witnesseth as follows:

1. In this Subcontract Agreement words and expressions shall have the same meanings
as are respectively assigned to them in the Conditions of Subcontract hereinafter
referred to.

2. The following documents shall be deemed to form and be read and construed as part
of this Subcontract Agreement, viz:
1. The Subcontract Agreement (if any);
2. The Contractor's Letter of Acceptance;
3. Minutes if pre contract award discussion (if any)
4. Appendix to subcontractor’s offer
5. The Subcontractor's Offer;
6. Part II of the Conditions of Subcontract;
7. Part I of the Conditions of Subcontract; and
8. the subcontract specification
9. Subcontract Drawings
10. Priced Bill of Quantities or Price Schedule
11. Any other document forming part of the Subcontract

3. In consideration of the payments to be made by the Contractor to the Subcontractor

as hereinafter mentioned the Subcontractor hereby covenants with the Contractor to
execute and complete the Subcontract Works and remedy any defects therein in
 conformity in all respects with the provisions of the Subcontract.

4. The Contractor hereby covenants to pay the Subcontractor in consideration of the

execution and completion of the Subcontract Works and the remedying of any defects
therein the Subcontract Price or such other sum as may become payable under the
provisions of the Subcontract at the times and in the manner prescribed by the
Subcontract.

In Witness Whereof the parties hereto have caused this Subcontract Agreement to
be executed the day and year first before written in accordance with the laws of the
Main Contract County.

For and on behalf of [[insert name of Contractor]

[Authorized Representative]

In the presence of

Name _______________________

In the capacity of _______________________

Signature _______________________

In the presence of

Name _______________________

In the capacity of _______________________

Signature _______________________
For and on behalf of [insert name of Subcontractor]

________________________________________________

[Authorized Representative]

In the presence of

Name _______________________

In the capacity of _______________________

Signature _______________________

In the presence of

Name _______________________

In the capacity of _______________________

Signature ______________________ in the presence of:

6. Reference

1. Ayalew, T., Dakhli, Z. and Lafhaj, Z. (2016). Assessment on Performance and Challenges of
Ethiopian Construction industry. Journal of Architecture and Civil Engineering Volume 2 ~
Issue 11 pp.: 01­11
2. Talukhaba AA and Mapatha M CIB world Building Congress, Selection Framework for
Domestic Subcontractors by Contractors in the Construction Industry School of Construction
Economics and Management Faculty of Engineering and Built Environment University of
the Witwatestand South Africa
3. Hakseerver, A.M, Kim H.S and Pickering, G, 1995, collaborative long term relationship in
UK construction industry: a lost opportunity in proceeding of the 11th ARCOM Conference,
University of York, UK
4. Oluwoye, J.O Macleannan H.M and Caolan C.G, 1996 Modeling building subcontractor
performance: a case stdy of the NSW construction industry. In proceeding of CIB working
commission 55 international symposium, Zagreb, Croatia,
5. Information on Subcontracting/Subletting parts of works including sample contract
agreements from CMD, EAST, West, South, Design and Build and North Regions
6. Chamara, KGA, S. and Harshini, M. (2015). Evaluating Subcontractor Performance in
Construction Industry. Paper presented at the 6th International Conference on Structural
Engineering and Construction Management, Kandy, Sirlanka.
7. Choudhry, R., Hinze, J., ASCE, M., Arshad, M. and Gabriel, H. (2012). Subcontracting
Practices in the Construction Industry of Pakistan. Journal of Construction Engineering and
Management. Volume 132~ Issue 12
8. Dykstra, A. (2011). Construction Project Management: A Complete Introduction. San
Francisco: Kirshner publishing company.
9. ERA. (2016). Annual road projects performance report .Available at:http://www.era.gov.et/
10. Hair, J. F,Black, W.C, Babin, B. J andAnderson, R. E (2010). Multivariate Data Analysis: A
Global Perspective, 7th edition. Published by Pearson Education
11. Kaliba, C. (2010). Cost Escalation, Schedule Overruns and Quality Shortfalls On
Construction Projects. Unpublished dissertation, University of Zambia
12. Lavelle, D., Hendry and Steel, G. (2007). The selection of subcontractors: Is price the major
factor? Paper presented at the 23rd Annual ARCOM Conference, 3­5 September 2007,
Belfast.
13. Lebas, D.L. (2014). Entering into Construction Contracts and Subcontracts, Construction
Law Seminar, Austin, Texas. [14] Lin, L. (2011). Supply chain quality management for
subcontracting systems in the construction industry. MEng thesis. Wollongong, New South
Wales: University of Wollongong.