Professional Documents
Culture Documents
By
Ghanta Surender,M.Tech.
Former Director(ITC) &
Senior Faculty Member ,
WALAM TARI ,HYDERABAD 1
TYPES OF CONTRACTS
• ITEM RATE CONTRACT
• The dept will call for tenders, indicating the details of
items to be executed, their quantities, rates as per
dept estimate.
• The bidder will quote the item wise rates.
• The work will be awarded to the bidder who quotes
the lowest rates, and the agreement is entered.
• The department will furnish all the designs,
drawings, specifications for each item of work to be
executed. The contractor has to execute the work
accordingly.
• The payment will be made, for the work done , as per
the item wise rates quoted by the contractor,.
Lump Sum (L.S) Contract
The tenders are called, indicating the details of
items of works to be executed, their quantities
and rates, and the total cost of the project.
The contractor has to quote a lump sum price, in
the shape of + or - % (excess or less) over the
estimated cost of the project.
Item wise rates are not applicable.
Work is awarded to the lowest bidder.
The dept will furnish all the designs, drawings,
specifications for the works to be executed.
Payment is made for the work done, based on the
estimated rates, plus or minus tender premium.
The work should be completed in all respects within
the time frame fixed by the dept.
•
E.P.C (Engineering Procurement Construction)
Contract
• The tenders are called by specifying the detailed scope
of work / components of works to be executed.
Quantities, rates, cost of the project etc are NOT
furnished in the tender.
• The contractor himself has to investigate, prepare
designs & drawings, estimates and quote a lump sum
price to complete the work, in all respects.
• The work will be awarded to the lowest bidder.
• The contractor will furnish the designs and drawings
of all components to be executed for approval of the
department
• The contractor will furnish the detailed estimates
showing component wise cost, for the total amount
quoted.
• The contractor will furnish , month wise physical /
financial programme of construction for approval of
the dept.
• Payment is arranged based on the stage wise progress
achieved ( not based on the quantities).
B.O.T( Build Operate Transfer) Contract
• The tenders are called specifying the details of work,
period of operation, the cess / tax leviable etc, terms
and conditions
• The bidder has to construct the project at his cost &
operate it for the specified period and then transfer
the project to Government .
• During the operation period, the bidder can collect the
cess / tax from the beneficiaries of the project, at the
rates fixed / accepted by the govt.
• The work will be awarded to the bidder who offers
lowest cess/taxes chargeable on the user.
• The work is to be executed as per the designs, drawing
and specifications approved by the dept.
• No cost is payable to the contractor,
• Bridges on major rivers, Bypass roads, Highways, mini
hydel projects, commercial shopping complexes etc
AGREEMENT
• On award of the work, an agreement will be entered between the
department and the contractor.
• The bid document signed and filed by the lowest bidder will
become the agreement signed by both the parties.
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Thank you
• Mail your queries if any to
• ghantasurender@yahoo.com
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Price Adjustment
Price adjustment is allowed on cement, steel,
pipes manufacturing materials, Diesel
Escalation is paid if the prices get increased
by more than 5% of base rates.
If the prices fall below 95% of base rates
recovery is made.
The price adjustment is made on monthly
basis based on the rates published by the
dept
Escalation should not be allowed where
liquidated damages are levied and extension
of time granted for reason attributable to
contractor.
Price Adjustment
For Cement / Steel
Vc = R x (Ci – Co )
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Price Adjustment for POL
• V= Pf /100 X R X (Fi -Fo) / Fo
• Where
• V = Price adjustment to be made for Increase /
decrease in the cost of POL.
• R = Value of work done during the period under
consideration
• Pf = % of fuel component of the work to be arrived
at as per AP standard data and approved by the
competent authority.
• Fo = retail price of HSD at the pump nearest to the
work spot on the last day of filling bids + 5 %
• Fi = retails price of HSD at the pump nearest to the
work spot during the period under consideration.
• The value of work done R shall exclude Seigniorage
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charges, VAT and all other over head charges.
Changes in the Quantities (EPC)
▪ The Contractor is bound to execute all supplemental
works that are found essential, incidental and
inevitable for overall completion of the work at no
extra cost to the employer, if not mentioned
otherwise
▪ If specific quantities are mentioned in the BOQ of the
agreement, any increase / decrease in the quantities
executed will be paid or deducted, if there is a
clause to that effect in the agreement
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Liquidated Damages
Time is the essence of any contract. The work
should be completed with in the time frame
fixed.
If the contractor fails to complete the works
within the stipulated periods of individual
mile stones the Superintending Engineer will
deduct one twentieth, of one percent of
respective mile stone value per calendar day
or part of the day for the period of delays
subject to a maximum of 10% of the contract
value.
The maximum amount of liquidated damages
for the whole of the works is ten percent of
final contract price.
Mobilization Advance:
Mobilization Advance to the extent of 10% of the
contract value is payable against BG in the
fallowing
a) 1 % after concluding Agreement
b) 4 % after completion of investigation &designs
• c) 5% for purchase of machinery/ equipment at
100% cost for new machinery and 50% for old
machinery brought to site and in working
condition.
• The advance shall bear an interest .
• Recovery of advance with interest shall
commence in the next interim payment following
that in which the total of work done reached 10%
of the contract amount and shall be made at the
rate of 20% of amount of all interim payments.
VAT:
– Value added Tax (VAT) during the currency of the contract deduction
towards AP-VAT Act 2005 according to which tax @ 5% on total value
has to be deducted at source, while making payments to the contractor
as per Memo No. 14420/R.I(2)/08-2, Dated: 17.12.2008 of T R&B (R.I)
Department.
– The contractor should produce a valid VAT clearance certificate before
the payment of the final bill, otherwise payment to the contractor will be
withheld.
– The following clause is incorporated as per the Government instructions
given in G.O.Ms. No: 141, T (R&B) Department, Dated: 27-07-2006.
• The total amount towards component of VAT at 5% is shown in PART”B” of
the estimate. This VAT component loaded in the estimate (PART"B") shall
be added in each bill of the contractors who opt for composition scheme
and recovered.
• In respect of those contractors who do not opt for composition scheme, the
VAT component loaded in the estimate shall not be released to them with
their bills. However VAT shall be recovered based on which they have to
claim adjustment through their returns submitted to their respective
assessing authorities.
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Seigniorage charges:
– Seigniorage charges will be recovered as per G.O.Ms.No. 198,
Industries & Commerce (MI) Department, Dated: 13-08-2009 from
the work bills of the contract, based on the theoretical requirement
of materials at the following rates.
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PERSONNEL
•
– The minimum number of the technical
personnel to be engaged by the contractor
and their qualifications shall be as per the
Contract Data. The wages of these personnel
will be payable by the contractor as per
minimum wages act/ SSR. If contractor fails to
engage technical personnel as per
agreement, penalty at double the rate payable
will be recovered from contractor’s bill.
• 30
– No contractor shall employ any person who is
under the age of 14 years.
– No contractor shall employ donkeys or other
animals with breaching of string or thin rope.
The breaching must be at least three inches
wide and should be of tape.
•
– No animal suffering from sores, lameness or
emancipation or which is immature shall be
employed on the work.
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•
INSURANCE
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Liquidated damages
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• (e) Contract Labour (Regulation & Abolition) Act 1970: The Act provides for certain
welfare measures to be provided by the contractor to contract labour and in case the
Contractor fails to provide, the same are required to be provided by the Principal
Department by Law. The Principal Department is required to take certificate of
Registration and the contractor is required to take license from the designated
Officer. The Act is applicable to the establishments or Contractor of Principal
Department if they employ 20 or more contract labour.
•
• (f) Minimum wages Act 1948: The Department is supposed to pay not less
than the Minimum wages fixed by appropriate Government as per provisions of the
Act if the employment is a scheduled employment construction of Buildings, Roads,
Runways are scheduled employments.
•
• (g) Payment of wages Act 1936: It lays down as to by what date the wages are to
be paid, when it will be paid and what deductions can be made form the wages of the
workers.
•
• (h) Equal Remuneration Act 1979: The Act provides for payment of equal wages
for work of equal nature to Male or Female workers and for not making discrimination
against Female employee in the matters of transfers, training and promotions etc.
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• Payment of Bonus Act 1965:The Act Is applicable to all establishments employing 20 or more
employees. The Act provides for payment of annual bonus subject to a minimum of 8.33% of
wages and maximum of 20% of wages to employees drawing Rs. 3500/- per month or less. The
bonus to be paid to employees getting Rs.2500/- per months or above and upto Rs.3500/- per
month shall be worked out by taking wages as Rs.2500/- per monthly only. The Act does not
apply to certain establishments. The newly set-up establishments are exempted for five years in
certain circumstances. Some of the State Governments have reduced the employment size from
20 to 10 for the purpose of applicability of this Act.
•
• j) Industrial Disputes Act 1947: The Act lays down the machinery and procedure for
resolution of Industrial disputes, in what situations a strike or lock- out becomes illegal and what
are the requirements for laying off or retrenching the employees or closing down the
establishment.
•
• (k) Industrial Employment (Standing Orders) Act 1946: It is applicable to all
establishments employing 100 or more workmen (employment size reduced by some of the State
and Central Government to 50). The Act provides for laying down rules governing the conditions
of employment by the Department on matters provided in the Act and get the same certified by the
designated Authority.
•
• (l) Trade Unions Act 1926: The Act lays down the procedure for registration of
trade unions of workmen and Departments. The Trade Unions registered under the act have been
given certain immunities from civil and criminal liabilities.
•
• (m) Child Labour (Prohibition & Regulation) Act 1986: The Act prohibits employment of
children below 14 years of age in certain occupations and processes and provides for regulation38
of employment of children in all other occupations and processes, Employment Child Labour is
prohibited in Building and Construction Industry
• (n) Inter-State Migrant workmen’s (Regulation of Employment & Conditions of service) Act
1979: The Act applicable to an establishment, which employs 5 or more inter-state migrant
workmen through an intermediary (who has recruited workmen in one state for employment in the
establishment situated in another State). The inter State migrant workmen, in an establishment to
which this Act becomes applicable, are required to be provided certain facilities such as housing,
medical aid, travelling expenses from home upto the establishment and back, etc.
•
• (o) The Building and Other Construction workers (regulation of Employment and conditions of
service) Act 1996 and the Cess Act of 1996: All the establishments who carryon any building or
other construction work and employs 10 or more workers are covered under this Act. All such
establishments are required to pay cess at the rate not exceeding 2% of the cost of construction
as may be modified by the Government. The Department of the establishment is required to
provide safety measures at the Building or construction work and other welfare measures, such as
Canteens, First-aid facilities, Ambulance, Housing accommodations for workers near the work
place etc. The Department to whom the Act applies has to obtain a registration certificate from the
Registering Officer appointed by the Government.
•
• (p) Factories Act 1948: The Act lays down the procedure for approval of plans before
setting up a factory, health and safety provisions, welfare provisions, working hours, annual
earned leave and rendering information regarding accidents or dangerous occurrences to
designated authorities. It is applicable to premises employing 10 person or more with aid of power
or 20 or more persons without the aid of power engaged in manufacturing process. 39
•
CHECKLIST TO ACOMPANY THE TENDER
•
• 1 Copy of Contractors valid Registration under appropriate Class with Government of
Andhra Pradesh.
• 2 Copy of Permanent Account Number (PAN) Card and copy of Latest Income tax
returns for the year 2012-13 submitted along with proof of receipt.
• 3 Registration copy under AP.VAT Act 2005 i.e., Taxpayer Identification Number
along with VAT clearance certificate in the prescribed proforma
• 4 Details of value of Civil Engineering works executed in the last 10 financial years in
the Bidder’s name in Statement-I with supporting certificates.
• 5 Details of similar works completed as Prime Contractor (in the same name) during
the last ten financial Years in Statement-II with supporting certificates.
• 6 Quantities of work executed as Prime Contractor (in the same name) in the last 10
financial years - in Statement–III with supporting certificates.
• 7 Details of existing commitments i.e., work on hand in Statement-IV with Supporting
Certificates.
• 8 Availability of critical equipment in Statement–V.
• 9 Availability of Key personnel in Statement.VI.
• 10 Litigation history in Statement–VII.
• 11 Proof of liquid assets in the shape of Solvency certificates etc., for the required
amount.
• 12 List of certificates enclosed
•
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•
• Insurance:
– The Contractor shall provide, in the joint names of the
Department and the contractor, insurance cover from the Start
Date to the end of the Defects Liability Period i.e., 24 months
after completion for the following events which are due to the
Contractor’s risks.
•
• loss of or damage to the Works, Plant and Materials;
• loss of or damage to the Equipment;
• loss of or damage of property in connection with the Contract; and
• personal injury or death of persons employed for construction.
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