opt: Tdi Topic: Tendering 1. Can you describe different tendering methods for public works projects? | Open tendering: + Tender invitations are published in the Govemment of the Hong Kong Administrative Region Gazeiéon the Internet, and if necessary, inthe locel ress an selected overseas joural. For covered by WTO, the procuring departments should also consider notifying consulates and overseas trade commissions ofthe tender invitations + All nterested supplierslcontractors ae five to submit tenders "Selective tendering: — ~ Tender invitations are published in the Govemment of the Hong Kong ‘Administrative Region Gazette, or are sent by leter 10 all supplirscontractors on the relevant approved. ists of qualified contractors established and approved forthe purpose of selective codeine ae ent on Sora ~ For procurements covered by the WTO GPA, suppliew/contacors note Ff ge ‘already on the lists may also be considered provided there is sufficient ime Bb ie 7 to complet the qualification procedure BX ~ Suppliers/ontrctors who wish to apply for admission may approach Government Supplies Department (GSD) or ETWB. Normally, they are required to meet certain qualification criteria or technical assessment to ensure suitability: Applications for inclusion may be submited at sny time Cal ‘and will be dealt with expeditiously, Up-to-date lists and the method of pplication for inclusion inthe lists are published inthe Government ofthe Hong Kong Special Administrative Region Gazete annually and are reviewed regularly. Prequalified tendering: — = Tender invitations are sent by Ieter to those prequalified supplirs/contractors approved by the Secretary fr the Treasuy (S for Ts. + Invitations to apply for prequalifcation may take the form of open tendering or selective tendering and the respective procedures will apply. = Projects with the following specialty may be necessary 10 adopt this tendering method: (2) Pre-testing of equipment is required to determine its suitability,ope: Todering (2) Amextreme complex project nature; G) High value projects; (4) Very seid completion programmes; (5). Ahigh level of coordination and technical expertise are required; or (©) Non-standard forms of contract are involved, e.g. BOT, D&B. ‘Single or resriete tendering (limited tendering as specified in WTO GPA): = Tender invitations are sent to only one or & numberof supplierscontractors approved by the S for Tey or the Director of Goverament Supplies. This procedure is only used when circumstances do not permit open tendering. ~ Projects with the following specialty may be necessary to adopt this tendering method: (1) Extreme urgeney o security: @) For proprietary products or for reasons of compatibility; or @)_No response to an open tender and selective tender. Selection of tendering methods: = As laid down in the Stores and Procurement Regulations (SPR), ‘government procurement exceeding HKSSmillion (for construction and ‘engineering services) in value is nonmally done by the use of open and ‘competitive tendering procedures s0 a o obiain the best value for money ~ Limited or restitive tendering procedures are, inline with the WTO GPA. provisions, only permissible under specified exceptional circumstances = Where the nature ofthe contract (Such as a contract that is time critical or ‘one that requires particularly high levels of skills and proven reliability) icttes that tenders have to be invited from qualified supplieslcontractors, selective tendering or prequalified tendering may be sed. = For most of the PWP contacts, selective tendering is used. What ar the requirements of WTO on government procurement? History: = 0 20 May 1997, Hong Keng acceded to the World Trade Organisation Agreement on Government Procurement (WTO GPA). ~ Prior to tht, Hong Kong had been a signatory to the Agreement on Goverment Procurement negoited under the General Agrecment on Po twsitts and Trade (GATT). From 1 July 1997 onwards, Hong Kong has continued tobe a signatory i the name of Hong Kong, Cina.pie: Tendering Objectives of WTO GPA. = The objective ofthe WTO GPA is ta provide for open and fair competition amongst domestic and foreign supplies and service providers + To this end, the Agreement presribes a set of requirements regarding non-discriminsiory treatment of goods, services and service suppliers, ‘qualification of supplies, tender procedures, tender specifications and challenge procedures. Applicaton: = The WTO GPA applies to the fllowing procurement entitles in Hong Kong, Cina for contracts above the values specified: () For all government bureaux and departments, contracts value sbove 130,000 SDR’ for procurement of products and services; and 5,000,000 SDR for construction services. (@) For non-government public bodies including the Housing Authority and Housing Department, the Hospital Authority, the Airport Authority, the MIR Corporation Limited and the Kowlooa-Canton Ralivway Corporation, contracts value above 400,000 SDR for procurement of products and services; and 5,000,000 SDR for construction services. 3. Can you describe briefly the tendering procedures? Preparation of tender documents: ~The functions of the tender documents are to providevall-necesary= _ information to assist the bidders to prepare their tenders, and to form the & basis for subsequent contract documents. . ~ _ Indrawing up the tender specifications for goods or services to be procured, Gator ets Certainty 1? Reduces conf lis bedatir latvocter amd. Uleggaey PP Sreitese busldability P>Allows Foie VALUE bab INE Ria rescutt epportantties of tlle ipetit. be ras TEAC Prot jtiano P fonk alityTYPES OF CONSTRUCTION CONTRACTS, CONSTRUCTION CONTRACTS Contract Defin ‘A.From a Legal Point of View ‘A mutual agreement between two or more parties that something shall be done, an agreement enforceable at law B. According to FIDIC Contract means the General Conditions, the Supplementary Conditions, the Specifications, the Drawings, the Bill of Quantities, the Tender, the Letter of Acceptance, the Contract Agreement, and such further documents as may be expressly incorporated in the Letter of Acceptance or Contract Agreement. dian ay eta yy aS Say yy Salad ag 2D le a il BD ede aad cs al ily gly Sad Aly GID J fy Leal Gin ey 5 ell hel a ii J Gis) A digas C. According to Method of Payment ‘The agreement of how the owner will pay the contractor for work performed such as a lump-sum or cost-plus payment. ——— "De Hoy ante NTYPES OF CONSTRUCTION CONTRACTS ‘Two broad categories: > Price Given in Advance Contracts (Priced-based Contracts) > Cost Reimbursement Contracts (Cost-based Contracts) Factors Influencing the Choice of the Type of Contract > The appropriateness for providing an adequate incentive for efficient performance by the contractor The ability to introduce changes vy The allocation of risks 7 ‘The start and completion date of the project 1, Lump Sum Contact Sometimes called Drawings and Specifications Contract ) Main Aspects of Lump Sum Contract 1. The contractor agrees to perform a stipulated job of work in exchange for a fixed sum of money. In other words a single tendered price is given for the completion of a specified work to the satisfaction of the client by a certain date. 2. Payment may be staged at intervals of time on the completion of 3. Useful for construction works: > that can be accurately and completely described at the time of bidding such as residential and building construction,> when limited variation is needed, > when level of risks is low and quantifiable, and > when the client does not wish to be involved in the management of his project. 4. The contractor is responsible for preparing his B.0.Q. ic. determination of work items, description of work items, obtaining his, ‘own quantity form drawings and specifications and taking the responsibility for the accuracy of the estimated quantities. 5. The responsibility is on the contractor to include in his price everything necessary for carrying out the work >) Advantages of Lump Sum Contract 1. The final price is known, by the owner, before the work commences. 2. The contractor has more incentive to reduce his cost to increase the profit. 3. The contractor hopes to complete the job as quickly as possible, to minimize overhead, to maximize profit and to move to the next Job. ©) Disadvantages of Lump Sum Contract Pr) 1. A great deal of work should be done by the contractors prior we ae preparing the estimate. It is wasteful of a skilled estimator’s time, J %*” 2. Changes in drawings and specifications can be very expensive and ) 22 5ct source of trouble. In other words the contract has very limited [ /*;" flexibility for design changes. J 7 "Dr Haryana WeTYPES OF CONSTRUCTION CO 3. The contractor carries much of the risks. The tendered price may include high risk contingency, éntedlor Hgh pike ceathgeanty 4, Competent contractors may decide not to bid to avoid a high-risk lump sum contract, Competent Contacts X pid ~ 68 Admeasurement Contract ctete 4 faces 1. Includes Bill of Quantities Contract and Schedule of Rates Contract. 2. Payments made (omy) for uapig of wor somblees and, measured during the month, 142% & 16 BAZ4~ BHAHS 3. The client can introduce variations in the work. —> ih ve 4, The contractor can claim additional payment for any changes in the work content. J clalyn 94 A102 2 Fader price] 5. Tender pric “Clam VO is usually increased by variations and claims.) 2. Contract based on a Bill of Quantities Sometimes called Unit Price Contract a) Main Aspects of Unit Price Contract 1. Items of work of the contract are specified with estimated quantities in the Bills of Quantities. > F821 4/ables 2, Estimated quantities are surveyed by Architect/Engineer. (lng EB Haced poate, 7 "De ony an EaterTYPES OF CONSTRUCTION CONTRACTS fortud. 3. Contractors enter unit prices against the estimated quantities of work” fate / geil 4. The contract is based on estimated quantities of work items and unit price for each of these work items. 5. Payment is made on the basis of units of work actually done and ‘measured in the field multiplied by the unit prices. Ls Zagby X unitprive 6, Re-determination of unit prices when substantial quantity deviatis ‘occur is stipulated in contract conditions. Lf, quant 7. Useful on projects where the nature of the work is well defined, but the quantities of work cannot be accurately determined in advance of construction. Suitable for highways, dams, airports... ) Advantages of Unit Price Contract 7 4 1. Saving the heavy cost of preparing many bills of quantities by the contractors. ast, ppt BQ 2. Fair basis for competition. 2. 3. In comparing with lump-sum contract, che OFS boty » Changes in contract documents can be made easily by the owner. > Lower tisk for contractor. fA. Rick 18 fomp Sum. ©) Disadvantages of Unit Price Contract, 1. The exact final price of the project is not known to the owner until the completion of the project. A> 74° Fx fh K Lothel 6) EeTYPES OF CONSTRUCTION CONTRACTS 3. Schedule of Rates Contract ) Main Aspects of Schedule of Rates Contract 1A Schedule of the work items (without quantities) (or inaccurate quantities; possibly with upper and lower probable limits) is prepared by the owner and /or A/E to be rated by the contractor. 2. The descriptions of items and the units of measurement are similar to those used in a normal B.O.Q., but no quantities are given, 3. It is common for separate rates to be quoted for labor, plant, and ‘materials. 4, Used for repair_and maintenance works or under conditions of urgency. — ») Advantages of Schedule of Rates Contract [) “ 1, Work can be commenced e: lier than if a full B.O.Q has been prepared. Ler ford f toe ©) Disadvantage of Schedule of Rates Contract lo 1. No indication of the final price of the works. —> M/P Fo // contractor submitted the most 2. Very difficult to determine whit 7 the most, which Gnteter 2 - {8 advantageous offer. —s di 3. May cause financial problems to the public owners. ~y {7 Rdetom fae eg pli a5 bl date This form is unsatisfactory for public owners and a B.O.O form is to be desired, 7 "br Ty and shoreCost Reimbursement Contracts a) Main Aspects of Cost Reimbursement Contract, 1 ‘The contractor will be reimbursed for all actual costs plus an agreed fee to cover his services (overhead and profit). 22s¢ + agued te ‘The contractor must make all his records and accounts available for inspeetion by the client or by some agreed neutral third party. BZ Ae cos ‘The fee can be designated as: > A fixed percentage of the cost of the work. A fixed fee A fixed fee with a guaranteed top price. A fixed fee with bonus. vv vv A fixed fee with an arrangement for sharing any cost saving. . Suitable: 4 > when the requirements of the client are Vaguesshot chal) eopaesce! > when it is desirable for design to proceed concurrenily with construction es?gn ¢ fackbuctia — he for emergency projects, repairs, maintenance work, and 9 alterations, v for project with unknown technologies or major changes. where the contractor possesses a special ability ‘when the client wishes to be involved in contract management. Confidential processes. vv 7 "Be Hey tht EonTYPES OF CONSTRUCTION CONTRACTS 5. Topies that should be negotiated between owner and contractor before signing a cost reimbursement contract include: Subcontract-letting, Determination and payment of fee. Accounting methods. Overheads (site and office), vvy v b) Advantages of Cost Reimbursement Contract 1. Start construction without waiting for the whole set of drawings and specifications. % +4 fuv'g 4 ject 244 NGSCA 2. More flexibility for the owner to make changes as work progresses Lat | 3. Draw the contractor expertise during d ©) Disadvantages of Cost Reimbursement Contract, 1. It is difficult to predict the final cost and the di ‘may cause financial problems to the owner. tribution of it, which 2, Contractor pays less attention to cost control. > AV Saye m 4, Cost plus Percentage of Cost a) Main Aspects of Cost plus Percentage of Cost 1. The contractor is reimbursed for all his costs with a fixed % age of costs to cover his services. 2. Projectisite overheads may be covered by the %age or computed as one of the costs.b) Advantages of Cost plus Percentage of Cost, 1, Construction can start before design is completed. 2. If the contractor is efficient in the utilization of resources then the cost to the client should represent a fair price for the work undertaken, ©) Disadvantages of Cost plus Percentage of Cost 1. The project total cost is completely unknown before the project start. 2. No incentive for the contractor to be efficient in his use of labors, materials or equipments. 3. Minimum e' the profit-> 4, Owner must exeroise tight cost Control; which may be difficult and/or costly, 5. Cost plus Fixed Fee a) Main Aspects of Cost plus Fixed Fee 1. The owner pays all costs of construction with a fixed sum of money. The fee is fixed and does not fluctuate with the actual cost of the project. 2. The work must be fairly well defined by the owner. ») Advantages of Cost plus Fixed Fee 1. Theres no incentive forthe contactor to inflate costs, 7 ME tn tlaLe face 7 "De Hoy anf toriTYPES OF CONSTRUCTION CONTRACTS 2. There is incentive for the contractor to complete the work as quickly as possible since his fee remajns constant fincantie 272 5 c) Disadvantages of Cost plus Fixed Fee 1. Major variations create problems. The fee must be re-negotiated to jations. Avo EP ~ cox 2. The speed of commencing the work is undermined since before a fee ccan be agreed a fairly detailed description of work must be made, take account of such 6. Target Cost with Variable Fees Contract a) Main Aspects of Target Cost Contract 1. The contractor and owner agree to a target estimate of construction. 2. Bonus or penalty arrangements are tied to this target figure. 3. The work must have a fairly definite nature. Drawings and specifications must be sufficiently developed to enable a reasonably accurate cost to be determined. 4. Cost target > sharing of savings 5. Time target > fixed sum of money for each day. b) Advantages of Target Cost Contract 1. There is an incentive to carry out the work as quickly and as economically as possible. 4 jal 2. The elient also stands to benefit through the contactor’ efficiency. 7 "Dr Hany ted EarTYPES OF CONSTRUCTION CONTRACTS c) Disadvantages of Target Cost Contract 1. Difficulties may arise in agreeing on a revised target cost if there are 1ajot variations or cost inflation, § (9. 2> Cast BF 2. A tight cost Control must be exercised, which may be difficult and/or costly. 7. Guaranteed Maximum Price Contract (GMP) 1. The contractor guarantees that he will construct the project in full accordance with the drawings and specifications and that the price to the owner will not exceed some total upset price. 2. If the price of the work exceeds the assured maximum, the contractor pays for the excess. 3. Contracts are often competitively bid in a manner similar to that for lump-sum contracts, but managed as cost plus. 4. The successful bidder is determined on the combined basis of his quoted maximum price and fixed fee. 7 "Dr Ty ind Esa‘pee of Contract peat Coat Seiion ‘epi ania Danae Mensroertconaciin | ASOR Gawipa Weal] See owomswas Ys taney 7 alisha Go Sona Patna Rrcvaanogean! | uroumeg epee (Ostby T poe sot ae Siemeretrbe | semartrmonmane [fb wart Tepng, | Sil fas —_ ne work whee | snall 2 Thotendosinsenprees | - tinot posse rpc! |) duck. Eee ford om against each tem (ro | attenderstage to ove | guanttie ordered, ‘wants realise and accurate fon toch package ‘quantities of the work to be (c+ Prof 2a diffecst) craton + ia wos torpor Tereanronarianved win [1 BO ae apposnatay aay | Connon aopediorcsial | Posse wraionad [ewe che Wotaie Bast erie 2 Parca 80 tomer | wens ue ow eve SOR fr taton ‘Scot an unto, Festa escsomat paonerpuye: oa’ | ertratedatte ~ Enoetrrce er Mrevoterpostintobeer | pretender sap, loved tense ero Sewn! acento mnt ow - pecans Page 114‘Lr sur contrast wh fim 80 Lump sum contacts with Bile of Quanties are priced onthe bass of the rawngs and ‘spectication, redveod by means of standard ‘method of measurement toast of toms which scribe and mansuto the ‘work included on the rawingsandin the specication, Any tem ‘or ston of wor hich cannot be accurately ‘measured is covered bya provisional quantity oF sum and measured 26 ‘executed on compietion of te tem or secton of work the value ofthe provisional tem) oF ‘section(s of workin the Bil ilare deat rom ‘the Contract Sum andthe vale ofthe Work ‘execute ead “Te value fe fm quanttos exceeds 60% of the estimated value of the Werks, tinting Provisonal, Contingency ‘and Pree Cost Sums (WBTC No. 17195) ‘contract where the ‘quanttos sr eubetantialy measured tm andthe fa ice tobe pide ascotained by adding toldeducting tom the contactor accented tender price the vale of ‘viatons and ther spect tome (2. ‘Provisional quantities and contingency toms) werer795) Mossurementis requires cont for provisional quanto (Iida tems cra whole secton) andthe ‘valuation of variations ‘Accurate quattios have to ‘be mss rom ho fly completed design nthe Procontact sage ‘he design ofthe Works ‘wo advanced a tander stage substan pars of the ‘Works are unkely 2 ‘change in quantity botwoen tender anda sccount (unos thor is ‘anerocinthe ‘variation tothe design rocessary Betor financial contol ‘Queries have tobe measured once oly sa¥e time) No meed for accurate roasure of the work done hen estimating IP ‘More pretender tineltiont (Go cannot be fast tract rojo has tobe alowed for advanced deals designer as project leader and contract adminsirator + contactors involvement isin construction ofthe works only > client responsible for financing the project and itimately operating the ‘competed fail ‘executed by contractor sometimes called tumkey project. contractor responsible for design separate desiznand | both design and + appointment ofa single contactor provides» servee-orentated project delivery construction stages constuction phases Unity of responsiblity approach * contactor responsible forall sages ofthe rojest delivery and the subsequent ‘operation ofthe completed facili + clint responsible for inaneing the pejest but witha “hands off” role * performance based contract + contract requirements enfored by nom payment for non performance of specific ‘operational quirements, financial ‘guarantee fom parent company, liquidated damages for late completion and independent checking + long-term relationship between clint and + some degree of projet financing shifts from the project originator (public seetor lie tothe project undertaker (special purpose vehicle) = project undertaker (special purpose ‘chile usually responsible for both Financing (partial oF Tull) and operation of the completed project, investment of project originator may be in the frm of monetary suppor, provision of land or future operating concessions + more rdtional procurement method stil ‘sod ata pre constuction level + long-term relationship between project rginato and project undertaker ETWB TCW No. 322004 Appendix A Page A6 of 8‘Comparison of Advantages + client can control ‘over material and ‘workmanship [+ most standard forms ‘of contact are ted and tested therefore lower possibility of Aisptes| the outset, single point responsibilty catler tar on site contribution of ‘contacto’ s echnical expertise into the ‘design process tender competition on alternative design solutons direct nes of| beswoen sub contractor and ‘designer most standard forms of contract ar tried tnd tested therefore lower possibilty of ipates ‘operating the facility a the award of contrac, > savings in intepration of and synergies between design, build and service operation, innovative design, avoidance of over- specification, innovative materials or more ficient management + no financial claim associated with imterface ‘between design, consiruction and operation + time saved by overlapping design and tendering periods J+ performance based contract enables ‘contractor freedom to determine the method of achieving performance and encourages + avoid deterioration of fact resulting fom {der investment in mainenance + outsourcing requies lower level of “supervision and allows the client fcedom to _geton wih heir coe services + local form of contret for Design Build Operate available + suitable for complex faites as it can daw the required expertise from the widest ange of technological fields + knowledge ofthe design, supervision and constuction of state-of-the-art facility ean bel transfered from intemational company (0 local sat Category IT ‘Category Category V Design & Construct Design Construct & Operate Finance Design Construct & Operate > easy valuation of | carainiy of > certainty of cost of constroting and > cenanty of cos of constructing and operating the facility atthe award of contact finding requirement on projec originator is signiicanly reduced savings in integration of and synergies between ‘design, build and service operation, inovative design avoidance of over-secitication, innovative materials ‘or more efficent management whole lie costs of project minimised time saved atthe overlap of the design development and tendering stages performance based contactenables project undertaker Freedom to determine the method of achieving performance and encourages innovation avoid deterioration of facility resulting from under investment in maintenance ‘outsourcing of Service leaves the projet originator (public sector) freedom to gt on with thei core ‘complex structure encourages al parties to co-operate {0 achieve common goals standard forms of contracts available in some suitable for complex buildings or facilities as itean ‘draw the required expertise fom the widest range of technologieal fields knowledge ofthe design, supervision and construction of sate-of the-art facility can be transfered fom Intemational company t Toca taf ETWB TOW No, 322004 Appendis A Page A7 of &Comparison of Disadvantages Category T Designer Led category Design & Construct ‘Category TI Design Construct & Operate Category TV Finance Design Construct & Operate [> longer overall prosurement ‘ime required | construction cannot commence unt the whole project is designed |= rely on design team to ‘provide the complete ete design tthe J+ no design input bythe J+ Jong and weak lines of ‘communication between insrictor and executor of works ‘ay not produce the cheapest building in toms lifecycle cot (whole Tie cost) any client inated change or interference may {jeopardise the major benef of integrity ‘more dificult valuation of = price premium fer single point responsibil rangement + high tendering costs + cient loses contol over programming and planning onsite ‘output based contract specfiationss an indirect contgolof the standard of material and workmanship + possiblity ofan appropiate allocation of risk between the parties ‘ree premium for single point, responsibility arangement high tendering costs “buy now pay later financing concept is iticised as hiding the real eosts slow bidding process requieed for seting up complicated agreement frameworks project originator (pubic sector client) loses contol over programming and Planning onsite output based contrat specitiationas an indivetcontolof the standard of materiat and workmanship project undertaker (special purpose ‘hile has ultimate ight and freedom of | choice of suppliers or sub-contractors possibility of an inappropriate allocation of Fisk betwocn the parties ETWB TCW No, 322004 Appendix A Page AB of 8mM ix CRC Construction Innovation Report Building Procurement Methods Reseach Project No: 2006484042 tnetngnet e Leaders in Constveton nd Property Research © mineEXECUTIVE SUMMARY Tape of Contents ‘peo ates by pn ele al ast - . ‘ibe Gestapo sneer et oun das Sane emt Cruncn inane earn Argent “4. INTRODUCTIONFe ence wen none aring ar wo a a te SSS Seana TA Bead re ape Ca Foeemten geo ty sor stn a he3. FACTORS INFLUENCING PROCUREMENT STRATEGY Eeramausaeg! cape nose a Soy ope mimes mf son's aes ote ope es Boicenet Satyr a awe pee he ‘San Gomme 0 Pron saroePmcnanescuge nne"*= YSN 173 nea cscs ewe re toe Tes and ach44, Tradona Procurement 2 ee ny en cng = ema 1 imo om erekast race narsmaeseene ‘iron se mos foarte Sn of rst rd ran “ee ‘SSE Fim tin He res ors wn es osu ha4 fy ta ca wn pa * Serban muon elem rw sng ane gay gas Sar ae ae neee e oncom ramereuranis rencercern tet a eS 438 Advantage aed aarrtge of ation procurement {ana se somosnos Gre Sind yay es Soar SESS Saba ann me pes Speman * Spina mae ar et tow ote wba1624 Key potato cone wt eg nd ante procurement ———— Seer . Eearem SRA * Secmaists ns stents iaeyewtepeme cms + Soa amn wen tytn tn sta rmtn eepegagyermn ce pe cn rete caenoreneean SaaS 4.23 vnan shout sgn andconaet procromat be wed? ‘ef cna tat oan pre! an Sap post cs eh et So So ey oe ai ori a en on oe ot ‘Scansqtsim bool Rae comes ttmcay asus Se RAS Tae neiaoc.anoteeaee ‘aig smc ae 4422 Contraction management By 1 Eageonena * ect tndant mnt Conn ne435 ey pot conie wth managment acamet| ieee rene yen woe © song et reg IGhg EPL Naa wa aa BS ‘tec gv yen en ae St corey memento ren cos ek SSRN Sei orcs saga aa se 5. REFERENCES Tapa ASE Con trea we apne 60 ee meri, nn sr toro pe @ “Riri Steerer Rees "rGamaton. Engrg tte 8 Pee “ne it 0, Pes, ad Lm.) ry Minn comatin ESS Se eee love PED, nt Mauna (8) Pre rn hy open et i ict se ncaa al a ee ‘Srabutingprt Contos hanapuet Bowmen 0 ope. oo 0 ua Soa pry vr Snamot Faas New Gown. Syny ass ns PE oS Rc nn ee Se ‘ma tn, DE en en oe? ee # ‘tse Sata ar an Sc re A) Baty Pert Hato UC Tal Si Mae as prepa amo Cite Soeroen AAT Moone ‘Ramee58 Separated procirement stems procured poets can rue in delays and aditional ot being incre bythe clin a conseguene of oor erormanc by ber cons ‘The deiled sod continuing valve ofthe cent can oles tee defies has ben amply demonstrated ta castors ho ke 8 Soostactve nd objec neces in al tpt of the projec heed ‘eet ele, partly ine of sed af completo, Becauee af the reparated ate ofthe conventional ethod of shor complted lmade meas of tern eats geerlyontly= tothe Yale ‘two dng ised bythe architeton he commendation ofthe que fcveys The pie il of quant sob bythe contactor tender ‘ge os the aso also and slo erste say vss an be valed by selene regen rae or appropiate eration ‘aged percenageirresine na fiction sad sae redo ‘snoan ntl he deny peri isnt comple, “This mow payment spe, peter wh he pat foldiag sention mon, has been eed ar eg very expensive tod of Payment fot ae numberof endereapai al esocttrs ro ow ery othe major of sca te ork soit bes ged that the adoption of more esalemetho a yn: ade stealing ‘ofthe tention pte would beet the het seve she indy Thelen of sucha major change in payment methods ng achred onal projects wii the foeneae fear s eot, ot nh se ‘any cles ae easrag tha ered paymenes ae pou honored {nd that the sequen seimburement oll abcess by te an fWntacor mae with he ute cy Such ation wlenate ht the fontractor's ellos are more elcely engeged natal nang te [oj cater than purming eustading permet nd bold see 0 {sure good restore ad tha improve prof ea). Theatr ofthe conventional thos of peocueent andi tacit tf 2 uN 1 hat often hapens the cen bi ie ambi and dows nox] ‘commie afer ree waht the contacto eat iC * boa 2 Theabeone of bl of quan aration © 0% ‘seal cicland eti e ets make changes 70. {the dein of ee proj during he pon oar pe otonge x 3 Although welldesigoed and sehedcallyplesing bingy canbe) kane whe using tis eatgory of prurient rem, the cleat aero ‘ene ofr taps of the rj estas when sng the | ethos of pocucent oirLe een ee, (pater {88 ntgratedprocroment opens Spec characterise Tach of hindi stems wii he ira cary arse range duadratgerond exe nT MT Desig and bai Disadsnage “The performance of sig and bul cones subject o considerable variation dependent wpe whether thy eps ines oe ep Teel of rechical and manager competence ae kl ob owe the cnt choice mores irom he i hog he son tothe hd pe tf contacor owing wo he ifernc in capably amo oats Specialising in design and bul with irhowe resources covering al Tine & cost savings, arr sk shaving, bettering relationship Different between traditional Contract & NEC MEcTneow aes negotiating to masiizeseltinteret’ | Paris accept that econome benetra rena ofthe | Interdependence “location of ik between partis tthe tne of| Parties negotiating n how to handle events the | contacting future rather than allocate risk at the time of Choose of right options (contract type): (pion 6: Fed pice Financia isk more on Contractor Option C/O: Target cost—Faiersisksharing € Mosty adopted in Gow. and MI (Option €: Cast Reimbursement ~More risk on Employer Option F: Management Contract - More rekon Employer Key Feature Proactive risk management > Early warning 1+ The Contactor and Project Manager ean early warring by notifying the other ASAP +The purpose ofthe Early Waring Noiiation kta aie the risk at the ety stage sng the problems together ater than aginst eachother > Risk reduction meeting ‘+ Following the Early Worning Notifation,« Risk Reduction Meating amongst Project Manager, Supervisor ‘and Contractor wil be conducted. It may be agreed that other people attend according to particular ereumstanes. Al partes wil discuss to fir out thereat problem and solution for eliminating educing thes together.compensation Event + Unforeseen physical conditions, inclement weather- compensation events Fairer ik sharing + Project Manager hast replies the Notification of Compensation Event within one week. ti very ferent ‘rom GCC for which no response time requirement on the Engineer (ick settlement (pre-event agreement) + Timeframe and sanetons ‘Default acceptance no reply Activity Schedule General use with Option A and ¢ ‘Prepared and priced by the Contractor 1+ Prices entered by the tenderers foreach actity are lamp sums, not uit ates asin 8 + Tenderer decides how to breakup hs workint activity + Tenderer have to measure quantities from the Works formation for estimating the cost ofthe work ‘Not all actites in an activity schedule will be direct construction activites, which maybe 2 design activities, administration activites, testing ee Payment (Option C) Pricing Method 1+ Tendere total ofthe Prices» Tota estimated cost from Activites Schedule + Fee 1 Fee =allthe cost ofthe Contractor that are not included in Defined Cost + ONP+ allowance fork + Defined Cost = Payment due to subcontractor + Cost Component (plant, materi ete) - Disallowed Cost + Disallowed cost = Corecting defect after completion / Not justified record / Supls resources / sub standard work te ‘ + Project Manager can monitor the overall financial arrangement ofthe Contato for the project, + Contractor shall prepare a subletting Procedure “+ Subleting procedure shal be commented and accepted by Project Manager and ICAC before subcontract tendering process carried out “+The Contractor shall propose subcontractor tenderer lst andthe Ist shall be approved by Project Manager Assessment of Payment ‘+ Defined Cost which Contractor has paid and presented the rectpt at each assessment data, sub- contractor payments, salary of ste personnel plant and equipment et.1 Project Manager and Supervisor can acess to Contractor's acount records ‘Open Account) which ‘ransparence and sbjet to Audit by Project Manage autor team Contract Document (Option C) se Ee Totes to Tenderer atest tenderer ‘General Special Condon of Tender ‘eneral& Special Conaiton af Tender ‘General Condon of Contract Core Causes & Secondary Option Causes Specs Condition of Contract rice of Agreement “Baile of Agreement ‘edu of Aries of Agreement a ‘Activity schedule From of render From of Tender “ppendicte Form of Tender Contact ata Se investigation Repor (fan Sie Information General & Particular Spectiestion ‘Works information Drawings Works information Handling of Defective Works + lsu of Notieaton of Defective Works Ensure defects recifad wth defect corection period normally 2 weeks) > Chectng of defect rectifeation 1+ Enhance the practice: ‘Advance Defect Notification to asset Contractor © Incentive fr earer correction of Deets © Fecuson clearing the Defects (Not Blame) ‘The Accepted Programme “+ Invariably the programme is prepared for tender purposes and becomes the accepted programme, ‘consequently the contents ofthe programme are inadequate duet: (© Lackof information at tender stage © Contractor has not dedicated sufcientprogramme resources at tender stage {© The programme hasbeen prepared to win the tender rather than Bull the project (© Projects ficult to manage without an adequate programme (© The Employer fai to provide information in accordance with the programme and these are compensation events arly Waring Notices 1+ Te Contract bles the contractor to give early warning notices, consequent the:© Contractor issues an early warning notice in relation to any matter which potenti affects the projet © Early warning notices become treated asa notice of ein Resa ‘© Too many eaty warning notices fr risk edeton mastings tobe held or be effective ‘© Hick eduction meeting are held then there i isnt tme/information to manage the rk effectively (© TheRisk Register ceases tobe a management too! Compensation vents +The Contractor required to notily the Project Manage fan event which ha happened ors expected to happen withia 8 weaks of becoming aware ofthe event consequent 19 The contractor treat aleary warnings as ntifation af a compensation event + Rest 1 Rsk reduction meetings cease tobe collaborative (© Projet Manageris unable or hsinsufiettime/resourceto dently ‘ue! compensation events (© Contactor fais to submit quotations in time or atl! (© TheProject Manager doesnot aes, oft assess the compensation events correctly