Table of Contents

Table of Contents ........................................................................................................................................... i

SOURCES OF LAWS ............................................................................................................................ ‐ 1 ‐

Common law, (case law) ..................................................................................................................... ‐ 1 ‐

Judicial Precedents ............................................................................................................................. ‐ 1 ‐

Customs ................................................................................................................................................ ‐ 2 ‐

Legislation............................................................................................................................................ ‐ 2 ‐

Statutory interpretation ..................................................................................................................... ‐ 2 ‐

Equity ................................................................................................................................................... ‐ 2 ‐

TOT LAW ............................................................................................................................................... ‐ 3 ‐

LAW OF CONTRACT........................................................................................................................... ‐ 4 ‐

FORMATION OF CONTRACT FOR THE SALE OF GOODS ....................................................... ‐ 5 ‐

Subject matter of the contract: .......................................................................................................... ‐ 5 ‐

Number of parties in a sale of goods contract .................................................................................. ‐ 6 ‐

Position of vendor and emptor........................................................................................................... ‐ 6 ‐

Contract documents ............................................................................................................................ ‐ 6 ‐

Contract sum ....................................................................................................................................... ‐ 7 ‐

Methods for payment of the contract sum ........................................................................................ ‐ 7 ‐

Contract of guarantee and indemnity ............................................................................................... ‐ 7 ‐

Rights of Indemnified or Indemnity Holder ..................................................................................... ‐ 7 ‐

Rights of Indemnifier .......................................................................................................................... ‐ 8 ‐

ESSENTIAL ELEMENTS OF A VALID CONTRACT ..................................................................... ‐ 8 ‐

Agreement ............................................................................................................................................ ‐ 9 ‐

Intention to create legal relationship ................................................................................................. ‐ 9 ‐

Free and genuine consent ................................................................................................................... ‐ 9 ‐

Parties competent to contract ............................................................................................................ ‐ 9 ‐

Lawful consideration .......................................................................................................................... ‐ 9 ‐

Lawful object ....................................................................................................................................... ‐ 9 ‐

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 Agreements not declared illegal or void ............................................................................................ ‐ 9 ‐

Certainty of meaning .......................................................................................................................... ‐ 9 ‐

Possibility of performance ................................................................................................................ ‐ 10 ‐

Necessary legal formalities ............................................................................................................... ‐ 10 ‐

COMMON CONTRACT CLAUSE .................................................................................................... ‐ 10 ‐

Common Contract Clauses: ............................................................................................................. ‐ 10 ‐

Merger and Integration Clause ....................................................................................................... ‐ 10 ‐

Choice of Law and Forum Clause ................................................................................................... ‐ 11 ‐

Statute of Limitations Clause ........................................................................................................... ‐ 11 ‐

Indemnification Language ............................................................................................................... ‐ 11 ‐

Time of Performance ........................................................................................................................ ‐ 11 ‐

Arbitration Clause ............................................................................................................................ ‐ 12 ‐

Savings (Severability) Clause ........................................................................................................... ‐ 12 ‐

Attorney Fees Clause ........................................................................................................................ ‐ 12 ‐

Non-Waiver ....................................................................................................................................... ‐ 13 ‐

Liquidated Damages Clause ............................................................................................................. ‐ 13 ‐

REMEDIES FOR BREACH OF CONTRACTS ............................................................................... ‐ 13 ‐

Damages ............................................................................................................................................. ‐ 14 ‐

Quantum Meruit ............................................................................................................................... ‐ 14 ‐

Specific Performance ........................................................................................................................ ‐ 14 ‐

Injuction ............................................................................................................................................. ‐ 14 ‐

Rescission ........................................................................................................................................... ‐ 14 ‐

Restitution .......................................................................................................................................... ‐ 14 ‐

PROCUREMENT OF WORKS- BILL OF QUANTITIES.............................................................. ‐ 15 ‐

PREAMBLE .......................................................................................................................................... ‐ 15 ‐

WORK ITEMS ...................................................................................................................................... ‐ 15 ‐

DAYWORK SCHEDULE ......................................................................................................................... ‐ 16 ‐

ESTIMATING....................................................................................................................................... ‐ 22 ‐

Detailed Estimate ............................................................................................................................... ‐ 23 ‐

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 Assembly Estimating .......................................................................................................................... ‐ 23 ‐

Square‐Foot Estimates ....................................................................................................................... ‐ 24 ‐

Parametric Estimates ......................................................................................................................... ‐ 24 ‐

Model Estimating ............................................................................................................................... ‐ 25 ‐

Project Comparison Estimates ........................................................................................................... ‐ 25 ‐

TENDERING METHODS & TENDERING PROCESS .................................................................. ‐ 27 ‐

OPEN TENDERING ............................................................................................................................... ‐ 27 ‐

SELECTIVE TENDERING ....................................................................................................................... ‐ 28 ‐

NEGOTIATED TENDERS ....................................................................................................................... ‐ 28 ‐

TENDER PROCESS ............................................................................................................................ ‐ 29 ‐

Letter to preferred tenderer............................................................................................................. ‐ 39 ‐

Letter advising other tenderers that their tenders were not successful ....................................... ‐ 39 ‐

Letter advising all tenderers that the tender has been cancelled .................................................. ‐ 40 ‐

CRITICAL PATH ANALYSIS ........................................................................................................... ‐ 41 ‐

WORK MEASUREMENT .................................................................................................................. ‐ 55 ‐

Time study .......................................................................................................................................... ‐ 55 ‐

Standard Data Procedure: .................................................................................................................. ‐ 58 ‐

Work Sampling: .................................................................................................................................. ‐ 61 ‐

Predetermined Motion Time System ................................................................................................ ‐ 66 ‐

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 SOURCES OF LAWS
Source of law means the origin from which rules of human conduct come into existence and derive legal
force or binding characters. There are many different sources of law in any society. Some laws will be
written in the country's Constitution; others will be passed by the legislature (usually a parliament or
congress); others will come from long social tradition. Several factors of law have contributed to the
development of law. These factors are regarded as the sources of law.

Common law, (case law)

English common law is the customary law of England, yet it has become influential in the laws of many
other countries. The United States and most countries in the Commonwealth have legal systems based on
English common law. If there is nothing in the Constitution to cover a situation, and if no specific law has
been passed by parliament to cover a situation, a court in a Commonwealth country may decide the case
depending upon English common law. Indeed, some Commonwealth countries have the British House of
Lords as their final court of appeal.
The common law is judge-made law; in the United States, it is law that has been developed by the judges
of both England and the United States. To comprehend how common law developed, you must
understand the concepts of precedent and stare decisis.
Whenever a court renders a legal decision, that decision becomes binding on the court and its inferior
courts when the same issue arises again in the future. The decision of the court is known as a precedent.
The principle that inferior court will comply when the issue is raised in the future is known as the doctrine
of stare decisis from the Latin phrase stare decisis et non queta overa (meaning "stand by precedents and
do not disturb settled points").
The rationale behind this policy is the need to promote certainty, stability, and predictability of the law.
Common law is fluid, always changing with societal values and expectations. As one court stated, "The
common law of the land is based upon the human experience in the increasing effort of enlightened
people to ascertain what is right and just between men". For example, under ancient common law,
ownership of land extended to the periphery of the universe. With the invention of the airplane, a change
in this common law was needed. In MacPherson v. BuickMotor Co., 217 N.Y. 382, 111 N.E. 1050
(1916), a new common law war recognized in a purchaser against a manufacturer for injuries caused by
latent defects in an article purchased at retail. Thus common law changes due to technological and social
developments.
Modifications to, and nullifications of, common law come about in many different manners. In some
instances, courts have decided that the common law must be changed to meet contemporary conditions. In
extreme situations, parts of the common law have been totally abolished. Because the legislatures are
charged with the duty of making laws, they have the final word, unless there is a state constitutional
provision stating otherwise, on the status of the common law. The common law normally is inferior to
legislation, so if a legislature acts in an area previously dealt with by common law, the new statute is
controlling, absent a statement by the legislature to the contrary.

Judicial Precedents
Latin term for "standing by the decision."The dictionary of English law defines a judicial precedent as a
judgement or decision of a court of law cited as an authority for deciding a similar state of fact in the
same manner or on the same principle or by analogy. Precedent is one of the sources of law. The
judgements passed by some of the learned jurists became another significant source of law. When there is
no legislature on particular point which arises in changing conditions, the judges depend on their own
sense of right and wrong and decide the disputes. Such decisions become authority or guide for
subsequent cases of a similar nature and they are called precedents. Precedent is more flexible than
legislation and custom. It is always ready to be, used.
The doctrine that judicial decisions stand as precedents for cases arising in the future. It is a fundamental
policy of our law that, except in unusual circumstances, a court's determination on a point of law will be

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followed by courts of the same or lower rank in later case presenting the same legal issue, even thought
different parties are involved and many years have passed.

Customs
A custom is a rule which in a particular family or in a particular district or in a particular section, class or
tribe, has from long usage obtained the force of law. The dictionary of English law defines custom as a
law not written, which being established by long use and consent of our ancestors has been and daily is
put into practice.
Typically, customary law applies in those areas of life least affected by colonisation. These may include
land ownership, customary titles and family relationships. There may be special courts to deal with these
matters, conducted according to tradition and presided over by a customary chief or group of elders.
Alternatively, these matters may be dealt with by an ordinary court, but customary law may take
precedence over other kinds of law in these cases.

Legislation
This is an Act of Parliament. This is law made by parliament directly in exercise of legislative power
conferred upon it by the constitution. Section 46(5) of the Kenya Constitution states that "a law made by
Parliament shall be styled an Act of Parliament".
Legislation is that source of law which consists in the declaration of legal rules by a competent authority.
Legislature is the direct source of law. Legislature frames new laws, amends the old laws and cancels
existing laws in all countries. In modern times this is the most important source of law making. The term
legislature means any form of law making. Its scope has now been restricted so a particular form of law
making. It not only creates new rules of law it also sweeps away existing inconvenient rules.
From the definition of environmentalist: mohamed abbullahi defines legislation as Legislation (or
"statutory law") is law which has been promulgated (or "enacted") by a legislature or other governing
body, or the process of making it. Before an item of legislation becomes law it may be known as a bill,
and may be broadly referred to as "legislation" while it remains under consideration to distinguish it from
other business. Legislation can have many purposes: to regulate, to authorize, to proscribe, to provide
(funds), to sanction, to grant, to declare or to restrict.
The written laws of municipalities are ordinances. Ordinances are enacted by city councils and commonly
regulate zoning, building, construction, and related matters. Many cities have criminal ordinances that
mirror state statutes, only they apply to those acts that occur within the jurisdiction of the city. Ordinances
may not conflict with state or federal law. Any ordinance that is inconsistent with higher law may be
invalidated by a court. States limit the power of cities to punish for ordinance violations, and most city
court trials are to the bench, not to a jury. Any law passed by a lawful government which is different from

Statutory interpretation
Interpretation is a very important function of the court, the process of ascertaining the meaning of letters
and expressions by the court is either interpretation or construction. Interpretation is the process of which
the court seeks to ascertain the Meaning of a particular legislature. It is through interpretation, the
judiciary evolves the law and brings the changes in it and thus keeps the law abreast of law.

Equity
The word "equity" means fair or just in its wider sense, but its legal meaning is the rules developed to
mitigate the severity of the common law. Judges in every country have contributed a lot towards the
process of law-making. Judges make new laws in the course of their judicial decisions. They cannot
always interpret different cases according to the existing law. Sometimes a novel ease about which
existing laws are silent may come up before a judge.
The judge cannot dispose of the case without giving any judgment. In such a situation, the judge will give
his judgment by consulting his own sense of justice and fair-play. Such judgments give rise to the laws of
equity which assume the force of well- recognized law. In England, there is the Court of Chancery which
is the supreme organization for the administration of equity. The Court is said to be the keeper of the
King's or Queen's conscience and is authorized to remedy injustice according to equity. The Indian courts
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have also been authorized to decide cases according to equity in the absence of positive law on the point.
We can conclude with the remarks of Gilchrist that "equity as a source of law, arises from the fact that the
positive law, as the world advances, tends to become unsuitable for new conditions. Equity is an informal
method of making new laws or altering old laws; depending on intrinsic fairness or equality of treatment."

TOT LAW

Tort law is a branch of the law which covers civil wrongs, such as defamation and trespassing, among
many other transgressions. Under tort law, if someone suffers a physical, legal, or economic harm, he or
she may be entitled to bring suit. If the suit is deemed valid, damages may be awarded to the victim to
compensate for his or her troubles. Most tort laws are found in regional, state, and national civil codes,
which often spell out limits on damages and the statute of limitations for tort cases.

Many people divide tort law into three rough categories: negligent torts, intentional torts, and strict
liability torts. Torts arising out negligence are civil wrongs caused by negligent behavior or a failure to
practice due diligence. For example, if you are playing soccer in the street and you accidentally kick the
ball through someone's living room window, this may be a negligence tort. Medical malpractice and other
forms of professional negligence are also covered under the umbrella of negligence torts.

Intentional torts are torts which involve a deliberate attempt to harm. Defamation is often viewed as an
intentional tort, as is battery, fraud, false imprisonment, and interference with the economic operations of
a company. Strict liability torts cover product liability; if a potato peeler takes your finger off when you
operate it as directed, the manufacturer could be liable, for example.

Every tort is an act or omission (not being merely the breach of a duty arising out of a personal relation,
or undertaken by contract) which is related in one of the following ways to harm (including reference
with an absolute right, whether there be measurable actual damage or not), suffered by a determinate
person:-

a) It may be an act which, without lawful justification or excuse, is intended by the agent to cause harm,
and does cause the harm complained of.
b) It may be an act in itself contrary to law, or an omission of specific legal duty, which causes harm not
intended by the person so acting or omitting.
c) It may be an act violation the absolute right (especially rights of possession or property), and treated as
wrongful without regard to the actor’s intention or knowledge. This, as we have seen is an artificial
extension of the general conceptions which are common to English and Roman law.
d) It may be an act or omission causing harm which the person so acting or omitting to act did not intend
to cause, but might and should with due diligence have foreseen and prevented.
e) It may, in special cases, consist merely in not avoiding or preventing harm which the party was bound
absolutely or within limits, to avoid or prevent.

Nuisance
The two types of nuisance are private nuisance and public nuisance. A private nuisance is a civil wrong; it
is the unreasonable, unwarranted, or unlawful use of one's property in a manner that substantially
interferes with the enjoyment or use of another individual's property, without an actual Trespass or
physical invasion to the land. A public nuisance is a criminal wrong; it is an act or omission that
obstructs, damages, or inconveniences the rights of the community.
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Trespass
Trespasses: A trespass is a direct and forcible injury. The plaintiff need not prove damages; he must only
show that a trespass has been committed. Actions on the case: Those were actions for damage caused
otherwise than directly and forcibly. They were recog- nized in circumstances in which there had been no
remedy but the plaintiff could show that, upon the facts of the case, he had suffered damage as the result
of some act or omission of the defendant. Here, the plaintiff must show that he suffered some acual
('special') damage.

LAW OF CONTRACT
Contract
A contract may be defined as an agreement between two or more parties that is intended to be legally
binding. The first requisite of any contract is an agreement (consisting of an offer and acceptance). At
least two parties are required; one of them, the offeror, makes an offer which the other, the offeree,
accepts.
An agreement is defined as “every promise and every set of promises forming consideration for each
other. “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to
be accepted. A proposal when accepted becomes a promise.”
From the above definition of promise, it is obvious that an agreement is an accepted proposal. The two
elements of an agreement are:
(i) Offer or a proposal; and
(ii) An acceptance of that offer or proposal.
Elements of Formation of Contract
Two main elements of formation of contracts are:
 Agreement-Offer Acceptance and Consideration
 Other elements are: Intention to create legal relations, Capacity and Formalities

Agreement –Offer
Defined as a statement by one person to another person, evincing his/her willingness to enter into
contractual relations with that person on certain terms.
Scope –A single offer may be made to a distinct person or people, or the world at large.
Central requirement –The statement alleged to be an offer must indicate a willingness to be bound without
further negotiations as to the terms of the proposed contract.

Agreement –Acceptance
Definition –Unequivocal statement (oral, written or by conduct) by the offeree agreeing to the offeror’s
offer.
Requirements:
1) Must exactly correspond with the offer (otherwise will be deemed a counter-offer).
2) Must be unequivocal (hence an offeree must have knowledge of an offer before accepting it).
3) Must be communicated by the offeree to the offeror (onus of communication is on the offeree). An
agreement is concluded upon the communication being received by the offeror.Note that there are several
exceptions to the requirement of communication which may apply. E.g. waiver by offeror.

CLASSIFICATION OF CONTRACTS
1. Classification according to validity or enforceability
Contracts may be classified according to their validity as (i) valid, (ii) voidable, (iii) void contracts or
agreements, (iv) illegal, or (v) unenforceable.
A contract to constitute a valid contract must have all the essential elements. If one or more of these
elements is/are missing, the contract is voidable, void, illegal or unenforceable.

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Example
A man enfeebled by disease or age, is induced by B’s influence over him as his medical attendant to agree
to pay B an unreasonable sum for his professional services. B employs undue influence. A’s consent is
not free; he can take steps to set the contract aside.
An agreement which is not enforceable by either of the parties to it is void [Section 2(i)].
Such an agreement is without any legal effect ab initio (from the very beginning). Under the law, an
agreement with a minor is void.*
A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

2. Classification according to mode of formation

There are different modes of formation of a contract. The terms of a contract may be stated in words
(written or spoken). This is an express contract. Also the terms of a contract may be inferred from the
conduct of the parties or from the circumstances of the case. This is an implied contract.
Example
If A enters into a bus for going to his destination and takes a seat, the law will imply a contract from the
very nature of the circumstances, and the commuter will be obliged to pay for the journey.
We have seen that the essence of a valid contract is that it is based on agreement of the parties.
Sometimes, however, obligations are created by law (regardless of agreement) whereby an obligation is
imposed on a party and an action is allowed to be brought by another party.
These obligations are known as quasi-contracts.
3. Classification according to performance
Another method of classifying contracts is in terms of the extent to which they have been performed.
Accordingly, contracts are: (1) executed, and (2) executory or (1) unilateral, and
(2) bilateral.
An executed contract is one wholly performed. Nothing remains to be done in terms of the contract.
Example
A contracts to buy a bicycle from B for cash. Pays cash. B delivers the bicycle.
An executory contract is one which is wholly unperformed, or in which there remains something further
to be done.
Example
On June 1, A agrees to buy a bicycle from B. The contract is to be performed on June 15.
The executory contract becomes an executed one when completely performed. For instance, in the above
example, if both A and B, perform their obligations on June 15, the contract becomes executed. However,
if in terms of the contract performance of promise by one party is to precede performance by another
party then the contract is still executory, though it has been performed by one party.

FORMATION OF CONTRACT FOR THE SALE OF GOODS

A contract for the Sale of Goods is formed according to the ordinary principles of the Common Law that
is to say by offer and acceptance. It’s a contract whereby the seller transfers or agrees to transfer the
property in goods to the buyer for a money consideration, called the price.”
Capacity to buy and sell is regulated by the general law concerning capacity to contract, and to transfer
and acquire property; Provided that, where necessaries are sold and delivered to an infant or minor, or to a
person who by reason of mental incapacity or drunkenness is incompetent to contract, he must pay a
reasonable price therefore.

Subject matter of the contract:

The term ‘goods’ is defined by The Sale of Goods Act to include all chattels personal other than things in
action and money, and all emblements, industrial growing crops and things attached to or forming part of
the land, which are agreed to be severed before sale or under the contract of sale. The definition excludes
non-physical items, such as company shares, which are technically ‘things in action’ or incorporeal

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movables and so are excluded by the plain words of the definition. Similarly, items of ‘intellectual
property’ such as copyrights, patents and trademarks are not ‘personal chattels’ or corporeal movables
and so fall outside the definition, although of course goods may exist which embody these intellectual
property rights.

Number of parties in a sale of goods contract

For a transfer of property in the goods to occur there must be at least 2 distinct parties. The transfer
implies necessity for more than 1 distinct person. There must be a seller and a buyer.
A person cannot buy one’s own property or goods. If one by mistake buys his own goods, he can recover
the price paid on the grounds of total failure of consideration. The seller and buyer must be two different
legal entities. Although the Act contemplates two distinct parties to the contract, namely a buyer and a
seller, it does not follow that the buyer cannot already be the owner of the goods, for the seller may be a
person having legal authority to sell them, for example a sheriff acting in execution of a writ of
execution. However, if a person contracts to buy his own goods from someone else under the mistaken
impression that the goods belong to the seller, it seems clear that he can recover any price paid on the
ground of total failure of consideration.

Position of vendor and emptor

In cases of misdescription, the vendor’s position is weak in two respects. First, at common law,
misdescription which, if corrected, would mean that the property would attract a higher price gives the
vendor no claim for compensation, since the vendor is regarded as having being in a position to stipulate
exactly what he is offering. Second, it is the purchaser who is in the position of being able to choose
whether to complete in the case of a material and substantial misdescription. In the case of an immaterial
misdescription which has caused loss or to complete, the vendor can compel the purchaser to complete
but only at an abated price to reflect the loss, and not at the full price, by the vendor to the purchaser. The
vendor’s agent does not have ostensible authority to make a misrepresentation on behalf of his principal,
so the vendor cannot without more be held liable for a misrepresentation made by his agent. But if the
vendor’s agent has actual authority to make what is a misrepresentation that is sufficient as a basis for
liability on the part of the vendor. The purchaser must show that the misrepresentation was made to him
or his agent, and was intended to be relied on by him. Note also the converse case of a misrepresentation
made by the purchaser to the vendor with a view to reducing the price or making the property unsaleable,
mentioned above.

Contract documents

In most contracts, the contract documents are "incorporated by reference." Contract documents usually
include plans and specifications, the “prime contract” between the owner and all prime contractors,
including the general contractor, addenda, building codes and regulations, and modifications to the plans
and specifications after execution of the contract.

It is important for a contractor to review all contract documents incorporated by reference, as the terms of
those documents may be binding on the contractor. For instance, if a prime contract (between the owner
and a general contractor) contains an arbitration provisions, courts will typically enforce the arbitration
requirement against a subcontractor in contract with the general contractor.

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Contract sum

The price in the contract will either be lump sum, unit price, or time and material. The contract should
include a definite price, or a definite method of determining price. Absent price, an otherwise valid
contract will be interpreted as requiring payment of a fair value (quantum meruit).

Methods for payment of the contract sum

Progress payments are periodic payments constituting partial payment of the contract sum. The contract
should include a specific provision for time and method of payment and calculation of amount.

A schedule of values should be prepared by the contractor and approved by the owner and architect. The
schedule should accurately break down the scope of work into component parts, and assign a value to
each component part.

Applications for payment should be measured against the schedule of values. The application typically
includes the amount of work in place, the cost of materials stored on site, the costs of labor to date, less an
amount for retainage and previous payments. The application is usually certified by the architect or
owner and the payment is due thereafter.

Contract of guarantee and indemnity

Indemnity, by definition, is protection against future loss. A ‘contract of indemnity’is a special

contract by which one party promises to save the other from the loss caused to him by the
conduct of the promisor himself or by the conduct of any other person. The person who promises
to make good the loss is called the indemnifier (Promisor) and the person whose loss is to be
made good is called the indemnified or indemnity holder (Promisee).

An indemnity can be defined as a sum paid by A to B by way of compensation for a particular

loss suffered by B. A, the indemnitor may or may not be responsible for the loss suffered by the
B, the indemnitee. Forms of indemnity include cash payments, repairs, replacement, and
reinstatement. Contract of Indemnties should all satisfy the conditions of a valid contract. All
Contracts of Insurance are Contracts of Indemnity except life insurance.

Rights of Indemnified or Indemnity Holder

 all damages which he may be compelled to pay in any suit in respect of any matter to
which the promise to indemnify applies;
 all costs which he may be compelled to pay in any such suit if, in bringing or defending
it, he did not contravene the orders of the promisor, and acted as it would have been
prudent for him to act in the absence of any contract of indemnity, or if the promisor
authorised him to bring or defend the suit;
 all sums which he may have paid under the terms of any compromise of any such suit, if
the compromise was not contrary to the orders of the promisor, and was one which it
would have been prudent for the promisee to make in the absence of any contract of
indemnity, or if the promisor authorised him to compromise the suit.

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The indemnity holder can call upon the indemnifier to save him from loss even before the actual
loss is incurred.

Rights of Indemnifier

 After compensating the indemnity holder, indemnifier is entitled to all the ways and
means by which the indemnifier might have protected himself from the loss.

Indemnity insurance compensates the beneficiaries of the policies for their actual economic
losses, up to the limiting amount of the insurance policy. It generally requires the insured to
prove the amount of its loss before it can recover. Recovery is limited to the amount of the
provable loss even if the face amount of the policy is higher. This is in contrast to, for example,
life insurance, where the amount of the beneficiary's economic loss is irrelevant. The death of the
person whose life is insured for reasons not excluded from the policy obligate the insurer to pay
the entire policy amount to the beneficiary. Most business interruption insurance policies contain
an Extended Period of Indemnity Endorsement, which extends coverage beyond the time that it
takes to physically restore the property. This provision covers additional expenses that allow the
business to return to prosperity and help the business restore revenues to pre-loss levels.

A car insurance policy is an example of indemnification. If a purchaser of car insurance policy is

involved in an accident wherein the liability for the accident is undisputedly of their insured
driver, then the insurance carrier has the duty to indemnify their insured driver in very specific
ways to "make them whole" again.

The insurance carrier may pay them compensation (recompense for lost wages that would have
normally occurred), pay them for medical/legal/(pain and suffering) damages (i.e., those costs
arising specifically as the result of the accident), reparations to tow and repair the vehicles
involved in the accident returning them to their original condition, and the payment of rental
vehicles while awaiting repairs.

ESSENTIAL ELEMENTS OF A VALID CONTRACT

The two elements of a contract are: (1) an agreement; (2) legal obligation. “All agreements are contracts if
they are made by free consent of parties, competent to contract, for a lawful consideration and with a
lawful object and are not hereby expressly declared to be void.”
Thus, the essential elements of a valid contract can be summed up as follows
1. Agreement.
2. Intention to create legal relationship.
3. Free and genuine consent.
4. Parties competent to contract.
5. Lawful consideration.
6. Lawful object.
7. Agreements not declared void or illegal.
8. Certainty of meaning.
9. Possibility of performance.
10. Necessary Legal Formalities.

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Agreement
An agreement is composed of two elements—offer and acceptance. The party making the offer is known
as the offeror, the party to whom the offer is made is known as the offeree. Thus, there are essentially to
be two parties to an agreement. They both must be thinking of the same thing in the same sense. In other
words, there must be consensus-ad-idem.

Intention to create legal relationship

There should be an intention on the part of the parties to the agreement to create a legal relationship. An
agreement of a purely social or domestic nature is not a contract.

Example
A husband agreed to pay £30 to his wife every month while he was abroad. As he failed to pay the
promised amount, his wife sued him for the recovery of the amount. Held: She could not recover as it was
a social agreement and the parties did not intend to create any legal relations [Balfour v. Balfour (1919)2
K.B.571].

Free and genuine consent

The consent of the parties to the agreement must be free and genuine. The consent of the parties should
not be obtained by misrepresentation, fraud, undue influence, coercion or mistake. If the consent is
obtained by any of these flaws, then the contract is not valid.

Parties competent to contract

The parties to a contract should be competent to enter into a contract. Every person is competent to
contract if he (i) is of the age of majority, (ii) is of sound mind, and (iii) is not disqualified from
contracting by any law to which he is subject.
Thus, there may be a flaw in capacity of parties to the contract. The flaw in capacity may be due to
minority, lunacy, idiocy, drunkenness or status. If a party to a contract suffers from any of these flaws, the
contract is unenforceable except in certain exceptional circumstances.

Lawful consideration
The agreement must be supported by consideration on both sides. Each party to the agreement must give
or promise something and receive something or a promise in return. Consideration is the price for which
the promise of the other is sought. However, this price need not be in terms of money. In case the promise
is not supported by consideration, the promise will be nudum pactum (a bare promise) and is not
enforceable at law. Moreover; the consideration must be real and lawful.
Lawful object
The object of the agreement must be lawful and not one which the law disapproves.
Agreements not declared illegal or void
There are certain agreements which have been expressly declared illegal or void by the law. In such cases,
even if the agreement possesses all the elements of a valid agreement, the agreement will not be
enforceable at law.
Certainty of meaning
The meaning of the agreement must be certain or capable of being made certain otherwise the agreement
will not be enforceable at law. For instance, A agrees to sell 10 metres of cloth.
There is nothing whatever to show what type of cloth was intended. The agreement is not enforceable for
want of certainty of meaning. If, on the other hand, the special description of the cloth is expressly stated,
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say Terrycot (80: 20), the agreement would be enforceable as there is no uncertainly as to its meaning.
However, an agreement to agree is not a concluded contract [Punit Beriwala v. Suva Sanyal AIR 1998
Cal. 44].

Possibility of performance
The terms of the agreement should be capable of performance. An agreement to do an act impossible in
itself cannot be enforced. For instance, A agrees with B to discover treasure by magic. The agreement
cannot be enforced.
Necessary legal formalities
A contract may be oral or in writing. If, however, a particular type of contract is required by law to be in
writing, it must comply with the necessary formalities as to writing, registration and attestation, if
necessary. If these legal formalities are not carried out, then the contract is not enforceable at law.

COMMON CONTRACT CLAUSE

When reviewing a contract, certain language or clauses may seem peculiar to a layperson. Understanding
this terms help explain the purpose and effect of certain language commonly found in contracts.

Common Contract Clauses:

 Merger and Integration Clause

 Choice of Law and Forum Clause
 Statute of Limitations Clause
 Indemnification Language
 Time of Performance
 Arbitration Clause
 Saving (Severability) Clause
 Attorney Fee Clause
 Non-Waiver Clause
 Liquidated Damages Clause

Merger and Integration Clause

The purpose of a merger and integration clause is to prevent the parties to a contract from later claiming
that the contract does not reflect their entire understanding, was changed by a subsequent oral agreement,
or is not consistent with prior agreements:

This Agreement and the exhibits attached hereto contain the entire agreement of the parties with respect
to the subject matter of this Agreement, and supersede all prior negotiations, agreements and
understandings with respect thereto. This Agreement may only be amended by a written document duly
executed by all parties.

A party entering into a contract which includes this type of language should make sure that all promises
and agreements are actually included in the written contract, as otherwise it may be impossible to enforce
those unwritten promises.

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Choice of Law and Forum Clause

Contracts will often contain language expressing that they are to be interpreted under the laws of a
particular state or jurisdiction, and that any litigation will occur within a specified court system:

This agreement shall be interpreted under the laws of the State of California. Any litigation under this
agreement shall be resolved in the trial courts of Los Angeles County, State of California.

Please note that this language may not always be enforceable, particularly in relation to consumer
contracts.

Statute of Limitations Clause

A statute of limitations clause changes the statute of limitations which applies to litigation relating to the
subject matter of the contract. For example, the law may provide for a six year statute of limitations for
litigations, but the parties can contractually agree to shorten that period, to eliminate the "discovery rule"
(which may extend the statute of limitations during the period a party is unaware of the breach), or both:

The parties agree that any action in relation to an alleged breach of this Agreement shall be commenced
within one year of the date of the breach, without regard to the date the breach is discovered. Any action
not brought within that one year time period shall be barred, without regard to any other limitations
period set forth by law or statute.

Please note that, for public policy reasons, states will not always enforce a reduction in the statute of
limitations, particularly in relation to consumer transactions. Before assuming that you don't have a valid
cause of action on the basis of this type of contract language, consult with an attorney in your jurisdiction.
However, until it is held invalid by a court, you should assume that this language is valid and whenever
possible should commence any litigation within the contractual period.

Indemnification Language

An indemnity clause requires that one party indemnify the other, in the event that certain expenses are
incurred. Example language:

The subcontractor agrees to indemnify and hold harmless the contractor against loss or threatened loss
or expense by reason of the liability or potential liability of the contractor for or arising out of any claims
for damages.

Be careful with this type of clause, as it can significantly increase your exposure in the extent of an
unexpected event or breach of the contract.

Time of Performance

Some contracts will provide that "time is of the essence", which may support an action for breach of
contract where the contract is not completed within a reasonable (or specified) time. This is often seen in

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construction contracts, where it is important that work be resolved such that a homeowner or business can
return to normal life or operations:

Time is of the essence for the completion of the work described in this contract. It is anticipated by the
parties that all work described herein will be completed within two (2) weeks of the date of execution, and
that any delay in the completion of the work described herein shall constitute a material breach of this
contract.

Others may specifically provide that time is not of the essence:

The parties agree that time is not of the essence in the completion of the work described in this contract.
All parties shall act to complete the work described within a reasonable time.

Where a contract includes language of the latter variety, you may wish to ask yourself why the other party
wants the language. That is, do they anticipate delays which will leave you dissatisfied with the timeliness
of their performance?

Arbitration Clause

Some contracts include language specifying that all disputes under the contract will be resolved by
arbitration:

All disputes, controversies, or claims arising out of or relating to this contract shall be submitted binding
arbitration in accordance with the applicable rules of the Kenyan Arbitration Association then in effect.

Please note that a typical arbitration clause is usually considerably more detailed than this example
language, and there may be statutory requirements for the content and appearance of an arbitration clause.
The party which seeks to impose an arbitration clause typically anticipates a significant benefit from the
inclusion of the clause - such as making any action in the event of breach unaffordable for the other party,
who will typically have to pay half the cost of a private arbitration.

Savings (Severability) Clause

Most contracts include a savings clause, which is meant to ensure that the contract remains enforceable
even if part of the contract is later held invalid:

If any provision of this Contract is held unenforceable, then such provision will be modified to reflect the
parties' intention. All remaining provisions of this Contract shall remain in full force and effect.

In the absence of a savings clause, it is possible that if a single clause is held invalid, the entire contract
will also be rendered invalid.

Attorney Fees Clause

An attorney fees clause requires that, in the event of litigation, the loser reimburse the prevailing party's
attorney fees:
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In the event of litigation relating to the subject matter of this Agreement, the non-prevailing party shall
reimburse the prevailing party for all reasonable attorney fees and costs resulting therefrom.

Non-Waiver

The purpose of non-waiver language is to protect a party who excuses the other party's non-compliance
with contract terms, and to prevent the parties' course of conduct under the contract from resulting in the
loss of enforceability of the actual terms of the contract:

The failure by one party to require performance of any provision shall not affect that party's right to
require performance at any time thereafter, nor shall a waiver of any breach or default of this Contract
constitute a waiver of any subsequent breach or default or a waiver of the provision itself.

For example, if a contract requires monthly payments but the party owing payments only pays every other
month, in the absence of a non-waiver clause, after a year of acceptance of the late payments a court
would be likely to hold that the bimonthly payments do not constitute a breach of the contract. With a
non-waiver clause, the party to whom the payments are due would typically be able to enforce the
monthly payment provision, despite the course of conduct which was inconsistent with the contract
language.

Liquidated Damages Clause

Where it can be difficult to calculate actual damages, it may be appropriate to include a "liquidated
damages clause" in a contract. The most common form of "liquidated damages" is probably the late fee
charged following the late receipt of payment on a lease or credit card. An example for the rental of a
University dormitory room:

Students canceling their housing contract after occupying their room shall pay liquidated damages in the
amount of $5.00 per day for the remainder or unexpired portion of the term of the academic agreement,
not to exceed $400.

The damages are "liquidated" in the sense that the contract sets forth a specific sum that will be paid as
damages, whatever the actual amount of damages may be. However, the amount of "liquidated damages"
should roughly parallel what actual damages might realistically be. Courts will typically not uphold
"liquidated damages" clauses if the damages are disproportionate to the injury, or if the amount of
liquidated damages appears to be intended as punitive as opposed to fair compensation for the injury.

REMEDIES FOR BREACH OF CONTRACTS

Remedies for Breach of Contracts include;

· Damages
· Quantum Meruit
· Specific Performance
· Injection
· Rescission

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-Restitution

Damages

Damages as one of the Remedies for Breach of Contracts are monetary compensation allowed to the
injured party of the loss for the injuries suffered by him or her as a result of the breach of contract. The
fundamental principal is compensation and not punishment. The aim is to put the injured party in the
same person he would have been had there been performance. As general rule compensation must be
commensurate with the injury or loss sustained arising naturally from the breach if actual loss is not
proved, no damages will be awarded.

Damages can occur in as liquidated damages where whatever is awarded is commensurate with the
damage penalty estimated and the rewards are in excess a person injured by a breach of contract is under
duty of mitigate and that is to say he must take seasonable steps to reduce incidence of loss arising from a
breach of contract the plaintiff can’t clam damages of loss which is attributable to his failure to mitigate.

Quantum Meruit

Quantum Meruit refers to as much as has been done. These may be available to either parties without
claiming damages or compensation for work done it can also be done by claiming reasonable
compensations

Specific Performance

One of the Remedies for Breach of Contracts is special performance. It means carrying out the contract as
agreed. It is an equitable remedy and it may be granted where monetary compensation is not adequate
relief, where there is no standard for asserting the actual damage and where it is probable that the
compensation in money can’t be gotten.

Injuction

Injuction is another of the Remedies for Breach of Contracts. It is a court order restraining a person from
doing a particular act.

Rescission

It occurs when the aggrieved party decides not to perform his part of the contract. He may even sue and
be granted rescission by the court in which case he becomes entitled to compensation for any damage
which he has sustained through non-fulfillment of the contract.

Restitution

Restitution is a remedy designed to restore the injured party to the position occupied prior to the
formation of the contract. Parties seeking restitution may not request to be compensated for lost profits or
other earnings caused by a breach. Instead, restitution aims at returning to the plaintiff any money or
property given to the defendant under the contract. Plaintiffs typically seek restitution when contracts they
have entered are voided by courts due to a defendant’s incompetence or incapacity. The law allows
incompetent and incapacitated persons to disavow their contractual duties but generally only if the
plaintiff is not made worse off by their disavowal.

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Parties that are induced to enter into contracts by mistake, fraud, undue influence, or duress may seek to
have the contract set aside or have the terms of the contract rewritten to do justice in the case. Rescission
is the name for the remedy that terminates the contractual duties of both parties, while reformation is the
name for the remedy that allows courts to change the substance of a contract to correct inequities that
were suffered. Like contracts implied in law, however, courts are reluctant to rewrite contracts to reflect
the parties’ actual agreement, especially when the contract as written contains a mistake that could have
been rectified through pre-contract investigation. Thus, one court would not reform a contract that
stipulated an incorrect amount of acreage being purchased, since the buyer could have ascertained the
correct amount by obtaining a land survey before entering the contract.

As seen above the five ways to for Remedies for Breach of Contracts are; Damages, Quantum Meruit,
Specific Performance, Injection and Rescission.

PROCUREMENT OF WORKS- BILL OF QUANTITIES

Bill of Quantities
Preparing a Bill of Quantities
Objectives
The objectives of the Bill of Quantities are
(a) To provide sufficient information on the quantities of Works to be performed to enable bids to be
prepared efficiently and accurately; and
(b) When a contract has been entered into, to provide a priced Bill of Quantities for use in the periodic
valuation of Works executed.
In order to attain these objectives, Works should be itemized in the Bill of Quantities in sufficient detail to
distinguish between the different classes of Works, or between Works of the same nature carried out in
different locations or in other circumstances which may give rise to different considerations of cost.
Consistent with these requirements, the layout and content of the Bill of Quantities should be as simple
and brief as possible.
Content
The Bill of Quantities should be divided generally into the following sections:
(a) Preamble;
(b) Work Items (grouped into parts);
(c) Daywork Schedule; and
(d) Summary.

PREAMBLE

The Preamble should indicate the inclusiveness of the unit prices, and should state the methods of
measurement that have been adopted in the preparation of the Bill of Quantities and that are to be used for
the measurement of any part of the Works.

WORK ITEMS

Rock
Where excavation, boring, or driving is included in the Works, a comprehensive definition of rock
(always a contentious topic in contract administration), if not given in the Technical
Specification, should be given in the Preamble, and this definition should be used for the purposes of
measurement and payment.
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Work Items
The items in the Bill of Quantities should be grouped into sections to distinguish between those parts of
the Works that by nature, location, access, timing, or any other special characteristics may give rise to
different methods of construction, phasing of the Works, or considerations of cost. General items
common to all parts of the Works may be grouped as a separate section in the Bill of Quantities. When a
family of Price Adjustment Formulae are used, they should relate to appropriate sections in the Bill of
Quantities.
Quantities
Quantities should be computed net from the Drawings, unless directed otherwise in the Contract, and no
allowance should be made for bulking, shrinkage, or waste. Quantities should be rounded up or down
where appropriate, and spurious accuracy should be avoided.

Units of Measurement
The following units of measurement and abbreviations are recommended for use (unless other national
units are mandatory in the country of the Employer).

Ground and Excavation Levels

The commencing surface should be identified in the description of each item for work involving
excavation, boring, or driving, for which the commencing surface is not also the original surface. The
excavated surface should be identified in the description of each item for work involving excavation for
which the excavated surface is not also the final surface. The depths of work should be measured from the
commencing surface to the excavated surface, as defined.

DAYWORK SCHEDULE

A Daywork Schedule should be included if the probability of unforeseen work, outside the items included
in the Bill of Quantities, is relatively high. To facilitate checking by the Employer of the realism of rates
quoted by the bidders, the Daywork Schedule should normally comprise:
(a) a list of the various classes of labor, materials, and Contractor's Equipment for which basic Daywork
rates or prices are to be inserted by the bidder, together with a statement of the conditions under which the
Contractor will be paid for work executed on a Daywork basis; and
(b) a percentage to be entered by the bidder against each basic Daywork Subtotal amount for labor,
materials, and Plant representing the Contractor's profit, overheads, supervision, and other charges.
Provisional Quantities and Sums
Provision for quantity contingencies in any particular item or class of work with a high expectation of
quantity overrun should be made by entering specific "Provisional Quantities" or "Provisional Items" in

‐ 16 ‐
the Bill of Quantities, and not by increasing the quantities for that item or class of work beyond those of
the work normally expected to be required. To the extent not covered above, a general provision for
physical contingencies (quantity overruns) should be made by including a "Provisional Sum" in the
Summary of the Bill of Quantities. Similarly, a contingency allowance for possible price increases should
be provided as a "Provisional Sum" in the Summary of the Bill of Quantities. The inclusion of such
Provisional Sums often facilitates budgetary approval by avoiding the need to request periodic
supplementary approvals as the future need arises.
The estimated cost of specialized work to be carried out, or of special goods to be supplied, by a
Nominated Subcontractor (reference Clause 59 or Part I) should be indicated in the relevant part of the
Bill of Quantities as a particular Provisional Sum with an appropriate brief description. A separate
bidding procedure is normally carried out by the Employer to select the specialists, who are then
nominated as subcontractors to the main or prime contractor. To provide an element of competition
among the main bidders (or prime contractors) in respect of any facilities, amenities, attendance, etc., to
be provided by the successful bidder as prime contractor for the use and convenience of the specialist or
nominated subcontractor, each related Provisional Sum should be following by an item in the Bill of
Quantities inviting a percentage (to be quoted by the main bidder) payable on the actual expenditure from
the Provisional Sum.

Summary
The Summary should contain a tabulation of the separate parts of the Bill of Quantities carried forward,
with provisional sums for Daywork, for physical (quantity) contingencies, and for price contingencies
(upward price adjustment) where applicable.
These Notes for Preparing a Bill of Quantities are intended only as information for the Employer or the
person drafting the bidding documents. They should not be included in the final documents.

Sample Bill of Quantities

A. Preamble
1. The Bill of Quantities shall be read in conjunction with the Instructions to Bidders, General and Special
Conditions of Contract, Technical Specifications, and Drawings.
2. The quantities given in the Bill of Quantities are estimated and provisional, and are given to provide a
common basis for bidding. The basis of payment will be the actual quantities of work ordered and carried
out, as measured by the Contractor and verified by the Engineer and valued at the rates and prices bid in
the priced Bill of Quantities, where applicable, and otherwise at such rates and prices as the Engineer may
fix within the terms of the Contract.
3. The rates and prices bid in the priced Bill of Quantities shall, except insofar as it is otherwise provided
under the Contract, include all Constructional Plant, labor, supervision, materials, erection, maintenance,
insurance, profit, taxes, and duties, together with all general risks, liabilities, and obligations set out or
implied in the Contract.
4. A rate or price shall be entered against each item in the priced Bill of Quantities, whether quantities are
stated or not. The cost of Items against which the Contractor has failed to enter a rate or price shall be
deemed to be covered by other rates and prices entered in the Bill of Quantities.
5. The whole cost of complying with the provisions of the Contract shall be included in the Items
provided in the priced Bill of Quantities, and where no Items are provided, the cost shall be deemed to be
distributed among the rates and prices entered for the related Items of Work.

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6. General directions and descriptions of work and materials are not necessarily repeated nor summarized
in the Bill of Quantities. References to the relevant sections of the Contract documentation shall be made
before entering prices against each item in the priced Bill of Quantities.
7. Provisional Sums included and so designated in the Bill of Quantities shall be expended in whole or in
part at the direction and discretion of the Engineer in accordance with Sub-Clause 52.4 and Clause 58 of
Part I of the Conditions of Contract.
8. The method of measurement of completed work for payment shall be in accordance with IEE
regulation governing electrical services.
9. Errors will be corrected by the Employer for any arithmetic errors in computation or summation as
follows:
(a) Where there is a discrepancy between amounts in figures and in words, the amount in words will
govern; and
(b) where there is a discrepancy between the unit rate and the total amount derived from the
multiplication of the unit price and the quantity, the unit rate as quoted will govern, unless in the opinion
of the Employer, there is an obviously gross misplacement of the decimal point in the unit price, in which
event the total amount as quoted will govern and the unit rate will be corrected.
10. Rock is defined as all materials that, in the opinion of the Engineer, require blasting, or the use of
metal wedges and sledgehammers, or the use of compressed air drilling for their removal, and that cannot
be extracted by ripping with a tractor of at least 150 brake hp with a single, rear-mounted, heavy-duty
ripper.

Sample Bill of Quantities

B. Work Items
1. The Bill of Quantities usually contains the following part Bills, which have been grouped according to
the nature or timing of the work:
Bill No. 1-General Items;
Bill No. 2-conduit layering;
Bill No. 3-protection zones;
Bill No. 4-etc., as required;
Daywork Schedule; and Summary Bill of Quantities.
2. Bidders shall price the Bill of Quantities in local currency only and shall indicate in the Appendix to
bid the percentage expected for payment in foreign currency or currencies.
Sample
Bill of Quantities
Bill No. 1: General Items

Item no description unit quantity rate amount

101 Performance Bond/Guarantee Sum Item -
102 Insurance of the Works Sum Item -
103 Insurance of Contractor's Equipment Sum Item -
104 Third-Party Insurance Sum item -
105 Allow for maintenance of Works for 12 month 12
months after completion
106 -etc.-
112 Provide and equip Engineer's offices nr 2
113 Maintain Engineer's offices for 24 months, month 24
including services
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 114 -etc.-
121 Provide diversion road Sum Item -
122 Provide for traffic control and maintenance month 24 -
of diversion road
123 -etc.-
132 Provide for cleaning up the Site on sum Item -
completion
-etc.-

Total for Bill No. 1

(carried forward to Summary, p. )

Sample Bill of Quantities

Bill No. 2: Conduit layering

Item no description unit quantity rate amount

201 Perform mini-trunking m 3,000
202 Excavate section for distribution m3 200
boards and powerhouse space on the
walls and dispose
203 -etc.-
Total for Bill No. 2
(carried forward to Summary, p. )

Sample
Bill of Quantities
Bill No. 3: protection zones
Item no description unit quantity rate amount
301 Fix MCBs and isolators no 12
302 Fix the earth rod and lightning arester ft 60
Total for Bill No. 3
(Carried forward to Summary, p. )

Sample
Bill of Quantities
C. Daywork Schedule
General
1. Reference should be made to Sub-Clause of the Conditions of Contract. Work shall not be executed on
a daywork basis except by written order of the Engineer. Bidders shall enter basic rates for daywork items
in the Schedules, which rates shall apply to any quantity of daywork ordered by the Engineer. Nominal

‐ 19 ‐
quantities have been indicated against each item of daywork, and the extended total for Daywork shall be
carried forward as a Provisional Sum to the Summary Total Bid Amount. Unless otherwise adjusted,
payments for daywork shall be subject to price adjustment in accordance with the provisions in the
Conditions of Contract. Daywork Labor
2. In calculating payments due to the Contractor for the execution of daywork, the hours for labor will be
reckoned from the time of arrival of the labor at the job site to execute the particular item of daywork to
the time of return to the original place of departure, but excluding meal breaks and rest periods. Only the
time of classes of labor directly doing work ordered by the Engineer and for which they are competent to
perform will be measured. The time of gangers (charge hands) actually doing work with the gangs will
also be measured but not the time of foremen or other supervisory personnel.
3. The Contractor shall be entitled to payment in respect of the total time that labor is employed on
daywork, calculated at the basic rates entered by him in the Schedule of Daywork Rates: 1. Labor,
together with an additional percentage payment on basic rates representing the Contractor s profit,
overheads, etc.
(a) The basic rates for labor shall cover all direct costs to the Contractor, including (but not limited to) the
amount of wages paid to such labor, transportation time, overtime, subsistence allowances, and any sums
paid to or on behalf of such labor for social benefits in accordance with kenyanlaw. The basic rates will be
payable in local currency only.

Sample Bill of Quantities

Schedule of Day work Rates: 3. Contractors Equipment

Item no description Nominal Basic hourly Extended

quantity rental rate amount
(hours)
D302 Electrical tools
.1 Up to and including 3 kW 500
Total for Daywork: Contractor s Equipment
(carried forward to Daywork Summary, p. )

Bill of Quantities
Daywork Summary

Amounta Extended
() amount
1. Total for Day work: Labor
2. Total for Day work: Materials
3. Total for Day work: Contractor s Equipment

Total for Day work (Provisional Sum)

(carried forward to Bid Summary, p. )
a. The Employer should insert local currency unit.

Sample
‐ 20 ‐
Bill of Quantities
Summary of Specified Provisional Sums

Bill no. Item description Extended

no. amount
1
2 2.8 Supply and install equipment in pumping station 1,250,000
3

4 4.32 Provide for ventilation system in workshop 3,500,000

etc.

Total for Specified Provisional Sums(carried forward to Grand Summary (B), p. ) 4,750,000

Sample
Bill of Quantities
Grand Summary

Contract Name:
Contract No.:

General Summary Page amount

Bill No. 1: Preliminary Items
Bill No. 2: conduit layering
Bill No. 3: protection zones
etc.
Total for Day work (Provisional Sum)
Subtotal of Bills (A)
Specified Provisional Sums included in subtotal of bills (B) 4,750,000b
Total of Bills Less Specified Provisional Sums (A - B) (C)
Add Provisional Sum for Contingency Allowance (D) [sum]b
Bid Price (A + D) (Carried forward to Form of Bid) (E)
a. All Provisional Sums are to be expended in whole or in part at the direction
and discretion of the Engineer
b. To be entered by the Employer.

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 ESTIMATING
Estimating is the determination of probable project costs of any given project. Many items influence and
contribute to the cost of a project; each item must be analyzed, quantified, and priced. Because the
estimate is prepared before the actual construction, much study and thought must be put into the
construction documents.
The competition in construction bidding is intense, with multiple firms vying for a single project. To stay
in business, a contractor must be the lowest-qualified bidder on a certain number of projects, while
maintaining an acceptable profit margin.
This profit margin must provide the general contractor an acceptable rate of return and compensation for
the risk associated with the project. Because the estimate is prepared from the working drawings and the
project manual for a building, the ability of the estimator to visualize all of the different phases of the
construction project becomes a prime ingredient in successful bidding.
The working drawings usually contain information relative to the:
i. design,
ii. location,
iii. dimensions, and
iv. construction of the project,
While the project manual is a written supplement to the drawings and includes information pertaining to
materials and workmanship, as well as information about the bidding process. The working drawings and
the project manual constitute the majority of the contract documents, define the scope of work, and must
be considered together when preparing an estimate. The two complement each other, and they often
overlap in the information they convey. The bid submitted must be based on the scope work provided by
the owner or the architect.

The estimator is responsible for including everything contained in the drawings and the project manual in
the submitted bid. Because of the complexity of the drawings and the project manual, coupled with the
potential cost of an error, the estimator must read everything thoroughly and recheck all items. Initially,
the plans and the project manual must be checked to ensure that they are complete. Then the estimator can
begin the process of quantifying all of the materials presented. Every item included in the estimate must
contain as much information as possible. The quantities determined for the estimate will ultimately be
used to order and purchase the needed materials. The estimated quantities and their associated projected
costs will become the basis of project controls in the field.
Estimating the ultimate cost of a project requires the integration of many variables. These
variables fall into either direct field costs or indirect field costs. The indirect field costs are also referred
to as general conditions or project overhead costs in building construction. The direct field costs are the
material, labor, equipment, or subcontracted items that are permanently and physically integrated into the
building. For example, the labor and materials for the foundation of the building would be a direct field
cost. The indirect field costs are the cost for the items that are required to support the field construction
efforts. For example, the project site office would be a general conditions cost. In addition, factors such as
weather, transportation, soil conditions, labor strikes, material availability, and subcontractor availability
need to be integrated into the estimate. Regardless of the variables involved, the estimator must strive to
prepare as accurate an estimate as possible. Since subcontractors or specialty contractors may perform
much of the work in the field, the estimator must be able to articulate the scope of work in order for these
companies to furnish a price quote.

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The complexity of an estimate requires organization, estimator’s best judgment, complete specialty
contractors’ (subcontractors’) bids, accurate quantity takeoffs, and accurate records of completed projects.
At the conceptual stage of the project, the contractor prepares a cost estimate based on the project’s
concept. This is known as a conceptual estimate. When performing a conceptual estimate, typically,
drawings are not available or they are very limited. What exists is often a vague verbal or written
description of the project scope, which may be accompanied by a few sketches. When preparing this type
of estimate, the contractor makes assumptions about virtually every aspect of the project. The conceptual
estimate is used early in the design process to check to see if the owner’s wants are in line with their
budget and is often used as a starting point to begin contract negotiations.
During the design process, the contractor prepares and maintains a cost estimate based on the current, but
incomplete, design. This is often referred to as a preliminary estimate.
In addition, the contractor may prepare estimates that are used to select between building materials and to
determine whether the cost to upgrade the materials is justified.
What all these estimates have in common is that the design is incomplete. Once the design is complete,
the contractor can prepare a detailed estimated for the project.

ESTIMATING METHODS
The required level of accuracy coupled with the amount of information about the project that is available
will dictate the type of estimate that can be prepared. The different estimating methods are discussed
below.

Detailed Estimate

The detailed estimate includes determination of the quantities and costs of everything that is required to
complete the project. This includes materials, labor, equipment, insurance, bonds, and overhead, as well
as an estimate of the profit. To perform this type of estimate, the contractor must have a complete set of
contract documents. Each item of the project should be broken down into its parts and estimated.
Each piece of work that is to be performed by the contractor has a distinct labor requirement that must be
estimated.
The detailed estimate must establish the estimated quantities and costs of the materials, the time required
for and costs of labor, the equipment required and its cost, the items required for overhead and the cost of
each item, and the percentage of profit desired, considering the investment, the time to complete, and the
complexity of the project.

Assembly Estimating

In assembly estimating, rather than bidding each of the individual components of the project, the
estimator bids the components in groups known as assemblies. The installation of the components of an
assembly may be limited to a single trade or may be installed by many different trades. An example of a
simple assembly would be a residential light switch, which includes a single-gang box, a single-pole
switch, cover plate, two wire nuts, and an allowance of 20 feet of NM-B 12 gage wire. The entire
assembly would be installed by an electrician.
A residential electrical estimate could be prepared using assemblies for the switches, outlets, lights, power
panels, and so forth rather than determining the individual components.For the switch assembly, the
estimator would take off the number of switch assemblies needed for the project, and the software would
add one single-gang box, one single-pole, one cover plate, two wire nuts, and 20 feet of NM-B 12-gage
‐ 23 ‐
wire to the detailed estimate for each switch assembly. This simplifies the estimating process and
increases the productivity of the estimator.
Assembly estimating is also useful for conceptual and preliminary estimates. By using broad assemblies,
an estimate can be prepared quickly for an entire building. Weather conditions, building materials, and
systems as well as design and construction team members change from project to project, all adding to the
uniqueness of every project.Skill and judgment must be used while preparing this type of assembly
estimate to ensure that proper adjustments are made by taking into account the varying conditions of each
project.

Square-Foot Estimates

Square-foot estimates are prepared by multiplying the square footage of a building by a cost per square
foot and then adjusting the price to compensate for differences in the building heights, length of the
building perimeter, and other building components. In some cases, a unit other than square footage is used
to measure the size of the building.
For example, the size of a parking garage may be measured by the number of parking stalls in the garage.
The information required to produce a square-foot estimate is much less than is needed to prepare a
detailed estimate. For example, a preliminary set of design drawings (a single-line floor plan and key
elevations) would have the dimensions that are necessary to prepare a square-foot estimate. Square-foot
estimates are helpful to check whether the project, as designed, is within the owner’s budget. Like an
assembly estimate that uses broad assemblies, care must be exercised while preparing a square-foot
estimate to ensure that the projects used to determine the cost per square foot are similar to the proposed
project.
The square-foot method may be used for the entire project of just specific trades within the project. For
example, we may prepare a square-foot estimate for the electrical to check our electrical pricing. In
addition, the square-foot method may be applied to each cost code in a bid. This requires the estimator to
think through each cost code and determine the best unit of measure to use each cost code. Some items
may be best based on the square footage (for example, floor slabs and roofing) or the length of the
perimeter of the building (for example, exterior brick), and others may be nearly fixed for a building
unless a large change in size occurs (for example, elevators).

Parametric Estimates

Parametric estimates use equations that express the statistical relationship between building parameters
and the cost of the building. The building parameters used in the equation may include the gross square
footage, number of floors, length of perimeter, percentage of the building that is common space, and so
forth. For an equation to be usable the parameters used in the equation must be parameters that can be
determined early in the design process; otherwise the equation is useless. Parametric estimates are similar
to square-foot estimates; however, the equations used in parametric estimates are more complex and may
use log functions, ratios of parameters, and multiplication of parameters.
Parametric estimating is useful for preparing conceptual estimates based on assumptions of key building
parameters or estimates based upon early designs. As with square-foot estimates and assembly estimates
that use broad assemblies, care must be taken to ensure that the proposed project is similar to the projects
from which the equation has been derived.

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 Model Estimating

Model estimating uses computer models to prepare an estimate based on a number of questions answered
by the estimator. Model estimating is similar to assembly estimating, but it requires less input from the
estimator. For example, an estimate may be prepared for a warehouse by answering the following
questions:
_ What is the length of the building?
_ How many bays are along the length of the building?
_ What is the width of the building?
_ How many bays are along the width of the building?
_ What is the wall height above the grade?
_ What is the depth (from the grade) to the top of the footing?
_ What is the floor thickness?
_ Do you want wire mesh in the slab?
_ How many roof hatches do you want?
_ How many personnel doors do you want?
_ How many and what size of overhead doors do you want?
_ How many and what size of skylights do you want?
_ Do you want fire sprinklers?
_ What bathroom facilities do you want (separate male and female, unisex, or none)?
On the basis of the answers to these questions, the model prepares a preliminary estimate for the project.
Logic is built into the model, such that the model selects the necessary components for the estimate based
upon the answers to the questions. For example, the size of the spot footings in the center of the building
that support the roof and their costs are selected based on the area of the roof the footings support, which
is equal to the width of a bay multiplied by the length of a bay. The length and width of the bays are
calculated from the first four questions. A simple model estimate (Warehouse.xls) for a warehouse is
provided on the companion disk. This model makes many assumptions as to the design of the warehouse,
such as assuming the exterior wall is constructed of concrete masonry units (CMU). The model ignores
the site and excavation cost, which needs to be added to the estimate from the model to get a complete
estimate.
Estimating models may be complex and may prepare a detailed estimate for the entire project, or the
models may be simple and prepare a preliminary estimate for part of a project.
As with square-foot estimates, assembly estimates that use broad assemblies, and parametric estimates,
care must be taken to make sure that the proposed project is similar to the projects from which the model
was developed.

Project Comparison Estimates

Project comparison estimates are prepared by comparing the cost of a proposed project to a completed
project. When preparing an estimate using this method, the estimator starts with the costs of a comparable
project and then makes adjustments for differences in the project. For example, an estimate for the
buildings in an apartment project may be prepared from a project built using the same plans during the
previous year in a nearby city. In this example, the prices from the completed project need to be adjusted
for inflation, changes in the availability and cost of labor, changes in the plans made to meet city codes,
and so forth. In most cases, the site should be estimated using another method because of the many

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differences in site conditions. As with other estimating methods that do not prepare a detailed list of
materials, care must be taken to ensure that the proposed project is similar to the completed project.

When preparing a project comparison estimate, the estimator must make sure that the projects are very
similar in both design and use. It is obvious that one cannot use the costs from a warehouse to determine
the costs of a school. They are simply too different. But what about using the costs for an apartment
complex to estimate the costs for a condominium project? Even if the design is the same, the use and
clientele are different. It costs more to deal with many owners (in the case of the condominiums)
ratherthan one owner (in the case of the apartments). If this comparison is made, the estimator needs to
take into account the difference in the use and ownership. When comparing two projects, the estimator
needs to consider the following:
_ Size. The size (usually square footage) should be within 10 percent for the projects being compared. As
the size of the building increases, the cost per square foot decreases. Conversely, as the size decreases, the
cost per square foot increases. This is due to economies of scale.
_ Height between floors. Increasing the height between floors increases the envelope cost without
increasing the square footage of the building.
_ Length of perimeter. Two buildings, a long skinny one and a square one, will have very different
perimeters and envelope costs for the same square footage.
_ Project location. Labor availability, materials availability, and government regulations vary by location.
_ When the project was built. Inflation in labor, materials, and fuel costs; weather (summer versus
winter).
_ Type of structure: Concrete, steel, wood framed, block.
Level of finishes. Quality of materials and workmanship. _ Utilization of the space. Some spaces cost
more than others do. Bathrooms and kitchens cost more per square foot than bedrooms.
_ Union versus nonunion labor.
_ Soil conditions.

CONTRACT DOCUMENTS
The bid submitted for any construction project is based on the contract documents. If an estimator is to
prepare a complete and accurate estimate, he or she must become familiar with all of the documents. The
documents are listed and briefly described in this section.
For design-bid-build projects, the contract documents consist of the owner-contractor agreement, the
general conditions of the contract, the supplementary general conditions, the working drawings, and
specifications, including all addenda incorporated in the documents before their execution. All of these
documents become part of the contract.
Agreement. The agreement is the document that formalizes the construction contract, and it is the basic
contract. It incorporates by reference all of the other documents and makes them part of the contract. It
also states the contract sum and time allowed to construct the project.
General Conditions. The general conditions define the rights, responsibilities, and relations of all parties
to the construction contract.
Supplementary General Conditions (Special Conditions). Because conditions vary by locality and
project, the supplementary general conditions are used to amend or supplement portions of the general
conditions.
Working Drawings. The actual plans (drawings, illustrations) from which the project is to be built are
the working drawings. They contain the dimensions and locations of building elements and materials
required, and delineate how they fit together.
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Specifications. Specifications are written instructions concerning project requirements that describe the
quality of materials to be used and their performance.
Addenda. The addenda statement is a drawing or information that modifies the basic contract documents
after they have been issued to the bidder, but prior to the taking of bids. They may provide clarification,
correction, or changes in the other documents.
These documents can be as simple as an agreement with a conceptual description of the project.

AVAILABILITY OF CONTRACT DOCUMENTS

When paper copies of the plans and the project manual are used, there is usually a limit on the number of
sets of contract documents a general contractor may obtain from the architect/engineer, and this limitation
is generally found in the invitation to bid or instructions to bidders. Subcontractors, material suppliers,
and manufacturers’ representatives can usually obtain prints of individual drawings and specification
sheets for a fee from the architect/engineer, but it should be noted that this fee is rarely refundable. The
architect/ engineer will require a deposit for each set of contract documents obtained by the prime
contractors. The deposit, which acts as a guarantee for the safe return of the contract documents, usually
ranges from $10 to over $200 per set and is usually refundable. It should be realized that the shorter the
bidding period, the greater the number of sets that would be required. Also, a large complex job requires
extra sets of contract documents to make an accurate bid.
To obtain the most competitive prices on a project, a substantial number of subcontractors and material
suppliers must bid the job. To obtain the most thorough coverage, there should be no undue restrictions
on the number of sets of contract documents available. If this situation occurs, it is best to call the
architect/engineer and discuss the problem. For many projects, the owner makes drawings available in
computer files, which can be printed or used in estimating software (such as On-screen Takeoff ). This
reduces the cost of reproducing the drawings and project manual, making it economical to distribute them
to numerous contractors and subcontractors. Often electronic copies of the plans and the project manual
can be downloaded via the Internet. During the bidding period, the lead estimator needs to be certain that
the contract documents are kept together.
Never lend out portions of the documents. This practice will eliminate subcontractors’ and material
suppliers’ complaints that they did not submit a complete proposal because they lacked part of the
information required for a complete bid.
Some subcontractors and suppliers still prefer to work with paper copies of the plans. The general
contractors often set aside space in their offices where the subcontractors’ and material suppliers’
estimators may work. In this manner, the contract documents never leave the contractor’s office and are
available to serve a large number of bidders who want to use the paper copies.

TENDERING METHODS & TENDERING PROCESS

There are three types of tendering methods used in construction – open tendering, selective tendering, or
by negotiation.

OPEN TENDERING

Under open tendering the employer advertises his proposed project, and permits as many contractors as
are interested to apply for tender documents. Sometimes he calls for a deposit from applicants, the deposit
being returned ‘on receipt of a bona fide tender’. However, this method can be said to be wasteful of
‐ 27 ‐
contractors’ resources since many may spend time preparing tenders to no effect. Also, knowing their
chances of gaining the contract are small, contractors may not study the contract in detail to work out
their minimum price, but simply quote a price that will be certain to bring them a profit if they win the
contract.

Thus the employer may be offered only ‘a lottery of prices’ and not necessarily the lowest price for which
his project could be constructed. If he chooses the lowest tender he runs the risk the tenderer has not
studied the contract sufficiently to appraise the risks involved; or the tenderer might not have the technical
or financial resources to undertake the work successfully. It is true that the employer can check the
resources and experience of the lowest bidder and reject his tender if the enquiry proves unsatisfactory;
but several bids may be below the estimated cost of the job and, if such tenderers appear satisfactory and
their bids are not far apart in value, it is difficult for the employer to choose other than the lowest. The
engineer advising the employer may think there is a risk that all such low bids could prove unsatisfactory,
but he cannot advise the employer what other bid to accept because he has no certainty of information.

SELECTIVE TENDERING

Under selective tendering the employer advertises his project and invites contractors to apply to be placed
on a selected list of contractors who will be invited to bid for the project (expression of interest).
Contractors applying are given a list of information they should supply about themselves in order to ‘pre-
qualify’. The advantage to the employer is that he can select only those contractors, who have adequate
experience, are financially sound, and have the resources and skills to do the work. Also, since only half a
dozen or so contractors are selected, each contractor knows he has a reasonable chance of gaining the
contract and therefore has an incentive to study the tender documents thoroughly and put forward his
keenest price. However, since contractors have all pre-qualified it is difficult to reject the lowest bid, even
if it appears dubiously low – unless that is due to some obvious mistake.

A problem with both open and selective tendering is that a contractor’s circumstances can change after he
has submitted his tender. He can make losses on other contracts which affect his financial stability; or
may be so successful at tendering that he does not have enough skilled staff or men to deal with all the
work he wins. Neither method of tendering nor any other means of procuring works can therefore
guarantee avoidance of troubles.

NEGOTIATED TENDERS

Negotiated tenders are obtained by the employer inviting a contractor of his choice to submit prices for a
project. Usually this is for specialized work or when particular equipment is needed as an extension of
existing works, or for further work following a previous contract. Sometimes it can be used when there is
a very tight deadline, or emergency works are necessary. A negotiated tender has a good chance of being
satisfactory because, more often than not, it is based on previous satisfactory working together by the
employer and the contractor.

When invited to tender the contractor submits his prices, and if there are any queries these are discussed
and usually settled without difficulty. Thus mistakes in pricing can be reduced, so that both the engineer
advising the employer and the contractor are confident that the job should be completed to budget if no

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unforeseen troubles arise. However, negotiated tenders for public works are rare because the standing
rules of public authorities do not normally permit them. But a private employer or company not subject to
restraints such as those mentioned in the next section can always negotiate a contract, and many do so,
particularly for small jobs. Even when a negotiated tender is adopted it is usual to prepare full contract
documents so that the contract is on a sound basis. Production of the documents also means they are
available for open or selective tendering should a negotiated tender fail, or should the chosen contractor
be unable to undertake the work.

TENDER PROCESS

The seven main steps in the tender process are

1. TENDER PROCESS IS DETERMINED: the organization requesting the tender will determine
the type of tender that will be used, as well as what will be involved in the tender process. The
procurement method and forms of tendering are established by determining.

i. The parts of the project for which tenders are to be sought.

It is important that the scope of a particular contract is clearly defined and that interfaces with
other parts of the project are accounted for. A contract may comprise design, delivery of plant and
machinery, construction or a combination of these.
ii. The conditions of contract to be adopted.
Only widely recognized standard conditions of contract which specifically cover the works and
services to be rendered by the contractor, should be used.
iii) The award criteria.
The award criteria should cover all elements on which the employer wishes the tenderers to
compete.The factors other than price to be used in the award criteria should to the extent
practicable be expressed in monetary terms. The award criteria may include costs,
quality/performance, time, ingenuity (ability to invent things or solve problems in clever way) and
environmental effects, and it may be necessary to apply weightings to each criterion to reach a
basis which will be used when evaluating the tenders.

iv) The tendering procedure.

A fair and systematic approach for obtaining and evaluating tenders may be adopted.
v) The criteria which shall be used to prequalify tenderers.
In principle, prequalification should always be carried out to ensure that only those who are
qualified to undertake the work invest resources in the preparation of a tender.

Once these basic preconditions have been determined and agreed, the employer and his engineer
commence the planning of when and how the tendering can be carried out. If, for unforeseen reasons,
changes in principle and form have to be made at a later stage in the project the implications of such
changes have to be considered and assessed carefully.

The tendering procedure, implies that certain activities have to be carried out in connection with each part
of the project for which a separate tender is to be called. It is important that these activities are carried out
in a systematic and timely manner. They should therefore be planned carefully and incorporated in the
programme for the project. Normally, a preliminary overall programme covering all major activities of
‐ 29 ‐
the project is prepared in the initial stage of the project. As a minimum, such programme should comprise
the main phases of the project, that is:
- Project definition
- tendering procedure
- Design
- Construction
- Taking-over and should establish all milestones of significance in connection with each phase.

Calling tenders for a given part of the project should be carried out in compliance with the overall
programme. In order to ensure this compliance, detailed programmes should be made for implementing
the tendering procedure for each part of the project.
As a minimum, these programmes should specify duration and deadlines for the following activities in
connection with each potential contract.
- Preparation of tender documents
- Prequalification of tenderers
- Obtaining tenders
- Opening of tenders
- Evaluation of tenders
- Award of contract
Time should be allowed in each programme for the employer to make necessary decisions and give
required approvals.
2. REQUEST FOR TENDER IS PREPARED: the request for tender outlines what is required, the
contractual requirements and how you should respond.

 A call for bids, call for tenders, or invitation to tender (ITT) (often called tender for short) is a
special procedure for generating competing offers from different bidders looking to obtain an
award of business activity in works, supply, or service contracts. They are usually preceded by a
pre-qualification questionnaire (PQQ).
 The Request for Tender (RFT) Terms and Conditions to the potential tenderers. See fig 1.
o This template sets out the terms and conditions of the tender process and specifies the
information that each tenderer must provide.
o If the Tenderee does not understand any part of the RFT terms and conditions or has any
concerns about the content of the RFT terms and conditions, it should obtain its own legal
advice.
Fig 1 Sample: Request for tender terms and conditions

[Eldoret poly]

REQUEST FOR TENDERS FOR THE PROVISION OF

[Farm machinery & services]

Date issued: [9/1/14]

Closing time and date: [5 pm 9/30/2014]

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 Request for Tender

1. This Request for Tenders (RFT) is issued by [Eldoret poly] and invites tenders for the provision of
specialist services in relation to [Farm machinery & services].

2. The purpose of this RFT is to obtain sufficiently detailed information from potential providers
about their respective organisations and the way they propose to provide specialist advice services
to enable us to select a provider of those specialist advice services, if we choose to.

3. This RFT also outlines how we will carry out the RFT process and includes a description of the
criteria we intend to use to evaluate the tenders.

4. This RFT consists of the following:

Section A - RFT Requirements and Process

Sets out instructions for responding to the RFT

Section B - RFT Conditions

Sets out the conditions for responding to the RFT

Section C - Evaluation of Tenders

Sets out how we will evaluate the tender

Section D - Communication of Decisions

Sets out how we will communicate our decision to tenderers.

Section E - Tender Response Form

Sets out how tenderers should set out their response to this RFT

Section F – Specialist Advice Service Specifications

Sets out the specifications for the specialist advice services we are seeking

Section G – Information about our company (Eldoret poly )

Sets out further information about us that may be of assistance to tenderers in the preparation of tenders.

Proposed contract term

5. The contract period proposed is from [ 1 January 2015 to 31 August 2015].

RFT timetable

6. The indicative timetable for this RFT is:

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 Date Activity

[9/1/2014] RFT issued

9/30/014 Tender closing date

10/1/2014 Evaluation of tenders

11/1/2014 Discussion with preferred tenderer (if any)

12/1/2014 Contract awarded (if any)

1/1/2015 Services commence (if contract awarded)

7. Please note that this timetable is indicative only and may be subject to change at our discretion.
We will notify tenderers of any changes to the indicative timetable as and when we become aware
of them.

Section A: RFT Requirements and Process

Submission of Tenders

8. Tenders must be enclosed in a sealed envelope marked “Tender for Farm machinery & services”
and addressed to: Eldo poly [p.o box 4461-30100 Eldoret]

9. We must receive the tender by 5pm on [9/30/2014].

10. The tender should be submitted in the following format:

 [Two] hard copies

 Only 1 copy of any additional material (e.g. brochures and attachments) not specifically
requested by this RFT may be supplied. Please list any additional material you include in a
covering letter.
11. Tenders may be forwarded by mail or courier. Tenders must not be forwarded by email or
facsimile, and such tenders will not be accepted.

12. Joint tenders may be submitted, provided one of the joint tenderers is identified as the contact point
for all communications relating to this RFT.

Late tenders

13. As a general rule, any tender received after the closing time, for whatever reason, will not be
considered. However, we reserve the right to receive and consider a late tender.

Acknowledgement of receipt of tender

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14. Following the closing date for submitting tenders, all tenderers who submit a tender will receive an
acknowledgement in writing from us that their tender has been received.

Further communications

15. All communications regarding this RFT must be directed in writing and sent by post or email to our
Representative:

[D. Rotich]

[4461-30100]

[eldorel ,kapsabet rd]

16. Any tenderer who indirectly or directly contacts any of our officers, employees, Board members or
advisors other than the Representative named in paragraph 15 concerning any aspect of this RFT
process may in our discretion be disqualified and their tender rejected. In such event, the tenderer
will be notified in writing by us.

Additional information or clarification

17. Requests for additional information or clarification must be in writing and sent by post or email to
our Representative named in paragraph 15.

18. Any clarification or additional information relating to this RFT or amendment to this RFT will be
issued by us as an “amendment notice” or “clarification” and sent to each tenderer. All amendment
notices and clarifications issued will become part of this RFT.

Section B: RFT Conditions

General conditions

19. We reserve the right to:

 consider any tender (whether or not it conforms or has been submitted in accordance with the
requirements set out in this RFT, is a late tender or is an alternative tender)
 reject all or any tenders
 not accept and not award the lowest priced tender or highest scoring tender
 meet and/or negotiate with any tenderer to the exclusion of others without being under any
obligation to involve any other tenderers or inform any other tenderers of the negotiations and
without incurring any obligations to any tenderer
 award contracts for all or part or any combination of parts of the services and to one or more
tenderers
 waive any irregularities or informalities in the RFT process;
 amend this RFT, or any associated documents
 request any tenderer to resubmit a tender on a revised or alternative basis
 suspend or cancel (in whole or in part) the RFT process
 re-advertise for or otherwise seek tenders.

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Tenderer investigations

20. The tenderer is solely responsible for examining the documents described in this RFT and any other
information provided to the tenderer by us including any amendment notice or clarification issued
prior to the closing date. All tenders are made solely in reliance on the tenderer’s own judgment.

21. We will not be responsible for any error, omission or misdescription in this RFT, or any associated
documents, information, amendment notices or clarifications.

Information complete and accurate

22. By submitting a tender, tenderers warrant that all information provided to us in, or in relation to, a
tender is complete and accurate in all material respects. Tenderers also warrant to us that the
provision of that information, and the use of it for the evaluation of tenders and for any resulting
negotiation, will not breach any third party intellectual property rights.

No warranties or representations

23. We make no representations and give no warranties in relation to this RFT.

Confidentiality

24. The information supplied by us in connection with this RFT or any contract that may arise out of
this RFT is confidential. Tenderers must not release or disclose any of the information to any other
person, (other than to its employees or advisors), without our prior written consent.

25. We may, if we consider it appropriate to do so, require tenderers to sign a confidentiality deed
before releasing any confidential or commercially sensitive information to any tenderer. Tenderers
agree to sign a confidentiality deed, if required to do so.

Advertising

26. Tenderers must not advertise or publish in any newspaper, magazine, journal or other advertising
medium any information relating to this RFT process or any contract that may arise out of it
without our prior written approval. Any tenderer who does so may be disqualified from inclusion
in the RFT process and their tender rejected. In such event, the tenderer will be notified in writing
by us.

Conflicts of interest

27. Tenderers must not place themselves in a situation that could create a conflict of interest. If there
are any situations or relationships that could be so construed they should be declared immediately
as they become known to the tenderer. In that case, tenderers must explain how the conflict will be
managed or removed. We will assess the impact and may decide to disqualify a tenderer from
inclusion in the RFT process and reject the tender. In such event, the tenderer will be notified in
writing by us.

No canvassing or acceptance of gifts

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28. Any tenderer who indirectly or directly canvasses any of our officers, employees, Board members
or advisors concerning any aspect of this RFT process may, in our discretion, be disqualified and
their tender rejected. In such event the tenderer will be notified in writing by us.

29. Gifts, inducements, promotional products, services or provisions of any other benefit offered by
tenderers to any of our officers, employees, Board members or advisors will not be accepted at any
time before, during or after this RFT process. Any tenderer who offers such benefits may be
disqualified from inclusion in the RFT process and their tender rejected. In such event, the tenderer
will be notified in writing by us.

No legal relationship

30. In submitting a tender, the tenderer acknowledges that it accepts the basis upon which tenders will
be considered, and the tenderer further acknowledges that no legal relations will be created between
the tenderer and us by the tenderer submitting a tender. No legal or other obligations shall arise
between the tenderer and us in relation to this RFT process unless and until the tenderer enters into
a contract with us.

Liability limitation

31. We and our officers, employees, Board members or advisors will not be liable in contract or tort or
in other way for any direct or indirect damage, loss or cost incurred by any tenderer or other person
in respect of this RFT process.

Costs

32. Tenderers must pay their own costs of preparing and submitting tenders, including but not limited
to any communications or negotiations with us and any meetings or interviews with us.

Price

33. Tender prices should be quoted inclusive of goods and services tax (GST).

Governing law

34. This RFT is governed by Kenyan law. The Kenyan courts have the exclusive jurisdiction as to all
matters relating to this RFT.

Section C: Evaluation

Evaluation criteria

35. Each tender received will be evaluated as to its merits with respect to the following evaluation
criteria:

 How the tenderer proposes to provide the specialist advice services

 The tenderer’s organisational structure, capacity and leadership
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  The tenderer’s experience
 The tenderer’s capacity to provide the services
 Cost.
36. The above list of criteria is indicative only. In addition to the above criteria, we may have regard to
any other matters we consider relevant.

Evaluation process

37. We will evaluate each tender according to the above criteria.

Clarification

38. Tenderers may be asked to clarify their tenders or provide additional information during the tender
evaluation process.

Ownership of tender documents

39. The tenders submitted in response to this RFT will be retained by us.

Checks

40. We are not obliged to contact referees provided by tenderers and may seek further information on
any issue from other sources. We may also take into account knowledge of the tenderer that we
already have.

Section D: Communication of Decision

Communication with preferred tenderer(s)

41. We will notify the preferred tenderer (if any) in writing of their selection as a preferred tenderer
and may proceed to negotiate a contract.

42. Should we advise a tenderer that it is a preferred tenderer(s), such advice does not:

 constitute an acceptance by us of the tenderer’s tender, or create a contract or

 constitute an award of the contract to the tenderer or tenderers.
43. We may discontinue any negotiations of the contract with the preferred tenderer at any time.

Communication with unsuccessful tenderers

44. We will notify all unsuccessful tenderers in writing that their tenders have not been successful after
we have entered into a contract with a tenderer.

Tender validity period

45. All tenders must remain open for consideration by us until we have entered into a contract with a
tenderer.

Section E: Tender Response Form

‐ 36 ‐
Instructions

46. Tenderers must provide an answer to each Part of this Section and complete the Tender Cover
Form attached as Appendix 1.

Specialist advice services

47. Please include:

(i) A description of how you would provide the specialist advice services required by the RFT –
this section should describe the service components you expect to provide and how you will
deliver them.
(ii) A summary of the benefits which, in your opinion, would be achieved from our acceptance of
your tender.
(iii) An overview of your capability to carry out the specialist advice services and of
subcontractors (if any) that you propose to engage in connection with the services.
(iv) Confirmation that you have the capacity to undertake the work within the period it is
required.
(v) An explanation of how you think your tender aligns with the other settlement-related
activities we are carrying out.
48. Your tender should set out clearly any assumptions you have made in respect of the requirements
of this RFT.

Organisational structure, capacity and leadership

49. Please describe your status as a legal entity (natural person/partnership/company):

 If the tenderer is submitting as a natural person, please provide personal references

 If the tenderer is submitting as a partnership, please state the names of each partner and
references for each of the partners
 If the tenderer is submitting as a company, please state the names of each Director and any
key personnel, and references for each of these persons and the full names of all major
shareholders of the company, including any beneficial shareholders who are not the registered
shareholders.
 Other – please state.
50. Please describe the governance and management structure of your organisation.

51. If you are proposing to provide the specialist advice services jointly with another organisation,
please describe the structure of the relationship with the other organisation and provide copies of
any agreements or memorandum of understanding that you have with the other organisation.

Provider experience

52. Please provide details of your organisation’s history or experience in:

 Providing the specialist advice services specified in this RFT

 Any other Treaty of Waitangi settlement processes.
53. Please include details about the length of time that you have provided this type of specialist advice
service and the specific services provided.
‐ 37 ‐
Capacity to provide the services

54. Please provide details on the staffing levels, and skills and qualifications that you currently have in
your organisation.

55. Please include details on the skills or expertise you consider will be required to deliver your
specialist advice services that will need to be provided from another provider (ie a subcontractor),
and whether you have an existing relationship with another provider that ensures your access to
those skills?

Cost

56. Please provide an estimate of the costs you will charge for the provision of the specialist advice
services. Please ensure all costs are inclusive of GST.

57. Please include a comprehensive list of any assumptions made in your pricing model.

3. TENDERS ARE INVITED: the value, complexity and business category determine how tenders are
invited.

The organization requesting the tender sends:

 A letter to potential tenderers inviting them to tender for the specialist advice services. See fig 2
Fig 2 sample Letter inviting potential tenderers to tender for the work

[9/1/2014]

[Brown Engineering services co ltd]

[p.o box xxxx eldoret]

Dear Sir

Request for Tenders

We are currently seeking tenders from suitably qualified persons to undertake specialist advice services in
relation to [industrial installation].

The RFT Terms and Conditions are attached. This documents sets out the terms and conditions for
submitting a tender as well as the information that you must include when submitting your tender.

All tenders should be signed and forwarded to [D .Rotich] at the address specified in the RFT Terms and
Conditions. Please ensure that all communications are made with our Representative only.

We look forward to receiving your tender.

‐ 38 ‐
Thank you,

D.Rotich [insert name of the person authorised to sign letters on behalf of your organisation]
[Eldoret polytechnic farm]

4. SUPPLIERS RESPOND: you should first obtain all relevant documentation. Then:

a. Attend any pre tender briefing sessions being conducted

b. Clarify any uncertainties
c. Plan your response
d. Prepare your response
e. Submit your response in the right format, on time and at the right location

5. EVALUATION AND SELECTION: each tender will be checked for compliance, and if compliant,
then evaluated against the criteria specified in the tender documentation. The tender that offers best value
for money will win the business.

6. NOTIFICATION AND DEBRIEFING: when a contract has been awarded, the successful tenderer
will be advised in writing of the outcome. Unsuccessful tenderers are also advised and offered a
debriefing interview.

Samp[10/28/2014]

[Lagat contractors]

[167 Nandi]

Letter to preferred tenderer

Dear Sir

Request for Tenders

Thank you for submitting a tender for specialist advice services in relation to [industrial installation
services]. We wish to advise that you are our preferred tenderer. We would therefore like to arrange a
time to meet with you to proceed to negotiating a contract.

We look forward to hearing from you.

Thank you

[D. Rorich]
[Eldoret poly farm]

Letter advising other tenderers that their tenders were not successful

[10/28/2014]

[Faith engineering services]

‐ 39 ‐
[p.o box 456 seikuru]

Dear Sir

Request for Tenders

We refer to your tender for specialist advice services in relation to [industrial installation services].We
wish to advise that your tender has not been successful on this occasion.

Thank you for submitting your tender.

[Anyango Betty]
[Eldoret poly farm]

Letter advising all tenderers that the tender has been cancelled

[10/28/2014]

[meakins contractors]

[456-00100 kariobangi]

Dear Sir

Cancellation of Tender

We refer to your tender for specialist advice services in relation to [industraial installation services].

We wish to advise that we have cancelled the tender process at this time.

Thank you for submitting your tender.

[Anyango Betty]
[Eldoret poly farm]

7. CONTRACTS ESTABLISHED AND MANAGED: generally a formal agreement will be required

between the successful tenderer and the relevant agency.

Contract Documents
i. Agreement
ii. General Conditions
iii. Supplementary/Special Conditions
iv. Working Drawings
v. Specifications
vi. Advertisement for Bids / Invitation to Bid
vii. Instruction to Bidders
viii. Addenda
ix. Associated Documents
x. Bid Form / Bid Proposal
xi. Bid Bond

‐ 40 ‐
 xii. Labor and Material Payment Bond
xiii. Performance Bond
xiv. Insurance

CRITICAL PATH ANALYSIS

Critical path is the sequential activities from start to the end of a project. Although many projects have
only one critical path, some projects may have more than one critical path depending on the flow logic
used in the project. If there is a delay in any of the activities under the critical path, there will be a delay
of the project deliverables. Most of the times, if such delays occurs, project acceleration or re-sequencing
is done in order to achieve the deadlines.
Critical path method is based on mathematical calculations and it is used for scheduling project
activities. In the critical path method, the critical activities of a program or a project are identified. These
are the activities that have a direct impact on the completion date of the project.

BASIC CONCEPTS AND FORMULA

1. Framework of Pert/Cpm
The PERT and CPM models are extremely useful for the purpose of planning, scheduling and controlling
the progress and completion of large and complex projects. A network is a graphical representation of a
project, depicting the flow as well as the sequence of well-defined activities and events. Both CPM
(Critical Path Method) and PERT (Programme Evaluation and Review Technique) are network
techniques/models.
2. Network
A network is, then, a graphical representation of a project plan, showing the interrelation- sh ip of the
various activities. Networks are also called arrow diagrams. When the results of time estimates and
computations have been added to a network, it may be used as a project schedule.
3. Steps in PERT/CPM Model
PERT/CPM model building consists of following five steps:
i. Analyze and break down the project in terms of specific activities and/or events.

‐ 41 ‐
 ii. Determine the interdependence and sequence of specific activities and prepare a network.
iii. Assign estimates of time, cost or both to all the activities of the network.
iv. Identify the longest or critical path through the network.
v. Monitor, evaluate and control the progress of the project by re-planning, rescheduling and
reassignment of resources

Identification of the critical path

For this, you need to determine four parameters of each activity of the network.
 Earliest start time (ES) - The earliest time an activity can start once the previous dependent
activities are over.
 Earliest finish time (EF) - ES + activity duration.
 Latest finish time (LF) - The latest time an activity can finish without delaying the project.
 Latest start time (LS) - LF - activity duration.
The float time for an activity is the time between the earliest (ES) and the latest (LS) start time or between
the earliest (EF) and latest (LF) finish times.
During the float time, an activity can be delayed without delaying the project finish date. The critical path
is the longest path of the network diagram. The activities in the critical path have an effect on the deadline
of the project. If an activity of this path is delayed, the project will be delayed. In case if the project
management needs to accelerate the project, the times for critical path activities should be reduced.
4. Activity
An activity is a distinct operation or an element of a project which consumes time or resources and has a
definable beginning and ending. Commonly used terms synonymous with "activity" are "task" and "job".

5. Conventions Adopted In Drawing Networks

There are two conventions normally adopted while drawing networks:
(a) Time flows from left to right.
(b) Head events always have a number higher than that of the tail events.
6. Graphical Representation of Events and Activities
Events are represented by numbers within circles. Activities are represented by arrows; the arrow-heads
represent the completion of the activities. The length and orientation of the arrow are of no significance.
7. Fundamental Properties Governing the Representation of Events and Activities
The representation of events and activities is governed by one simple dependency rule which requires that
an activity which depends upon another activity is shown to emerge from the head event of the activity
upon which it depends and that only dependent activities are drawn in this way. An event cannot occur
until all activities leading to it are complete. No activity can start until its tail event is reached.
‐ 42 ‐
8. Logical Sequencing and Connection of Activities
A project entails several activities. The arrows are arranged to show the plan of logical sequence in which
the activities of the project are to be accomplished. The sequence is ascertained for each activity by three
queries:
(i) Which activity or activities must be completed before the start of a particular activity?
(ii) Which activity or activities should follow this?
(iii) Which activities can be accomplished simultaneously?
9. Dummy activity
It is a hypothetical activity which consumes no resource and time. It is represented by dotted lines and is
inserted in the network to clarify activity pattern under the following situations:
(i) It is created to make activities with common starting and finishing events distinguishable.
(ii) To identify and maintain the proper precedence relationship between activities that are not connected
by events.
(iii) To bring all "loose ends" to a single initial and a single terminal event in each network.
Advantages of Critical Path Method
i. Offers a visual representation of the project activities.
ii. Presents the time to complete the tasks and the overall project.
iii. Tracking of critical activities.
Question 1
Explain the following in the context of a network:
(i) Critical path
(ii) Dummy activity.
Answer
(i) Critical Path:
Critical Path is a chain of activities that begin with the starting event and ends with ending event of a
particular project. It is that path that runs through a network with the maximum length of time or it
indicates the maximum possible time required for completion of a project. Critical path indicates the
minimum time that will be required to complete a project. It is determined after identifying critical events.
Critical path goes through critical events.
(ii) Dummy Activities:

‐ 43 ‐
Dummy Activity is that activity which does not consume time or resources. It is used when two or more
activities have same initial and terminal events. As a result of using dummy activities, other activities can
be identified by unique end events. These are usually shown by arrows with dashed lines.

Question 2
The following network gives the duration in days for each activity:

(i) You are required to list the critical paths.

(ii) Given that each activity can be crashed by a maximum of one day, choose to crash any four activities
so that the project duration is reduced by 2 days.
Answer
Critical Paths

(i) Choose 5 - 6, common path;

Crash by 1 day
ii) Choose: 1 - 2, 1 - 3, 1 – 4 or (iii) Choose: 1 - 2, 3 - 5, 4 – 5 or (iv) Choose: 2 - 5, 3 - 5, 4 - 5 Or (v)
Choose: 1 - 3, 1 - 4, 2 – 5
Question 3
A company is launching a new product and has made estimates of the time for the various activities
associated with the launch as follows:

‐ 44 ‐
Required:
(i) Draw the network diagram.
Answer
(i) Network Diagram
Critical Path A -78 -7 C -7 F -7 G -7 Z

Question 4
Consider the schedule of activities and related information as given below, for the construction of a Plant:

‐ 45 ‐
Assuming that the cost and time required for one activity is independent of the time and cost of any other
activity and variations are expected to follow normal distribution.
Draw a network based on the above data and calculate:
(i) Critical path
(ii) Expected cost of construction of the plant
(iii) Expected time required to build the plant
(iv) The standard deviation of the expected time.
Answer
The required network is drawn below:

(i) From the above network, it can be noted that the critical path is 1 - 2 - 4 - 6 - 8.
(ii) Expected cost of construction of the plant = (5 + 3 + 4 + g + 2 + 12 + 20 + 7 + 14 +4) millions of
kshs. = 80 million
‐ 46 ‐
(iii) Expected time required to build the plant = 4 + 6 + 9 + 1 = 20 months.
Question 5
A product comprised of 70 activities whose normal time and cost are given as follows:
activity Normal times (days) Normal cost
1-2 3 50
2-3 3 5
2-4 7 70
2-5 9 120
3-5 5 42
4-5 0 0
5-6 6 54
6-7 4 67
6-8 13 130
7-8 10 166

Indirect cost kshs 9 per day.

(i) Draw the network and identify the critical path.
(ii) What are the project duration and associated cost?
(iii) Find out the total float associated with each activity.
Answer

Critical path A D G H J
1------2-------5-------6---------7---------8
(ii) AD G H J is the critical path having normal project duration
3 + 9+6+ 4 +10 = 32days
Normal project cost:- Direct cost =kshs. 704
Indirect cost (32x9) =~288 + 704= 992
(iii) Calculation of total float.

‐ 47 ‐
 activity Normal Time (days) EF LF Float(LF-EF)
1-2 3 3 3 0
2-3 3 6 7 1
2-4 7 10 12 2
2-5 9 12 12 0
3-5 5 11 12 1
4-5 0 10 12 2
5-6 6 18 18 0
6-7 4 22 22 0
6-8 13 31 32 1
7-8 10 32 32 0

Question 7
A company had planned its operations as follows:
Activity Duration (days)
1-2 7
2-4 8
1-3 8
3-4 6
1-4 6
2-5 16
4-7 19
3-6 24
5-7 9
6-8 7
7-8 8

(i) Draw the network and find the critical paths.

(ii) After 15 days of working, the following progress is noted:
(a) Activities 1- 2, 1- 3 and 1- 4 completed as per original schedule.
(b) Activity 2- 4 is in progress and will be completed in 4 more days.
(c) Activity 3-6 is in progress and will need 17 more days to complete.
(d) The staff at activity 3-6 are specialized. They are directed to complete 3—6 and undertake an activity
6- 7, which will require 7days. This rearrangement arose due to a modification in a specialization.
(e) Activity 6-8 will be completed in 4 days instead of the originally planned 7 days.
(f) There is no change in the other activities.
Update the network diagram after 15 days of start of work based on the assumption given above. Indicate
the revised critical paths along with their duration.
Answer
‐ 48 ‐
Critical path 1 - 2 - 4 - 7 - 8 = 42 days.
Revised Duration of activities 2 - 4 and 3 - 6 after 15 da ys for updation.

(ii)

‐ 49 ‐
Critical path = 1 - 3 - 6 - 7 - 8 = 47 days.
Question 8
The following table gives the activities in a construction project and the time duration of each activity:

Required:
(i) Draw the activity network of the project.
(ii) Find critical path.
(iii) Find the total float and free-float for each activity.
Answer
(i)

A ~ D ~ F = 16 + 10 + 12 = 38
B ~ E ~ F = 20 + 6 + 12 = 38
(ii) A- C- E - F = 16 + 8 + 6 + 12 = 42 critical path
(iii) Total float and free float for each activity

‐ 50 ‐
 Activity Normal Earliest Time Latest start Time finish Float total Free
time Start Finish
A 16 0 16 0 16 0 0
B 20 0 20 4 24 4 4
C 8 16 24 16 24 0 0
D 10 16 26 20 30 4 4
E 6 24 30 24 30 0 0
F 12 30 42 30 42 0 0

Question 9
What do you mean by a dummy activity? Why is it used in networking?
Answer
Dummy activity is a hypothetical activity which consumes no resource or time. It is represented by dotted
lines and is inserted in the network to clarify an activity pattern under the following situations.
(i) To make activities with common starting and finishing events distinguishable.
(ii) To identify and maintain the proper precedence relationship between activities that are not
connected by events.
(iii) To bring all "loose ends" to a single initial and single terminal event. e.g.

Dummy (2) - (3) is used to convey that 4 can start only after events numbered (2) and (3) are over:
Question 10
List the 5 steps involved in the methodology of critical path analysis.
Answer
Working Methodology of PERT:
The working methodology of PERT which includes both CPM and PERT, consists of following five
steps:
1. Analyze and break down the project in terms of specific activities and/or events.
2. Determine the interdependence and sequence of specific activities and prepare a network.
3. Assign estimates of time, cost or both to all the activities of the network.
4. Identify the longest or critical path through the network.
5. Monitor, evaluate and control the progress of the project by re-planning, rescheduling and reassignment
of resources.

‐ 51 ‐
Question 11
A small project is composed of seven activities, whose time estimates are listed below. Activities are
identifies by their beginning (i) and ending (j) note numbers:

(a) Draw the project network.

EXERCISE
Question 1
The time schedule for different activities of a project is given below:

‐ 52 ‐
Construct the PERT network and compute.
(i) Critical path and its duration.
(ii) Total and free float for each activity.
Answer
The critical path is given by 1 - 2 - 3 - 5 - 6. The path represents the minimum possible time to complete
the project. The project duration = 8 + 10 + 17 + 9 = 44 da ys.
Question 2
A project has the following time schedule:

Construct a PERT network and compute:

(i) TE and TL for each event;
(ii) Float for each activity: and
(iii) Critical path and its duration.
Answer
Critical path is given by all those activities which have zero floats. Along the zero float activities, there
are two such critical paths:
(i) 1 _ 3 _ 5 _ 7 _ 8 _ 9 _ 10
(ii) 1 _ 3 _ 5 _ 7 _ 8 _ 10
The project duration is 25 weeks.
Question 3
‐ 53 ‐
Given the following information:

(i) Draw the arrow diagram.

(ii) Identify critical path and find the total project duration.
(iii) Determine total, free and independent floats.
Answer
The critical path is - 0_1_3_ 6_ 7
Total project duration = 27 days.

‐ 54 ‐
 WORK MEASUREMENT
Work measurement refer to the estimation of standard time, that is the time allowed for
completing one piece of job using the given method. This is the time taken by an average
experienced worker for the job with provisions for delays beyond the workers control. There are
several techniques used for estimation of standard time in industry. These include time study,
work sampling, standard data, and predetermined time systems.

Time study

Time study is a technique to estimate the time to be allowed to a qualified and well-trained
worker working at a normal pace to complete a specified task. This technique is based on
measuring the work content of the task when performed by the prescribed method, with the
allowance for fatigue and for personal and unavoidable delays.
Objectives and Applications:
Standard times for different operations in industry are useful for several applications like
• Estimating material machinery and equipment requirements.
• Estimating the production cost per unit as an input to
o Preparation of budgets
o Determination of selling price
o Make or buy decision
• Estimating manpower requirements.
• Estimating delivery schedules and planning the work
• Balancing the work of operators working in a group.
• Estimating performance of workers and use as basis for incentive payment to
those direct and in director labor who show greater productivity.
Time Study is the most versatile and the most widely used.
Time Study Equipment
The following equipment is needed for time study work.
• Timing device
• Time study observation sheet- It is a printed form with space provided for noting down
the necessary information about the operation being studied like name of operation,
drawing number, and name of the operator, name of time study person, and the date and
place of study.
• Time study observation board - It is a light -weight board used for holding the
observation sheet and stopwatch in position
• Other equipment- This includes pencil, eraser and device like tachometer for checking
the speed, etc
Time Study Procedure:
The procedure for time study can best be described step-wise.
Step 1: Define objective of the study. This involves statement of the use of the result, the
precision desired, and the required level of confidence in the estimated time standards.
Step 2: Analyze the operation to determine whether standard method and conditions exist and
‐ 55 ‐
whether the operator is properly trained.
Step 3: Select Operator to be studied if there is more than one operator doing the same task.
Step 4: Record information about the standard method, operation, operator, product, equipment,
quality and conditions.
Step 5: Divide the operation into reasonably small elements.
Step 6: Time the operator for each of the elements. Record the data for a few number of cycles.
Use the data to estimate the total numbers of observations to be taken.
Step 7: Collect and record the data of required number of cycles by timing and rating the
operator.
Step 8: For each element calculate the representative watch time. Multiply it by the rating
factory to get normal time.
Normal time = Observed time * Rating factor
Add the normal time of various elements to obtain the normal time for the whole operation.
Step 9: Determine allowances for various delays from the company's policy book or by
conducting an independent study.
Step 10: Determine standard time by adding allowances to the normal time of operation.
Standard time = Normal time + allowances
Terms and Definition:
Normal Performance
It is generally defined as the working rate of an average qualified worker working under capable
supervision but not under any incentive wage payment scheme. This rate of working is
characterized by the fairly steady exertion of reasonable effort, and can be maintained day after
day without undue physical or mental fatigue.
Performance Rating
During the time study, time study engineer carefully observes the performance of the operator.
This performance seldom conforms to the exact definition of normal or standard. Therefore, it
becomes necessary to apply some 'adjustment' to the mean observed time to arrive at the time
that the normal operator would have needed to do that job when working at an average pace.
This 'adjustment' is called Performance Rating.
Determination of performance rating is an important step in the work measurement procedures. It
is based entirely on the experience, training, and judgment of the work-study engineer. It is the
procedure in which the time study engineer compares the performance of operator(s) under
observation to the Normal Performance and determines a factor called Rating Factor.
Rating factor = observed performance/Normal performance

System of Rating
There are several systems of rating, the performance of operator on the job. These are
1. Pace Rating
2. Westinghouse System of Rating
3. Objective Rating
4. Synthetic Rating
A brief description of each rating method follows
‐ 56 ‐
Pace Rating
Under this system, performance is evaluated by considering the rate of accomplishment of the
work per unit time (time taken to fix a switch and lamp and socket). The study person measures
the effectiveness of the operator against the concept of normal performance and then assigns a
percentage to indicate the ratio of the observed performance to normal or standard performance.
In this method, which is also called the speed rating method, the time study person judges the
operators speed of movements, i.e. the rate at which he is applying himself, or in other words
"how fast" the operator the motions involved.
Westinghouse System of Rating
This method considers four factors in evaluating the performance of the operator: Skill, effort,
conditions and Consistency.
Objective Rating
In this system, speed of movements and job difficulty are rated separately and the two estimates
are combined into a single value.
The rating factor R can be expressed as
R=PxD
Where: P = pace rating factor
D = Job difficulty adjustment factor.
Synthetic Rating
This method of rating has two main advantages over other methods that (i) it does not rely on the
judgment of the time study person and (ii) it give consistent results.
The time study is made as usual. Some manually controlled elements of the work cycle are
selected. Using a PMT system (Pre-determined motion time system), the times for these
elements are determined. The times of these elements and the performance factor is determined
for each of the selected elements.
Performance or Rating Factor, R = P / A
Where P = Predetermined motion time of the element,
A = Average actual Observed time of the element.
The overall rating factor is the mean of rating factors determined for the selected elements,
which is applied uniformly to all the manually controlled elements of the work cycle.
Example
A work cycle has been divided into 8 elements and time study has been conducted. The average
observed times for the elements are as:

M = Manually Controlled, P = Power

Controlled
Total observed time of work cycle = 2.32 min.
‐ 57 ‐
Suppose we select elements number 2,5 and 8 (These must be manually controlled elements). By
using some PMT system,
suppose we determine the times of these elements as

The mean of the rating factors of selected elements = 94.93 % or say 95 % is the rating factor
that will be used for all the manual elements of the work cycle.
The normal time of the cycle is calculated as given in the following table.

Normal Cycle Time

= 0.95(0.14+0.16+0.52+0.26+0.45+0.34+0.15)+1.00(0.30)
=1.92+0.30
=2.22 minutes

Standard Data Procedure:

In this procedure, we estimate the allowance for arriving the standard data.
Allowances
The readings of any time study are taken over a relatively short period of time. The normal time
arrived at, therefore does not include unavoidable delay and other legitimate lost time, for
example, in waiting for materials, tools or equipment; periodic inspection of parts; interruptions
due to legitimate personal need, etc. It is necessary and important that the time study person
applies some adjustment, or allowances to compensate for such losses, so that fair time standard
is established for the given job.

‐ 58 ‐
Allowances are generally applied to total cycle time as some percentage of it, but sometimes
these are given separately as some % for machine time and some other % for manual effort time.
However no allowance are given for interruptions which may be due to factor which are within
the operator's control or which are avoidable.

Most companies allow the following allowances to their employees.

_ Delay Allowance
_ Fatigue Allowance
_ Personal Allowance
_ Special Allowance
Delay Allowance
This time allowance is given to an operator for the numerous interruptions that he experiences
every day during the course of his work. These interruptions include interruptions from the
supervisor, inspector, planners, expediters, fellow workers, production personnel and others. This
allowance also covers interruptions due to material irregularities, difficulty in maintaining
specifications and tolerances, and interference delays where the operator has to attend to more
than one machine.

Fatigue Allowance
This allowance can be divided into two parts: (i) basic fatigue allowance and (ii) variable fatigue
allowance. The basic fatigue allowance is given to the operator to compensate for the energy
expended for carrying out the work and to alleviate monotony.
For an operator who is doing light work while seated, under good working conditions and under
normal demands on the sensory or motor system, a 4% of normal time is considered adequate.
This can be treated as a constant allowance.
The magnitude of variable fatigue allowance given to the operator depends upon the severity of
the factor or conditions, which cause extra (more than normal) fatigue to him. As we know,
fatigue is not homogeneous, it range from strictly physical to purely psychological and includes
‐ 59 ‐
combinations of the two. on some people it has a marked effect while on others, it has apparently
little or no effect. Whatever may be the kind of fatigue-physical or mental, the result is same-it
reduces the work output of operator. The major factors that cause more than just the basic fatigue
includes sever working conditions, especially with respect to noise, illumination, heat and
humidity; the nature of work, especially with respect to posture, muscular exertion and
tediousness and like that.
It is true that in modern industry, heavy manual work, and thus muscular fatigue is reducing day
by day but mechanization is promoting other fatigue components like monotony and mental
stress. Because fatigue in totality cannot be eliminated, proper allowance has to be given for
adverse working conditions and repetitiveness of the work.
Personal Allowance
This is allowed to compensate for the time spent by worker in meeting the physical needs. A
normal person requires a periodic break in the production routine. The amount of personal time
required by operator varies with the individual more than with the kind of work, though it is seen
that workers need more personal time when the work is heavy and done under unfavorable
conditions.
The amount of this allowance can be determined by making all-day time study or work sampling.
Mostly, a 5 % allowance for personal time (nearly 24 minutes in 8 hours) is considered
appropriate.
Special Allowance
These allowances are given under certain special circumstances. Some of allowances and the
conditions under which they are given are:
Small Lot Allowance: This allowance is given when the actual production period is too short to
allow the worker to come out of the initial learning period. When an operator completes several
small-lot jobs on different setups during the day, an allowance as high as 15 percent may be
given to allow the operator to make normal earnings.
Training Allowance: This allowance is provided when work is done by trainee to allow him to
maker reasonable earnings. It may be a sliding allowance, which progressively decreases to zero
over certain length of time. If the effect of learning on the job is known, the rate of decrease of
the training allowance can be set accordingly.
Rework Allowance: This allowance is provided on certain operation when it is known that some
present of parts made are spoiled due to factors beyond the operator's control. The time in which
these spoiled parts may be reworked is converted into allowance.
Different organizations have decided upon the amount of allowances to be given to different
operators by taking help from the specialists / consultants in the field and through negotiations
between the management and the trade unions. ILO has given its recommendations about the
magnitude of various allowances.
Example:
In making a time study of a laboratory technician performing an analysis of processed food in a
canning factory, the following times were noted for a particular operation.

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If the technician's performance has been rated at 120 percent, and the company policy for
allowance (personal, fatigue, etc.) stipulates 13 percent,
(i) Determine the normal time.
(ii)Determine the standard time.
Watch readings falling 50 % above and 25 % below the average may be considered as abnormal.

Work Sampling:

Work Sampling (also sometimes called ratio delay study) is a technique of getting facts about
utilization of machines or human beings through a large number of instantaneous observations
taken at random time intervals. The ratio of observations of a given activity to the total
observations approximates the percentage of time that the process is in that state of activity. For
example, if 500 instantaneous observations taken at random intervals over a few weeks show that
a lathe operator was doing productive work in 365 observations and in the remaining 135
observations he was found 'idle' for miscellaneous reasons, then it can be taken that the operator
remains idle (135/500) x 100 = 27 % 0f the time. Obviously, the accuracy of the result depends
on the number of observations. However, in most applications there is usually a limit beyond
which greater accuracy of data is not economically worthwhile.
Use of Work Sampling for Standard Time Determination
Work sampling can be very useful for establishing time standards on both direct and indirect
labor jobs. The procedure for conducting work sampling study for determining standard time of a
job can be described step-wise.

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Sampling Procedure:
Step 1. Define the problem. (i) Describe the job for which the standard time is to be determined.
(ii) Unambiguously State and discriminate between the two classes of activities of operator on
the job: what are the activities of job with which if operator is found engaged would entitle him
to be in 'working" state. This would imply that when operator will be found engaged in any
activity other than those would entitle him to be in "Not Working" state.
Step 2. Design the Sampling plan. (i) Estimate satisfactory number of observations to be made.
(ii) Decide on the period of study, e.g. two days, one week, etc. (iii) Prepare detailed plan for
taking the observations. This will include observation schedule, exact method of observing,
design of observation sheet route to be followed, the particular person to be observed at the
observation time, etc.
Step 3. Contact the person concerned and take them in confidence regarding conduct of the
study.
Step 4. Collect the data at the pre-decided random times.
We will now briefly discuss some important issues involved in the procedure.
Number of Observations
As we know, result of study based on larger number of observations are more accurate, but
taking more and more observation consume time and thus is costly. A cost-benefit trade-off has
thus to be struck. In practice, the following methods are used for estimation of the number of
observation to be made.
(i) Based on judgment. The study person can decide the necessary number of observations
based on his judgment. The correctness of the number may be in doubt but estimate is often
quick and adequate in many cases.
(ii) Using cumulative plot of results. As the study progresses the results (of the proportion of
time devoted to the given activity, i.e. Pi from the cumulative number of observations are plotted
at the end of each shift or day. Since the accuracy of the result improves with increasing number
of observation, the study can be continued until the cumulative Pi appears to stabilize and
collection of further data seems to have negligible effect on the value of Pi.
(iii) Use of statistics. In this method, by considering the important of the decision to be based on
the results of study, a maximum tolerable sampling error in terms of confidence level and desired
accuracy in the results is specified. A pilot study is then made in which a few observations are
taken to obtain a preliminary estimate of Pi. The number of observations N necessary are then
calculated using the following expression

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 N = total number of observations needed.

The number of observations estimated from the above relation using a value of Pi obtained from
a preliminary study would be only a first estimate. In actual practice, as the work sampling study
proceeds, say at the end of each day, a new calculation should be made by using increasingly
reliable value of Pi obtained from the cumulative number of observations made.
Determination of Observation Schedule
The number of instantaneous observations to be made each day mainly depends upon nature of
operation. For example, for non-repetitive operations or for operations in which some elements
occur in frequently, it is advisable to take observations more frequently so that the chance of
obtaining all the facts improves. It also depends on the availability of time with the person
making the study. In general, about 50 observations per day is a good figure. The exact (random)
schedule of the observations is prepared by using random number table or any other technique.
Design of Observation Sheet
A sample observation sheet for recording the data with respect to whether at the pre-decided
time, the worker on job is in 'working' state or 'non-working' state is shown in figure5. It contains
the relevant information about the job, the operators on job, etc. At the end of each day,
calculation can be done on the percent of time workers on the job (on an average) spend on
activities, which are considered as part of the work method.
Standard Time Determination
In this method of work measurement, the observed time for a given job is estimated as the
working time divided by the number of units produced during that time.

Where T = Total study period

N = Number of units produced in study period
ɳ= Total number of observations made in study period
ɳi=Number of observations in which worker(s) was found in 'working' state

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The normal time (NT) is found by multiplying the observed time by the average performing
index (rating factor).

Finally, the standard time is found by adding allowances to the normal time.
Example

A work sampling study was made of a cargo loading operation for the purpose of developing its
standard time. The study was conducted for duration of minutes during which 3000, 1500
instantaneous observations were made at random intervals. The results of study indicated that the
worker on the job was working 80 percent of the time and loaded 360 pieces of cargo during the
study period. The work analyst rated the performance at 90 %. If the management wishes to
permit a 13 % allowance for fatigue, delays and personal time, what is the standard time of this
operation?
Ans:
Here, Total period = 1500 minutes
Working fraction = 80 percent
Average rating = 90 percent
Number of units loaded = 360
Allowances = 13 %

Advantages and Disadvantages of Work Sampling in Comparison with Time Study.

Advantage
Economical
1. Many operators or activities are difficult or uneconomical to measure by time study can
readily be measured by work sampling.
2. Two or more studies can be simultaneously made of several operators or machines by a single
observer. Ordinarily a work study engineer can study only one operator at a time when
continuous time study is made.

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3. It usually requires fewer man-hours to make a work sampling study than to make a continuous
time study. The cost may also be about a third of the cost of a continuous time study.
4. No stopwatch or other time measuring device is needed for work sampling studies.
5. It usually requires less time to calculate the results of work sampling study. Mark sensing
cards may be used which can be fed directly to the computing machines to obtain the results just
instantaneously.
Flexible
6. A work sampling study may be interrupted at any time without affecting the results.
7. Operators are not closely watched for long period of time. This decreases the chance of getting
erroneous results for when a worker is observed continuously for a long period, it is probable
that he will not follow his usual routine exactly during that period.
Less Erroneous
8. Observations may be taken over a period of days or weeks. This decreases the chance of day-
to-day or week-to-week variations that may affect the results.
Operators Like It
9. Work sampling studies are preferred to continuous time study by the operators being studied.
Some people do not like
to be observed continuously for long periods of time.
Observers Like It
10. Work sampling studies are less fatiguing and less tedious to make on the part of time study
engineer.
Applications
11. Work sampling is applicable to a wide variety of situations in manufacturing, distribution, or
service industries.
12. Work sampling is useful when determine the nature of the distribution of work activities
within a gang operation.
Disadvantage
1. Work sampling is not economical for the study of a single operator or operation or machine.
Also, work-sampling study may be uneconomical for studying operators or machines located
over wide areas.
2. Work sampling study does not provide elemental time data.
3. The operator may change his work pattern when he sees the observer. For instance, he may try
to look productive and make the results of study erroneous.
4. No record is usually made of the method being used by the operator Therefore a new study has
to be made when a method change occurs in any element of operation.
5. Compared to stop watch time study, the statistical approach of work sampling study is difficult
to understand by workers.
Computerized Work Sampling
Use of a computer can save as much as 30 to 40 percent of the total work sampling study cost.
This is because too much clerical effort is involved in summarizing work sampling data, e.g. in
determining the number of observations required, determining the daily observations required,
determining the number of trips to the area being studied per day, determining the time of each
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observation, calculating the accuracy of results, plotting data on control charts and like that.
Computers can be made use for mechanization of the repetitive calculations, display of control
charts and calculation of daily as well as cumulative results.

Predetermined Motion Time System

A predetermined motion time system (PMTS) may be defined as a procedure that analyzes any
manual activity in terms of basic or fundamental motions required to performing it. Each of these
motions is assigned a previously established standard time value in such a way that the timings
for the individual motions can be synthesized to obtain the total time for the performance of the
activity.
The main use of PMTS lies in the estimation of time for the performance of a task before it is
performed. The procedure is particularly useful to some organizations because it does not require
troublesome rating with each study.
Applications of PMTS are for
(i) Determination of job time standards.
(ii) Comparing the times for alternative proposed methods so as to find the economics of the
proposals prior to production run.
(iii) Estimation of manpower, equipment and space requirements prior to setting up the facilities
and start of production.
(iv) Developing tentative work layouts for assembly line prior to their working.
(v) Checking direct time study results.
A number of PMTS are in use, some of which have been developed by individual organizations
for their own use, while other organizations have publicized for universal applications.
The following are commonly used PMT systems
_ Work factor
_ Method Time Measurement
_ Basic Motion Time
_ Dimension Motion Time
Some important factors which be considered while selecting a PMT system for application to
particular industry are
1. Cost of Installation. This consists mainly of the cost of getting expert for applying the system
under consideration.
2. Application Cost. This is determined by the length of time needed to set a time standard by
the system under consideration.
3. Performance Level of the System. The level of performance embodied in the system under
consideration may be different from the normal performance established in the industry where
the system is to be used. However, this problem can be overcome by 'calibration' which is
nothing but multiplying the times given in the Tables by some constant or by the application of
an adjustment allowance.

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4. Consistency of Standards. Consistency of standards set by a system on various jobs is a vital
factor to consider. For this, the system can be applied on a trial basis on a set of operations in the
plant and examined for consistency among them.
5. Nature of Operation. Best results are likely to be achieved if the type and nature of
operations in the plant are similar to the nature and type of operations studied during the
development of the system under consideration.
Advantages and limitations of using PMT systems
Advantage
Compared to other work measurement techniques, all PMT system claim the following
advantages:
1. There is no need to actually observe the operation running. This means the estimation of time
to perform a job can be made from the drawings even before the job is actually done. This
feature is very useful in production planning, forecasting, equipment selection etc.
2. The use of PMT eliminates the need of troublesome and controversial performance rating. For
the sole reason of avoiding performance rating, some companies have been using this technique.
3. The use of PM times forces the analyst to study the method in detail. This sometimes helps to
further improve the method.
4. A bye-product of the use of PM time is a detailed record of the method of operation. This is
advantageous for installation of method, for instructional purposes, and for detection and
verification of any change that might occur in the method in future.
5. The PM times can be usefully employed to establish elemental standard data for setting time
standards on jobs done on various types of machines and equipment.
6. The basic times determined with the use of PMT system are relatively more consistent.
Limitations
There are two main limitations to the use of PMT system for establishing time standards. These
are : (i) its application to only manual contents of job and (ii) the need of trained personnel.
Although PMT system eliminates the use of rating, quite a bit of judgment is still necessarily
exercised at different stages.

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