Assignment 01

Unit-23
Contract and Management

Student Name: M.Harshi vidarshika

Batch no: 865

SCOT ID:508405
Acknowledgement
I would like to extend my sincere gratitude to Mr. Akila Deemantha Course Instructors, on

Skills College of Technology for giving me good guidelines for assignment throughout

numerous consultations. Also, I would like to expand my gratitude to all those who have

directly and indirectly guided me in completing this assignment.

Project Contractual Requirements

Contractual requirements for a project with a private client typically involve a written agreement
between the client and the contractor. The agreement should specify the scope of the work to be
performed, the timeline for completion, and the compensation to be paid to the contractor. Private
clients are institutions or companies which need assistance from contractors to build and maintain
their private properties, such as buildings, roads, etc. They can use their own funding to build the
project or obtain loan from financial institutions [1]. Some common contractual requirements for a
project with a private client may include:
1. Scope of Work: This outlines the tasks and services that the contractor will be providing. It
should include a detailed description of the work to be done, including any materials or
equipment needed, as well as any specific requirements or standards that must be met. In
construction, the term ‘scope of work’ (sometimes described as a ‘scope of works’,
‘statement of work’ or 'terms of engagement') is a very general, and sometimes ambiguous
term referring to a general description of the work that is expected to be performed under a
particular contract. It may be prepared by the client or their consultants and included in
tender documentation for construction works.
The scope of work can be a useful way of agreeing broad project requirements for both the
client and supplier. However, errors or inconsistencies with other contract documentation
can lead to confusion and uncertainties which are often cited as a cause of disputes on
construction projects.
The nature of the scope of work can vary significantly from project to project. Sometimes it
will simply offer a very broad description of the works required, whilst sometimes it provides
a complete description of the project, significant milestones, a programme of work with the
expected time frames for delivery, reports, pricing, deliverables, roles and responsibilities
and end products that are to be provided.
2. Timeline: The contract should include a schedule for completion of the project, including
milestones and deadlines for key deliverables. It should also include a provision for delays
or extensions due to unforeseen circumstances. Project timeline attempted to solve the
activity scheduling problem so that the duration of a basic task was seen on a horizontal bar,
showing its start and completion date, and in the same way the total time required in
executing an activity. It is the most widespread scheduling method as it adapts well to both
small and large projects of all types, assuming they are not overly complex. It is the most
commonly used method of scheduling works in the construction industry and can be easily
understood, even by those less familiar with scheduling tools [2].
 Figure 1 Project timeline

3. Payment Terms: The contract should specify the total price for the project, including any
applicable taxes or fees. It should also outline the payment schedule, including the amount
of any deposits, progress payments, and the final payment. According to the Institute for
Construction Training and Development (1992), payment terms are something considered
very important because it has an effect on the price and also on the efficiency of the
contractor. According to them, the cardinal principle is that the contractors should not be
required to fund the construction; there must be an appropriate flow of funds so that the
contractor doesn’t have to commit his resources for the funding of the construction. At the
same time, the flow of funds will not be such a way in which the contractor would be
tempted, having got more than enough, to slow down [3].
4. Warranties: The contract should specify any warranties or guarantees that the contractor
provides for their work, such as a warranty for defects in materials or workmanship.
Warranties may be used to provide assurance from one party to another that goods and/or
services will meet certain expectations, e.g., being free from defects, complying with
statutory and other regulations and specifications. A common form of warranty, and one
that is paid for, is that which runs with a product, meaning that the customer of a product is
given an assurance by the manufacturer that any defects or losses will be repaired or
compensated during a given period. The warranty can also detail both parties’ rights and
obligations in the event of a dispute.
5. Termination: The contract should outline the conditions under which the client or the
contractor may terminate the agreement, such as breach of contract or failure to meet
project milestones. Assessing the seriousness of breaches of contract depends on the
particular circumstances and terms of the contract. For example, if a contractor failed to
carry out the work to an agreed timetable, this might be considered a relatively minor issue
on some projects, whilst on others it could be an extremely serious breach. The innocent
party must be careful therefore to establish that there has actually been a material breach
before considering that the contract is terminated, otherwise they might find themselves in
 breach of contract.

Contractual requirements for public infrastructure.

Public bodies that undertake infrastructure projects are often required to follow certain contractual
requirements. These requirements are designed to ensure that the project is completed on time,
within budget, and to the required standard. The term ‘public body’ refers to a formally established
organization that is typically created by statute and publicly funded for the purposes of delivering a
public or government service [4]. Examples of infrastructure projects include highways, tunnels,
bridges, water mains, dams, sewage systems, water treatment plants, power generation plants
and pipeline networks. Infrastructure projects can be classified as large construction projects that
utilize vast number of resources in terms of money, materials, labor, equipment and time.
infrastructure projects including both types of projects require large initial investment in capital; and
both types are usually developed to be operated over a relatively long duration. Despite these
similarities, there has been no serious attempt to evaluate the predictive accuracy of feasibility
studies conducted prior to the construction of infrastructure projects [5].The following are some of
the key contractual requirements that a public body may need to consider when undertaking an
infrastructure project;

1. Procurement: The public body will need to follow procurement procedures to ensure that
the project is awarded to the most suitable contractor or supplier. This may involve
advertising the project, setting out selection criteria, and evaluating bids. Design and build
is a procurement route in which the main contractor is appointed to design and construct
the works. Design and build can be attractive to clients as it gives a single point of
responsibility for delivering the project. Design and build projects can follow either a single-
stage or two-stage tender process. Develop and construct' is a variation on design and
build, in which most of the design is completed before the contractor is appointed. This
avoids some of the potential problems of design and build, but also misses some of the
opportunities. Public Private Partnership (PPP) means an arrangement between
Government or statutory entity or Government owned entity on one side and private sector
entity on the other, for the provision of public assets and/or related services for public
benefit, through investments being made by and/or management undertaken by the private
sector entity for a specified period of time, where there is a substantial risk sharing with the
private sector and the private sector receives performance linked payments that conform to
specified pre-determined and measurable performance standards.
2. Design: The public body will need to ensure that the infrastructure project is designed to the
required standard. This may involve hiring a design consultant or a team of engineers to
 draw up detailed plans and specifications for the project. In the planning of facilities, it is
important to recognize the close relationship between design and construction. These
processes can best be viewed as an integrated system. Broadly speaking, design is a
process of creating the description of a new facility, usually represented by detailed plans
and specifications; construction planning is a process of identifying activities and resources
required to make the design a physical reality. Hence, construction is the implementation of
a design envisioned by architects and engineers. In both design and construction,
numerous operational tasks must be performed with a variety of precedence and other
relationships among the different tasks.
3. Quality control: The public body will need to ensure that the infrastructure project is built to
the required standard. This may involve setting up a quality control program to monitor the
work and ensure that it meets the required specifications. Quality control (QC) is the part of
quality management that ensures products and services comply with requirements. It is a
work method that facilitates the measurement of the quality characteristics of a unit,
compares them with the established standards, and analyses the differences between the
results obtained and the desired results in order to make decisions which will correct any
differences.
4. Payment: The public body will need to ensure that the contractor or supplier is paid
according to the terms of the contract. This may involve setting up a payment schedule,
withholding payments for work that is not completed to the required standard, and
negotiating any changes to the contract that may affect payment.
5. Dispute resolution: The public body will need to have a dispute resolution process in place
to deal with any disagreements that may arise during the course of the project. This may
involve mediation, arbitration, or litigation. Dispute resolution is the process of resolving
disagreements or conflicts between different parties. There are a number of scenarios
where dispute resolution is required. For example, a consumer may have a dispute with a
company they've purchased faulty goods from. The mediation is one of the mediation
technique and it used for specially public body for an infrastructure project. Mediation is
commonly practicing Alternative Dispute Resolution method in construction industry. When
we consider experience in worldwide has shown that mediation facilitates a high settlement
rate and most people are satisfied with the outcome of the mediation. However, the current
experience of mediation in the Sri Lankan construction industry is not much popular when
compared to the other ADR methods. According to the Construction Industry Development
Act No.33 of 2014 Clause 50, CIDA has been given the Authority for the settlement of
disputes through conciliation or mediation. Mediation is a voluntary process in which a
trained and impartial third party called a mediator. The mediator helps the both parties in
dispute to reach an amicable settlement that is responsive to their needs and acceptable to
 each sides. The parties meet together with the mediator and each party will have the
opportunity to explain their position and their desired relief. The mediator listens both sides
and then attempts to resolve the dispute in a mutually agreeable manner. Mediation is non-
binding process. It means that a decision or resolution that is reached in the mediation
cannot be legally enforced. It is rather a suggested course of action that the parties must
both agree to follow. If one party believes that the proposed resolution is unjustified, that
party can simply leave the mediation and pursuer alternate ways to resolve the dispute. A
mediator does not produce an order or a ruling. He or she simply offers opinions and
suggestions toward resolution.
Overall, the contractual requirements for a public body for an infrastructure project are designed to
ensure that the project is completed on time, within budget, and to the required standard. By
following these requirements, the public body can ensure that the project is a success and delivers
the expected benefits to the community.

Factors affecting contract selection.

When selecting a contract, time, cost, and quality are three key factors that should be considered.
These factors have an impact on the project outcomes, and they are interdependent. The following
are some ways in which these factors affect the selection of a contract:

1. Time: The time factor is critical in contract selection. The timeline for completing the project
must be reasonable and achievable. If a project has a tight deadline, a contract that can
deliver the project on time should be selected. If the deadline is flexible, a contract that can
deliver high-quality work at a reasonable cost should be considered. The term ‘Time is of
the essence’ refers to a contractual position in which, if one of the parties to the contract
fails to complete their obligations by a specified date, then the other party can treat the
 contract as terminated. This might be appropriate for example in the supply of perishable
goods where late delivery would go to the ‘root’ of the contract, depriving the innocent party
of the whole benefit of the contract. They may then terminate the contract and claim
damages. Typically, on construction contracts, time is not of the essence, but rather a
completion date is set (the date by which practical completion must be certified). There are
generally mechanisms allowing the completion date to be adjusted, and liquidated
damages can be claimed by the client if delays that are the fault of the contractor result in a
failure to complete the works by the completion date. However, the contract is not
terminated, and to do so would generally not be in the interests of either party.
2. Cost: Cost is another critical factor that affects the selection of a contract. The budget
available for the project should be considered when selecting a contract. If the budget is
tight, a contract that can deliver the project within the budget should be selected. If the
budget is flexible, a contract that can deliver high-quality work within a reasonable
timeframe should be considered. The term ‘cost’ in the construction industry generally
refers to the amount that has to (or will have to) be paid to receive goods or services. It
may also have wider interpretations, such as the environmental cost or the social cost of a
particular purchase or action, lifecycle costs (rather than capital costs), and so on.
Generally, cost is not fixed. There is uncertainty at the beginning of a project about
precisely what is required, and whilst this is clarified as the project proceeds and more
decisions are made, even when a firm price has been accepted from suppliers, this is likely
to change as a result of variations to requirements, events such as exceptionally adverse
weather (relevant events), the rate of inflation (fluctuations), and so on.
3. Quality: Quality is essential when selecting a contract. The quality of work delivered will
impact the success of the project. A contract that can deliver high-quality work within the
budget and timeline should be selected. In summary, time, cost, and quality are critical
factors that must be considered when selecting a contract. The ideal contract is one that
can deliver the project on time, within budget, and to the desired quality standards. A good
balance between these factors must be achieved to ensure that the project is successful.
Time, cost, and Quality are three of the most important factors in a contract. The cost has to be
competitive; the quality has to be excellent, and the project has to come in within a reasonable
period of time for the investor or investors to get their planned return on investment. To achieve
this, the client has to put together a highly professional and capable team. Only an experienced
and professional contractor with an excellent track record can provide clients with this service. The
important thing to note here is that the contractor will definitely not be the lowest quote in the
tender. The contractor’s experience and expertise will alert him to price intelligently because he
knows the problem areas. The client simply cannot get excellent quality at the lowest price.
Another important factor is to not get into a contract where the time period (the duration of the
contract) is too tight. A client will run into penalties if you delay and lose financially. So, to the
contractor, I would say, If the time allowed is insufficient, pull out. There is no point in working with
people who don't have a good idea of what they are doing. To the investor/s: select a contractor
who will know how to give you an excellent quality product at a reasonably competitive cost and
pace himself to bring it in on time. This is where you will need the input of consultants who have a
pretty good idea of what they are doing [6]
Evaluate the ways in which time project.

Time is a critical factor in project management, and it affects the success or failure of a project.
There are several ways in which time can impact a project:
Time affects the cost of a project.
Time plays a critical role in project cost management. Delays in project completion can lead to
increased expenses due to extended labor and resource usage, as well as additional overhead
costs. Accelerated project schedules may also require overtime payments, leading to higher labor
costs.
On the other hand, efficient time management can result in cost savings. Timely completion allows
for better resource allocation, minimizes the need for prolonged supervision, and reduces the risk
of inflation impacting material prices.

Advantages
 Efficient time management can lead to
cost savings by reducing labor and
resource expenses, optimizing
resource allocation, and minimizing the
need for overtime payments.
 Timely project completion can result in
faster returns on investment and
revenue generation, contributing to
better financial outcomes.
 Meeting project deadlines can enhance
the overall reputation of the
construction company, leading to
potential new business opportunities
and client referrals.
Disadvantages
 Delays in project completion can
increase expenses due to extended
labor, equipment rentals, and overhead
costs.
 Prolonged project timelines may result
in inflation impacting material prices,
leading to higher procurement costs.
 Time delays can lead to contractual
penalties and damage the relationship
with clients and stakeholders.

Quality affects the cost of a project.

High-quality workmanship and materials might involve higher upfront costs, but they can
significantly impact project durability and reduce ongoing maintenance expenses. Investing in
quality can lead to longer-lasting structures and fewer replacements, ultimately saving money in
the long run.
Conversely, compromising on quality to cut costs may lead to expensive repairs, rework, and
potential legal liabilities. Poor-quality outputs can result in dissatisfied clients and stakeholders,
affecting the project's reputation and leading to additional expenses to rectify issues.
 Advantages
 Investing in high-quality materials and
workmanship may result in reduced
maintenance and repair costs over the
project's lifespan.
 Superior project quality can lead to
increased client satisfaction and a
positive reputation, potentially attracting
more clients and repeat business.
 Quality construction enhances the
project's durability and longevity,
reducing the need for frequent
replacements or renovations.
Disadvantages
 Implementing high-quality standards
may initially increase upfront costs,
affecting the project budget.
 Striving for perfection in every aspect of
the project can lead to delays,
impacting the project schedule and
increasing labor costs.
 Achieving the desired level of quality
may require specialized expertise and
additional testing, adding to project
expenses.

References
[1] J. U. Dwi Hatmoko and R. R. Khasania, “Comparing Performance of Government and Private
Clients in Construction Projects: Contractors’ Perspective,” Civil Engineering Dimension, vol. 18,
no. 2, Oct. 2016, doi: 10.9744/ced.18.2.85-92.
[2] L. Anastasiu, C. Câmpian, and N. Roman, “Boosting Construction Project Timeline: The Case of
Critical Chain Project Management (CCPM),” Buildings, vol. 13, no. 5, May 2023, doi:
10.3390/buildings13051249.
[3] H. A. Odeyinka and A. Kaka, “An evaluation of contractors’ satisfaction with payment terms
influencing construction cash flow,” Journal of Financial Management of Property and
Construction, vol. 10, no. 3, pp. 171–180, Dec. 2005, doi: 10.1108/13664380580001074.
[4] L. Andrews, “Public administration, public leadership and the construction of public value in the
age of the algorithm and ‘big data,’” Public Adm, vol. 97, no. 2, pp. 296–310, Jun. 2019, doi:
10.1111/padm.12534.
[5] K. Hesham Hyari, K. Hyari, A. Kandil, and A. Professor, “Validity of Feasibility Studies for
Infrastructure Construction Projects,” 2009. [Online]. Available:
https://www.researchgate.net/publication/268074053
[6] A. Bhargava et al., “Three-Stage Least-Squares Analysis of Time and Cost Overruns in
Construction Contracts”, doi: 10.1061/ASCECO.1943-7862.0000225.