ASSIGNMENT

ON
CONSTRUCTION CONRACTS &
CONTRACTING
PGPM 14

ASSIGNMENT
NICMAR/CODE OFFFICE
1.
2.
3.
4.
5.

Course No
Course title
Assignment No
Date of dispatch
Last date of receipt of
Assignment at CODE office

:
:
:
:

PGPM 14
Construction Contracts & Contracting
04

Assignment
Contract administration and monitoring is the most important area of
construction management. Contract administration process should start right from the
day work is assigned to the company. Discuss any project contract currently in
progress with your company and how administration and monitoring is being done.
Draw the organization chart for this activity and explain all the function carried out.
Do you think the system is achieving results? Discuss.

SUBMITTED BY

SANDEEP SUDHAKAR,
,
REG NO: 211-03-31-9250-2133

INTRODUCTION
Contract management is the process that enables both parties to a contract to
meet their obligations in order to deliver the objectives required from the contract. It
also involves building a good working relationship between customer and provider. It
continues throughout the life of a contract and involves managing proactively to
anticipate future needs as well as reacting to situations that arise.
The central aim of contract management is to obtain the services as agreed in
the contract and achieve value for money. This means optimising the efficiency,
effectiveness and economy of the service or relationship described by the contract,
balancing costs against risks and actively managing the customerprovider
relationship. Contract management may also involve aiming for continuous
improvement in performance over the life of the contract.

The company has got approval from the OHS and the blank tabulated form is
given below:
CONTRACT MANAGEMENT
Document 1h: Contract OHS System Approval for Labour Hire
Last Update:
Owner:

Labour hire consists of contractors engaged directly or through labour hire

agencies to carry out work under similar arrangements to normal staff. The contractor
will be supervised directly by University staff. This does not include contractor
managed work teams which fit under the other classifications of contract management.
This document when completed is to be kept with the current version of the
Contractors Health and Safety Plan and forms part of the contract documentation.
Contract
Long
Medium
Ongoing
Short

Majo
r

Mino
r

Business
services

Event
Mgt

Light
deliver
y

Heavy
delivery

Contract
staff

Off-site

Venue
hire

L/M/H
hazard
L/M/H
hazard
L/M/H
hazard
L/M/H
hazard

In general, contractors in this group must be treated in the same manner as staff members as regards
induction, supervision and other OHS requirements. The University is described as the Host
Employer.

Contract Details:
Contract Name.

Contract Number:

Company Name:
Name of Contact Person:
Contact details:
Position:

Date:

Name and Contact Details of Deakin Representative:

Contract
Characteristics
Type of Contract?
CT 1 -9

Class

CT 1: Labour
hire contract
staff

Notes

The type of contract is an important factor in determining the

types of OHS controls required

Type of Engagement?

E1: Long term project or service contract (more than 2 weeks)

E1-4

E2: Medium term project or event (up to 2 weeks)

E3: Ongoing but intermittent
E4: Short term (few hours), one-off or annual

Hazard level?

Low: Serious injury is unlikely

L/M/H

Medium: Serious injury is possible

High: Serious injury is likely if not well managed
(Serious injury is any injury that involves lost time or hospital
treatment)

Element
(see Table 1:OHS Control Measures for Labour Hire)

Date
Received

Contract for Labour Hire

Labour Hire Contractor insurances
Labour Hire Contractor OHS Management System
Labour Hire Contractor has established systems and procedures for managing OHS
hazards
Labour Hire Contractor and contractor employees hold all necessary qualifications and
permits.
Labour hire employee has a good understanding of the hazards and risks associated with
the contract
(University responsibility) Plant and equipment used by the contractor is appropriately
licensed or registered and is maintained on a regular basis
The Labour Hire Contractor is recommended for inclusion on the Approved Contractor
List (Panel) for (describe type of contract)
Hazard Disclosure and Labour Hire Job Description
(University responsibility) Project Risk Assessment
The University will be required to develop (if required) and use Job Safety Assessments
and/or Safe Working Method Statements
The labour hire employee will operate under University Permit and Isolation procedures
and have been made familiar with them
The labour hire employee have completed the General University Induction
The labour hire employee will complete a Local Site Induction before commencing
work
The labour hire employee has received copies of the Site Safety Rules
Deakin staff will be required to supervise the contractor
The labour hire employee will follow University sign in/sign out procedures
The labour hire employee will be monitored (indicate how frequently and whether
randomly or by agreement)
The performance of the labour hire employee will be formally evaluated (indicate
when)

Satisfactory/
Unsatisfactory /
Not Applicable

Element
(see Table 1:OHS Control Measures for Labour Hire)

Date
Received

Satisfactory/
Unsatisfactory /
Not Applicable

Comments

Authorisation

Signature

Date

Local supervisor
Contract Manager
Contractor Representative

Element

Date

Yes / No

The Contractor is approved for inclusion on the Approved Contractor List

The Contract meets the University OHS contractor management requirements

Authorisation
Dean / Head of School /
Director

Signature

Date

Table 1:OHS Control Measures for Labour Hire

Resources and Tools
OHS Control
Measures

Notes

All the forms are intended for adaption as

required
For use of the Contract Manager:
(1a) Contract OHS Management System
Guidelines

Contract OHS
Management

Contracts cannot transfer

responsibility for OHS to the
contractor

(1b) Contract OHS Management System

Template for Labour Hire (This
document)
WorkSafe Victoria: Host Employers:
Managing the safety of labour hire
workers

Written contract

OHS requirements must be

included in the contract.

For use of the Contract Manager:

(2) Model Contract Clauses

Hazard Management

Project Risk
Assessment

OHS Management
System

Required for all contracts that

involve a medium to high hazard
level. An initial risk assessment
should be carried by the Contract
Manager to identify issues. The risk
assessment must be discussed with
the labour hire employee

Large labour hire contractors will

have an established OHS
Management System.

For use of the Contract Manager and

Contractor:
(3a) Contract OHS Risk Assessment for
construction and related works
(3a) Contract OHS Risk Assessment for
maintenance and related works

For use of the Contract Manager:

(4a) OHS Guidelines for Contractor
Selection
(4c) Tender OHS Management System
Evaluation

Proof of WorkCover
and insurance coverage

For completion by the contractor:

Normally required for all contracts

(4b) Tender OHS Management System

Questionnaire
WorkSafe Victoria: Labour Hire Agency
health and safety health check

Resources and Tools

OHS Control
Measures

Hazard Disclosure
Statement

Notes

The Hazard Disclosure Statement is

a formal advice to the Contractor
about hazards known to Deakin
University that may affect the
safety of the contractor
The Labour Hire Provider may
require the University to complete a
Labour Hire Description or OHS
Management System assessment

All the forms are intended for adaption as

required

For use of the Contract Manager:

(6) OHS Hazard Disclosure Statement
(6b) Labour Hire Job Description
WorkSafe Victoria: Assessment of host
employers system for managing OHS

In major works where there are

activities with a medium to high
hazard level

For use of the Contract Manager or local

supervisor:

Safe Work Method

Statements

In major works where there are

activities with a medium to high
hazard level

(10b) Job Safety Assessment Template

Universitys Permit and

Isolation procedures

The labour hire employee must be

familiar with these procedures.

Local procedure

Labour Hire employee

Certificates

Where work requires that the

operator has certification (e.g.
forklift driver),

The Contract Manager must verify their

currency

Job Safety Assessments

(10a) Guidelines for Job Safety Assessments

(10c) Safe Working Method Statement

Template

This is the normal induction process for

casual and contracted staff

Local induction

For use of the Contract Manager:

(15a) Contractor OHS Induction Checklist Maintenance and Service contracts

Site induction

This induction is required and

would be the same as a similar
University staff member

(15b) Contractor OHS Induction Checklist Office based labour hire, casual staff,
temporary staff contracts

The induction checklist chosen will

depend upon the nature of the work

(15c) Contractor OHS Induction Checklist Venue hire contracts

(15d) Contractor OHS Induction Checklist Laboratory and workshop based
contractors and temporary staff
(15e) Contractor OHS Induction Checklist
Labour Hire Selection, Induction and
Training Record

Resources and Tools

OHS Control
Measures

Site Safety Rules

Booklet

Notes

Site Safety Rules provided as a

booklet to the Labour Hire
employee

All the forms are intended for adaption as

required

Local arrangements

Supervision and Monitoring

The University is
responsible for
supervision

Required

Sign in and Sign out

procedures

Normal University arrangements

Monitoring the
performance of the
contract

Direct responsibility of the

University supervisor

Evaluating contractor
performance

Where a labour hire contractor has

an ongoing relationship with the
University, the contractors OHS
performance must be periodically
reviewed.

The supervisor nominated in this document

Requirements for the contractor:

(21a) Site Sign In / Out Template

For use of the Contract Manager:

(23a) Non Conformance Report Form
(23b) Post / Annual Contractor Evaluation
Form

Based on the above data and elements of consideration i do have submitted a labour
contract that happened in a company.

Name of Project
Completing Water Supply System for the upcoming project Aditya Aluminum,
at Lapanga, Sambalpur, Orissa.

Scope of Work
Complete Design and Engineering, Manufacture, Supply, Transport, Handling,
Erection, Testing and commissioning including Performance Guarantee Test for Water
Supply System and related Substation, pipe Line, WBM Road for supply of Raw
Water from Hirakud Reservoir to Aditya Aluminium Smelter & Captive Power Plant
at Lapanga, District Sambalpur, Orissa.
Important details of the contract:
Name of the company

Aditya Aluminium,
(A Division of HINDALCO Industries Ltd.)
Lapanga, Sambalpur, Orissa

Name of contractor

Not to Display

Type of Contract
The contract is of Lump sum Fixed Price type turnkey contract. The above
contract includes complete design, engineering, supply, erection, testing and

commissioning of equipment. In case any item is missed out or omitted from the list of
technical specification for completion of the job as per contract provision it is also
deemed to be in scope of the supplier without any cost implication to the company.
Price of the contract
The contract price is payable by the company to the supplier in consideration of all
the supplies to be made and all services to be provided by the suppliers according to
the terms of the contract shall be:
(i)
(ii)

Supply of equipment including

Commissioning spares, packing
Forwarding, transit Insurance
Design, Engineering, Unloading,
Storage, Handling, Erection and
Commissioning including all civil
Work etc. with supervision and
insurance for storage and erection
of the water Supply System
in Complete

Not to Display
Not to Display

The above prices are exclusive of Transport, Excise Duty with education cess,
Sales Tax, Entry Tax, but inclusive of work Contract Tax and other Taxes and duties as
applicable to the scope of the contract.

Price Variation

In this contract the aforesaid contract price shall remain firm throughout the
entire contract period and shall not be subject to any escalation on the any account
whatsoever expect for any statutory variation (Increase or decrease) in taxes and duties
and the price of the MS spirally welded pipe for main water supply. The price of the
MS pipe are based on 11th jan,2010 if any variation in the in price by the SAIL shall be
applied on the supply price of the pipe with its correspondence impact on taxes and
duties and shall be paid.
Similarly for intake well & pipe line laying system the depth/length variation
are applicable at mutually agreed unit rates. In case of any variation (increased and
decreased) in account , the total contract price shall be increased or decreased and the
advances/payments already paid and/or due for payment shall be adjusted accordingly.

Time of Completion
The program of delivery, installation and commissioning of the Equipment
will be effective from the effective date and will be according to the schedule of 24
months from the effective date.

For construction of the raw water pipe line land corridor will be provided by
Aditya Aluminiumin phases within 8 month of the date of LOI. Incase of any delay in
providing land corridor due to any reason attributable to Aditya Amuminium, the
contract period shall be extended correspondingly without any financial impact to the
company.
Similarly for the construction of intake well and channel inside the Hirakud
Reservoir, in case any delay in the construction due to change in stipulation of
government of the Orissa and central government or Dam authority etc. the contract
period will also be extended correspondingly without levying and LD.

Payment terms
The payment of the contract price will be made by the company in accordance
with the following terms on receipt of invoices and other related documents:
For supplies
1. 10% contact value as advance with LOI against of BG
2. 5% of contract value against the submission & approval of GA drawings.
3. 60% of contract along with 100% taxes &duties on pro-rata as per approved
billing schedule against lawful invoice.
4. 10% of contract value against achievement of milestone.

5. 5% of contract value after issuing of commissioning certificate against

performance bank guarantee of equivalent amount.
6. 10% of contract value against issue of final acceptance certificate (FAC). i.e.
after completion of defect liability period of 12 month from date of
commissioning certificate.
For Civil, Erection, Testing & Commissioning
1. 10% contact value as mobilization advance against of BG of equivalent.
2. 5% of contract value against the submission & approval of GA drawings.
3. 60% of contract along with 100% taxes &duties on pro-rata as per approved
billing schedule against lawful invoice.
4. 10% of contract value against achievement of erection milestone.
5. 5% of contract value after issuing of commissioning certificate against
performance bank guarantee of equivalent amount.
6. 10% of contract value against issue of final acceptance certificate (FAC). i.e.
after completion of defect liability period of 12 month from date of
commissioning certificate.

Quality inspection and testing during manufacturing

The company will be entitled at all reasonable times to witness the inspection,
examination and testing of the equipment and erection & construction work at
workshop of supplier.
For this the contract should give one week prior notice to company for testing.
The supplier should provide such assistance, labour, material, electricity, fuels,
apparatus and instrument etc. for carry out test. If, after inspecting, examination, or
testing any part of the equipment and erection & construction work, the company
should decide that such part is defective or not in accordance with the terms and
specification for the contract, then it may reject such part by giving to supplier seven
working days written notice of such defect.
The company will bear all the costs and expenses for deputing its inspector.

Warranty
The supplier warrant that all material and all services provided by the supplier
should new, free from defect in workmanship and material or design and fit purpose
for which they are supplied.
The supplier warranty shall be effective for 18 month from last date of receipt
of supplies or 12 month from the date of successful commissioning.
During the warranty period if there are any failure, the supplier, on it option,
repair. Make good, replace, or modify with all possible speed without any additional
cost to company.
If supplier does not commence the correction activities the company may, at its
option, correct the defect at the suppler expenses. In such case the warranty period will
extended to 12 month from the date on which such replacement or repair is completed.

Project Management, Co-Ordination, Monitoring and Supervision

The supplier should depute at their own expense duly qualified supervisors to
site to supervise the erection and construction work and putting in to operation at site.
The supplier should provide supervisory services for project management,
installation and commissioning also bear all the cost against the facilities provided to
its supervisors.
All the work should be complete on or before time if any site supervisor
deputed at site for work is not able to complete the work on time or at any guilty of
serious misconduct, the supplier should remove or replace such persons at supplier
expense so as not to cause any interruption in carrying out the erection & construction
work or any delay in specified time schedule for the work.
The supplier should provide adequate on the job training to operating and
maintenance staff of the company at site during the erection & commissioning without
charging any additional cost to the company.
Liaison and co-ordination for processing of all statutory clearances with State
Government Authority at Bhubaneswar or at District Level or with the DAM
Authorities shall be carried by the supplier.

Liquidated damages (LD) for delays and shortfall in performance

In the event of delay in completion of supply and commissioning of the water
supply system, beyond the completion period as per schedule, the supplier shall pay
LD @ 0.5% of the contract price per week of delay subjected to a maximum of 5% of
the contract prices for both supply and erection order value.
The payments of deduction of liquidated damages shall in no way relieve the
supplier from completing the supplies and works and discharging all its other
obligations under the contract provided however that the above mentioned liquidated
damages are the supplier only obligation to financially compensate the company in
case of delay completion of the facility and/or failure to achieve the performance
guarantees.

The important point from contract point of view to be monitored/ resolved

1. The company should furnish all the pertinent data and informations available to
it without charges and within a reasonable time and should give such assistance
as should reasonably required by the supplier for carrying out the supplier
obligations under the contract as per schedule.
2. The supplier , in carrying out its responsibilities, shall comply with the
legislation, laws, by-laws, rules, regulations of the Govt. of India, the State of
Orissa and other local authorities as may be applicable including those relating
to environment, labour and safety.
3. The company should make timely payment to the suppliers for all amounts due
to the suppliers under the contract in accordingly with the terms and provisions
of the contract.
4. The Engineer-in-charge (EIC) carryout such duties in issuing certificates,
decision, instructions and order as per contract to be carried out by the supplier.
EIC shall have the full authority to act on behalf of the company for all purpose
in connection with the contract and shall be supplier primary point of contact
with company in relation to the execution of the work. The supplier shall
proceed with the works in accordance with decision, instruction and order given
by EIC subject to and in accordance with the contract, including provision for
variation hereof.
5. Liaison and co-ordination for processing of all statutory clearances with State
Government Authority at Bhubaneswar or at District Level or with the DAM
Authorities shall be carried by the supplier.
6. During the contractual period, the supplier shall indemnify the company to coordinate and ensure to take care of all the Local, socio, economic, cultural,
education and political requirement of various non profitable organizations,
association, institution including district and local administration if any form
time to time as a part of their contractual and social obligation with due
consultation and approval from the company.

7. The supplier shall also get approved by the company the list of its vendors
engaged for the purpose of the contract.
8. The supplier shall make its own arrangement for land, supply of water,
electricity or any other facilities required for fabrication, erection, and
commissioning of the work.
9. The supplier shall indemnify to the company that they will create as
environment of awareness and physical being that is conducive to a safe and
healthy workplace, in accordance with all federal, state, local and corporate
regulation and contractual obligations. The supplier shall provide safety
programs that are effective in identifying and reducing hazards in the work
place and impart training to their employees to develop safe work practices that
efficiently produce quality products in a safe manner with an objective to have
an injury free workplace and zero accident.
10.The supplier shall use liberal factors of safety throughout the design and shall
follow all other relevant IS and also international codes, wherever applicable.

The Consultant
The Consultant will be totally responsible for all the engineering of Projects
going on at all the branches. He will be involved in each activities from initial idea,
generation of layout drawings with all infrastructure requirements, Detail working
drawings, estimates, and site execution up to hand over.

The consultants would be responsible for preparation of drawings and

documentation within their various disciplines with regard the Services. Site-visits
would be made by the consultants at specified milestones, or as may be required.
The Group Head (CEO & COO):
The group heads role would be the monitoring of the designers output and
activities, and taking responsibility for all the work that is generated by the group.
Project In charge (Sr. V.P.):
Interaction with contractors to detail out their requirements, obtaining signoffs
and overseeing the tendering and negotiating process. Subsequently, during the
execution stage, he monitors the project for cost, quality, and schedules and local
administration.
The Project Manager (GM):
The project manager audits the project during the drawing/design stage, for
conformance to the stipulated process, and for adherence to agreed schedules.
Subsequently, during the execution stage, he monitors the project for cost, quality, and
schedules.

The Site In Charge(Manager/ Sr. Manager):

The site in charge is responsible for achieving quality on site, interpreting the
drawings and documentation on site, and raising reports on quality and scheduling.
Assistant Site In charge (Asst. Manager/ Engineer):
The role of a Assistant site In Charge is the day to day monitoring of site activities.
Monitoring of day to day schedules and raw material quality fall within the scope of
duties. He is responsible for Co-ordination between Vendors and the generation of
daily and weekly status reports.

Recommendations & Conclusion

1. In this contract there is no provision and any point hasnt made about change of
the scheme for drawl of water from the reservoir and change in the price of the
contract according to that change.
2. The contract doesnt have the provision of the penalty as per contract the
contract cant leave work there is provision of the liquidity damage maximum
of 5 % of the contract value. The contract has to complete the work and if there
is any defect in the work the contractor has to rectify it on his own expenses
within the guarantee period in case of any delay of contract due to
unsatisfactory work the company will suffer the loss by unavailability of the
water at plant area.

References:
- NICMAR publication lesson books on Construction Contract Management