Contract Management PDF

CONTRACT MANAGEMENT
Tanuj Chopra
Thapar University, Patiala
Tanuj Chopra
Thapar University Patiala
CONTRACT
Contract is an agreement between two or
more than two parties (enforceable at law) in
which one is agreed to provide goods and
services to other for which he will get the
return in the some form.
The contract is legal document and
binding on both the parties.
The form in which return for providing goods
and services is delivered, is called type of
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contracts.
PARTIES TO A CIVIL ENGINEERING

CONTRACT
The employer(also known as client),
party interested in having the project executed.
The contractor-responsible for executing the

project in accordance with the employers
wishes.
The consulting Engineer-responsible for
preparing all plans, specification & schedules in
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accordance with the Employers
In this arrangement, Contract exist

between
The construction contract between
employer (client) & the contractor
The
design/consultancy
contract
between the employer (client) & the
consulting Engineer
There is no contract between the consultant
(from client side) and the contractor Tanuj Chopra
Construction Project Phases

Preliminary planning and feasibility
studies
Preliminary engineering and design
Detailed Engineering design
Procurement
Construction
Operation
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Contracts are used during all phases

of construction projects.
In the first phase , which is the
feasibility phase, contracts are formed
between an owner and a consultant (an
engineering firm, or an architectural firm)
to perform a feasibility and site selection
study.
In the construction phase contract are
formed between an owner and a
Contractor firm.
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Bidder :- Someone who responds to a request for

Expression of Interest (EoI) or an invitation to
submit a bid in response to a Project Brief. A bidder
could be a single party or a consortium of parties,
each responsible for a specific element, such as
constructing the infrastructure, supplying the
equipment, or operating the business. Government
normally contracts with only one lead party
(bidder) who is responsible for the provision of all
contracted services on behalf of the consortium.
Concessionaire :- The private partner awarded the
tender for the implementation of the PPP Project.
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PPP :- Public Private Partnership, in which the

Government contracts a private sector enterprise for
providing a public asset or a service (roads, water
supply, etc.), usually at a user charge.
Concession:- A PPP modality in which the general
public usually pays Service Fees in the form of tolls,
fares or other charges for using the Facility & the
duration of the PPP contract is called as concession
period.
BOT, Build, Operate & Transfer: A PPP Mode

under which the Concessionaire builds the assets,
operates and maintains them and at the end of the
Concession, transfers the assets backTanujto
the
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Sponsoring Authority.
Expression of Interest (EoI): The first stage

of the two stage bidding process (Request
for Qualification or RfQ), wherein Technical
& Financial Qualification documents are
invited. Based on the criteria specified in the
RfQ documents, potential bidders are shortlisted for the next stage, i.e., inviting financial
offers.
Pre-Bid meeting: A meeting with the
prospective/short-listed
bidders
before
inviting firm proposals, to answer their
queries.
Request for Proposal (RFP):The
second stage of the two stage bidding
process, wherein only financial proposals are
invited from short-listed bidders.
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Letter of Intent
In a perfect world employers and contractors,
and contractors and subcontractors, would
finalize all aspects of their deal and record it in a
written, signed contract before any work was
performed or expenditure incurred.
In reality, however, the parties are often under
commercial pressure to commence works or
preparatory works as soon as possible and turn
to a 'letter of intent' while they continue to
negotiate the full contract
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Special Purpose Vehicle (SPV) : In establishing a

project consortium, the sponsor or sponsors typically
establish the private party in the form of an SPV which
contracts with government. The SPV is simply an
entity created to act as the legal manifestation of a
project consortium, with no historical financial or
operating record which government can assess.
GACEPL / GMRACEPL
The project sponsors normally will form a Special
Purpose Vehicle (SPV) to act as
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the concessionaire ThaparTanuj
University Patiala
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STRENGTHENING AND WIDENING OF

EXISTING 2-LANE ROAD TO 4-LANE
DUAL CARRIAGEWAY FROM (I) KM
5+735 TO KM 39+960 OF NH-22 & (II)
KM 0+000 TO KM 0+871 OF NH-21,
AMBALA CHANDIGARH SECTION(CONSTRUCTION OF FLYOVER ON NH22 AT ZIRAKPUR, PUNJAB)
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IMPORTANT DATES
16th Nov 2005
Signing of the Concession Agreement with NHAI
11th May 2006
Commencement of Construction
11th May 2006
Financial Closure of Project
November 2008
Completion of the Project
Negative Grant of 105.86 Crore
STATISTICS
Location
NH22-21, Haryana-Punjab
Project Distance
35 kms
Cost of Project
499.11 Crores
(including a cost overrun of 107.95 crores)
Contract Basis
Build, Own, and Transfer
Toll project
Concession Period
2 0 y e a r s Tanuj Chopra
C LIENT
National Highway Authority Of India (NHAI)
C O N C E S S I O N A I R E / S P V:
GMR Ambala Chandigarh Expressway Pvt . Ltd .
(GMRACEPL).
E P C C O N T R A C TO R :
GMR Projects Pvt. Ltd.(GPPL)
C O N S U LTA N T S :
S T U P C O N S U LTA N T S P v t . L t d .
INDEPENDENT E NGINEER:
M/S Sheladia Associates In.
C O N T R A C TO R :
ITD Cementation India Ltd
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GACEPL is a wholly owned subsidiary of the

GMR group. Currently, GMR Infrastructure Limited
holds 24.99% shareholding in the company, while
GMR Energy Limited holds 26.01% and the remainder
49% is held by GMR Highways Limited.
GACEPL is a special purpose vehicle (SPV) set up
for the purpose of collecting toll, based on a twenty
year concession agreement (ending May 2026) with
National Highway Authority of India. The project
scope
entails
improvement,
operation
and
maintenance including strengthening, widening of
existing 2 lane road to 4 lane dual carriage way of 35
kms stretch of the Ambala Chandigarh
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(NH21/NH22) highway.
The project was completed on schedule and it

achieved the Commercial Operation Date (COD)
for the project on 14th November 2008, however,
the toll collection on the project highway started a
month later on 10th December 2008.
The total project cost was Rs. 499.11 crore
(including a cost overrun of Rs. 107.95 crore),
which was funded by promoters/ sponsors
contribution of Rs. 217.53 crore and term loan of
Rs. 281.58 crore.
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Loan Rating:*ICRA has reaffirmed its long-term rating of

[ICRA]BB+ on the Rs. 269.59 crore long-term
outstanding debt programme of GMR Ambala
Chandigarh Expressways Private Limited (GACEPL).
The outlook on the long-term rating is negative.
The reaffirmation of GACEPLs rating takes into
account the continued diversion of traffic to
alternate routes and subdued traffic growth during
FY2013 & 14 leading to much lower traffic on the
project route than anticipated. The lower traffic is
resulting in inadequate toll collections for the SPV,
thus necessitating substantial infusion of funds by
its promoters in order to meet the contractual
obligations of the project.
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SPV has claimed compensation from NHAI
on account of losses due to traffic diversion

to alternate routes and has invoked the
arbitration clause in the concession
agreement for the same. The arbitration
committee has been formed and the first
hearing of the case is expected to be held
shortly.
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IL&FS Engineering and Construction Company

Limited (IL&FS Engineering Services) has
received a Letter of Intent (LoI) from Kiratpur
Ner-Chowk Expressway Limited (KNCEL), an
SPV
incorporated
by
ITNL
(IL&FS
Transportation Networks Ltd.) for the Project
for a total value of Rs. 1436.08 crores of which the
company's share is Rs. 1210.50 crores.
(Kiratpur Sahib to Manali Highway first phase up

to Nerchowk with Segmental Engineering &
Thapar University as Consultants) Tanuj Chopra
Financial Closure:-The stage when the

Concessionaire
ties
up
with
the
banks/financial institutions for the funds
required for the project, and conditions
precedent to initial drawing of the debt have
been fulfilled.
In a Public Private Partnership (PPP)
project, financial closure indicates the
commencement of the Concession
Period. The date on which financial closure
is achieved is the appointed date which is
deemed to be the date of commencement of
concession period.
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In order to give a uniform interpretation for

the term financial closure, Reserve Bank of
India has provided the following definition.
For Infrastructure projects, financial
closure has been defined as "a legally
binding commitment of equity holders and
debt financiers to provide or mobilize
funding for the project. Such funding must
account for a significant part of the project
cost which should not be less than 90 per cent
of the total project cost securing the
construction of the facility".
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SP Jammu Udhampur Highway Pvt. Ltd. is a special

purpose vehicle project(SPV) of Shapoorji Pallonji and
Company Ltd. It is engaged in development of road
project on BOT (Build operate transfer) basis.
The project involves strengthening and 4-laning of 65
kilometer stretch of Jammu Udhampur section of
National Highway -1A with SMEC India Pvt. Ltd. &
Thapar University as Consultants.
The company was incorporated in 2010 and is based in
New Delhi, India.
Shapoorji Pallonji has closed financing on the

Rs27.8 billion ($485.6 million) for Jammu
Udhampur Highway PPP. IDFC and Standard
Chartered arranged the debt package.Tanuj Chopra
TYPICAL DRAWINGS
IN A CONTRACT
AGREEMENT
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Model Concession Agreement (MCA)

Model Concession Agreement (MCA) forms the
core of public private partnership (PPP) projects
in India. The MCA spells out the policy and regulatory
framework for implementation of a PPP project. It
addresses a critical issues pertaining to a PPP
framework like mitigation and unbundling of risks;
allocation of risks and returns; symmetry of
obligations between the principal parties.
The MCA allocates risk to parties best suited to
manage them.
The Model Concession Agreements for various sectors
like National Highways, State Highways, Urban Rail
Transit System and Ports are available
for
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construction in India
CONCESSION AGREEMENT
This Agreement is entered into on this the
. day of ., 2015 BETWEEN
NATIONAL HIGHWAYS AUTHORITY OF INDIA, a
statutory body constituted under the provisions of the
National Highways Authority of India Act, 1988, and
having its principal office at ______,New Delhi 110 065.
AND
[
LIMITED],
a
company
incorporated under the provisions of the Companies
Act, 1956 and having its registered office at
. (hereinafter referred to as the
Concessionaire or Company/SPV.
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WHEREAS
A) The Government of India had

entrusted to the Authority the
development,
maintenance
and
management of National Highway No. 1A
from km 15.000 to km 67.000 (approx.
64.58 km) on the Jammu - Udhampur
section of NH1A in the Jammu & Kashmir
by Four-Laning on design, build, finance,
operate and transfer on Annuity ("DBFOT
Annuity") basis in accordance with the
terms and conditions to be set forth in a
concession agreement to be entered into.
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B) The Authority had accordingly invited
proposals by its Notice / Request for

Qualification No. NIL dated February
27,2009 (the "Request for Qualification
or "RFQ) for short listing of bidders for
construction, operation and maintenance
of the above referred section of NH - 1A on
DBFOT Annuity basis and had shortlisted
certain bidders including, the selected
bidder i.e., Shapoorji Pallonji & Co. Ltd.
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The Authority had prescribed the technical and

commercial terms and conditions, and invited
bids (the "Request for Proposals" or "RFP")
from the bidders shortlisted pursuant to the
RFQ for undertaking the Project.
After evaluation of the bids received, the
Authority had accepted the bid of the selected
bidder and issued its Letter of Award No.
NHAI/N-111 1019/RFP/2009/60 dated April
30, 2010 (hereinafter called the "LOA") to the
selected bidder requiring, the execution of this
Concession Agreement within 30 (thirty) days
of the date of issue thereof.
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The selected bidder has since promoted and

incorporated the Concessionaire as a
limited liability company (SPV) under
the Companies Act 1956, and has requested
the Authority to accept the Concessionaire
as the entity which shall undertake and
perform the obligations and exercise the
rights of the selected bidder under the LOA,
including the obligation to enter into this
Concession Agreement pursuant to the LOA
for executing the Project.
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By its letter dated July 8, 2010, the

Concessionaire / SPV has also joined in
the said request of the selected bidder to
the Authority to accept it as the entity
which shall undertake and perform the
obligations and exercise the rights of the
selected bidder including the obligation to
enter into this Concession Agreement
pursuant to the LOA.
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The Authority has agreed to the said

request of the selected bidder and the
Concessionaire, and has accordingly
agreed to enter into this Concession
Agreement with the Concessionaire
for execution of the Project on DBFOT
Annuity basis, subject to and on the
terms and conditions set forth
hereinafter.
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Advance Payment
The Contractor may claim an advance
payment not exceeding 20% of the value
of the Contract, provided that it is covered by
an unconditional and irrevocable bank
guarantee from a bank. Such guarantee should
be valid for the entire contract implementation
period & will be recoverable in equal installment
in
the
succeeding
payment
Valuation
Certificates.
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PERFORMANCE SECURITY
A contractor may cause a Performance bond to
be issued in favor of a client for whom the
contractor is constructing a building / project.
If the contractor fails to construct the project
according to the specifications laid out by
the
contract(most
often
due
to
the bankruptcy of the contractor), the client is
guaranteed compensation for any monetary
loss up to the amount of the performance
bond.
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A performance bond, also known as a

contract
bond,
is
issued
by
an insurance company or a bank to
guarantee satisfactory completion of a
project by a contractor
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Example NH-1A Contract Agreement

The Concessionaire shall, for the performance of
its obligations hereunder during the
Construction Period, provide to the
Authority no later than 180 days from the
date of this Agreement, an irrevocable and
unconditional guarantee from a Bank for a sum
equivalent to Rs. 90.70 Crores (Rupees
Ninety Crores Seventy Lakhs only) in the form
set forth in Schedule-F (the "Performance
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Security").
Until such time the Performance Security is

provided by the Concessionaire and the same comes
into effect, the Bid Security shall remain in force
and effect, and upon such provision of the
Performance Security, the Authority shall release
the Bid Security to the Concessionaire.
Notwithstanding anything to the contrary contained
in this Agreement or in the event Performance
Security is not provided by the Concessionaire
within a period of 180 (one hundred and eighty)
days from the date of this Agreement, the
Authority may en-cash the Bid Security and
appropriate the proceeds thereof as
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Damages
Upon occurrence of a Concessionaire

Default or failure to meet any Condition, the
Authority shall, without prejudice to its
other rights and remedies hereunder or in
law, be entitled to en-cash and
appropriate the relevant amounts from
the Performance Security as Damages for
such Concessionaire default.
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Upon such encashment and appropriation from

the Performance Security, the Concessionaire
shall, within 30 (thirty) days thereof,
replenish, in case of partial appropriation, to
its original level the Performance Security, and
in case of appropriation of the entire
Performance Security provide a fresh
Performance Security, as the case may be, and
the Concessionaire shall, within the time so
granted, replenish or furnish fresh Performance
Security as aforesaid failing which the Authority
shall be entitled to terminate this Agreement
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Upon replenishment or furnishing of a fresh

Performance Security, as the case may be, as
aforesaid, the Concessionaire shall be
entitled to an additional Cure Period of 90
(ninety) days for remedying the
Concessionaire Default, and in the event of
the Concessionaire not curing its default within
such Cure Period, the Authority shall be entitled
to en-cash and appropriate such Performance
Security as Damages, and to terminate this
Agreement
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Obligations prior to commencement

of construction
submit to the Authority and the
Independent Engineer its detailed
design, construction methodology,
quality assurance procedures, and the
procurement,
engineering
and
construction time schedule for completion
of the Project in accordance with the
Project Completion Schedule
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Maintenance to existing facilities

During the Construction Period, the
Concessionaire shall maintain, at its cost
the existing lane(s) of the Project Highway
so that the traffic worthiness and safety
thereof are at no time materially inferior
as compared to their condition 7 (seven)
days prior to the date of this Agreement
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By submitting the Drawings for review to

the
Independent
Engineer,
the
Concessionaire shall be deemed to have
represented that it has determined and
verified that the design and engineering,
including field construction criteria
related thereto, are in conformity with the
Scope of the Project and the Specifications
and Standards.
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Within 15 days of the receipt of the Drawings, the
Independent Engineer shall review the

same and convey its observations to the
Concessionaire with particular reference to
their conformity or otherwise with the Scope of
the Project and the Specifications and Standards.
The Concessionaire shall not be obliged to
await the observations of the Independent
Engineer on the Drawings submitted beyond the
said 15 (fifteen) days period and may begin or
continue Construction Works at its own discretion
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and risk.
If the a observations of the Independent

Engineer indicate that the Drawings are not
in conformity with the Scope of the
Project or the Specifications and
Standards, such Drawings shall be revised by
the Concessionaire and resubmitted to the
Independent Engineer for review.
The Independent Engineer shall give its
observations, if any, within 7 (seven) days
of receipt of the revised Drawings/
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No review or observation of the Independent

Engineer or its failure to review or convey its
observations on any Drawings shall not
relieve
the
Concessionaire
of
its
obligations and liabilities under this
Agreement in any manner nor shall the
Independent Engineer or the Authority be liable
for the same in any manner
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The Concessionaire shall construct the

Project Highway in accordance with the
Project Completion Schedule given in
Schedule.
In the event that the Concessionaire fails to
achieve any Project Milestone within a
period of 90 (ninety) days from the date
set forth for such Milestone in Schedule &,
unless such failure has occurred due to Force
Majeure or for reasons solely attributable to the
Authority, it shall pay Damages to the Authority
in a sum calculated at the rate of 0.1% (zero
point one per cent) of the amount of
Performance Security for delay ofTanuj
each
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day until such Milestone is achieved.
in the event Project Completion Date is

achieved on or before the Scheduled Four
Laning Date, the Damages paid shall be
refunded by the Authority to the
Concessionaire, but without any
interest thereon
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In the event that Four-Laning is not

completed within 270 (two hundred and
seventy) days from the Scheduled FourLaning Date, unless the delay is on
account of reasons solely attributable to
the Authority or due to Force Majeure, the
Authority shall be entitled to
terminate this Agreement.
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Monitoring of Construction
During the Construction Period, the
Concessionaire shall, no later than 7
(seven) days after the close of each month,
furnish to the Authority and the
Independent Engineer a monthly
report
on
progress
of
the
Construction Works
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During
the
Construction
Period,
the
Independent Engineer shall inspect the
Project Highway at least once a month and
make a report of such inspection (the
"Inspection Report") stating in reasonable detail
the defects or deficiencies, if any, with particular
reference to the Scope of the Project and
Specifications and Standards. It shall send a copy
of the Inspection Report to the Authority and the
Concessionaire within 7 (seven) days of such
inspection and upon receipt thereof, the
Concessionaire shall rectify and remedy the
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defects or deficiencies, if any, stated
Inspection Report.
Such inspection or submission of

Inspection
Report
by
the
Independent Engineer shall not
relieve the Concessionaire of its
obligations and liabilities hereunder
in any manner whatsoever.
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COMPLETION CERTIFICATE
At least 30 (thirty) days prior to the likely
completion of the Project Highway, the
Concessionaire shall notify the Independent
Engineer of its intent to subject the Project
Highway to Tests. The date and time of each of
the Tests shall be determined by the
Independent Engineer in consultation with the
Concessionaire, and notified to the Authority
who may designate its representative to witness
the Tests.
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Upon completion of Construction

Works and the Independent Engineer
determining the Tests to be successful,
it shall forthwith issue to the
Concessionaire and the Authority a
certificate
as the "Completion
Certificate.
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Provisional Certificate
The Independent Engineer may, at the
request of the Concessionaire, issue a
provisional certificate of completion the
"Provisional Certificate if the Tests are
successful and the Project Highway can be
safely and reliably placed in commercial
operation though certain works or things
forming part thereof are outstanding and
not yet complete.
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In such an event, the Provisional

Certificate shall have appended thereto
a list of outstanding items signed
jointly by the Independent Engineer
and the Concessionaire (the "Punch
List").
Provisional certificate is issued if at
least 75% (seventy five per cent)
of the total length of the Project
Highway has been completed.
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All items in the Punch List shall be

completed by the Concessionaire
within 90 (ninety) days of the date
of issue of the Provisional Certificate
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Subject to the provisions of this Agreement,

the Concessionaire upon achieving COD
for the Project Highway and in consideration of
the Concessionaire accepting the Concession and
undertaking to perform and discharge its
obligations in accordance with the terms,
conditions and covenants set forth in this
Agreement, Authority agrees and undertakes to
pay to the Concessionaire, for each Annuity
Payment Period, on each Annuity Payment Date
as set forth in Annuity Payment Schedule,
the sum of Rs. 201.90 Crores after every six
months as set forth in its Bid.
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BONUS AND REDUCTION IN ANNUITY

In case the Concessionaire achieves COD
prior to the Scheduled four laning Date
then it shall be entitled to receive from
the Authority a bonus for early completion
of the Project (the "Bonus").
Such Bonus shall be paid along with the
first Annuity payment on the first Annuity
Payment Date.
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The Bonus for such early completion

shall be the product of Average Daily
Annuity and the number of days by
which the COD preceded the
Scheduled Four Laning Date.
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In case the Concessionaire achieves COD after to

the Scheduled four laning Date then shall it shall
be liable for reduction in its first Annuity for
delayed completion of the Project (the
"Reduction"). Such Reduction shall be effected
on the first Annuity payment on the first Annuity
Payment Date.
The Reduction for such delayed completion shall
be the product of Average Daily Annuity and
the number of days by which the COD
exceeded the Scheduled Four Laning
Date.
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If in an Annuity Payment Period, the

Concessionaire fails to maintain the
Project Highway in accordance with the
Maintenance Requirements as provided in
Schedule, then it shall be liable for
payment of Damages in accordance
with this Agreement.
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Financial Closure
Financial Closure:- within 180 days of
signing the agreement.
Grace period of 90 days for financial
closure with fees of Rs. 1,00,000 per
week as Damage charges.
Maximum 270 days for Financial closure.
After this termination of contract. Client can
en-cash bid security or performance
security.
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If Project on Negative Grant
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ESCROW
ACCOUNT
SPV within 60
days from date of
agreement open
and establish the
Escrow account
& all funds
constituting the
financing package
for meeting the TPC
shall be credited to
such escrow
account by F.C.
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During Operations Period all Fees

collected by the Concessionaire from the
users of the Project Highway shall be
exclusively deposited therein.
In addition, all Fees collected by NHAI in
exercise of its rights under this Agreement
during the Concession Period and all
disbursements or payments by NHAI
shall also be deposited by NHAI in the
Escrow Account
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All expenses in connection with and

relevant to the construction of Project
Highway by way of payment to the EPC
Contractor and such other persons and
expenses during O& M phase should be
specified in the Financing Documents of
Escrow Account.
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An escrow account is a temporary pass through

account held by a third party during the process
of a transaction between two parties.
This is a temporary account as it operates until
the completion of a transaction process, which
is implemented after all the conditions
between the buyer and the seller are
settled.
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Arbitration
Every dispute, difference, or question
which may, at any time, arise between the
parties ,in respect of any clause of this
agreement or in respect of work done or
quality of materials used or in respect of any
delay in completion of works, it may give a
notice in writing to the other party that the
matter in dispute be referred to the
arbitration of an arbitrator to be agreed upon
and appointed by both the parties.
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Major
Type
of
Contracts
Construction Industry
in
Lump sum contract

Item rate contract
Cost plus fixed fee contract
Cost plus percentage of cost contract
BOT, DBOT, DBFOT, PPP
Labour Contract
Turnkey Contract
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LUMP SUM CONTRACT

In a lump sum contract an owner /client agrees
to pay a contractor a specified lump sum after
the completion of work without a cost
breakdown.
Under a lump sum contract, a single 'lump sum'
price for all of the works is agreed before the
works begin.
It is generally appropriate where the project is
already well defined when tenders are sought and
changes are unlikely. This means that
the contractor is able to accurately price
the
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risk.
In this type of contract, the contractor

offers to do the whole work as shown in
drawings and described by specifications,
for a total stipulated sum of money.
There are no individual rates quoted, thus
it becomes difficult to make
adjustments in the contract value if
any changes are to be made in the
work later on.
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Deposit of 10 % security money and other

conditions of the contract are included in
the contract agreement.
Upon the completion of work, a fixed lump sum
amount is paid to the contractor.
Detailed measurements of different items are
required but the whole work is compared and
checked with drawings and specifications before
releasing the payment
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In large projects, part payments are

made to the contractor at different
stages of work on money agreed terms.
In case the contractor stops the work in
between, contractor not entitled for
any further payment.
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Many additional items may have to be

undertaken as the work progresses, giving
opportunity to the contractor for claiming
higher rates of the extra items not
included in the contract agreement.
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ITEM RATE / SCHEDULE RATE

CONTRACT
In this contract the contractor is
required to quote a rate for each
activity of work. This type of contract is
mainly done in Railway and Public
Work Departments.
It allows a thorough rate analysis.
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The amount to be received by the

contractor, depends upon the quantities
of various items of work actually
executed.
The payment to the contractor is made on
the basis of detailed measurements
of different items of work actually
done by him.
Tanuj Chopra
In this type of contract, there is no need

for detailed drawings at the time of
allotting contract as in the case of lump
sum contract.
The detailed drawings can be prepared

after the contract is awarded.
Tanuj Chopra
Changes in drawings and quantities

of individual items can be made as
per requirement within agreed limits.
The payment to the contractor is made on
the actual work done (actual quantity) by
him at the agreed rates.
Tanuj Chopra
The total cost of work can only be

known upon completion. As such,
the owner may incur financial difficulty if
the final cost increases substantially.
Additional staff is required to take

detailed measurements of work done for
releasing payments to the contractor.
Tanuj Chopra
Cost plus fixed fee contract

In cost plus fixed fee, the owner pays
the contractor an agreed amount
over and above the documented
cost of work.
Tanuj Chopra
This type of contract is suitable for

works required to be completed
expeditiously and where it is difficult
to foretell what difficulties are likely to
be encountered.
This contract is also suitable for important
structures where the cost of construction is
not so important.
Tanuj Chopra
In this type of contract, actual cost is to

be borne by the owner. Therefore, the
contractor performs the work in the best
interest of the owner resulting in good
quality work.
The work can be taken in hand even before
the detailed drawings and specifications
are finalized.
Tanuj Chopra
Changes in design and method of

construction if needed can be easily
carried out without disputes.
The work can be executed speedily.
The final cost of the work is not known in
advance and this may subject the owner to
financial difficulties.
Tanuj Chopra
Cost plus percentage of cost contract
Work is given on certain percentage

over the actual cost of construction.
The actual cost of construction is
reported by the contractor and is
paid to him by the owner together
with a certain percentage as agreed
earlier.
Tanuj Chopra
The suitability, merits and demerits

of this type of contract are similar to
cost plus fixed fee contracts.
An additional demerit is the
tendency of the contractor to
increase the cost of work to
earn profit by way of percentage of
enhanced actual cost.
Tanuj Chopra
Turn-key Contract
A turn-key contract is an integrated
contract in which all works pertaining
to various disciplines such as civil,
electrical, mechanical are in the hands of a
single contractor called the main
contractor.
The main contractor can sublet the contact
to subcontractors who are specialists in
their respective fields.
Tanuj Chopra
In this contract, the main advantage to the

owner is that owner need not to coordinate the
work of different contractors.
The main contractor is responsible for all kinds
of jobs starting from planning to commissioning
stage.
The owner takes over the entire work
(which is fully operational and of proven
performance) from the main contractor.
Tanuj Chopra

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CONTRACT MANAGEMENT

PARTIES TO A CIVIL ENGINEERING

The contractor-responsible for executing the

In this arrangement, Contract exist

Construction Project Phases

Contracts are used during all phases

Thapar University Patiala

Bidder :- Someone who responds to a request for

PPP :- Public Private Partnership, in which the

BOT, Build, Operate & Transfer: A PPP Mode

Expression of Interest (EoI): The first stage

Thapar University Patiala

Special Purpose Vehicle (SPV) : In establishing a

STRENGTHENING AND WIDENING OF

Thapar University Patiala

GACEPL is a wholly owned subsidiary of the

The project was completed on schedule and it

Loan Rating:*ICRA has reaffirmed its long-term rating of

SPV has claimed compensation from NHAI

on account of losses due to traffic diversion

IL&FS Engineering and Construction Company

(Kiratpur Sahib to Manali Highway first phase up

Financial Closure:-The stage when the

Thapar University Patiala

In order to give a uniform interpretation for

Thapar University Patiala

SP Jammu Udhampur Highway Pvt. Ltd. is a special

Shapoorji Pallonji has closed financing on the

Model Concession Agreement (MCA)

Thapar University Patiala

A) The Government of India had

Thapar University Patiala

B) The Authority had accordingly invited

proposals by its Notice / Request for

The Authority had prescribed the technical and

The selected bidder has since promoted and

Thapar University Patiala

By its letter dated July 8, 2010, the

The Authority has agreed to the said

Thapar University Patiala

Thapar University Patiala

A performance bond, also known as a

Example NH-1A Contract Agreement

Thapar University Patiala

Until such time the Performance Security is

Upon occurrence of a Concessionaire

Upon such encashment and appropriation from

Upon replenishment or furnishing of a fresh

Obligations prior to commencement

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Maintenance to existing facilities

By submitting the Drawings for review to

Within 15 days of the receipt of the Drawings, the

Independent Engineer shall review the

If the a observations of the Independent

No review or observation of the Independent

The Concessionaire shall construct the

Thapar University Patiala

in the event Project Completion Date is

In the event that Four-Laning is not

Such inspection or submission of

Upon completion of Construction

Thapar University Patiala