Académique Documents
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UNIT –IV
Contracts
2 List of topics
1. Introduction of contracts
2. Types of contracts: Conditions of contract
3. Tender : Tender form, Tender Documents, Tender Notice, Work Order.
4. Project Delivery Methods : Public Private Partnership (PPP)
5. Stages of awarding contract
6. Procedure for execution of PWD works
7. Safety in construction
8. Workmen compensation act
9. Contract labor act
10. Demolition of buildings
3 Introduction of contracts
Construction contracts are formalized in the form of a written document which defines
clearly the Rights and Obligations of each party
Contract describes precisely the Legal, Financial and Technical provisions of the
work
It usually contains clauses that specify
Completion time
Liquidated damages
Payments to the contractor
Scope and nature of work
It is agreed and signed by both parties
The elements of a contract consists of
Job Offer
Monetary consideration and
Acceptance
14 a) Turnkey contract
Under this contract, the Contractor carries out all the Engineering, Procurement and
Construction (EPC) providing a fully-equipped facility, ready for operation (at the “turn of the
key”)
It is an integrated contract in which all works related to civil, electrical, mechanical e.t.c., are
in the hands of a main contractor
Also the main contractor takes total responsibility from planning to commissioning stage
The owner need not to coordinate the work of different sub-contractors
This type of contract is suitable, where a higher degree of certainty of final price and time is
required
In-house progamme (June 29, 2007)
15 b) Package contract
Two or more related jobs, each of which form a separate contract are combined in a single
contract
Design and development + construction + maintenance
Supply + maintenance
Plan of work and standards are established and the work is carried out accordingly by the
contractor
The main contractor is responsible for safeguarding the owner’s interest and for this reason,
prior approval of design and technical aspects have to be taken from the owner
Responsibility for correctness of the design lies with the main contractor
16 c) Negotiated contract
In this type of contract Negotiation across the table takes place between representatives of
the owner and the main contractor for project cost and other conditions of contract
Detailed project specifications are arrived at by discussions
It involves extended discussions for finalisation as a competitive contract
Most of the consultancy projects of world bank are negotiated contracts
17 d) Continuing contract
New or additional work is awarded on the basis of agreed terms and conditions of existing
contract
It requires no retendering hence can save time and money
e) Running contract
These provide goods and services at specified intervals or as and when required by the
owner
The contract price is not fixed and payment is based on actual goods supplied and services
rendered as specified in the contract document
18 f) FIDIC contract
Evolved by an International body of consultants - Federation Internationale des Ingenieurs
Conseils (FIDIC)
FIDIC was originally founded in 1913 by the National Associations of Belgium, France and
Switzerland and is now best known as the organisation which publishes standard forms of
contract documents
Every Project has contract document consisting of Part I – General Conditions & Part II –
Conditions of Particular Application (COPA)
Is a very equitable form of contract, fair to both Owner & Contractor and employs the principle
of a neutral “Engineer”
In-house progamme (June 29, 2007)
21 Contract document
The contract document generally follows a standard format
It consists of the contract agreement (on non-judicial stamp paper of prescribed value) and
the following set of documents, each page of which is signed both by the owner and the
contractor
Cover page/Title page:
Contents page:
Notice inviting tender (NIT):
Tender form:
Schedule of issue of materials:
Drawings:
Specifications
General specifications
Detailed specifications
Conditions of contract
25 1. Contract specifications
The specifications prepared for a particular job to accompany the working drawings are called
contract specifications
These are further classified as
General specifications/Brief specifications
To give the general idea of work
Detailed specifications
To give detailed description of each item of work
26 3. Standard specifications
2. Guide specifications
These specifications provide a guideline for preparing contract specifications and give a broad
idea about the class and type of construction for a particular purpose (e.g. Model Concession
Agreement)
3. Standard specifications
These specifications re prepared for various materials or group of materials for the guidance
of all concerned with construction (e.g. IS 456)
4. Manufacturer’s specifications
Manufacturers prepare specifications of their products for the guidance of users. These
specifications also include installation instructions and other guidelines for use and
maintenance of products. Generally provided in the form of Manuals
37 Disadvantages of P3
The owner may experience higher total life cycle costs
The proposal process can be very expensive for all involved
A high level of expertise is required to execute a P3 project
42 References
Construction-Project-Management by Peter Feweings
CPWD Construction manual
CMAA Owner’s Guide to Project Delivery Methods - August 2012