MADHYA PRADESH PUBLIC WORKS DEPARTMENT

CONTRACT
MANAGEMENT
OF CIVIL WORKS

Presented By:
Er. AKHILESH AGRAWAL
Adviser State Planning Commission
 DEFINITION OF CONTRACT
The first stage of a contract is a proposal or an offer, which
is made by one person to another for doing something, may
be for selling a material, building a house, rendering a
service, and so on. The second stage is the acceptance of
the proposal by the person to whom it is made. A proposal
when accepted becomes a promise. Next comes the
consideration involved in the promise.
Every promise and every set of promises forming the
consideration for each other is an agreement. An agreement
enforceable by law is a CONTRACT.
(Please refer Indian Contract Act, 1872)
 ENFORCEABILITY

To be enforceable by law an agreement must be made:

1. By the free consent of the parties
2. The parties must be competent to contract
3. The object or the consideration of the agreement must be
lawful.
4. The agreement must not be declared void by the Contract
Act.
 TYPES OF CONTRACTS

1. Admeasurements Contracts
• Percentage Rate
• Item Rate

2. PPP Contracts
• DBFOT, OMT, Toll+ Annuity, Annuity.
3. Lump-sum or Turnkey Contracts
 PROJECT COMPONENTS

For E.A. the Project comprises of the following:

 Detailed Project Report
 Civil Works
 Supervision
Each of the above shall have :
 Procurement
 Execution.
 PRE REQUISITES FOR A SUCCESSFUL PROJECT

• Good DPR with accurate and cost effective

Engineering Input.
• Good Bidding Documents for Civil Works and
Recruitment of Consultants.
• Fair and Transparent Procurement Process
• Effective management by EA during execution of
works
ENGINEER (SC) CONTRACTOR

PROJECT

EMPLOYER
 EMPLOYER'S ROLE
• Arranging Finances.

• Clearances from various statutory bodies.

• Inter Departmental Coordination for removal of hindrances,

like utility shifting, tree cutting, land acquisition, etc.

• Handing over of site.

• Quick decision making specially in terms of approval of

variation orders & payment against IPCs.

• Follow up meetings.

• Ensure that delays by Engineer are avoided.

 ENGINEER'S ROLE

• Taking timely decisions on all aspects of the contract.

• Ensure availability of Supervision Staff at all times.
• Conduct and Supervise all testing work as per the required
frequency.
• Immediate approval/ instructions on RFIs sent by the
contractor.
• Timely recommendation for variation orders, subletting
permission, payment certificates etc.
• Should act as an Independent person
 CONTRACTOR'S ROLE

• Arrange for necessary finances for the project.

• Prepare a realistic work program so as to meet out the

deadline for completion of the project.

• Mobilize manpower and equipments at site as soon as

possible, so as to meet out the requirement of the
project, in accordance with the work program.
 BIDDING DOCUMENTS
Basics
Purpose
 To inform about the scope of contract
 To advise on procedure for bid preparation and submission
 To inform on criteria and methods for bid evaluation and
award of contract.
 To inform on conditions of contract

Responsibility
 EA is responsible for preparing and issuing the bidding
documents
 BIDDING DOCUMENTS
Basics
Clarity
• Bidding Documents must……
• Be comprehensive in scope and clear in content
• Describe works to be done.
• Indicate methods, terms and conditions of bid
evaluation
• Clearly state the conditions of contract and other
requirements that the bidders must comply with
 BID OPENING
Purpose, Principles and Features

• Bids received are opened online by the EA at the time

and place indicated in the bidding documents.
• All the participating bidders can witness the opening
of bids online.
• Required for the sake of Fairness and Transparency.
• Gives bidders assurance that all bids will be treated
fairly and impartially.
 EVALUATION OF PROPOSALS & AWARD
OF CONTRACT
• It should be ensured that right from the opening of the
Technical Proposals, the provisions of the bidding document
are strictly adhered to.
• EA has to be strictly transparent in all its activities related to
procurement.
• The Technical Evaluation alongwith the assessment of bid
capacity of bidders is done.
• The Financial Proposals are opened with prior intimation to all
qualified bidders.
• The Contract is awarded normally on the basis of Least Cost to
EA.
 EXECUTION OF CIVIL WORKS

• This happens to be the most tedious of all as this activity is

spreaded over a very long period and is in fact the ultimate target.
• EA in this Phase of activities has to primarily keep a close vigil on
the job being done by the Civil Contractor as well as the
Supervision Consultant.
• For this purpose, EA may make their representative responsible for
keeping control over quality and quantity of various item of works
executed. This may be effected by EAs own involvement in the
measurements and quality control activities of the Supervision
Consultant.
• The IPCs as submitted by the Supervision Consultant should be
carefully seen in terms of contract provisions and requirements of
technical specifications.
• Excise & Custom Duty exemptions if any which are permitted by
Government for Externally Aided Projects should be carefully
issued.
 SALIENT FEATURES OF STATE BID DOCUMENT

The bid document adopted by the State has 5 Sections:

Section - 1 - NIT
Section - 2 -
i. Instructions to Bidders
ii. Bid Data Sheet
iii. Annexures
Section - 3 -
i. General Conditions of Contract
ii. Contract Data
iii. Annexures
iv. Special Conditions of Contract
Section - 4 - Bill of Quantities
Section - 5 - Agreement Form
 SECTION -1 NIT

The NIT gives following information to the prospective bidders-

i. Name of the work
ii. Location
iii. Probable Amount of Contract
iv. Earnest Money Deposit (EMD)
v. Cost of Bid Document
vi. Period of Completion
 SECTION -2 Instructions to Bidders (ITB)

In any document the ITB lays down the procedure of bidding and describes all the
activities which shall be done up to the time of the signing of the contract. The
main features of ITB are as below -
1. Procedure for preparation of the bid
a. Envelope -A - containing proof of registration, payment of cost of Bid
Document, EMD and an Affidavit .
b. Envelope -B (Technical Proposal) - containing documents demonstrating
fulfillment of PQ conditions.
c. Envelope - C (Financial Proposal)- Online Price Bid .
2. Period of Validity and Forms of EMD
3. Procedure of bid opening & evaluation
4. Award of Contract
 SECTION -2 Bid Data Sheet (BDS)

• Bid Data Sheet is a supplement to the ITB .

• ITB is kept generic in nature and the BDS makes it customized.
• Gives details like Bid Validity, EMD its amount, Forms of EMD,
Performance Security Amount, etc.
 SECTION -2 Annexures
In this part of Section -2 there are various annexures describing relevant details
and procedures , etc. The annexures are as below -
A. Describes Key Dates for Bidding .
B. Format of Affidavit ( Declaration by the Bidder ) .
C. PQ Criteria
D. Special Eligibility Criteria
E. Applicable Specifications
F. Procedure for E-tendering
G. Requirement in case of Joint Venture (JV)
H. Organisation Details
I. Technical Proposal containing formats I-1 to I-5
J. Financial Bid
K. Material to be issued by the department & their issue rates
L. Format of Letter of Acceptance (LoA)
M. Format of Peformance Security
 SECTION -3 General Conditions of Contract (GCC)

This part of the document describes the conditions of contract in which all the
details regarding communcations, Sub Contracting, Dispute Resolution, Time
Control, Quality Control, Cost Control, Price Adjustment, etc. are described.
This part is also kept generic in nature and may be modified / customized
through the Contract Data and /or Special Conditions of Contract (SCC).
Salient features of GCC are as below -

1. Definition, interpretation and documents comprising the contract .

2. Sub Contracting ( 25%)

3. Force Majeure ( French term meaning greater force )

4. Contractor's risks
 SECTION -3 General Conditions of Contract (GCC) ...... Conti.....

5. Dispute Resolutions -
• Should be raised within 45 days of its occurence .
• Competent Authority to decide in 45 days .
• Appeal in 30 days
• Appellate Authority to decide in 45 days
• Second Appeal to M.P. Arbitration Tribunal
6. Time Control and Work Program describing amount to be withheld for not
submitting the work program .
7. Extension of Time
8. Compensation for delay and mile stones
9. Quality Control - Establishment of lab by the contractor and penalty for not
doing
10. Correction of defects during Defect Liability Period ( DLP)
 SECTION -3 General Conditions of Contract (GCC) ...... Conti.....

11. Cost Control and Procedure for payments for variations -

• All extra quantities of items included in the BOQ shall have to be executed
on the same rates .
• Items not included in the BOQ but are available in SOR the payment shall be
made by applying quoted tender percentage on SOR rate .
• For items neither in the BOQ nor in SOR the rates shall be derived from the
rates of similar type of work as provided in the priced BOQ and if not
available in the priced BOQ then from similar type of work in the SOR and
applying tender percentage.
• If rates cannot be derived from above procedure a rate analysis for such item
shall be done and rate shall be determined by the competent authority on the
basis of prevailing market rates at the time of execution of related work .
• Contractor cannot refuse to carry out work for reasons of non acceptance of
rates . However the final decision in this matter shall be arrived at through
dispute resolution procedure.
 SECTION -3 General Conditions of Contract (GCC) ...... Conti.....

12. The Engineer may not require the whole or any part of the work to be
carried out and may withdraw such work. The contractor shall have no claim
for compensation on this account .
13. Recovery from the contractors - The recoveries from the contractor may be
made in the following manner -
• From Performance Security / Additional Performance Security / Security
Deposit & any sums payble under the contract .
• If the above amount is not sufficient then payments due to the contractor
under any other contract of the department including the securities which
become due for release.
• Additional right to recover as land revenue arrears .
14. Taxation - The rates quoted by the contractor shall be deemed to be inclusive
of all applicable taxes royalties , etc.
 SECTION -3 General Conditions of Contract (GCC) ...... Conti.....

15. Termination by the Engineer-in-Charge - The Engineer-in-Charge may

terminate the contract if the contractor-
• Abandons the work
• Declared bankrupt
• Fails to rectify defects within reasonable time after being served notice
• Fails to maintain Performance Security
• The amount of LD imposable has reached to the maximum limit
• Fails to deploy machinary as specified
• Has engaged in corrupt or fraudulent practices in competing for or in
executing the contract
• The Engineer-in-Charge prior to termination shall give a 14 days notice to
the contractor. However in case of bankruptcy and corrupt practices the
contract may be terminated without notice . The contract may be terminated
for convenience also.
 SECTION -3 General Conditions of Contract (GCC) ...... Conti.....

16. Security Deposit shall be deducted at the rate specified in the contract data .
17. Price Adjustment -
• shall be done as per the formula provided in the contract data / annexures
appended with the contract data .
• The price adjustment is applicable only upto the initialy intended completion
date and the time extensions granted for reasons attributed to the employer .
• Price Adjustment is payble on quarterly basis .
• Price Adjustment may be positive or negative .
18. Mobilization and Machinary Advance
19. Secured Advance
20 . Payments Certificate
21. Completion Certificate
• Physical Completion Certificate
• Final Completion Certificate
 SOME IMPORTANT EXPERIENCES TO SHARE

 Do not leave DPR entirely to the consultant. The agency itself

should check the practicability of specifications and items in
BOQ.
 All works related to Land Acquisition, and various statutory
permissions should be started much earlier to the placement of
SC or the contractor, through departmental officers.
 SC should be mobilised ahead of the civil works contractors so
as to review the DPR submitted by the DPR consultant , and the
tender drawings, specifically keeping in mind the current site
conditions and engineering requirements thereof.
 SOME IMPORTANT EXPERIENCES TO SHARE

 The safety during construction has to be specifically ensured.

 The IPCs as submitted by the Supervision Consultant should be
carefully seen in terms of contract provisions and requirements of
technical specifications.
 For this purpose, EA may make their representative responsible
for keeping control over quality and quantity of various item of
works executed. This may be effected by EAs own involvement in
the measurements and quality control activities of the Supervision
Consultant.
 Continuous dialogue and monitoring the work of Supervision
consultant with focus on avoiding delays in work is the key to
successful completion of the project.
 SOME IMPORTANT EXPERIENCES TO SHARE

 Monthly review meetings by the Employer involving the

Engineer, Resident Engineers , Project Managers of the
Contractor and Employers Representatives help in monitoring
the progress of the works on one hand while on the other hand
help in identifying bottlenecks if any. These meetings are of help
in taking timely decisions at Employers level, in accordance
with the contract.
THANKS