ASSIGNMENT

NICMAR / SODE OFFICE

1. Course - GPBM 23

2. Course Title - Contracts Management

3. Assignment No. -1

4. Date of Dispatch -

5. Last Date of Receipt -

Of Assignment at SODE office

Name: Mr. Prabhakar Prakash Shingrut

Course: GPCBM
Reg. No. 217-04-22-50914-2183

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 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 organization chart for this activity
and explain all the functions carried out. Do you think the system is
achieving results? Discuss.

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Project Brief:

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. Recently our company had
been awarded a contract of Finishes and Wall Cladding Works for one of the
most, prestigious commercial buildings in Mumbai City. Attached herewith is a
report giving briefs about Administration and Monitoring done for the said
project.

Project Details:

Project is about, Construction and development of Commercial premises for

finance companies at Bandra-Kurla Complex, Mumbai, and the new
developing financial center of Mumbai.

This project had been conceived by its owners when the finance market was
at its peak. Thus the investment involved at that particular time was
enormous, since the property market in Mumbai than was really very high.
Thus the plot bought by these owners was at real high price. But eventually
somehow the clients decided to develop the property in order to gain benefit
from the investment already made.

Project involved top people from the field of design, Engineers, Consultants,
and Project Managers etc. This Building designed, consisted of 2 basements,
stilt and eight storied Superstructure. The building proposed was to be a high-
tech building, with all kind of modern facilities to be provided. But eventually,
with financial crisis being at its peak, it was not very feasible to tackle all the
hi-tech, services within the fixed budgets. But still the outlook of the building
never changed, and the façade remain as envisioned by the Architect at the

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start of the Project. Thus the Building façade had to be finished with base
(Podium Level.) in Granite and the top (Towers) in Curtain Wall.
The contracts for all the above works was divided into number of agencies.
The first contract that they tendered was for “Construction of Diaphragm Wall”.
Then came the work of sub- structure, which consisted of “Construction of two
Basements,” Then the clients proceeded with the tendering for “Construction
for Superstructure Work”. Contractors involved in the work of Basements,
were only finally considered for the works of Super Structure. It was only
towards the finishing of super structure work, that Medium Size contractors
like us were involved in the project. Since the structural works for the building
was done, it became necessary to invite tenders for finishing, wall cladding
and curtain wall tenders. Curtain wall falls under a special item and thus
special curtain wall contractors were invited for quoting for the above
mentioned project.

Medium sized civil contractors like ourselves were invited, to quote for
finishing works, which consisted of various items as given further in this
project along with carrying out work of dry and wet cladding of granite on the
external wall surface as per Architect’s requirement.

Given above was the brief history of the project, of which we also became a
part contractor.

Now being the project Engineer in Charge for the entire work to be carried
out, it was necessary for me to read through the entire contract document
thoroughly and note down any special clause, terms of payments and details
which could become items of conflicts later. So it was most important to read
the contract thoroughly and if any discrepancies see, to resolve prior to
starting of work.

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Some of the important items in the conditions of contract are as mentioned
below:

Contract Conditions:
(I) Instructions to Tenderer
a) Earnest Money Deposit: Tender must be accompanied by
E.M.D. in the form of Demand draft in favor of “….” Or Bank
guarantee in approved format and shall be interest free and
valid for a period as given in Appendix TF to Tender Form from
the date of submission of tender or as extended by mutual
agreement.

Items Included in Appendix TF

a) Validity of tender 90 days
b) Period of commencement from
Employer’s order 15 days
c) Time of Completion 7 months
(incld. Monsoon)
d) Amount for compensation for delays 05% per week
e) Maximum amount of Compensation 10% of Contract
value
f) Period of Maintenance 12 calendar
months
g) Amount of E.M.D. Rs. XYZ
h) Amount of Security Deposit And 7.5 % of
Contract
Retention Money Value
i) Mobilization advance 5.0 % of
Contract

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 Value
j) Interim Certificates monthly
k) Submission of Final Bill 30 days from
date of virtual
completion
k) Approval and payment of final bill 90 days from the
date of receipt of
certificate
l) Time within which R.A. Bill payment 75% in 10 days
of
to be made after Certificate submission.
Balance 25%
within 30 days of
date of
submission.
m) Program Submission Within 7 days
from work order
n) Third Party Insurance Rs. 2 Lakhs per
person
Rs. 10 Lakhs per
accident
o) Mobilization 15 days

Besides the above there were certain special conditions also levied in the
tender, which also contained scope of work etc. as mentioned below:

Brief Scope of Work:

This tender is for finish work and providing, designing and installation of
external stone dry wall cladding. It shall be:

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Finishing Work:
- R.C.C. work (where required)
- Masonry (where required)
- Plastering work (where required)
- Finishes
- Doors
- Railing
- False- ceiling
- Painting
- Plumbing works (Sanitary Fittings and Fixtures)
- Rolling Shutter
- Space Frame Canopy
- Water Proofing

External Cladding:
- Design to Indian and other International Standards
- Shop drawings and samples
- Installation
- Testing of permanent work as directed by Architect/EIC
- Performance
- Guarantee for 10 years

ITEM RATE CONTRACT

The contract is item rate and quantities set out in the B.O.Q. are tentative.
Tenderers shall quote for each item at the place given in the bills of Quantities.
Cost evaluation shall be based on these quantities and price quoted. Work
shall be measured in actual and paid as per terms set out in contract.

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Firm Rate:
The rates shall be firm and shall not be subjected to any variation in cost of
materials, labor or due to any other condition except as ordered by the
Architect and provided for in the Contract. The description given in B.O.Q. shall
include all items required to complete a particular item. Anything not
specifically stated shall not be taken as an exclusion from the same item. Any
claim for extra Item or variation on this ground shall not be accepted.

Rate to include:
The rates quoted in the tender shall include all charges for tools, plants,
temporary water and electric connections ( if any), overhead reservoirs, sheds
for material ( of the contractor and as issued by the employer), hire charges if
any, maintenance of all services and equipment clearing the site etc. for the
execution of the works. It shall also include all taxes such as sales tax, octroi,
excise, or any other duties of any public body or corporation (duly authorized to
collect)

Extra- item/ variations:

All additional items and variance from those given in B.O.Q. and accepted by
the architect shall be treated as extra items. These shall be expressly ordered
by the E.I.C. in writing with prior approval of the architect prior to start of work
by the contractor. The Contractor shall be paid as per similar item in B.O.Q. In
absence, actual rate analysis shall be prepared considering market rates of
labor and materials with the contractor’s overhead profit as 15 % added to
such cost thus arrived. The contractor shall have to produce vouchers to
support the rate analysis. The architect reserves the right to call additional
quotations for material, labor/ workmanship if felt necessary and rates
approved by the architect shall be final. The architect’s decision shall not be
subjected to arbitration.

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 Execution of additional work:
The successful tenderer is bound to carry out any items of work necessary for
the completion of the job even though such items may not be part of his offer.
He shall be instructed in writing by the Architect/ EIC for such works and rates
shall be settled as detailed above.

Compensation by extension of time only:

The contractor shall not be entitled to any compensation for any loss suffered
by him on account of delays may be, including delays arising out of
modifications to the works entrusted to him or in any sub-contract agencies
connected there with or delays in awarding contracts for other trades of the
project or in commencement or completion of such works or in procuring
government controlled or other building material or in obtaining water or power
connections for construction purposes or for any other reasons what so ever
and the employer shall not be liable for any claim in respect thereof. The
employer does not accept any liability for any such besides the tender amount,
subject to such variation as are provided for herein. However the Employer
shall compensate for the loss of time suffered by the contractor, by extension
of time as approved by EIC.

PROGRAM AND METHOD CARRYING OUT THE WORKS

As detailed above, the contractor shall prepare a detailed comprehensive

program for approval of the EIC within the time stipulated in the tender form.
Program shall cover:
- Descriptive note explaining sequence of various activities.
- Network( Pert/ CPM)
(I) Design Submission
(II) Program of shop drawing
(III) Program of mock-up

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 (IV) Program of Testing mock-up
(V) Program of Fabrication
(VI) Program of Shipment
(VII) Program of Installation
(VIII) Program of Testing
- Cash flow based on program to be earmarked by the employer for the
purpose of the contract.
- Phased requirement of plant and equipment to be deployed by the
contractor.
- Phased requirement of areas to be made available with stage of civil/
mechanical/ plumbing work needed to be completed by other agencies.

All these program and plans submitted by the contractor and approved by the
E.I.C. shall become part of the contract.

The acceptance of programmers as submitted by the contractor or with any

modification thereto in the opinion of the E.I.C., shall not relieve the contractor
of any extension of time unless delay, if any, is expressly sanctioned by the
E.I.C.

Plant Requirements:

The contractor shall submit, with the program and method statement
mentioned above, a comprehensive plant schedule which shall include the
dates of arrival on and removal from site of each major item of plants.

Sufficiency:

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The contractor shall take upon himself the full and entire responsibility for the
sufficiency of plants, centering, scaffolding, timbering, machinery, tools, or
implements and generally for all means used for the fulfillment of the contract.
In the event of any day of these means proving insufficient, the contractor
even then shall be fully and entirely responsible for the sufficiency of these
means notwithstanding any previous approval or recommendation that may
have been given by the E.I.C.

Drawings:
Contractor shall receive from the E.I.C. two prints of the drawings approved
for construction.

Standards to be followed:
At various places throughout this specification and the B.O.Q., reference is
made to the standards, specifications and the bye-laws issued by the Indian
Standard Institution and other similar organizations. These references shall in
every case be deemed to include the latest edition or issue of such standards,
specifications and bye-laws including the revisions, amendments and
addenda subsequently issued. Where materials are not specified and
standards exist in respect of such materials, then the materials shall in all
respects comply with the relevant and current I.S.I. In such cases where I.S.I.
do not exist, the specified manufacturers’ specification shall be followed; in
absence of all these, the architects’ instructions shall be followed.

Materials:
All the materials and manufactured goods are to be the best of their
respective kinds and as described in the specifications, drawings and the
B.O.Q., cement used shall be 43 grade unless specified otherwise. The
contractor shall submit for the approval of the architect through the E.I.C.
within a reasonable time after receipt of the employer’s order to commence

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the Works, a list of the names and addresses of the manufacturers, the
trademarks and types of all materials and articles he proposes to employ
together with all specifications and descriptions and samples that may be
required in this connection before any orders are placed. Within a reasonable
time the E.I.C. shall issue written decision on the Contractor’s proposals. If
any of the manufacturers, materials etc., have been rejected then the
contractor must propose acceptable alternatives within one week of such
rejection. The Architect’s decision shall be final and binding on the contractor.

The contractor shall submit to the E.I.C. copies of all orders for materials.

Where a particular proprietary product, supplier or supplier’s catalogue is

referred to in this specification or in the B.O.Q., the material specified is for
quality type etc. Other equal and approved source shall be permitted in use.

If, during the course of the contract, certain materials required for use in the
works should be unobtainable despite the best efforts of the contractor, then
the contractor may offer substitute materials for the approval of the E.I.C.
These substitute materials, although not complying fully with the specification,
must nevertheless be suitable and appropriate for use in works.

Acceptance or refusal of such substitute materials shall be at the sole

discretion of the Architect/E.I.C. In the event of acceptance of the substitute
materials a suitable price reduction shall be made in respect of decrease in
quality or value but no price addition shall be made in respect of increase in
quality or value. In the event of refusal of the substitute materials, the
contractor shall not be relieved of any delay or loss occasioned by his failure
to provide materials as specified.

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Temporary Works:

The contractor is entirely responsible for the design, construction, and

maintenance and removal of all temporary works employed in carrying out the
contract. Within a reasonable time (and in any case not less than fifteen days)
before he intends to commence construction of any temporary works, the
contractor shall submit full particulars including drawings of the same, for the
approval of the E.I.C. The E.I.C.’s approval will in no way relieve the
contractor of his responsibility for the safety of the works, operators, adjoining
property, structures or services and compliance with appropriate regulations
and codes of practice. Temporary works supporting adjoining buildings,
property and public utilities and roads shall also be submitted to the
appropriate authority for their approval if requested/required.

The temporary works shall be designed and constructed in such a manner as

to enable the permanent structures to be built around them without detriment
to their effectiveness and due allowance will be deemed to have been made
for all necessary adjustments thereto to enable the works to proceed.

Price escalation:
The rates quoted by the contractor shall be firm for the entire duration of
contract and no price escalation shall be allowed; with the exception or
adjustment towards difference in basic price for cement and steel.

Taxes, Levies, Duties:

The contractor shall be responsible to pay the appropriate authorities as
applicable taxes, levies, such as sewerage fees, royalties, octroi, sales tax,
excise duty, income tax etc. as applicable from time to time. Changes to
statutory taxes, duties etc. during period of depositing of tender till completion
shall be paid by the contractor and no escalation payable on account.

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 Like wise brief descriptions regarding facility for water and electric supply are
briefly given in the special conditions of contract.
It has also been recommended that the contractor who shall mobilize to site
shall be responsible for constructing and maintaining temporary structure for
site office for architect /E.I.C. Special mention has been made to site
drainage/cleaning, safety codes to be followed, fire precautions, accidents,
labor accommodation site supervision etc.
After studying through the contract thoroughly there were certain
discrepancies, and clarifications required pertaining to design, Items and
specifications mentioned in the B.O.Q. etc and mainly for works contract tax. It
was not very clearly mentioned who would pay the works contract tax. These
doubts were clarified at the time of pre-bid meeting itself.

First of all we had to prepare a site-organization chart, indicating number of

people to be involved on the job and duty of each individual at site. As can be
observed in the diagram no. 2, where a comprehensive site-organization chart
had been prepared, to know the works of each engineer in charge.

The work mainly constituted of Civil finishing work, plumbing works, Metal
works, waterproofing works and external cladding work.

First of all we had a project manager, whose main responsibility is to arrange

all input such as material, labor, plant and equipment. This duty was given to
me by my company. Thus my other duty was to coordinate with the
representative of the client, get quality control carried out from time to time,
work acceptance, measurement taken and bills raised for payments.

Different engineers appointed had different tasks to perform. Some of these

engineers had to accomplish the task of completing the work for which they

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were appointed. It was the duty of the plumbing engineer to ensure that all the
plumbing work to be done under scope of work is accomplished in the right
way. Besides engineers in charge of civil works had to ensure that works under
their scope of work was completed in time. Besides it was the duty of each of
these engineers to check whether there has been any deviation from contract,
and if so to bring the same to notice of the project Manager. There was a daily
site record maintained of important noteworthy events. If there had been any
work stoppage or holdup, the same to be recorded in the hindrance book. An
extract of these records of hindrance register had to be the basis for future
claims to be established on account of work delay.

There were weekly meetings arranged, where a representative from the clients
side, representative from Architects, Consultants, and Contractors along with
their team members were expected to be present and discuss the progress of
the work at site. This was a platform where, problems faced by us as regarding
any delays etc. could be directly discussed in presence of everyone. Besides
these were minuted and became records for future claims if any. Clarifications
for extra-items and the price escalations if any were also discussed during
these meetings.

Most of the work went ahead as per schedule, with of course some hindrances
etc. which generally are a part of a project. Only one big issue came up
regarding paying of works contract tax. It was right in the beginning we had
brought the same to the notice of the clients, that since the contract did not
mention anything regarding the work contract tax, it shall be the responsibility
of the Clients to bear the same. After continuous discussions, it was decided
that the same shall be sorted out with the architects since they are the once
who have prepared the tender documents in consultation with Project
Managers. It was also decided that the same shall be discussed towards the
end of the project, and if required we should go in for arbitration.

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Towards the end, once again, the issue of Works Contract Tax rose, and a joint
meeting in the presence of the architects, Project managers and a consulting
arbitrator was called. After making a detailed study of the contract, finally
arbitrator gave his final verdict In favor of us. Except for the problem of works
contract tax, no major issues ever became a part of this contract.

The essence of our method of work was on emphasis on communication,

particularly in the lateral direction, among the teams and within the teams. In a
way, communication was the key to managing this gigantic project. To get the
best from our team members, being the person In-charge of the site, I spoke to
them frequently on the goals and objectives of the organization, emphasizing
the importance of each member’s specific contribution towards realization of
these goals. At the same time, I tried to be receptive to every constructive idea
emanating from any sub-ordinates and to relay it in an appropriate form for
critical examination and implementation. I used communication to promote
understanding and to come to an agreement with colleagues in defining the
problems that existed and in identifying the action necessary to be taken to
solve them. Authentic communication was the tool used for managing the
project.

We learned the hard way that the biggest problem of the project management
is to achieve a regular and efficient interfacing between the different individuals

(Team members at site) and work centers i.e. the head office. Hard work can
be set at naught in absence of proper co-ordination. Close intervention with
different work centers create such harmony, that the fine threads of individual
efforts were woven into a mighty fabric of great strength.
It was here that the actual site execution work would really take off. It is the
activity through which all plans are transferred into reality. The completion of

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project and realization of goal is achieved through the satisfactory conduct of
this activity.

As it is said,” Proof of Pudding is in eating it” therefore execution only can

determine whether the project is going on well or otherwise. In site
management operation, actual execution is the important theatre activity. The
planning process, organization, agencies, material and equipment all come
into play in execution.

It’s so truly said that emergencies and unforeseen problems might crop up. But
they should not upset or delay the normal activities planned for the day. Facing
the pressure with commitment, determination and positive approach, would
certainly lead to success in achieving the goal.

The main reason for our successfully accomplishing the given task without
much delays and problems, was a good communication set up amongst the
team members and the head office.

Another reason for the success was responsibility. My C.E.O. had put complete
faith on me and so did he give me the responsibility of handling the complete
project. This itself gave great confidence and independence towards handling
of the project. The same faith had to be entrusted upon my sub-ordinates by
me and this also made them responsible individuals.

Thus it was our group effort that made us accomplish our task.

References:
1) Course Material, NICMAR
2) Tender Documents of one of the prevailing projects.

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