NICMAR- SODE/May 2011

ASSIGNMENT: CONSTRUCTION CONTRACTS AND CONTRACTING(NCP 23)

1. NAME OF PROJECT:

CONSTRUCTION OF COMMERCIAL SHOPPING COMPLEX BUILDING (PHASE – 1-GROUND

FLOOR) FOR PANDITA RAMABAI MUKTI MISSION AT KEDGAON, PUNE.

2. SCOPE OF WORK:

The estimated cost for constructing 10201.13 sq.ft is Rs.102.01 lacs. The section A in the

ground floor will consist of 19 shops in front and 15 at the back with entrance in front. On

the back side there will be two toilet areas, staircase, provision of space for lift and

proposed semi-circular frontage area will be undertaken for construction.

The Contractor shall carry out and complete the said works in every respect in accordance

with this contract and in accordance with the directions and to the satisfaction of the

Architect.

3. CONDITIONS OF CONTRACT:

The above Contract is drafted and agreed to by all the parties as ‘Lump Sum’ contract.

Important Information for Bidders :

1) Earnest Money to be deposited with bid : 1% of Total Cost in DD or Pay order

In the form of pay order or DD. : On National/Scheduled Bank.

2) Time of Completion (Calendar Months) : 9 months from issue of work order.

3) Cost of Tender Document : Rs.20,000/- in cash (non refundable)

4) Retention : 4% of total finalized cost to be

deducted from every running bill.

50% of retention amount and

Security Deposit to be paid on

virtual completion of work after

Architects certificate and balance

50% after 12 months from date of

completion & handing over.

5) Tender Drawings : One set of tender drawings will be

Issued free of cost. It will be

obligatory to return the same with

Tender bid.

6) Project : Construction of Commercial shop-

-ing building (Phase-I) at PRMM

Kedgaon, Dist. Pune.

7) Penalty for non completion of work on time : ½ % of total cost of work per week.

8) Interim Running Bills of completed work : Minimum 8% of total per running

(No billings for unused materials on site) Bill.

9) Certification of Bills : Within 10 days from submission.

The Architect may in their absolute discretion from time to time issue further drawings

and /or written instructions, details, directions and explanations which are hereafter

collectively referred to as “the Architects instructions” in regard to :-

a) The variation or modification of the design, quality or quantity of works or the

addition or omission or substitution of any work.

b) Any discrepancy in the drawing or Schedule of Quantities and/or Drawings and/or

Specifications.

c) The removal from the site any materials brought thereon by the Contractor and the

substitution of any other materials therefore.

d) The removal and/or re-execution of any works executed by the Contractor.

e) The dismissal from the works any persons employed thereupon.

f) The opening up for inspection of any work covered up.

The Contractor shall forthwith comply with and duly execute any work comprised in

such Architects instructions provided always that verbal instructions, directions and

explanations given to the Contractor or his representative upon the works by the

Architect shall if involving a variation be confirmed in writing by the Contractor within 7

days and if not dissented from in writing with a further period of 7 days by the Architect,

such instructions shall be deemed to be the Architects instructions within the scope of

the contract. In compliance with Architect instructions as aforesaid involves work

and/or expense and/or lose beyond that contemplated by Contract then unless the

same were issued owing to some breach of this Contract by the Contractor, the

Employer shall pay to the Contractor on the Architects certificate, the price of the said

work as an extra to be valued as herein after provided and/or expense and/or loss.

4. IMPORTANT POINTS FROM CONTRACTOR’S POINT OF VIEW TO BE

MONITORED/RESOLVED:

During the execution of the project the Contractor had been executing the works as per

the directions & approvals of the Architects/Site Manager/Technical Consultant without

getting into the commercial aspects of the projects. The work order for the ground floor

part was issued to in July 2009, after the scrutiny of the tenders submitted in April 2009,

where the Contractor’sbid was the lowest amongst all. Similarly, the work order of the

first floor part was issued in May 2010, after the tendering process was completed in

April 2010.

Prices were quoted on the basis of the Bill of Quantities furnished by the Architects in

the Tender document and the rate per square foot was calculated. Due to the reduction

& changes in the plans, the revised bill of quantities was not furnished to the

Contractor. However, the square foot rate arrived at was multiplied with the revised

building area to calculate the revised cost of the building project.

The Contractor is incurring heavy losses due to the above and other issues which are

stated below:

1. The basis of the rates for main items are as follows-

PARTICULARS DURING

TENDERING (Rs.)

START OF WORK

(Rs.)

PROGRESS OF

WORK (Rs.)

CEMENT (PER BAG) 240 230 260

STEEL (PER M.T.) 30,000 30,000 44,000

RIVER SAND (PER

BRASS)

2,000 2,600 4,500

AGGREGATE (PER

BRASS)

1100 1100 1800

The prices of steel, aggregate and river sand have escalated considerably. And

the availability of river sand became very scarce due to the restrictions imposed

by the Govt. on the dredging of sand. The price of aggregate increased

considerably due to the non-availability of power.

2. The quantities of many items have increased considerably, more than the

estimate furnished in the bill of quantities (in tender document).

3. Numerous jobs which were not specified in the original tender were executed.

4. The portion of the building foundation which had been completed along the

road side-footings, columns & plinth beams etc., had to be discontinued due to

the restrictions/approval of the PWD authorities who stated that the adjoining

road is a Major district Road (MDR),admeasuring 40 feet in width, including the

side margins.

5. The work was stopped on occasions, some due to unavoidable circumstances like

inclement weather conditions(Cyclone Phyan, unseasonal rains which caused

flooding in the site), other like the PWD authorities obstructing the construction

in the guise of road widening proposals, the Gram Panchayat causing delay by

withholding renewal of building permission after the first year elapsed. The

estimated loss of man days due to the above stated reasons is around 120 days.

6. The contract value was reduced by almost 30% and the completion was

extended. At the same time, Contractor still had to maintain the same strength

and incurred the same overheads which was not foreseen at the time of

submission of tender bids.

5. ORGANIZATIONAL CHART WITH FUNCTIONS (ANNEXURE I):

6. METHOD FOLLOWED FOR ADMINISTER AND MONITOR:

The Contractor Superintendence & representative on the works:

The Contractor shall give all necessary personal superintendence during the execution

of the work and as long thereafter as the Architect may consider necessary until the

expiration of the “Defects Liability Period” stated in the Appendix hereto. The Contactor

shall also employ a competent Foreman for full time as recommended by the Architect and

Employer. Any directions, explanations, instructions or notices given by the Architect to

such Foreman shall be held to be given to the Contractor.

The Clerk of Work

The term “Clerk of Work” shall mean the person approved by the Architect and

appointed and paid by the Employer and acting under the orders of the Architect to inspect

the work in the absence of the Architect. The Contractor shall afford the Clerk of Work

every facility and assistance for inspecting the work and checking the materials. The Clerk

of Work shall not have power to revoke, alter, enlarge or relax requirements of the Contract

or to sanction any day-work additions, alterations, deviations or omissions or carrying out

any extra work whatever except into far as such authority may be specially conferred by

written order of the Architect.

The Clerk of work, or any representative of Architect shall have power to give notice to

the Contractor or to his Foreman of non-approval of any work or materials and such work

shall be suspended or the use of such materials be discontinued until the decision of the

Architect is obtained. The work will be examined from time to time by the Architect, the

Clerk of work or the Architect’s representative, by such examinations shall not in any way

exonerate the Contractor from obligation to rectify and any defects which may be found to

sexist at any stage of the work or after the same is completed within the period of 10 days

from the date of receipt of instructions from Architect. Subject to the limitations of this

clause the Contractor shall take instructions only from the Architect.

Variation not to vitiate Contracts

No Alteration, Omission or variation shall vitiate this contract, but in case the Architect

thinks proper at any time during the progress of the work, to make any alteration in or

additions to or omissions from the work or any alterations in the kind of quality of the

material to be used therein and shall give notice thereof in writing under hs hand to the

Contractor, shall alter, add to or omit from, as the case may require in accordance with such

notice, but the contractor shall not do any work extra or make any alteration or addition or

omission from the works or direction from provisions of the contract, specification or

contract drawings without previous consent in writing from Architect and the value of such

extra, alterations, addition or omissions shall in all cases be determined by the Architect in

accordance with the provisions of clause thereof this contract and the same shall be added

to or deducted from the contract amount accordingly.

Delay and Extension of time:

If in the opinion of the Architect the work be delayed (a) by force majeure or (b) by

reason of any exceptionally inclement weather or (c) by reason of proceeding taken or

threatened by or disputes with adjoining or neighboring owners or public authorities or (d)

by the works or delay of other contractor or Tradesmen engaged nominated by the

Employer and not referred to in the Specification or (e) by reason or Architect’s instructions

or stated or (f) by the reasons of workmen strike or lock-out affecting any of the building

trades or (g) inconsequence of the Contractor not having received in due time necessary

instructions from the Architect for which, he shall have specifically applied in writing, or (h)

for other causes which the Architect may certify as beyond the control of the Contractor or

(i) or by reason of non-payment of interim certificates at specified time, the Architect shall

make a fair and reasonable extension of time for completion of the contract work; in case of

such strike-out or lock out, the Contractor shall as soon as may give written notice thereof

to the Society. The Contractor shall constantly use his endeavours to prevent delay and

shall do all that may reasonably be required to the satisfaction of the Architect to proceed

with the work.

Settlement of disputes

i. All disputes and differences of any kind whatever arising out of or in connection with

the contract or the carrying out of the work (whether during the progress or after

the work or after the completion and whether before or after the determination

abandonment or breach of the contract) shall be referred to and settled by the

Architect who shall state his decision in writing, such decision may be in the form of

a final certificate or otherwise. The decision of the Architect with respect to any of

the accepted matters shall be final and without appeal as stated. But if either the

Employer or Contractor be dissatisfied with the decision of the Architect or any

matter , question of the dispute of any kind (except any of the accepted matters) or

as to the withholding by the Architect of any certificate which the Contractor may

claim to be entitled then and in any such case either party (the Employer or the

Contractor) may within 28 days after receiving notice to such decision give a written

notice to the other party requiring that such matters in dispute be arbitrated upon.

Such written notice shall specify the matters which are in dispute or difference of

which such written notice has been given and no other shall be accepted. A single

Arbitrator shall be agreed upon and appointed by both the parties. But in case of a

disagreement two arbitrators one from each side shall be appointed and they shall

be free to appoint an umpire of their choice.

ii. The arbitrator or the umpire shall have the power to open up, review and revise any

certificate, opinion, decision, requisition or notice given in regard to the accepted

matters and to determine all matters in dispute which shall be submitted to him or

to them and of which notice shall have been given to the aforesaid.

iii. Upon every or any such reference the cost of incidental to the reference and award

respectively shall be in the direction of the arbitration of arbitrators or the umpire

who may determine the amount thereof or direct the same to be taxed as between

Attorney and Client or as between party and parties and shall direct by whom and to

whom and in what matter the same shall be borne and paid. The submission shall be

deemed to be a submission for arbitration within the meaning of the Indian

Arbitration Act 1940 or any statutory modification thereof. The award of the

arbitrator or arbitrators or the umpire shall be final and binding on both the parties

and such reference except to the withholding of the Architect of any certificates to

which the Contractor claims to be entitled shall not be opened or entered upon until

the completion or alleged completion of the work or until after the practical

cessation of the work arising from any cause unless with the written consent of the

Employer and the Contractor. Provided always that the Employer shall not withhold

the payment of interim certificate nor the Contractor except with the consent in

writing of the Architect in any way delay in the carrying out of the work by reason of

any such matter, question or dispute being referred to arbitration but shall proceed

with the work with all due diligence and shall until the decisions of the arbitrator or

umpire shall relieve the Contractor of his obligations to adhere strictly to the

Architect’s instructions with regard to the actual carrying out of the work, the

Employer and the Contractor hereby also agree that arbitration under the clause

shall be a condition precedent to any right of action under the contract.

7. RECOMMENDATIONS/ CONCLUSION:

The Management (Client) were not satisfied by the administration and monitoring the

contract by the Architect. It was noted as follows:

The Architectural Services agreement which covers the scope of work, payment

terms etc. is not drafted as per the best interests of PRMM.

The scope of work is not explicit in defining the Architect’s role in preparation of

tender, selection of contractor, selection of materials, scrutiny and certification of

Contractor’s bills. For example, the Mission (client) is certifying the works executed by

the Contractor and his appointed agencies, vide its appointed Site Manager- not the

Architect. Ideally, a Payment Certificate should be issued for every bill certified and

cleared for payment.

The set of architectural drawings prepared for tender & estimation purposes were

found unsatisfactory as the necessary data for estimation were not incorporated in the

building drawings. Similarly, in few of the working drawings supplied for construction

purpose, the details were not sufficient. In some cases, the measurements depicted in

the drawings were not according to site conditions which resulted in delays and

revisions in drawings.

The Architects have been inspecting the construction work sites mostly when they

have been invited to do so, or on certain important dates like marking centre-line

layouts, slab-checking, etc. It has been observed that this practice has led to occasional

lapses in decision making & management of the project has suffered consequently. This

is just putting it mildly. It is hoped that in the future, all consultants may be encouraged

to undertake a more intensive role in project management and other aspects of the

building construction.

The following recommendations were made:

There is a serious need to consider appointing an architectural/project

management agency. The scope of work for architectural services would

continue to remain the same as it was with the earlier architectural agencies. In

addition, it would also include the liaisoning work, structural design consultancy

& civil works supervision. The architect’s site visits also can be scheduled as per

the changing needs of the project in a real scenario. For example, if supervision

is needed on a weekly basis rather than just 1 official visit per month. 1 or more

civil works supervisors can be employed for daily supervision of civil, painting

and plumbing works etc.

Design & Build: The responsibility for the design, planning, procurement, control

and execution of the entire project lies with the Contractor. As, the Contractor

bears most of the risk, hence, charges more from the Client..

8. BIBLIOGRAPHY/ READINGS:

i. Lesson Book-NCP 23

ii. Contract Management in Civil Works Projects-V.A. Prakash-NICMAR Publications.