Prof. Bhasker V. Bhatt Civil Engineering Department SCET, Surat

Transcription

1 Prof. Bhasker V. Bhatt Civil Engineering Department SCET, Surat B. E. CIVIL IV (Semester VII) Infrastructure Engineering & Management (Department Elective) CONSTRUCTION CONTRACTS by Bhasker Vijaykumar Bhatt is licensed under acreative Commons Attribution- ShareAlike 4.0 International License.

2 It is a convenient form of consent, written or verbal, between two or more parties to accomplish a task. It do not serve as a legal document/ evident for dispute resolution in the court of law.

3 An arrangement.. Valid in law or enforceable by Law Between or among two or more parties For provision of supplies or services Against a consideration of monetary value Either in cash or kind 3

4 Contracts are legal binding Basic Principle CLARITY As being between different parties, a clear message which can be understood and agreed upon.. Be fair to each side Taking in account nature of work, users, requirements, problems Utilize common interests to best advantage Allocate each of risk to the side best equipped 4

5 Owner / Employer Minimum cost/ Risk On time No Accidents/ Injuries Usable, Maintainable Products Co-operation from Contractor Quality standards met Contractor Maximum Profit/ Minimum Risk Prestige Maximum Disruption Maximum Productivity Co-operation from Owner Minimum Interference 5

6 A Typical Contract Package Includes Invitation to Bid Bid Form Bid Breakdown Sample Contract General Conditions Special Conditions Work included in contract (ToR) Work not included in contract Specifications, addenda, drawings Supplemental provisions Owner furnished items Construction/supply Schedule 6

7 1 Lump-sum Contract 2 Cost plus Fixed Fee Contract 3 Cost plus Bid Fee Contract 4 Guaranteed Maximum Contract 5 Negotiated Contract 6 Unit-Price Contract 7 Design Build Contract 8 Turn-Key Contract 9 PPP Contract 10 Consultancy Assignment Contract Traditional Advanced 7

8 Before Start of construction Total construction costs is defined Definitive contractual commitment established Contractual relationships clearly defined for Owner - Contractor Owner A/E A/E Contractor Project scope and limits defined Best price obtained through competitive process 8

9 Lack of time flexibility result in delayed Implementation Demands Proficiency Competence of A/E as all material/ procedures are fixed Revisions are difficult and may prove costly 9

10 All pre-determined costs and additional fixed fee are paid to contractor There may be inclusion of fee on Lump sum basis Percentage basis to total cost 10

11 All costs are pre-determined and paid to contractor Fee is kept subjective to bidding Profit is negotiable Precise requirement schedule is required Fee depends on Capacity Capability Past experience Performance 11

12 Direct substitute of Lump-sum contract All works are carried out within pre-established Budgets (Cost Ceilings) only Budget if exceeded, new appropriations are needed Excess cost may be borne by Contractor unless the scope of budgetary increase exists Owner is greatly flexible in terms of Purpose of time Project Requirements 12

13 Important Factors Capability of past experience in specific area Availability of personnel to accomplish work in time frame Bid price Proposed method of compensation or fee Competitiveness of selection is limited Preselected group (panel) Negotiation on non-competitive basis 13

14 Based on estimated quantities Cost per each item is under bidding Works precisely carried out based on estimated items Fixation on quantities is flexible Payments are as per units of works on Actual basis Total project cost is arrived only after complete construction There may be increase in unit cost over a period of time.. If clause is allowing 14

15 Approaches single Administrative Management and Professional responsibility Contracting method can be any of traditional approaches It also can be used to obtain multiple designs for comparison Competitive proposals design competitions 15

16 Single Contract for ALL FUNCTIONS Sole responsibility for design construction Design Administration Management Single party under Contract Included functions as, Site selection Land Acquisition Implementation All Tasks All functions required to enable an Owner to TURN-KEY (Open The Door) and start operating facility 16

17 Contractor may have DIRECT FINANCIAL INTEREST In work In final product Contractor is in business to build facility Contractor company needs Technically competence manpower Financial Resources 17

18 There is no one model for PPP - many possibilities. PPP is not a defined procurement model with a common understanding across the world. When a project is described as a PPP, do not make assumptions as to what that means!!! PPP is not simply a means of accessing private. Many forms of PPP involve no capital investment by the private sector. Different models of PPP have gained popularity in different jurisdictions. 18

19 Many forms of a partnership between public and private sectors depending on the political environment, the nature of the assets and the level of private sector participation. Adopted internationally across Europe and worldwide Design- Build Design- Build- Transfer Design- Build- Operate Design- Build- Operate- Transfer Build- Own- Operate- Transfer Build- Own- Operate Public Responsibility Private Responsibility Service Contracts Management contracts Lease Concession Divestiture Existing Services and Facilities 19

20 BOOT: Build-Own-Operate-Transfer BOO: Build-Own-Operate BLT: Build-Lease-Transfer RLT: Rehabilitate-Lease-Transfer ROT: Rehabilitate-Operate-Transfer BRT: Build-Rent-Transfer DBFO: Design-Build-Finance-Operate Concession Lease/Maintain Contracting out Public services 20

21 A contractual arrangement between the public sector and a private entity to provide a public service (not an asset) based on: Substantial risk transfer to the private sector; An output specification stating the desired output quality and quantity; Performance related rewards (payment depends on standards being met); and Whole life costing (a balance between construction and maintenance costs). 21

22 BENEFITS Bring in private capital and make projects affordable Maximise use of private sector skills Public sector only pays when services delivered Quality of service has to be maintained Accountability Ensures that assets are properly maintained Strong Customer Service orientation DISADVANTAGES Long term relatively inflexible structures Procurement delays and high procurement costs Loss of management control by the public sector Private sector has higher cost of finance Does not achieve absolute risk transfer Requires public sector capacity and skills that may not be available Potential for negative public reaction to profit and control 22

23 Changes in Contract-Work (Extra Work) Differing Unusual Site Conditions Encountered Suspension of Works Variation in Quantities Damage due to Natural Disaster Force-Majeure Re-Inspection and Acceptance Termination of Work for convenience of Client 23

24 Quality and Cost-Based Selection (QCBS) Cost-Based Selection (CBS) Least Cost Selection (LCS) 24

25 Escalation of price due to Inflation Possession Prior to Completion Acceleration of Work Progress Currency Fluctuation Effect Ambiguity in Specifications and Drawings 25

26 Credits / Sources All the cited references are copy right of the respective authors/ organizations as shown and referred to. Logo on slide Construction Engineering and Management by S. Seetharaman CONSTRUCTION CONTRACTS by Bhasker Vijaykumar Bhatt is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. You are free to use, distribute and modify it, including for commercial purposes, provided you acknowledge the source and sharealike. Construction Contracts by Bhasker Vijaykumar 26