Works Contract M. B. Vijay Sr. Professor Civil Engineering.

Works Contract

M. B. Vijay

Sr. Professor Civil Engineering

CONTRACTS FOR WORKS

– Common intention– Agreement enforceable by law– Free consent, competency to contract, lawful

consideration.

Purpose of works Contracts:

• Zone Works• Special Works• Supplies of Building Materials.

– Lump Sum– Schedule– Piece Work/Unit rate

Forms of Contracts.

Type of Tender

• Open Tender

• Limited Tender

• Single tender

• Dispense with calling of tender- Quotation

– From approved list.– Otherwise standing list.– Through wide publicity.

• Provided - Enlistment is dynamic.

Limited Tender

Single Tenders.

– For Restoration Works of Accidents, Breaches and Other Emergencies & For Works of Specialised Nature. –

– Shifting Target Dates for Works Like GC/Urgency Invite Special Limited Tenders.

– Selection of Agency From Approved List Except for Specialised Nature of Work.

– Spell Detailed Reasons.– Prior Finance Concurrence Before Adm. Approval

• PHODS - Up To Rs.20 Lakh, Annual Limit Rs.1 Cr. DRMS - Up To Rs.10 Lakh, Annual Limit Rs.50 Lakh.

– TC And Accepting Authority be One Step Higher Except Where GM is Accepting Authority.

Quotations

• Not for Items Which can be Executed Through Existing Contracts Including Zone Contracts– Not For Fancy Items.– Only For Works of Urgent Nature– Quotations Form at Least 3 Contractors.– Genuine Firms.

• Dispense Calling of Tenders./Accept Quotations.• Rly Bd’s Letter NO.90/CE-I/CT/1 DT.14.12.90

Type of tender to get best price for the government

money

Framing Contract Agreement:

– Terms: Precise, Definite, Detail.– What Contractor is to do: When, Where, To

whose satisfaction.– What Railway To do: When, on what terms.– Payment: What it is to cover, to whom, when,

method & Basis.– Responsibilities of contractor: Supervision,

Care of Government Property, Safety, Laws in force.

– Terms of modification, variations.

Pre-tendering home work:

• How much time is spend on making a tender schedule

• Do you look into details of schedule.

• Spent time on pretender.

• Value addition by you.

What is your role?

Pre-tendering home work:

• Prepare detailed specification and • Properly drafted tender schedule

• Contractor wants to maximize profit.• Drawing not finalized.

• Material Not available which is to be given by Rly.

• Detailed Investigation Like Soil Exploration• Infringements - DOT, Tree, Services.

Documents forming integral part of contract document:

– Conditions- Standard, Special.– Specifications.– Plans.– Schedule of items, quantity, Rates.– Agreement form.– Tender Form.– Instructions to tenderers.

Sale of Tender Documents.

– Adequate time between invited and opened.

• > 15 Days Before Date of Opening.

• RLY BD’s LETTER No.93/CE-I/CT/85 Dt.9.5.94.

• Tenders Unaccompanied With EM.

• Summarily Reject Offer

• No Discretion Permitted.– RLY BD’s LETTER No.66/WI/CT/22/A

Dt.20.5.67.

• Standing Earnest Money.

Earnest Money & Security Deposit.

• Submission of tenders

• Opening of tenders

• Comparative statement & Briefing note.

• Constitution Of T.C

• Acceptance of tender.

• Signing of agreement.

• Custody of Security Deposits.

Tender Procedures.

Disputes

• Unresolved

• Delay in completion

• Arbitration.

Submission of tenders

• To Cater Anti Social Elements Tender Submission Permitted at More Than One Place.

» RLY BD’s LETTER No.90/CE-I/CT/1 Dt.28.10.98.

Opening of tenders

• Precautions during opening.• Before all the tenderers or their representatives• Tender opening register enter information and

sign• Tender On proper tender form• Signed by authorised representative• Corrections to be encircled and signed• Comparative statement & Briefing note.• To be serially numbered

Reasonability of Rates.

• Be Examined in Detail By TC.

– For Comparison Avg. of Last Accepted Rates for Similar Works, Similar Conditions and Geographical Proximity be Worked Instead of Latest Last Accepted Rates.

– Where Only One Accepted Rate is Available, Analysed Rates Based on Market Survey be Derived.

• We apply mind when offer received not in the beginning.

• Rate of analysis done after opening of tender.

• Not always reliable.– Rates may be going down.– Assumed inflation 10% not realistic.

• Rates analysis based on Rates opened but not finalized –never

Rate Analysis

• Don’t change eligibility criteria in the mid of process.

• after opening- never.• Eligibility criteria should not be unduly restrictive- should

be discussed in file- should not be tailor made.

Change in acceptance criteria

Credentials

• Eligibility Criteria for Each Work be Specified in Tender Notice it Self.

• Tender Notice & Tender Document should match. (Eligibility criteria)

• To be Ascertained By TC

– Check for False or not relevant credential.

Role of convener

• He must fully brief TC

• Full knowledge of work

• Market survey for work analysis

• Time frame

• Urgency

• Specifications

• Site conditions

Constitution Of T.C.

• Normally TC consists of three members– Convener- user department also expected to

be expert in the given subject

• A finance member a person from associate finance deptt

• A Third member any other technical department

Finance Member in TC

• Tenders are on properly issued form

• Signed by authorised person

• All tenders are correctly filled

• Corrections have been initialed by tender opening officials

• Tenders have been opened correctly

• Earnest money in requisite and in acceptable form

• All valid tenders are serially placed in the comparative statement

• Briefing not duly vetted

• All special conditions have been mentioned and their financial implications have been correctly evaluated

• Arithmetical accuracy of the offer

• Proper rate analysis has been done and placed on record by convener

• Fund position• if the work is sanctioned• Partnership deed and other legal issues

have been examined• Consistent approach has been taken in

dealing with all similar cases as he is common member.

• Relying on - A/c-wrong.– Play positive role.– Moderator.– See independently.– Spent time.

Third Member

TC as a whole

• Definite recommendation bringing out all known facts

• Basis of recommendations

• Authority competent to consider recommendations

• Delays to be Explained by TC in Minutes.

TAA

• Work is essentially required• Reasonableness of offer has been properly

examined by TC• Full opportunity has been given and • There is adequate response

– Where Officer In Whose Competence Acceptance of Tender Lies is a Member Of T.C., The Minutes be Put Up To Next Higher Office (And Not To Colleagues).

• Information through Tender Committee Not directly- Like President.

• Consistency at different times.

Execution

• Not taking timely decision.

• Lack of will power.

• Fancy decision.

• Lack of Coordination amount different department.

• Avoid Changes in Designs and Foundations• Variation in quantities• Don’t change quantities.

– Increase in cost.– Delay– Loss of earnings.– Vitiation– Arbitration

Contract without proper preparation.

Other issues

• Law and order - Labour.

• Political• Understand the culture of the place where you

are working.• Rates cannot come to rescue if the canons of

financial propriety are defied• Sweeping changes in the work ethos can only

be brought with due consultation

• Without test check.• Overpayment.• Fraudulent payment.• Specially When officer transferred/

new/ fresh.

ON account payment

In one case of track renewal

• 200-300% variation in transportation without track renewal work being executed.– 8 times the normal rates justified on SOR

rates.

• Deletion of items - Without reason- Undue benefit- To contractor.

– Cement & Steel Shoud be Supplied by Contractors in Case Railway is to Supply Free of Cost, its Quantites Should be Fixed. Rates of Recovery for Variation in Quantities Should be Incorporated.

Supply of Material

Materials Issued to Contractors

– Recovery for Excess @ 1.5 Times Cost of Procurement Inclusive of Freight.

– Maxm % of Cut Pieces. Deduction @50% of Cost of Procurement Including Freight for Excess Cut Pieces.

– Day to Day Consumption of Chemicals, Cement be Checked with Theoretical Requirement.

Tenders By More Than One Firms Under Same Management.

• Rly Bd’s Letter No.72/W-i/Ct/32 Dt.14.5.74– Restriction Can Not Be Imposed Legally.– Ensure That Undue Advantage Should Not Accrue,

Should They Alone Be In Field Of Competion.

Negotiation In Works Tender.

– Rly Bd’s Engg. Standing Order No.9 Issued Vide Letter No.99/Ce I/Ct/1 Dt.15.1.99.

• Post Tender Negotiations Permitted Only With L1 I.E. Lowest Tenderer.

Zonal Contracts.

• Rly Bd’s Letter No.63/W-ii/Ct/28 Dt.5.3.66.– Period 1st July To 30th June– No WOs Be Issued As Far As Possible After Opening

Of New Tenders.– Works Of Old Contracts Be Completed By End Of

June.– Exceptional Cases Be Dealt With On Their Merits Incl.

Trend In Rates.

Approved List Of Contactors.

• Rly Bd’s Letter No.88/Ce-i/Ct/74 Dt.17.9.97.– Annual Updating Giving Wide Publicity Through

Advertisements Inviting Contractors To Register.– Validity Of Registration For 3 Years Unless. Annual

Fee Of Rs.1000/- Not Paid Or Decision To Delist Is Communicated. After 3 Years, Contractor Has To Apply Again.

– During The Year Addn. /Deletion/Down Grading Can Be Done.

Approved List Of Contractors

• Slabs– Class A > Rs.50 Lakhs– Class B < Rs.50 Lakhs– Class C < Rs.20 Lakhs– Class D < Rs.05 Lakhs– Class E < Rs.01 Lakhs

• Criterias For Selection As Per Rly Bd’s Letter No.85/W1/Ct/23 Gcc Dt.16.8.89.

• Rly Bd’s Letter No.85/W-i/Ct/23/Gcc(part I) Dt.25.8.89 For Selection Committee For Appd. List Of Contractors.

Class A:

– Engg. Orgn, Graduate Engr With 10 Yrs Experience Plus An Engg. Diploma Holder Having 5 Yrs. Of Experience.

– Min Transport Eqauipments.– Construction T & P– Satisfactiory Execution Of At Least 2 Works,

Each < 25 Lakhs.

Class B:

– Engg. Orgn, Graduate Engr With 5 Yrs Experience

– Min Tansport Equipments– Construction T & P– Satisfactory Execution Of At Least 2 Works,

Each < Rs.10 Lakhs

Class C:

– Engg. Orgn, An Engg Diploma Holder Having At Least 3 Yrs Experience.

– Satisfactory Execution Of At Least 2 Works, Each < 3 Lakhs.

Class D:

– No Specific Minimum Requirement.

• Selection Committee & Accepting Authority As Per Rly Bd’s Letter No.88/Ce-i/Ct/74 Dt.17.9.97.

• Confidential Reports As Per Specified Proforma.

Two Packet System Of Tenders.

– With A View To Assess The Tenders Technically Without Being Influenced By The Bids.

– Quotations In Two Sealed Envelopes With One Cover Containing Technical And Commercial Conditions And Other Containing Financial Bids.

– Technical Details & Commercial Conditions Are Read Out And Evaluated By T.C.

– If Technical Bids Found Acceptable By Competant Authority, The Second Packet Is Opened And Tenders Are Processed For Acceptance.

– Two Packet System Be Adopted For Exceptional Tender Cases Of High Value And High Complexity.

Two Packet System ( CONTD)

It Can Be Adopted For :

– Important And Prestigious Buildings.– For Structures Such As Auditoriums, Multistoreyed

Bldgs.– For Big Rly Bridges On Important Rivers And

Important Robs.– For Works Involving Special Architectural Features.

Price Variation

– Rly Bd’s Letter No.80/W - I/Ct/10 Dt.23.4.80, Dt.20.1.87, Dt.16.3.88.

– Rly Bd’s Letter No.85/W - I/Ct/7 Dt.17.7.90 And Dt.4.4.96.

• 5% Floor Price Variation• For Contracts Up To 1 Yr No Pv Clause• For Contracts Between 1 To 2 Yrs. Maxm. 10%

(I.E. 15% - 5%)• For Contracts > 2 Yrs Duration Maxm. 20% (I.E.

25% - 5%)

Prequalification Of Tenderers(Rly. Bd.’S Letter No.

85/W1/Ct/23-gcc Dt. 31.1.86)

Why Required

• Only Reliable And Resourceful Contractors To Be Chosen For Works

• A. Of Large Value & Magnitude• B. Requiring Special Expertise• C. Specialised Equipment Works Of

Complex Nature

When Required

1. Earthwork

2. Tunnelling

3. Bridge Work

4. Building And Structural Works

5. Electrification Works

Earthwork Involving

• Mechanical Compaction Where C.A.Value Would Exceed 50 Lacs

• Soil Stabilisation E.G Sand Piling, Vibre Floatation, Soil Chemical Treatment Irrespective Of C.A. Value

• Heavy And Deep Rockcutting Reqg. Deployment Of Heavy Plant & Machinery Or Expensive Blasting Operations Irrespective Of Contract Value

• Tunnelling Where C.A. Value Would Exceed Rs. 50 Lacs

Bridgework Involving

• Pile Foundations Of Large Diameter• Deep Well Foundations• Long-spanned Psc Bridges• Cable Stayed Bridges• Continuous Girder Bridges• Fabrication And Launching Of Girder Spans>60m• Building Works• Pile Foundations

Penalties For Specific Contractor

• Adverse CR Prevents Future Works Being Awarded Till Improvement

• In Extreme Cases, Banning Of Business Dealings By Rly. Board

Incentives In Contracts

• Additional Fixed Amt. Per Day In Advance Of Completion Period

• Bonus Percentage Payment On Contract Value

• Points System For Future Tender Consideration