Professional Documents
Culture Documents
Construction Contracts2
Construction Contracts2
Structure
12.1 Introduction
Objectives
12.2 hwitation to Tender
12.3 Instructions to the Tenderers
12.4 Prequalification of Contractors
12.4.1 Prequalificati OII Procedure
12.4.2 Example of a Prequalification Questionnaire
12.4.3 Advantages and Disadvantages of Prequnlificatio~~
12.5 Contract Conditions
12.5.1 General Conditions of Contract
12.5.2 Special Conditions of Contract
12.6 Technical Specifications
12.7 Drawings
12.7.1 Cotlstructio~~
Drawings
12.7.2 As Executed Drawings
12.8 Addenda
12.0 Proposal
12.10 Tender Bond aid Performance Bond
12.11 Labour and Material Payment Bonds
12.12 Letter of Ititelit
12,13 Forms
12.14 Surm1~1ry
12.1 INTRODUCTION
In Unit 11, you were told about the legal aspects of the contracts. It also covered the
various types oC contract suitable for construction. In this unit, you will learn about the
procedure to enter into a contract.
i Objectives
i After studying tliis unit, you should be able to
M A S E R BED ROOM
CONSULTANCY
ROOM
7' a x 7' 8"
(
From the initial dqawings prepared by the design engineer or arcl~itecl,delailed drawings
are produced. Custo~nand usage have given place to Inore or less standard classifications
of drawings and a definite order in which Uley appear in a set. The drawings for the
non-overflow section of a colllcrete dam typically include subgroups such as layoul plan,. Rgurc 12.2 :As Executed Urawillgs
foundation treatment, embedments for grouting and drainage, joint details, coiicreting SAQ 7
with reinforcemenl details, galleries and shafts, road features, uld electrical installations,
appearing i n that order. Tlie sheets of each category are designated by a11 identifying Whal do you understand by "construction drawings" and "as executed drawings"
capital letter prefix and are numbered separately and sequentially. Tlie drawings, if and who prepares them ?
revised subsequently, should be duly issued giving reference to the earlier drawings.
However, the drawing format varies with the type of construction. The makeup of the
drawings varies considerably between building, industrial, heavy, highway, and utility
construction.
Nowadays, 'aniinportmt and growing area is computer production of construction .
drawings 'and details. Architects and engineers use interactive computer graphics to
design structures and to produce dimensioned construction drawings for llie field
C:IIII~ l.:~ctProccrlllres
C I I I I ~ ~ ~ I Co~~tr:lct
IC~~IIII
envelope, noting the type ruld amount of tender security, verifying receipt of addenda, ancl :1nd I)oclll~lclll\
41:111n~c1neni 12.8 ADDENDA reriding the anloullt of each tender item. At many tcnder openings, the esti~llatcof cost
prepared by the engineer or owner is alsoread or distributed to those allending. Tender
Addenda arc critical documents that are issued during llic bicltllng period Lo lllake tabulation forlns are also circulated Lo those attending for noling down the proceedings. It
alleralions in any of Uie tender documenls. They usually become parr of the contract is customary Ulat the tender opening adjourns wilhoul a1 official ainouncement
documcnls when a contract 1s made, ulllcss they are issued only Lo modify a lender concerning Ule identity of the successful tenderer. Before the contract ciUl he awarded, the
clocumenl thal does no1 become a codracl Jocunienl. Atldenda nlay he issued lo add to, bids are carefully sluclicd and evaluated by Ule owner iuld the engineer, a process known
o ~ n i from,
t or alternately, ~llodifyally clocumait during Lhe tendering period. They ,arc as "canvassing".
prepared i ~ l dissued by the engineer to all who hacl collected Ule tender documents. l'hus,
it is very i~ilportalltthal a record is kepL of all lhosc wlio received Uic Lender docuinents After the lenders have been opened and read, the contractor colllununicates Lhe results oL'
so that all the bidders are assured of receiving exactly the same infornlalion. It 1s for this llle bidding lo his surely CnlllpiLIlY. This infomation is included into Lhe surely's
reason Ulat a space is providcd in the bid Corm lo enter all adtlcnda received (by nunlber permanent file 011 tlie contractor and forlns an iinporliu~L11x1 of the contractor's record 01'
anrl date) and taken into accotunl while sublnitting lhc tender. The greiller llsk llcs with performance ,
sub-biclders, especially Ulose wlio do no1 posscss a full copy of the rcncler documcnts ruld I11 closed biclding, the amnunl of !he bids are not necessarily disclosed. After delivery oS
who, for the mosl part, have to depclld on copies deposited hy lhc engineer in plrul rooms; Llie proposals. Ule owner uses the bids in iLtly way he sees fit lo serve his own besl
allel Uie responsibility is o u the prime tenderer lo ensme that all sub-leu~lersthey recelve inleresls. Tllc owner cru~select any of the bidders he clionses. or rejccl all bids. The
arc hssed on iL11 the relevant adclenda. The sub-hitlders ~liuslensure ill the sallle lime that owner of1c11lllakes a final selection of the successful conWactor only i~Sterprotracled
they liiive seen anrl accounted for all addenda, and lilakc sure of the same w ~ l htheir ow11 ~iegoliations.
suh-lenders.
Addenda are best nvoitlecl wl~encverpossihle by documenls which recluire no SAQ 9
niotlificalions or corrections, bul sonlctimcs llicy are unavoidi~hlc.They should he issued (a) W1lU are Lhe special fealures or proposals s u h ~ ~ ~ i tby
l erlifl'crent
d bidders ?
will1 great citrc. becinsc in the 111i1idsof 111ost estiillalors. Uicy arc 1101 01' Llle same
( 0 ) What does Uie owner or his engiileer tlo when the proposals are opcned '1
calcgory as olhzr Leildcr documcnts, especially if (hey are issued lusl hel'ore llie Lenders
ikrc due ant1 Illus, requiring changes Lo be 111i~lc111 Lhe estimales. A liilstily cons~tlered
;~rklendamay rcsull in eilher overpricing or unclerpitcing lllc work. Tlic fonncr results in
waslc of inoney, while the latter leads lo subsecluent altcmpls by the conlri~ctorLo cut
costs or lo i11;Lkc 1117tllc loss ill so111c otllcr way. Thus, both piove dclt~~lle~ltal Lo llle
owner. Corrective addcnda are an indication lo 111c cslimnlors and leaderers thal there
may hc other defecls in Ule hiel clooumenls, and so atldenda often cletracl irom tile
n t s somelimcs proinpts a search l'o~ways Lo claim Cor additional costs. Hence,
d o c ~ ~ ~ n cant1
addenda should only be ~ssucdwhen they are ;~bsolulelyessentii~l. 12.10 TENDER BOND AND PERFORMANCE BOND
Atltlcncla appear in holh ve~baland wrillen form. They slloul~lhe prepired witli even Tender Dond
greatcr cilre U ~ X Io111er ~ O C U L ~ ~ C I Iespecially
IS. when h e y iir? 11ot for n simple nddilion to
llle work ant1 izivolve both a dclclioll i ~ l dan addition of eilhe~worcls or work, or both. The tender bond is suhlllitlecl along will1 Lhe l ~ t ) l ~ It ~ gui~rantees
~i~l. Illat Ule lc~lclc~
They should be cilrefully prepiu'ed with lhc estinlalo~skccping lheii esli~l~alcs aid tenders has heen made in good fail11 ailtl that tlic lcntlcrcr will cntcr into the contracl il' 111s
in mind because iicltlalda ofLen create plenly ol' extra work lor hiddcrs a1 Ihc 111osl crilical proposal is accepted. 11 arlso guarantees tlial he will funiish Lhe pcri'omi;ulce and
lime in a bidding period. pi~ymcnthoncls. If the hiclder refuses lo sign the contri~clill accortlaiice will1 hi&
bid, thc surety is bountl lo pay to the owner tlie danlilgcs caused thercl,y suldecl lo
SAQ 8 the penally of the bontl. Tlle i ~ i n o ~ lofl t the bond is usuiilly spccifictl by the
ownerltlesigaer iu the iuslructions to l ~ i d d e lo ~ sbe 10% of (lie a n ~ o u nof~ the hid.
(a) Wlial are addendil ?
Performance Bond
(b) Why shoultl :~clclendabe avoided ?
The owner 1s e~ilille~cllo j ~ c lwl~iilhc co~llr;~clcd Sor or its cquivalc~lt.'The
perfornlance ho~idis pl~cscribe(l101 Ilic prolcction of thc owner. I1 gu:lrantccs Ills1
the conlr:Lct will be ~~erfornled ;m(l Lhar [he owncl will lcceivc its structure in
substanlial accordii~lcewith lhc tcnns ol 111~:corilracl. A perl'orilliulcc hond includes
by rclerence the Lerilis ot the conlri~cl.i i ~ l ( l(IIC rcsy,onsihilily o f the contractor is Lllc
measure of the surely's obligalio~l.On clclaull ol' Lhc conlraclor, 111c hurclen or
conll act perfonuancc is lhal of tllc surely. A performance bond covers illiy
12.9 PROPOSAL wilrtailty periocl that may bc recluired by rlic conlracl, the usual hond premium
illcludes one yeix ol' such coverage. All pcrl'otnirulce bontfs have :I I'rlc~value
It is the responsibility of the contractor to submit his tender al Ihc proper place ;uld before whicli serves as thc upper lirn~lof expense, Lllc surely will incur in I'inishing Llic
the tilnc mentioned. The completed proposal forln, togelher wilh Llre I,id security and contri~cl,sl~ouldlhi~lacl~onbeco~nesnecessary. This face value is cxp~.essedas :I
other supplementary information, is sealed in an e~lvelopet h a ~is addressed ilS directed in fixed suln of money, the :~nlounlof wliicll is usually some percentage oS Ule tolal
the instructio~lsto bidders and clearly labeled as a proposal for the project being leudered. coiltract price.
Tenders may be deposited at any tirne before h e deadline schccluled l'or tlleir acceptance.
The usual practice, where feasible, is that the contractor delivers personally the seilled bid SAQ 10
shortly before opening time. Alternately, the proposals lnay be sent I>)) letler, Lelegraph. What is the difference hetween "tender hontl" ancl "l,crformancc bontl" !'
messenger or courier service. A colmnon problem arises when the bill ;lrrlvcs at the
designaled address afler the established time. Though there is sollie tlisparily how such
cases are liiu~dled,most engineers feel that a late bit1 is no1 a valid l ~ i ( l .
All proposals are to be opelied publicly and read aloud. Such tender openings ire
attended by t h e , p r i ~ nCoiItracLor,
~ ~ubco~itraclor~,
nlatcrial suppliers. and (Nher illterested
parties. The procedure consists of the owner or lijs engiilecr opening each bidcler's sealed
Constroction Contnct
-- -
Mnl~agerne~~t 1 2 LABOUR AND MATERIAL PAYMENT BONDS 12.14 SUMMARY
A pay~iientbond protects U~irdparties to ttie contract aid $uarantees payment thr labour In this unit, you learnt about tlie procedure to he followed in entering into a contract ruld
and materids used or supplied durillg tlle execution o f Uie constructio~l.Tliis bond tlie viuious documents lo be signed by boll1 tlie parties aid the balds to be executed by
provides the followillg : the contractor lo protect the owner from da~~iages in the evenl, the contractor fails to
(a) The claimait must have had a dircct contacl with the general contractor or complete Uie project. How is n tender hvited lor colistructing a project ald what
subcon tractor. insCuctions are given lo the bidders liave been explained. To obtain co~itractsLa1 are Bet
from coniplications arising later due to the inadequacy of t l ~ eo~ntractorl11e i ~ r e dto
(b) Labour and 111alerialinclude waler, power, light, Ileal, oil, petrol, diesel, pre-qualify Llie contractors has bee11 discussed. What are tlir general and special
teleplionc, ;uld rental of equipnlent directly applicable to tlie contract. conditions of contract to be iuclucled in the contract docu~rientsand the tecl~nical
(c) WritLen nolice must be give11hy the claimanl, othcr than tl~rone 11;tvinp a direct specificatioi1s that should be followed during the execUtia11 of the work have been
conlracl with Ulc geilcral coiltrilctor, t o ;my two 01' Ulese: pelier;ll conlracttx, discussed in Uiis unil.
owner, or surety, witlli11YO days after clairiialt perlormed his last work or -
-
SAQ 11
What is the purpose of a letter of intent '?
12.13 FORMS I 1
Bidders are required to co~lipletecertain t'c)rms while they submit a tender. Some sample
forlns are il~cludedin tlie Appendices hcre wit11 the following details. but ally similar
format is also acceplable.
Appendix I Bid Form
Appendix I1 For11for Bid Security (B a~lkGuarantee)
Appendix I11 Form for Bid Security (Boiirl)
Activity
Go to some lieruby project and collect from the contract the "technical
specificalions" for placing reinforcemenl.
Appendix I (A) Appendix I (B)
f \
ANNEXURE TO FORM OF RID
FORM OF BID Conditions of
Conlr;~ctClause
Amount of Perf(or1nrulce Security :k
(Note :The form forms part of the bid. Bidders are recluircd to fill up all the blank
spaces in the Form of Bid and Appendix). (a) Bank Guxaltec ( 1
(b) Bond ( 1
4:
(1) H a v i n g e x a ~ ~ l i i l ethe
d Drawings, C o n t l i t i o ~ ~osf Contract,
Specificatio~land Bill of Quilntities for t l ~ cexeculioii 01' the Percent ol' Rcleul.ion :I: ( )
above-named Works, we, the undersigned, offer lo execute, co~nplete Liinit of Retention Money ;I: ( 1
and lnaiillain the whole of the said Works in colll'or~nitywith the said
Drawings, Condiliclns of Contract, Specification and Bill of Minimum Ainounl Interim Certil'ic;ltes :I ( )
Quantities for the suill of [Rupees (in figures a i d words)] or such Time within which pi~ymentlo be ~ilade
other sum as may be ascertained in accordance with llie said after Cerll'iciite I: ( ) days
Conditions.
(2) We undertake, if our Bid is accepted lo comnience thc Works wlthin
Dat.ec'l this (lay of 1 .
[ ] days of receipt of lhe Engineer's order to commence, and to
comnplele and deliver the whole of the Works comprisetl in the
Coiltract witl~iil[ ] days calculated from the last day of llle al'oresaid Signidure in the
period in which Ule Works are to be commenced. capricily of duly aulliorises to sign Bid
(3) If our Bid is accepted we will furnish a security ill the forin of :i bank for iind 011 bellrill' of' (in block
guarantee (to be approved by you) to be joinily and scvera.lly bound capil:~ls).
with us in rul aillouilt of [ ] per ceiit of the above n;lmed suin in
accordance with the Coilditioils of Contract or a perfor~ilanceho11d in ...
a11 cunouilt (of [ ] per cent of the above llailles sum ill ncca)rcliu~ce
with Nnlne of Witness Address
the Conditions of Contract.
(4) ,We agree to abide by this Bid i'or the period [ 1 t1;iys L'ro111 the date Sigl:~ture
oCBid openiilg prescribed in Clause [ ] oi'tllc Instri~ctioiisto Biddcrs,
and it shall reinain binding upon us ruld may he acceplcd it1 any lime
before tlie expiration of lhnl period. \ J
(5) U~ilessand uiilil a11 Agreeinent is prepared rind execuletl, [his Bid,
together with your written acceptailce thereof', slli~llconstilute a
billding Contract betweell us.
(6) We u~lderstmldthat you are no1 houild lo accept the lowesl or ruly Bid
you may receive.
Contract Procedures
Appendix I1 Appendix IIl and Docu~nents
I (i) If the Bidder withdraws his Bid during the period or bid validity (hereinafter called Ule "Bid").
specified in the For111of Bid; or
I (ii) IS the Bidder having been notified of ll~eacceptaim of his Bid by tl~e
Employer during period of bid validity;
(a) fails or refuses to execute the Forin of Agreenlelll in accordance
Now, Ulerefore, tl1e conditions of lhis obligation are :
(i) If Ule Principal witlldraws his Bid during Ule period of bid validity
specified in Lhe Form of Bid; or
with the Instructions to Bidders, if required; or
(ii) If the Priiicipal, baving been notified of the acceptance of his Bid by
(b) fails or refuses to furnish tl~ePerformance Security, in the Emnployer during the period of bid validity:
accordance witll tl~eInstructions to Bidders,
(a) fails or refuses lo execute the Form of Agreemenl in accordance
with llle Instructions to Bidders, if required; or
We undertake to pay to the Employer up to the above amount upon receipt of his (b) fails or refuses to furi~ishthe Perrormance Security iin
first written demand, witllout the Employer having to substantiate his dem:lnd, accordailce with the Instruclio~lsto Bidders, if requiretl,
provided that ill his demand the Employer will ilole tllat tl~eunount clailned by
him is due lo him owing eo the occurrence of one or boll1 of the two a~nditicws, Ltlen tl~isobligation shall rcinain in full force and effect, otherwise it shall be null
specifying the occurred conditio~lor cot~clitio~ls. and void.
This Gunrantee will re1n'a.h in force up to and including the date [ ] days after
the closing date for sub~nissionof bids as stated in Ule Invitation lo Bid or as Provided however, that the Surety slid1 nol be :
extended by you at any tirne prior to this dale, notice of which extensicw b tl~e (i) liable for a greater sutrl than tile specified penalty OF Ulis bond, uor
Bank being hereby waived, ru~dany clemiuld in respect thercof should reacl~the
Bank not later b a n tl~eabove dale. (ii) liable for a greater sum Ulan t l ~ difference
e between the amount of the
said Principal's Bid and t l ~ eamount of the Bid that is accepted by the
Employer.
I DATE
WITNESS
SIGNATURE OF THE B ANK
SEAL
I The Surety execuling this instrument hereby agrees tllat its obligatioii will relnai~i
in force up to and including the date [ 1 days after the closing date for
sublnission oE Bids as stated in the Invitation to Bid or exlelrded by the Employer
at any time prior to this date, notice of wl~ichextension(s) to the Surety being
hereby waived.
~ SEAL