18‐06‐2019

Introduction          contd…
MODEL CONTRACT DOCUMENT ALONG  • Essential Components of Contract:
WITH SCHEDULES & ARTICLES FOR Preamble, Recital
Definitions
EPC CONTRACT  Consideration
FOR HIGHWAY PROJECTS Representations and Warranties
Covenants and Rights
Conditions to Obligations
Endgame Provisions and Remedies
D. Sarangi

1 3

Introduction Types of Contract in Highway Projects 
 General Definition of Contract: An agreement between 2 or more
parties to perform a service, provide a product or commit to an act
and is enforceable by law. • Item Rate Contract
• Indian Contract Act defines Contract as “An agreement enforceable • EPC Contract
by law”. An Agreement is defined as “Every promise and set of • Build Operate & Transfer Contract:
promises forming the consideration for each other”. Consideration
essentially means “something in return”. BoT (Toll)
• Basic Requirements of Contract: BoT (Annuty)
An Offer Hybrid Annuity Mode
An Acceptance
Lawful Purpose Time, Cost & Quality are essential ingredients of any form of
Consideration Contract
Mutual Obligation
Competancy and Capacity

2 4

Model Contracting Formats by FIDIC
Red Book – Conditions of Contract for Construction (Building and
Engineering Works designed by Employer)
• Yellow Book – Conditions of Contract for Plant and Design Build
(Electrical and Mechanical Plant and Building and Engineering
Works designed by Contractor)
• Silver Book – Conditions of Contract for EPC/Turnkey Projects
5 7
General Principles of EPC Contract
• EPC is a particular form of contracting arrangement where the EPC
Contractor is made responsible for all the activities from design,
procurement, construction, commissioning and handover to the
client/authority at an agreed price at a fixed date.
• Performance standards of the product is also hallmark of EPC
Contract.
• EPC Contract incentivizes innovation and best practices
• Contractor’s ability to manage risk (probability that, despite careful
project costing and planning, unforeseen events will occur during the
implementation of a project which will affect the final cost and
completion time scale) in design, procurement and construction phase
is critical for success of contract.
6 8
18‐06‐2019
Genesis of FIDIC Silver Book
• FIDIC took note of Governments’ concerns on risk sharing matrix
of Red and Yellow Books
• FIDIC recognised the requirement of:
Higher degree of certainty of final price and time which Red and
Yellow Books lacked;
Allocating total responsibility to Contractor for design and
construction
• Accordingly, FIDIC published its Silver Book in the year 1999.
Extracts from Introductory Note to FIDIC Silver 
Book
• ….. much of the construction market requires a form of contract
where certainty of final price and often of completion date are of
extreme importance.
• ….. it is necessary for the contractor to assume responsibility for
a wider range of risks than under the traditional Red and Yellow
Books.
• Employers using this form must realise that “Employer’s
Requirements” which they prepare should describe the principle
and basic design of the plant on a functional basis.
• …. the Contractor has to prove the reliability and performance of
his plant and equipment. Therefore special attention is given to
the “Tests on Completion” …….
 18‐06‐2019

Extracts from Introductory Note to FIDIC Silver 
Advantages & Disadvantages of EPC Contract
Book      contd……
• Advantages:
• These Conditions of Contract for EPC/Turnkey Projects are not Single point responsibility
suitable for use in the following circumstances: Provides an efficient, economical and competitive environment for the
Contractor
If there is insufficient time or information for tenderers to
Minimises time and cost over-runs
scrutinise and check the Employer’s Requirements……..
Opportunity for innovation and faster delivery
If construction will involve substantial work underground or work Fitness for purposes
in other areas which tenderer can not inspect Efficiency
If the Employer intends to supervise closely ……. Fewer variations
If the amount of each interim payment is to be determined by an Improved risk management
official or other intermediary • Disadvantages
Incentive to provide minimum compliant design
Larger and complex disputes
Premium on contract price to manage risks

9 11

EPC vrs. Turn Key Contract
• EPC and Turn Key appears to be same but there are some
differences between two concepts as follows;
In EPC, employer (Authority) will provide basic engineering to a
contractor and the latter shall perform detailed design based on
received basic design.
In Turnkey, employer (Authority) will only provide certain
technical specifications of the project and it is the responsibility
of the contractor to prepare basic and detail design of the
project.
In Turnkey, the contractor is responsible to perform construction
and commissioning, start-up and take over of the plant to an
employer, but in EPC, it may be the responsibility of another third
person to do commissioning and start-up.
Chronology of Development of MoRT&H EPC 
Document
• Structured on international best practices and customised for
Indian requirements
• Model EPC document for construction of two lane NH projects
was developed/approved in August 2012
• Several amendments have been carried out from time to time
based on feedback from stakeholders
• Modified standard EPC agreement for National Highways and
centrally sponsored road works was issued in January 2017 and
November 2018.
• The document has been further amended in March 2019 (with the
stricter provisions for damages, the liability has increased for
both the Authority and Contractor to meet their obligations in a
time-bound manner)

10 12
 18‐06‐2019

EPC vis‐à‐vis Other Modes of Contracts Structure of Model EPC Agreement   contd…..

• There is worldwide trend of shifting towards EPC/LSTK contract Schedule D: Specifications and Standards
in engineering & construction sector Schedule E: Maintenance Requirements
Schedule F: Applicable Permits
• BoT (Toll) contract not finding favour with lenders primarily due
Schedule G: Form of Bank Guarantees
to toll risks apart from construction risks
Schedule H: Contract Price Weightages
• Share of EPC contracts in ongoing NH projects based on a rough Schedule I: Drawings
estimate: Schedule J: Project Completion Schedule
Schedule K: Tests on Completion
Mode of Contract No. of Projects Total Length (km) Total Cost (Rs. in  Schedule L: Completion Certificate
Crores) Schedule M: Payment Reduction for Non-Compliance
EPC, HAM, BoT (Toll), 1616 57432 607105
Schedule N: Selection of Authority’s Engineer
BoT (Annuity) etc. Schedule O: Forms of Payment Statements
Schedule P: Insurance
EPC 1420 41025 363484 Schedule Q: Tests on Completion of Maintenance Period
Schedule R: Taking over Certificate

13 15

Structure of Model EPC Agreement Brackets, Asterisks & Foot Notes

 Provision in Curly Bracket {} [for example Definition of Affiliate]:
• Six Parts (contains 28 Articles): To be retained in RFP but to be modified in Agreement
Part I: Preliminary  Provision in Square Bracket [for example Schedule Completion
Part II: Scope of Project Date in Clause 10.3(i)]: To be suitably filled/modified in RFP
Part III: Construction and Maintenance  Asterisks to be substituted by project specific details in RFP (for
example specific chainage of project to be filled up in a recital B).
Part IV: Financial Covenants
 Serially numbered footnotes for guidance and to be deleted from
Part V: Force Majeure and Termination
RFP
Part VI: Other Provisions
 Footnotes marked “$” to be retained in draft agreement [for
• Sixteen Schedules: example Annex I to Schedule B]
Schedule A: Site of the Project
Schedule B: Development of the Project highway
Schedule C: Project facilities

14 16

Definition, Interpretation, Priority of Documents
• Certain important words/expressions are defined/assigned
specific meaning in the contract and first letter of such
words/expressions are always written in uppercase. For example:
“Project” means the construction and maintenance of the Project
Highway in accordance with the provisions of this Agreement and
includes all works, services and equipment relating to or in
respect of the Scope of the Project.
“Contract Price” is the amount quoted by the selected bidder and
accepted by the Authority. It includes all duties, taxes, royalty,
cess, charges, and fees applicable as on Base Date. It does not
include maintenance cost. Contract Price shall be adjusted for
increase and decrease in rates and prices of labour, cement,
steel, plant, machinery and spare, bitumen, fuel and lubricants and
other materials. Contract Price shall also be modified to take
into account change in law.
17
Definition, Interpretation, Priority of Documents   Definition, Interpretation, Priority of Documents
contd…..
“Base Rate” means the floor rate of interest announced by the
State Bank of India for all its lending operations.
“Base Date” means the last date of the calendar month, which
precedes the Bid Due Date by at least 28 days.
“Encumbrances” means in relation to the Project Highway, any
encumbrances such as mortgage, charge, pledge, lien,
hypothecation, security interest, assignment, privilege or priority
of any kind having the effect of security or other such
obligations, and shall include any designation of loss to payees or
beneficiaries or any similar arrangement under any insurance
policy pertaining to the Project Highway, where applicable herein
but excluding utilities referred to in Clause 9.1.
18
18‐06‐2019
Definition, Interpretation, Priority of Documents  
contd…..
“Material Adverse Effect” means a material adverse effect of
any act or event on the ability of either Party to perform any of
its obligations under and in accordance with the provisions of this
Agreement and which act or event causes a material financial
burden or loss to either Party.
“Project” means the construction and maintenance of the Project
Highway in accordance with the provisions of this Agreement, and
includes all works, services and equipment relating to or in
respect of the Scope of the Project.
19
  
contd…..
“Right of Way” means and refers to the total land required and
acquired for the project both in its width and length together
with all way leaves, easements, on restricted access and other
rights of way howsoever described necessary for construction
and maintenance of the Project Highway in accordance with this
Agreement.
“Taxes” means any Indian taxes including GST, excise duties,
customs duties, value added tax, sales tax, local taxes, cess and
any impost or surcharge of like nature (whether Central, State or
local) on the goods, materials, equipment and services
incorporated in and forming part of the Project Highway charged,
levied or imposed by any Government Instrumentality, but
excluding any interest, penalties and other sums in relation
thereto imposed on any account whatsoever. For the avoidance of
doubt, Taxes shall not include taxes on corporate income.
20

Definition, Interpretation, Priority of Documents   Definition, Interpretation, Priority of Documents
contd…..
“Works” means all works including survey and investigation, design,
engineering, procurement, construction, plant, materials, maintenance,
temporary works and other things necessary to complete the Project
Highway in accordance with this Agreement.
• Different interpretation of certain terms/ expressions/ references
may jeopardize a contract. Interpretation of such terms/ expressions/
references are given in contract. For example:
References to any legislation or any provision thereof shall include
amendment or re-enactment or consolidation of such legislation or any
provision thereof so far as such amendment or re-enactment or
consolidation applies or is capable of applying to any transaction
entered into hereunder.
Reference to “development” include unless the context otherwise
requires construction, renovation, refurbishing, augmentation, up-
gradation and other activities incidental thereto during the
construction period and “develop” shall be construed accordingly.
21
Definition, Interpretation, Priority of Documents   Scope of the Project
contd…..
Any reference to any period commencing ‘from’ a specified day or
date and ‘till’ or ‘until’ a specified day or date shall include both
such days or dates provided that if the last day of any period
computed under this Agreement is not a business day, then the
periods are wrong until the end of the next business day.
• All measurements and calculations shall be in the metric system
and calculations done to 2 (two) decimal places, with the third
digit of 5 (five) or above being rounded up and below 5 (five)
being rounded down.
• Priority of agreements:
Agreement
All other agreements and documents forming part of contract
• In case of discrepancies within the Agreement, following will
prevail:
Between 2 or more clauses, the clause relevant to issue
22
18‐06‐2019
  
contd…..
Between clause of agreement and schedule, the clause
Between schedule and annex, schedule
Between any 2 schedules, schedule relevant to issue
Between written description on drawings and specifications/
standards, the later
Between dimension scaled from drawing and written value, the
later
Between any value written in numerals and words, the later
23
• Construction of Project Highway on Site set forth in Schedule A,
as specified in Schedule B together with Project Facilities in
Schedule C in conformity with Specifications & Standards set
forth in Schedule D
• Maintenance in conformity with Schedule E
• Schedule A (Site of the Project):
Site of the Project Highway includes the land, buildings,
structures and road works as described in Annex – I to Schedule
A
All chainage in Schedule A wrt existing kilometer stones on the
road
Jurisdiction wrt chainage
Land position chainage wise (sum total of land already in
possession and land to be possessed) and schedule of handing over
of land.
24

Scope of the Project           contd…..
Existing carriageway & pavement details
Particulars of existing bridges (major and minor), RoB/RuB, Grade
Separators such as location, span arrangement, width, type of
foundation, sub-structure, super structure etc.
Particulars of Railway Level Crossings, Culverts, Bus bays, Truck
lay byes, Drains, Major/Minor junctions, Bypasses etc
Alignment plan & profile
Traffic signage plan
Status of environmental clearances
25
Scope of the Project           contd…..
• Schedule B (Development of the Project Highway)
(very important part of contract agreement, utmost care should be
given in preparation of Schedule B to avoid any ambiguity, additional
essential project features to be added to model format)
Chainage refer to design chainage
Geometrics improvement minimum to the extent given in
alignment plan & profile, further improvement as per standards
subject to land availability.
Width of carriageway in rural/urban sections, typical cross
sections along with cross section schedule
Design Speed
Stretches to be retained with deficient geometrics
26
18‐06‐2019
Scope of the Project           contd…..
Shoulder details
Service road location (left side, right side separately)
Location of underpasses/overpasses along with lateral & vertical
clearances
Particulars of grade separated structures such as location, raising
of project highway/ cross road, span arrangement, vertical
clearances, approach gradient
Particulars of cattle/pedestrian underpasses
Particulars of at grade intersections (Lay out plan may be
provided for important intersections)
Raising of pavement (stretch, extent)
Pavement Design: Type, Design Period, Design Traffic in terms of
msa, Reconstruction Stretches
Road side drainage (surface as well as sub-surface)
27
Scope of the Project           contd…..
Details of reconstruction, retention with widening/ repair/
rehabilitation of existing bridges, culverts, RoBs, RuBs, Grade
Separated Structures
Major rehabilitation requirements to be specified
Details of new bridges, culverts, RoBs, RuBs, Grade Separated
Structures for bypass/realignment sections and 4/6 lane projects
(In case of bridges and structures, details such as location, span
arrangement, height, width, type, provision of footpath or otherwise,
utility services to be carried etc., has to be provided and General
Arrangement Drawing to be attached)
Details of Road Safety, Traffic Control works, Road Side Furniture
(Although relevant section of the Manual is generally referred to but
important details such as gantry mounted over head signs to be
furnished)
Details of afforestation
Safety barriers for hazardous locations
28

Scope of the Project           contd…..
Special requirements for hill roads if any
Variation in length of structures arising out of actual design not to
constitute Change of Scope
Detail item wise quantity of utilities/no. of trees and location thereof
shall be given in Schedule B
• Schedule C (Project Facilities)
Chainage refer to design chainage
Description of project facilities such as toll plaza, roadside furniture,
pedestrian facilities, bus bays, truck lay byes, rest areas, plantation
etc. (adequate details including location, configuration, components,
design requirements etc. to be provided along with drawings wherever
necessary)
• Schedule D:
Design standards to follow applicable Manual (Manual of specifications
and standards for two/ four/ six laning of highways)
29
Scope of the Project           contd…..
MoRTH Specifications for Road & Bridge Works for materials,
works and construction operations
Terms in Manual such as Concession Agreement, Concessionaire
and Independent Engineer shall be replaced by agreement,
Contractor and Authority’s Engineer
Deviation list
• Once capacity (lane configuration) and other scope of a project is
finalized, the appropriate Manual forms the backbone for design
and construction in conjunction with specifics given in Schedule B,
C&D
30
18‐06‐2019
Obligations of the Parties
• Authority Obligations:
Correctness of Scope of the Project, Project Facilities,
Specifications and Standards and criteria for testing of
completed works.
Handing over of Site free from encumbrances in 90% length of
the Project Highway within 30 days from the date of signing of
Agreement (sum total of parcels in not less than 5 km length) and
remaining 10% within 150 days from Appointed Date as per the
schedule given in Schedule A
Approval of GAD from Railways within 60 days from Appointed
Date and re-imbursement of all costs paid by the Contractor to
the Railways
Environmental clearances before issue of LoA
Reasonable assistance to Contractor in procuring applicable
permits, access to water, electricity etc., visa for expatriate
personnel of Contractor etc.
31
Obligations of the Parties     contd……
No barriers on project highway by any government instrumentality that
would have material adverse effect on the works except for reasons of
emergency, national security, law and order or collection of taxes
Not to do anything violative of provisions of Agreement
Maintenance obligations prior to Appointed Date so that traffic
worthiness and safety of Project Highway are at no time materially
inferior as compared to its condition 10 (ten) days prior to the last date
for submission of the Bid
• Contractor Obligations:
Survey, investigation, design, engineering, procurement, construction,
quality assurance, quality control and maintenance of Project Highway
Compliance to applicable laws and applicable permits
Procure appropriate proprietary rights, licenses, agreements including
those of sub-contractors
Remedy loss, defects or damages to Project Highway from Appointed
Date till completion of Defects Liability Period
32

Obligations of the Parties     contd……
Not to do anything violative of provisions of Agreement
Compliance to labour laws
Traffic safety and work zone safety by self and Sub-contractors
Obligations wrt sub-Contracting:
 Execution of minimum 51% of Contract Price
 Split above works to not more than 5 sections
 Approval of individual sub-Contractors if value of works iro such sub-
Contractors is more than 5% of Contract Price
 Sub-Contractor is required to execute a single work not less than 40%
of value of sub-contracted work in preceding 3 years.
Grant of employment/ residential visa and works permit for foreign
nationals
Qualification, skill and experience of personnel for effective
superintendence of works from planning to testing
Hiring of at least 10% trained work men as per National Skills
Qualifications Framework
Eviction of unsuitable personnel from Site within 10 days of necessary
direction from AE
33
Obligations of the Parties contd……
Coordination with other Contractor(s) if any
Procurement of electricity, water and other services
Operation of Project related bank account at site
Activities pursuant to Environmental Management Plan
Contractor to satisfy himself about Site Data Bidding
Sufficiency of Contract Price
34
18‐06‐2019
Representations and Warranties
• Contractor’s representations and warranties include its
constitutional validity under the laws of India, its own corporate
clearances, re-affirmation to information furnished by
Contractor in its Bid, legal safeguards, conformance to
“Intellectual Property” rights, conformance to integrity
requirements, granting of technology rights to the Authority etc.
• Authority’s representations and warranties include its
administrative authority, requisite approvals taken for
implementation of the project, financial standing of the
Authority, legal safeguards, procurement of right of way and
environmental clearances
35
Performance Security
• Contractor to submit BG towards Performance Security
equivalent to 5% of Contract Price within 30 days from issue of
LoA.
• Additional Performance Security for under priced bid
• Performance Security shall be valid upto 60 days after Defects
Liability Period whereas Additional Performance Security shall be
valid upto 28 days after Project Completion Date
• Selected Bidder has option to submit 50% of Performance
Security & Additional Performance Security within 30 days from
LoA and balance 50% within 30 days of signing of Agreement
• Upfront Damages to be paid by Contractor @0.01% of the Bid
Price for each day delay in submission of Performance Security
including Additional Performance Security upto 60 days period.
36

Performance Security        contd……
• Failure to submit Performance Security and Additional
Performance Security within additional 60 days time period by
Contractor will lead to deemed cancellation/ withdrawal of award
and forfeiture of Bid Security.
• Contractor has option to submit BG initially for 2 years validity
period and extend 2 months prior to expiry.
• Appropriation of Performance Security by Contractor within 30
days against part or full encashment by Authority towards
Damages for Contractor Default failing which Authority may
terminate Contract.
• Authority to return Performance Security within 60 days of the
expiry of Maintenance Period or Defects Liability Period
whichever it later.
• Authority to return Additional Performance Security within 28
days from the date of issue of Completion Certificate
37
Performance Security        contd……
• Authority to pay interest @9% per annum for delay in release of
Performance Security
• Retention of 6% of each IPC value towards Retention Money
subject to maximum 5% of Contract Price
• Authority entitled to recover Damages from Retention Money.
• Balance Retention Money to be refunded by Authority to the
Contractor within 15 days from the date of issue of Completion
Certificate.
• In case Contract terminated, Retention Money will be treated as
Performance Security
38
18‐06‐2019
Site & Encumbrances thereon
• Site comprises of land and all other existing features such as
carriage way, bridges, culverts, ROB/RUB, grade separators,
under passes, junctions as detailed in Scheduled A.
• Within 10 days from date of the Agreement, a Handover
Memorandum shall be prepared by Authority Representative,
Contractor and Authority’s Engineer clearly specifying parts of
Site where work can be executed. It will also have appended an
Appendix specifying only those parts of Site to which vacant
access and right of way has not been given to Contractor along
with the details of hindrances.
• Those parts of Site to be considered for which Right of Way is
available in respect of Construction Zone which comprises of :
Main carriage way
Median
Paved and earthen shoulders
39
Site & Encumbrances thereon    Contd……
Area for structures including ROB/RUB
Safety measures including road side drains and furniture
A parallel working space for accommodating slopes/ retaining
structures etc.
• Land portions contained in Appendix will have to be handed over to the
Contractor within 150 days from the Appointed Date as per the
schedule given in Schedule A.
• Appendix will not contain sections having cumulative length more than
10% length of the Project Highway.
(Implication – preparation of Handover Memorandum and consequent
declaration of Appointed Date only after land in aggregate 90% length of
the Project Highway is available in parcels each not less than 5 km length)
• In case of disagreement of Contractor for any part of Site or failure
to attend site inspection, decision of Authority’s Engineer will be final.
40

Site & Encumbrances thereon    Contd……
• Authority will pay Damages to the Contractor for delay in handing
over of Site calculated by the following formula:
Amount of Damages in Rs. per day per metre = 0.05 x C x 1/Lx
1/N
Damages restricted only in respect of Construction Zone
• In case of delay in approval of GAD of ROB/RUB, Damages shall
be payable for a length of 2 km for each such ROB/RUB.
• Aggregate Damages payable Authority shall not exceed 1% of
Contract Price.
• Contractor entitled to Extension of Time for delay in Site
handing over apart from Damages (only with respect to such
affected parts of Site) but overlapping delays if any shall not be
additive.
• Authority may withdraw any works not exceeding an aggregated
value equal to 10% of Contract Price excluding the works in
municipal limits, calculated in accordance with Schedule H.
41
Site & Encumbrances thereon    Contd……
• Contract Price to be reduced by 90% of the value of the works
withdrawn, no other claims by Contractor admissible.
• If any work is withdrawn after commencement of construction,
Authority to pay Contractor 110% of the fair value of works done
as assessed by Authority’s Engineer
• Works within municipal limits shall be deemed to be withdrawn if
site for such works is not handed over within 180 days from the
Appointed Date. Such works shall not be computed for the above
10% ceiling
• Site to be made available by the Authority to the Contractor free
from all Encumbrances and occupations.
• Contractor to ensure that no encroachment takes place and
remove any encroachment that may take place within construction
period.
42
18‐06‐2019
Site & Encumbrances thereon    Contd……
• Contractor is responsible for shifting of utilities, felling of trees and
dismantling of structures.
• Contractor will be reimbursed the cost of utility shifting and tree
felling. Scope of utility shifting and tree felling shall be specified in
Schedule B-1.
• Contractor can carry out to utility shifting, tree felling etc., within the
Development Period.
• Contractor to dismantle structures on acquired lands at its own cost
and dispose off the debris as per EMP.
• No EoT to Contractor for delay in shifting of utilities and felling of
trees on its own account.
• In case of delay in dismantling of structures on acquired land for
reasons not attributable to the Contractor, Contractor is entitled to
EOT.
• Although, Contractor can execute pre-construction activities during
Development Period, no claim against Authority for delay during this
period will survive.
43
Appointed Date
• Appointed Date is the project commencement date declared by
the Authority
• Conditions to be fulfilled by the Contractor and Authority before
declaration of Appointed Date:
Submission of Performance Security and Additional Performance
Security, if any, by the Contractor
Handing over of Site in not less than 90% length of the Project
Highway by the Authority.
• Deemed termination of Contract if Appointed Date does not
occur within 90 days of signing of agreement and submission of
full performance security by Contractor
Damages payable to the Contractor 1% of Contract Price (3% in
case of stand alone bridge project)
44

Authority’s Engineer
• The officer in-charge of the Authority (e.g. PD/ RO/ CGM/ Member in
the case of NHAI; RO/CE/ADG in the case of MoRTH projects
executed through the State PWDS; and PD/ED/Director in the case of
NHIDCL) is responsible for the overall supervision and monitoring of
the execution of Project.
• Authority shall appoint a farm of consulting engineers or a project
monitoring committee as Authority’s Engineer within 10 days from the
date of Agreement or before declaration of Appointed Date whichever
is earlier following open bidding using model RFP of MoRTH.
• Authority may appoint an officer to act as Authority’s Engineer till such
time a consulting firm is appointed as Authority’s Engineer.
• The remuneration, costs and expenses of Authority’s Engineer shall be
paid by the Authority.
• Terms of Reference of Authority’s Engineer given in Schedule N.
Salient features described below:
45
Authority’s Engineer      Contd…..
Determination of Time extension, any additional cost to be paid to the
Contractor, Termination Payment, issuance of Completion Certificate
and any other matter involving financial liability with prior approval of
Authority.
For determination of any matter, AE will try consensus of Authority
and Contractor but failing such consensus, decision of AE shall prevail
but the party disputing the determination may seek dispute redressal
mechanism.
Review and approval of drawings, design, quality assurance plan,
methodology, traffic diversion proposal, environmental management plan
etc.
Review the monthly progress report of Contractor and send comments
to Authority within 7 days apart from regular periodic reports
Inspection of the construction works and the Project Highway and
submission of monthly report within 10 days of beginning of a month to
the Authority
46
18‐06‐2019
Authority’s Engineer      Contd…..
Ensure that Contractor carry out tests at such time, frequency
and number as per Specifications and Standards and test check
50% of the quantity or number of tests prescribed for each
category or type of tests as per MoRTH Specifications for Road
and Bridge Works.
Issue of NCR and ensure rectification of defects
To carry out all tests specified in Schedule K before issue of
Completion Certificate.
Thorough review of progress of construction in case of failure of
Contractor to achieve Project Milestone
Monthly inspection during maintenance period and issue of
monthly inspection report
Permission for Lane closure during maintenance period
47
Authority’s Engineer      Contd…..
Specifying time limit to the Contractor for repair/rectification of any
deviation or deterioration with respect to Schedule E during
maintenance period
Processing of payments to the Contractor during construction as well as
maintenance period
Recommendation to Authority for suspension of the works in whole or
part
Keeping watch over Contractor’s personnel and direction to Contractor
for removal of any unsuitable personnel
Authority’s Engineer shall remain liable for actions/omissions of its
personnel
Authority may terminate AE any time, so also Contractor may cause
removal of AE. In either case Authority to engage a fresh AE.
Authority need to supervise functioning of Authority’s Engineer,
replace any personnel of Authority’s Engineer for misconduct/ inability
to perform or even terminate the Contract with Authority’s Engineer
48

Design & Development of Project Highway
• Contractor shall appoint its representative within 20 days from
the Appointed Date.
• Contractor shall appoint a Design Director within 20 days from
the Appointed Date.
• The Contractor shall appoint a Safety Consultant to carry out
design stage safety audit with prior consent of Authority (for the
consultant as well as its key personnel) who will carry out design
stage safety audit
• The Contractor shall appoint a Proof Consultant with prior
consent of Authority (for the consultant as well as its 2 key
personnel) who will proof check the detail calculations, drawings
and designs.
• Within 30 days from the Appointed Date, the Contractor shall
submit to the Authority and Authority’s Engineer a programme
comprising of the following:
49
Design & Development of Project Highway         Construction of Project Highway
Contd….
Contractor’s organization, general methods and arrangements for
design and construction, EMP, QAP, traffic management and safety plan
(including use of ‘ROBOTS’ for diversion and control of traffic),
Contractor’s key personal and equipment.
Works programme using appropriate soft tools indicating the order in
which works are intended to be carried out, anticipated timing of
design, periods for review, sequence and timing of inspection and tests
and particulars of pre-construction reviews
Monthly cash flow forecast.
Contractor will develop design and drawings in conformity with
Specifications and Standards set forth in Schedule D, the same will be
vetted/ audited by Proof Consultant/ Safety Consultant as the case
may be and same will be reviewed/approved by Authority’s Engineer
before commencement of respective works. The list of drawings to be
submitted by the Contractor is specified in Annex I to Schedule I.
50
18‐06‐2019
Design & Development of Project Highway         
Contd….
AE will approve/give observations on drawings within 15 days (30
days for major bridge/structure)
Contractor responsible to get all drawings approved from AE
within 90 days from Appointed Date
If recommendation of Safety Consultant requires any work
beyond Scope in Schedule B or C or design standards beyond
Schedule D, Contractor will seek instructions from Authority for
CoS.
Notwithstanding review/approval by Authority’s Engineer or
failure to do so, Contractor shall remain sole responsible for
correctness for design and drawings.
Contractor will compute length/area/number of different stages
of items shown in Schedule H based on drawings developed. Such
quantities will form basis for interim payment.
51
 Contractor shall construct the project highway in accordance with the
Project Completion Schedule set forth in Schedule J.
• Project Completion Schedule has following milestones:
Project Milestone I – [35%] of the Schedule construction period,
submission of Stage Payment Statements for amount not less than 10%
of Contract Price.
Project Milestone II – [60%] of the Schedule construction period,
submission of Stage Payment Statements for amount not less than 35%
of Contract Price and start of construction of all bridges.
Project Milestone III – [85%] of the Schedule construction period,
submission of Stage Payment Statements for amount not less than 70%
of Contract Price and start of construction of all project facilities
• Figures in square bracket may be modified keeping specific
requirements of Project during DPR stage
52

Construction of Project Highway      Contd….
Stage Payment requirement for Project Milestones shall be
proportionately reduced considering delay in handing over of site.
• Damages to be paid by Contractor if Project Milestone or
Schedule Completion date is not achieved within a period of 30
days from the date set in the Schedule J @0.05% of the
Contract Price for delay of each day. Ceiling of Damages is 10%
of Contract Price. Damages exceeding 10% constitute default of
Contractor without cure and Authority may terminate Agreement.
• Contractor restricted from Bidding in future projects of
Authority in case Project (Contract value not less than Rs. 300
crores) completion is delayed by 90 days unless such failure is due
to Force Majeure or reasons attributable to Authority
53
Construction of Project Highway      Contd….
• Contractor will maintain the Project Highway during construction period
so that traffic worthiness and safety is not inferior to condition on
Appointed Date. In case project involves tunnel/bypass, Contractor
shall maintain the existing road until the new facilities are open to
traffic.
• Contractor shall at all times be responsible for safe operation of
Project Highway.
• In the event of default by Contractor, Authority may maintain the road
at risk and cost of Contractor.
• Contractor is entitled to Time Extension for completion of any Project
Milestone or final completion on account of (i) Delay in handing over of
site, (ii) Change of Scope, (iii) Force Majeure Event, (iv) Any delay
attributable to Authority
• Quality Assurance Plan prepared by Contractor shall include:
Organisation, duties and responsibilities, inspection and documentation
Sampling and testing of materials, test frequencies, standards, testing
facilities, acceptance criteria, recording and interpretation of test
results, calibration of equipment etc.
54
18‐06‐2019
Construction of Project Highway      Contd….
 Internal Quality Audit System
 Source Approval
• Pre-construction review of manufacturer’s test reports and standards samples
of manufactured materials
• RFI
• Authority’s Engineer to witness 50% of the total tests
• Three business days notice to AE before covering up works by the Contractor
• Authority may arrange external technical audit if required
• Monthly Progress Report by the Contractor (within 10 days of month following)
• AE to submit its comments on monthly progress report of Contractor (within 7
days from receipt of such report) and its own monthly report within 10 days of
month following
• NCR, remedial work
• Suspension of unsafe construction works
• Contractor’s personnel and labour, orderly conduct of personnel, exhaustive
provision for compliance to labour laws, safety and health concerns of labour
55
Change of Scope
• Change of Scope means any additional work, change in
specification in work or omission of any work from Scope of the
Project
• Authority may require the Contractor for Change of Scope within
the period of six months from the Appointed Date. Any such
Change of Scope excluding major structures can be agreed to be
executed before expiry of 50% of the original Scheduled
Construction Period subject to condition that it does not entail
any EOT. Contractor may also submit a Change of Scope Request
to the Authority within 90 days from the Appointed Date.
• Change of Scope notice by Authority’s Engineer to the Contractor
at the instruction of the Authority
56
 18‐06‐2019

Change of Scope      Contd….
• Upon receipt of Change of Scope of Notice Contractor shall submit
detailed proposal including design, quantities, drawings, costs and time i.e.,
impact on Project Completion Schedule.
• Rate shall be worked out considering rates in SOR of concerned circle of
State PWD duly updated based on WPI and factoring tender
premium/excess. Rate of items not available in SOR to be determined as
per MoRTH Standard Data Book and prevailing market rates. If MoRTH
Standard Data Book does not provide requisite details, AE to determine
rates as per Good Industry Practice.
• The costs of existing works or items, which are being changed/ omitted
shall also be valued similar to above and only net cost shall be considered.
• In case the design and rates submitted by the Contractor is not acceptable
to the Authority, Authority may issue Change of Scope Order requiring the
Contractor to proceed at the rates and conditions approved by the
Authority till matter is resolved through dispute resolution mechanism or
Authority may undertake works through separate agency.
• Design charges payable to Contractor for new works (works not similar to
works under original scope) @1% cost of such works.
Project Completion
• Following tests as specified in Schedule K shall be conducted on
completion of the project. Authority’s Engineer shall either
conduct or observe, monitor and review the tests
Visual and physical tests
Riding quality tests using NSV
Non-destructive tests such as rebound hammer and ultra sonic
pulse velocity test at two spots on each span of bridges
Load Tests on Bridges having more than 15 metre span length
Reflectivity of road marking and road signs
Illumination level of lighting
Environmental Audit
Safety Audit

57 59

Change of Scope      Contd….
• The provisions of construction, supervision, monitoring, testing as Project Completion               Contd……  
applicable to original Scope of the Project shall also be applicable
to Change of Scope. • Upon successful completion of tests, Authority’s Engineer shall
issue the Contractor and the Authority Completion Certificate in
• Total value of all Change of Scope orders shall not exceed 10% of
the form set forth in Schedule L.
Contract Price.
• Within 30 days from issue of Completion Certificate Contractor
• No Change of Scope shall be executed without issue of Change of
shall remove equipment, materials, debris, and temporary works
Scope order except emergency works
from Site
• Any change necessitated because of default of Contractor shall
not constitute Change of Scope
• Contractor to maintain any CoS undertaken by Authority through
other agency after DLP of said work is over at no extra cost to
Authority.

58 60

Defects Liability & Maintenance
• Contractor shall be responsible for all Defects except usual wear and
tear in the Defects Liability Period commencing from the date of
Completion Certificate as specified below:
Road with flexible pavement – 5 years
Road with rigid pavement – 10 years
Road with flexible pavement using perpetual design – 10 years
Stand alone structures such as major bridges/tunnels – 10 years
Stretches with new material/technology used – 10 years
Renewal coat/recycling of BC layer – 3 years
IRQ with DBM/BM and BC – 3 years
• Defect Liability Period deemed to be extended till identified defects
are remedied
• In case of Default by Contractor, Authority may undertake defect
rectification through other agency and recover cost of repair +20%
thereof from Contractor
• Maintenance Period is commensurate with Defects Liability Period
61
Defects Liability & Maintenance     Contd….
• Contractor shall be paid following amount for
performance of its maintenance obligations :
 Road with flexible pavement – no payment in the first
year, 0.5% of Contract Price in second, third and fourth
year and 1% of Contract Price in fifth year
Road with rigid pavement – 0.25 % of Contract Price in
first, second and third year, 0.5% of Contract Price in
fourth, fifth, sixth and seventh year and 0.75% of
Contract Price in eighth, ninth and tenth year
62
18‐06‐2019
Defects Liability & Maintenance     Contd….
Road with flexible pavement using perpetual design – no payment
in the first year, 0.5 % of Contract Price in second, third and
fourth yea laying, 0.75% of Contract Price per year till renewal
coat/end of maintenance period (requirement to be assessed
based on investigations, cost to be determined in same way as for
Change of Scope) and 0.25% of Contract Price in remaining period
Stand alone structures such as major bridges/tunnels – 0.25% of
Contract Price for the first five years and 0.5% of Contract Price
for remaining five years.
• Actual maintenance pay out will be linked to WPI variation and
Contract Price adjusted for Change of Scope and works
withdrawn but not price adjustment
63
Defects Liability & Maintenance     Contd….
• Maintenance Requirements specified in Schedule E specifying nature of
defect/deficiency in carriage way, paved shoulders, other shoulders
sides slopes, drains, culverts, road side furniture, lighting, toll plaza,
rest area, plantation, bridges etc. and time limit for
repair/rectification of such defects/deficiencies (Schedule E
substantially strengthened for pavement evaluation)
• No later than 60 days prior to Completion Date, Contractor shall evolve
a Maintenance Manual for regular and preventive maintenance of
Project Highway
• Obligation of the Contractor to permit safe, smooth and un-interrupted
flow of traffic on the Project Highway.
• Daily inspection, pre-monsoon inspection and post-monsoon inspection by
Contractor
• Monthly inspection by Authority’s Engineer
• Contractor to carry out Tests specified by Authority’s Engineer in
accordance with Good Industry Practice
64

Defects Liability & Maintenance     Contd….
• External technical audit of maintenance works at the wish of
Authority
• Monthly maintenance programme of the Contractor indicating
condition of road, proposed maintenance works and deployment of
resources
• Vehicle rescue post by the Contractor with one mobile crane
having 30 ton capacity
• Specific approval of Authority’s Engineer for lane closure
• Damages to be paid by Contractor for delay in re-opening of close
lane.
65
Defects Liability & Maintenance     Contd….
• Reduction in payment for non-performance of maintenance
obligations by the Contractor using the formula and reduction
percentage for various items/defects/deficiencies as given in
Schedule M
• Authority’s right to take remedial measures
• Issue of Taking Over Certificate by Authority after Maintenance
Requirements duly carried out, maintenance period expired and
Authority’s Engineer determining Tests on Completion of
Maintenance successful
66
18‐06‐2019
Payments to Contractor
• Advance Payment:
Advance is interest bearing (Bank rate i.e., floor rate of interest
announced by SBI for all lending operations plus 3%) compounded
annually
Advance Payment equal to 10% of Contract Price in two
instalments of 5% each
First instalment at any time after Appointed Date along with the
irrevocable and unconditional BG for an amount equal to 110 % of
the instalment
Second instalment at any time after 60 days from Appointed
Date along with the irrevocable and unconditional BG for an
amount equal to 110% of the instalment and utilization certificate
of first instalment
67
Payments to Contractor      Contd….
Additional interest bearing advance payment against newly purchased
key construction equipment (procured in the name of Contractor and
verified by AE to have been brought into site) upto 5% against BG
Contractor has option of splitting BG against Advance Payment into
parts each not less than 2.75 % of the Contract Price and each part
effective till full repayment of such part
Advance Payment to be paid by the Authority within 15 days of receipt
of request from Contractor.
Recovery of Advance Payment from stage payments starting with the
first Stage Payment at the rate of 15 % of each Stage Payment
Statements provided Advance Payment shall be completely repaid prior
to 80% schedule construction period.
If total stage payments don’t exceed 20% of Contract Price by 50% of
schedule construction period, entire outstanding advance including
interest to be recovered by encashment of BG
68

Payments to Contractor      Contd….
In case of termination of contract prior to recovery of Advance
Payment for Contractor Default, it will carry interest @ bank
rate plus 5% for the unrecoverable advance
• Payment for Construction Works :
Interim payments to the Contractor on monthly basis based on
completion of stages
Stages are measured in units of linear length, number, area as
shown in Schedule H
Contractor to submit Stage Payment Statement for Works with
details as per Schedule O such as estimated amount of work
executed since last claim, price adjustment amount, estimated
amount of each COS order since last claim, any adjustment in
price on change of scope amount, deductions, net claim, amount
received by Contractor upto last claim, progress of works etc.
69
Payments to Contractor      Contd….
Stage Payments to be worked out as per Schedule H:
 Works are divided into four Items such as “Road Works including
culverts, widening and repair of culverts”, “Minor
bridge/underpasses/overpass”, “Major bridge, ROB/ RUB/
Elevated Sections/ flyovers including viaducts” and “Other
works”. Weightage is assigned to each group of items in
percentage such that total is 100%.
 Each Item has several Stages and percentage weightage is
assigned to each Stage such that sum total of the percentage
weightage is 100% for each Item.
 Following are given for each Stage in Schedule H:
Unit of measurement (linear length, number, area etc.)
Method of calculation of payment is prorota basis based on gross
length, number etc.
Ceiling for part completion of a Stage (if it is allowed) in length or
number for purpose of payment
70
18‐06‐2019
Payments to Contractor      Contd….
 Payment for a particular Stage (for example bituminous wearing
coat) shall be calculated in following manner :
Cost per km = P x weightage for road work x weightage for
bituminous work x (1/L)
 Ceiling for Stages involving earth work and pavement courses in
widening of existing road is taken as 10% of the total length
 Ceiling for Stages involving earth work and pavement courses in
reconstruction/ realignment/bypass and reconstruction/new
service road/slip road is taken as 5 km.
 Length affected due to law and order problem or litigation will
not be considered in total length for the purpose of payment
71
Payments to Contractor      Contd….
 Ceiling for Stage involving culvert construction is taken as 5
numbers
 Cost of each bridge/underpass/ flyover/ grade separator shall be
determined on pro rata basis with respect to the total linear
length of the bridge/underpass/ flyover/ grade separator.
Payment for bridge/underpass/ flyover/ grade separator shall be
made for each bridge/underpass/ flyover/ grade separator on the
completion of 25% of the foundation, sub-structure, for each
span in case of cast in situ structure, 50% for each span after
casting and 50% after launching and completion in all respect.
72
 18‐06‐2019

Payments to Contractor      Contd….
• Illustration 1 (Stage-Sub-base Course under Widening &
Strengthening of road under Item-Road Works including Culverts,
widening and repair of Culverts)
Contract Price: Rs. 100
Total length of Sub-base Course under Widening & Strengthening of
road under Item-Road Works including Culverts, widening and repair of
Culverts: 56 km
Weightage of Item (Road Works including Culverts, widening and repair
of Culverts): 47%
Weightage of Stage Sub-base Course under Widening & Strengthening
of road: 18%
Unit of measurement: Linear length
Ceiling for part completion of a Stage: 10% of total length i.e. 5.6 km
Payments to Contractor      Contd….
Total linear length of New Major Bridges: 1264 m
Weightage of Item (Major bridge works and ROB/RUB/elevated
sections/flyovers including viaducts, if any): 19%
Weightage of Stage Foundation: On completion of the foundation
work including foundations for return walls, abutments, piers
under New Major Bridges: 23%
Unit of measurement: Linear length
Ceiling for part completion of a Stage: Not less than 25% of the
scope of foundation of a major bridge and minimum 2 foundations
i.e. 4 foundations for Bridge - 1, 6 foundations for Bridge - 2 and
2 foundation for Bridge - 3

73 75

Payments to Contractor      Contd…. Payments to Contractor      Contd….
Length of Stage Sub-base Course under Widening & Bridge wise quantity of Stage completed and payment
Strengthening of road completed: 8.1 km i.e. more than ceiling admissibility:
length, hence payment can be made for the Stage
Bridge No. No. of Ceiling no. of Whether Stage
Cost per km = Rs. 100*0.47*0.18*1/56 = Rs. 0.15 foundations foundations payment
Value of work done = Rs. 0.15*8.1 = Rs. 1.22 completed admissible
• Illustration 2 (Stage-Foundation: On completion of the 1 3 4 No
foundation work including foundations for return walls, 2 7 6 Yes
abutments, piers under New Major Bridges under Item Major 3 1 2 No
bridge works and ROB/RUB/elevated sections/flyovers
including viaducts, if any) Cost of 1 foundation of Bridge 1 = Rs. 100*0.19*0.23*479/1264*
Contract Price: Rs. 100 1/16= Rs. 0.10
Details of New Major Bridges: Bridge 1-479 m (16 foundations), Cost of 1 foundation of Bridge 2 = Rs. 100*0.19*0.23*703/1264*
Bridge 2-703 m (24 foundations), Bridge 3-82 m (4 foundations) 1/24= Rs. 0.10

74 76
 18‐06‐2019

Estimating Value of Work     contd…. Payments to Contractor      Contd….
The amount payable to the Contractor shall be adjusted in the IPC for
the increase or decrease in the index cost of inputs such as labour,
• Cost of 1 foundation of Bridge 3 = Rs. 100*0.19*0.23*82/1264* cement, steel, plant, machinery and spares, bitumen, fuel and lubricants
and other materials
1/16= Rs. 0.02
Price adjustment shall be applied on completion of specified stage of
• Value of work done = Rs. 0.10*7= Rs. 0.70 the respective item of work in accordance with Schedule H.
The value of work done under a particular IPC is segregated into two
major group of items i.e., RW (Road Works and other works) and BR
(Major bridges and structures) based on Schedule H. Road Works and
other works (RW) is further sub-divided into four sub-items i.e., (i)
Earthwork, Granular work, and other works (ii) Bituminous work (iii)
Cement concrete pavement (iv) Culverts, minor bridges and other
structures
For each of the four sub-items of Road Works and other works and
major bridges and structures, percentage contribution of the seven
components i.e., (i) labour, (ii)cement, (iii) steel, (iv) plant, machinery
and spares, (v) bitumen, (vi) fuel and lubricants and (vii) other materials
is given depending upon the nature and scope of the Project

77 79

Payments to Contractor      Contd…. Payments to Contractor      Contd….
Within 10 days of receipt of Stage Payment Statement from  Price adjustment of the seven components is governed by
Contractor, Authority’s Engineer shall broadly determine the amount
due to the Contractor and recommend release of 90% of the amount. following indices :
Within 10 days of receipt of such recommendation from Authority’s Input Relevant Index
Engineer, Authority shall make payment to the Contractor Labour Consumer Price Index for Industrial Workers for the
Within 15 days of receipt of Stage Payment Statement from concerned circle published by Labour Bureau
Contractor Authority’s Engineer shall determine and deliver to the
Cement WPI for Ordinary Portland cement published by
Authority and the Contractor the IPC. Authority shall make payment
Ministry of Commerce and Industry
within 30 days from the date of submission of the claim by the
Contractor Steel WPI for mild steel – long products published by
In case, IPC is not issued within 30 days from submission of claim by Ministry of Commerce and Industry
Contractor, Authority will pay the claimed amount by Contractor and Plant, Machinery And Spares WPI for construction machinery published by Ministry
discrepancy, if any, to be adjusted later on. of Commerce and Industry
AE’s view final wrt valuation of work for any stage. Bitumen Official retail price of Bitumen in nearest refinery
Authority’s Engineer may withhold any amount towards in admissible Fuel And Lubricants Official retail price of HSD at the existing consumer
works which the AE has notified the Contractor. pumps of IOC in the State
Contractor is entitled to interest @ Bank Rate + 3% for delayed Other Materials WPI for all commodities published by Ministry of
payment by Authority
Commerce and Industry

78 80

Payments to Contractor      Contd….
Price adjustment for each item/ sub-item of works shall be worked out
considering the change in indices between the month of the Base Date
and the month which is three month prior to the month for which the
IPC relates.
Price Adjustment payable for Stage Payment Statements submitted
within 30 days after applicable Project Milestone/Scheduled
Completion Date or any EoT granted therefor. In respect of Stage
Payment Statements submitted after such period, price adjustment
shall be applicable considering respective Milestone.
• Payment for Maintenance Works :
Monthly lumpsum amount payable for maintenance shall be one-twelfth
of the annual cost of maintenance
Within 15 days of receipt of monthly maintenance statement from
Contractor the Authority’s Engineer shall certify the amount to be paid
to Contractor considering compliance with Maintenance requirements
and reduction for non-compliance
81
Payments to Contractor      Contd….
Deduction on account of non compliance to Maintenance Requirements
shall not be paid after compliance.
Authority shall pay Contractor once in every quarter and payment shall
be made within 30 days from date of submission of last IPC of the
quarter
Lumpsum quarterly payment for maintenance shall be adjusted for
changes in rates and prices of various inputs with respect to wholesale
price index for all commodities.
• Final payment statement for construction and maintenance on
completion of respective works
Upon submission of Final Payment Statement for Works by Contractor
(within 60 days from date of issue of Completion Certificate),
Contractor will submit a written discharge conforming full and final
settlement of all monies due to Contractor.
82
18‐06‐2019
Payments to Contractor      Contd….
Within 30 days after receipt of Final Payment Statement from
Contractor as well as on receipt of written discharge, AE will issue Final
Payment Certificate.
Within 30 days of receipt of Final Payment Certificate from AE,
Authority shall make payment to the Contractor. Delay in payment,
attracts interest @Bank Rate + 3%.
Within 30 days after completion of Manitenance Period, Contractor will
submit final payment statement for Maintenance. AE wii certify final
payment within 30 days and Authority will pay in next 30 days.
• Bonus for early completion – for completion of project earlier to
Scheduled Completion Date, Bonus @ 0.03% of Contract Price for each
day with ceiling up to 5%.
Contract Price shall always be deemed to be the amount specified in
Clause 19.1 (i) after excluding the Contract Price of the Works deemed
to be deleted from the Scope of Work under clause 8.3 of this
Contract Agreement, and shall exclude any revision thereof for any
reason.
Bonus is payable only if each work for which Time Extension is granted
is completed within respective extended time.
83
Insurance
• Contractor shall effect and maintain at its own costs following
insurances from Appointed Date till date of issue of Completion
Certificate for any loss or damage:
Insurance of works, plant and materials and additional sum of [15%] for
such replacement costs to cover any additional cost
Insurance for Contractors equipment and documents for such
replacement costs
• Contractor shall effect and maintain insurance cover of not less than
15% of Contract Price from the date of issue of Completion Certificate
until the end of defects liability period
• Contractor shall insure against loss, damage, death or bodily injury or
damage to any property for any number of occurrence for a [specified
amount]
• Insurance against accident to workmen of Contractor
• Professional Liability Insurance for [3%] of Contract Price
• Insurance in the joint name of Contractor and Authority
• Insurance evidence to be submitted by Contractor within 10 days from
Appointed Date
84

Force Majeure  Force Majeure                      Contd….
• Force Majeure Event :
An event that affects performance of the Affected Party of its
obligations and is beyond its reasonable control and the Affected Party
could not have prevented or overcome it by exercise of due diligence
and has adverse material effect on affected party.
Force Majeure Events are of three types i.e., Non-Political Event,
Indirect Political Event and Political Event
Non-Political Event relates to act of God, epidemic, adverse weather
conditions, earthquake, lightning, landslide, cyclone, flood, strike (other
than those by Contractor, its sub-contractor(s) or their personnel),
failure of sub-Contractor except those coming under Indirect political
Event, judgment against Contractor without any default on its part etc.
Indirect Political Event relates to war, blockade, embargo, riot,
terrorist action, industry wide/ state wide strike, civil commotion,
boycott, political strike preventing construction etc.
Political Event relates to change in law beyond the scope of Agreement,
compulsory acquisition, unlawful action by any Government Authority
etc. in revoking or not renewing any license/permit without valid reason
etc.
85
Force Majeure                      Contd….
• Notice from Affected Party to the other party giving particulars of nature and
extent of Force Majeure Event, estimated duration, action proposed by the
Affected Party to alleviate impact of Force Majeure Event etc.
 Regular weekly reports from Affected Party
 No relief to Affected Party if first notice is not served within 10 days from
occurrence of Force Majeure Event
• Effect of Force Majeure Event:
 Extension of time to the Contractor for all kinds of Force Majeure Events
apart from full Force Majeure cost in case of Political Event and one half of
Force Majeure Cost in excess of insurance cover in case of Indirect Political
Event and no cost in case of Non Political Event
 Force Majeure Cost will include all such costs directly attributable to Force
Majeure Event but not include debt repayment obligations of Contractor
• Contract can be terminated by either party if Force Majeure Event subsists
for aggregate period of 60 days within a continuous period of 120 days after
issuing intention to terminate notice to the other party and granting him 15
days time period to make any representation.
• Termination payment for Force Majeure Event :
86
18‐06‐2019
Non-Political Event – value of unpaid works
(construction/maintenance)
Indirect Political Event – value of unpaid works + a reasonable
cost of the Plant and Materials procured by the Contractor and
transferred to the Authority for use in construction/maintenance
if such Plant and Materials meet specifications and standards
Political Event – value of unpaid works + the reasonable cost of
temporary works + 10% of the cost of works that are not
commenced or not completed
87
Suspension
• Suspension of Contractor’s Rights :
Upon occurrence of Contractor’s Default Authority may suspend
the Works or Maintenance or part of same and carry out such
works through other agency. Suspension may extend upto a
period not exceeding 90 days
Upon the Contractor having cured its Default or Authority
removed the cause of suspension within a period of 60 days,
Authority may revoke suspension
During the pendency of suspension Contractor may anytime by
notice require Authority to revoke suspension and issue
termination notice. Within 15 days of such notice, Authority will
terminate Contract.
In case of suspension is not revoked within 90 days, Contract
shall be deemed to be terminated by mutual agreement and it will
be treated as Termination for Contractor’s Default
88

Termination
• Contractor’s Default :
Failure to provide, extend or replenish Performance Security
After replenishing Performance Security, Contractor fails to cure
Contractor Default within 30 days for which Performance
Security was appropriated in full or part
Contractor does not achieve project milestone in time and
continuous to remain in default for 45 days
Contractor abandons Project or stops works
(construction/maintenance) for 30 days
The Contractor fails to rectify any Defect
Contractor sub-contracts the works in violation of Agreement.
Contractor is adjudged, bankrupt or insolvent or in the process of
being liquidated etc.
Contractor indulges in unethical activities
89
Termination   Contd….
• Cure of Contractor’s Defaults:
Upon occurrence of Contractor’s Default Authority may issue cure
period notice to the Contractor. Contractor has to cure the default
within period specified in Agreement (60 days wherever Cure Period is
not specified for a particular Default).
Cure Period will not relieve Contractor from any Damages payable by it.
Authority may extend Cure Period if it considers reasonable.
• Upon occurrence of a Contractor’s Default the Authority may issue a
notice (either directly or after expiry of Cure Period without the
Default being cured) to the Contractor showing intention to terminate
contract and granting Contractor 15 days to make representation.
Authority may terminate contract any time after expiry of 15 days time
period
• Authority’s Default:
Authority fail to make payment as per agreement
90
18‐06‐2019
Termination   Contd….
 Authority becomes bankrupt
 AE fails to issue relevant IPC within 60 days after receiving it
 The whole work is suspended by the Authority beyond 120 days period for any
reason not attributable to Contractor.
• Upon occurrence of Authority’s default Contractor may issue a notice to the
Authority showing intention to terminate contract and granting Authority 15
days to make representation. Contractor may terminate contract any time
after expiry of 15 days time period
• If Contractor does not issue Termination Notice after 15 days from the date
of issue of intention to terminate notice, the Contracor will be deemed to have
waived any claim.
• Authority may terminate Contract for its own convenience and termination
becomes effective within 30 days from the date of issue of notice.
• Upon termination of Contract, Contractor will submit all records to Authority,
transfer applicable permits to the Authority to the extent possible and vacate
Site within 15 days.
• Within 30 days from the date of Termination, AE will determine value of
unpaid works i.e. for completed stages of works, partially completed stages of
works, maintenance works as applicable.
91
Termination   Contd….
• Termination payment on account of Contractor’s Default – Authority to encash
Performance Security, Additional Performance Security, Retention Money and
outstanding BG for un-recovered advance payment by the Authority and pay
value of unpaid works to the Contractor
• Termination payment on account of Authority’s Default/Authority’s
convenience :
 Return of Performance Security, Additional Performance Security and
Retention Money to the Contractor
 Encashment of BG towards un-recovered advance payment
 Payment to the Contractor of value of unpaid works + the reasonable cost of
temporary works +10% of the cost of works that are not commenced or not
completed
• Termination Payment to be made within 30 days from the date of claim of
Contractor with all supporting documents. Authority liable to interest @Bank
Rate +3% for delay.
• Upon termination of Contract, the property, ownership of all Materials, Plants,
Works and Project Highway will vest with Authority.
• Foreclosure on mutual consent with drawal of Supplementary Agreement
92
 18‐06‐2019

Dispute Resolution Key Challenges
• Dispute Resolution Mechanism needs to be fair, equitable and prompt to
achieve competitive bidding, transparent contract operation and timely Issue Impact
completion of project
Lack of understanding of project Delay in finalisation of design and extra cost incurred due
Dispute Resolution has 2 stages i.e. Conciliation and Arbitration scope in bidding stage to hidden elements of design
Both Contractor & Authority have equal opportunity for dispute
resolution Unhealthy competition Affects quality, completion delayed, termination of
contract
Conciliation
 Either party has to first try conciliation process before invoking Lack of participation of Affects technology transfer and does not promote
arbitration international construction firms international standards in the industry
 Conciliation can be done by either (i) Authority’s Engineer/any other Poor ability to manage risks Delay in completion and increase in cost
person “Conciliator” mutually agreed by the parties or (ii) Chairman of
the Authority and Chairman of the Board of Directors of Contractor Ambiguity in design and Delay in finalisation of drawings
 In case dispute is not resolved by above conciliation process, engineering specifications
conciliation shall be explored through Conciliation Committee of
Independent Experts set up by Authority before invoking arbitration. Lack of transparent supply chain Uncertainties in supply and poor quality leading to
reworking/rejection/premature distress which involves
additional cost

93 95

Dispute Resolution                contd…. Key Challenges      contd……
Arbitration
 Process to follow Arbitration and Conciliation Act 1996, amended
in 2015 Issue Impact

In case award is challenged in court of law by a party, it will make Delay in procurement by Impacts performance of several activities, depending on the
75% of award amount to other party pending final settlement of Contractor/ delay in need for equipment in the critical path and cause overall increase
delivery of critical in project cost due to idle time of several resources
dispute on furnishing of BG for a sum equal to 120% of above
equipment by supplier
amount.
Shortage of construction Delay in dependent activities impacting subsequent activities as
Upon final settlement, any balance amount due to be paid or materials well and cause overall increase in project cost due to idle time of
returned, shall be paid or returned with interest @ 10% per several resources
annum from the date of interim payment to the date of final Rise in the cost of raw Impacts margins as cost escalation clause may only cover some of
settlement. materials the costs
Delay in payments by the Contractor may have to raise funds through additional equity or
Authority debt leading to additional burden on Contractor or slow down of
works.

94 96
 18‐06‐2019

Key Challenges      contd…… Implications of Contract Price      contd….
Issue Impact
• Damages to be paid by Authority to Contractor for deemed termination = 1%
of Contract Price (3% for Standalone structures)
Lack of coordination Idle time of several resources and extra cost • Maximum value of works that can be sub-contracted = 49% of Contract price
between various incurred due to reduced productivity and increased • Approval of sub-contractor for value of work more than 5% of Contract Price
participants (vendors, idleness
• Maximum amount of Retention Money = 5% of Contract Price
sub-contractors, etc)
• Maximum amount of works that can be withdrawn = 10% of Contract Price
Community Delay in completion and increase in cost
disenchantment • Reduction in Contract Price for works withdrawn = 90% of value of said works
Disregard to More accidents/fatalities, community wrath, lack of • Damages to be paid by Contractor for delay in achieving Project
construction zone support from administration milestones/Scheduled Completion Date = 0.05% of Contract Price for each
safety measures day
• Maximum Damages to be paid by Contractor for delay in achieving Project
milestones/Scheduled Completion Date = 10% of Contract Price

97 99

Implications of Contract Price Implications of Contract Price      contd….
• Contract Price is the lump-sum price quoted by the selected Bidder and accepted by • Contract price shall be increased/decreased for Change of Scope
Authority.
• Total value of CoS shall not exceed 10% of Contract Price
• The Contract Price includes all duties, taxes, royalty, cess, charges, and fees that
may be levied in accordance with the laws and regulations in force as on the Base • For maintenance pay out Contract Price shall be adjusted for CoS and amount
Date on the Contractor's equipment, Plant, Materials and supplies acquired for the of works withdrawn
purpose of this Agreement and on the services performed under this Agreement.
• Advance Payment linked to Contract price.
• The Contract Price shall be adjusted for increase or decrease in rates and price of
labour, cement, steel, Plant, machinery and spares, bitumen, fuel and lubricants, and • Stage Payments and Final Payment linked to Contract Price
other material inputs. • Bonus linked to Contract Price reduced for value of works withdrawn
• The Contract Price shall be adjusted for Change in Law. • Professional Liability Insurance for a sum not less than 3% of Contract Price
• No adjustment of Contract Price for any unforeseen difficulties
• Contract Price covers all of Contractor’s obligations.
• Aggregate Damages paid by Authority to Contractor for delay in Site handing over =
1% of Contract Price

98 100
 18‐06‐2019

101