EPC Contract Final Mr. Sarangi

MODEL CONTRACT DOCUMENT ALONG
WITH SCHEDULES & ARTICLES FOR

EPC CONTRACT
FOR HIGHWAY PROJECTS
D. Sarangi
Introduction
 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.
• Indian Contract Act defines Contract as “An agreement enforceable
by law”. An Agreement is defined as “Every promise and set of
promises forming the consideration for each other”. Consideration
essentially means “something in return”.
• Basic Requirements of Contract:
An Offer
An Acceptance
Lawful Purpose
Consideration
Mutual Obligation
Competancy and Capacity
Introduction contd…
• Essential Components of Contract:
Preamble, Recital
Definitions
Consideration
Representations and Warranties
Covenants and Rights
Conditions to Obligations
Endgame Provisions and Remedies
Types of Contract in Highway Projects
• Item Rate Contract
• EPC Contract
• Build Operate & Transfer Contract:
BoT (Toll)
BoT (Annuty)
Hybrid Annuity Mode
Authority/Employer’s ultimate objective in all types of contracting

format: Value for Money by way of Time, Cost, Quality,
Performance etc.
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
General Characteristics 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
• Improved risk management
• However, 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.
• Contractor’s focus to provide minimum compliant design is cause of
worry
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.
Silver Book was amended by FIDIC from time to time. Last time,
it was amended in 2017.
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” …….
Extracts from Introductory Note to FIDIC Silver
Book contd……
• These Conditions of Contract for EPC/Turnkey Projects are not
suitable for use in the following circumstances:
If there is insufficient time or information for tenderers to
scrutinise and check the Employer’s Requirements……..
If construction will involve substantial work underground or work
in other areas which tenderer can not inspect
If the Employer intends to supervise closely …….
If the amount of each interim payment is to be determined by an
official or other intermediary
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)
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.
EPC vis-à-vis Other Modes of Contracts
• There is worldwide trend of shifting towards EPC/LSTK contract
in engineering & construction sector
• BoT (Toll) contract not finding favour with lenders primarily due
to toll risks apart from construction risks
• Share of EPC contracts in ongoing NH projects based on a rough
estimate:
Mode of Contract No. of Projects Total Length (km) Total Cost (Rs. in
Crores)
EPC, HAM, BoT (Toll), 1616 57432 607105

BoT (Annuity) etc.
EPC 1420 41025 363484

Structure of Model EPC Agreement
• Six Parts (contains 28 Articles):
Part I: Preliminary
Part II: Scope of Project
Part III: Construction and Maintenance
Part IV: Financial Covenants
Part V: Force Majeure and Termination
Part VI: Other Provisions
• Sixteen Schedules:
Schedule A: Site of the Project
Schedule B: Development of the Project highway
Schedule C: Project facilities
Structure of Model EPC Agreement contd…..
Schedule D: Specifications and Standards

Schedule E: Maintenance Requirements
Schedule F: Applicable Permits
Schedule G: Form of Bank Guarantees
Schedule H: Contract Price Weightages
Schedule I: Drawings
Schedule J: Project Completion Schedule
Schedule K: Tests on Completion
Schedule L: Completion Certificate
Schedule M: Payment Reduction for Non-Compliance
Schedule N: Selection of Authority’s Engineer
Schedule O: Forms of Payment Statements
Schedule P: Insurance
Schedule Q: Tests on Completion of Maintenance Period
Schedule R: Taking over Certificate
Brackets, Asterisks & Foot Notes
• Provision in Curly Bracket {} [for example Definition of Affiliate]:
To be retained in RFP but to be modified in Agreement
• Provision in Square Bracket [for example Schedule Completion
Date in Clause 10.3(i)]: To be suitably filled/modified in RFP
• Asterisks to be substituted by project specific details in RFP (for
example specific chainage of project to be filled up in recital B).
• Serially numbered footnotes for guidance and to be deleted from
RFP
• Footnotes marked “$” to be retained in draft agreement
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:
 “Base Date” means the last date of the calendar month, which precedes the
Bid Due Date by at least 28 days.
 “Base Rate” means the floor rate of interest announced by the State Bank of
India for all its lending operations.
 “Change in Law” means the occurrence of any of the following after the Base
Date:
(a) the enactment of any new Indian law;
(b) the repeal, modification or re-enactment of any existing Indian law;
(c) the commencement of any Indian law which has not come into effect until the
Base Date; or
(d) a change in the interpretation or application of any Indian law by a judgement
of a court of record which has become final, conclusive and binding, as compared
to such interpretation or application by a court of record prior to
the Base Date.
contd…..
“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.
“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.
contd…..
“Good Industry Practice” means the practices, methods, techniques,

designs, standards, skills, diligence, efficiency, reliability and prudence
which are generally and reasonably expected from a reasonably skilled
and experienced contractor engaged in the same type of undertaking as
envisaged under this Agreement and which would be expected to result
in the performance of its obligations by the Contractor in accordance
with this Agreement, Applicable Laws and Applicable Permits in reliable,
safe, economical and efficient manner.
“Lead Member” shall, in the case of a joint venture, mean the member
of such joint venture who shall have the authority to bind the
contractor and each member of the Joint venture; and shall be deemed
to be the Contractor for the purposes of this Agreement; the Lead
Member shall itself undertake and perform at least 51% (fifty one per
cent) of the total length of the Project Highway.
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.
“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.
contd…..
• “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.
• “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.
contd…..
• 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.
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
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
Scope of the Project
• 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 B & C should be drafted in such a way that there is complete
harmony with Manual referred to Schedule D and Plan & Profile
provided at Annex III to Schedule A and free from any
inconsistency/ambiguity. Additional details may be provided in Schedule
A, B & C if considered necessary.
• For Project comprising of combination of 2/4/6 lanes, provisions of
applicable Manual shall apply to respective sections.
• Four important requirements of Schedule A, B & C: Clarity,
Consistency, Completeness & Correctness
• 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
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.
Land position chainage wise (sum total of land already in possession and
land to be possessed) and schedule of handing over of land.
Alignment plan & profile
Traffic signage plan
Status of environmental clearances
• Schedule B (Development of the Project Highway)
Guidelines for preparation:
 Chainage refer to design chainage
 Terrain classification for geometrics
 Any section to be designed for speed less than ruling speed / radius of horizontal curve less
than desirable minimum radius for applicable terrain shall be indicated in Schedule D under
Deviation List.
 Sight distance equal to at least twice SSD shall be provided throughout
 Where Manual permits more than 1 discrete value (e.g. Width of Service Road) any value may
be indicated in Schedule, lower value not a deviation.
 Service road shall be deigned for 40 kmph
 Inclusion of incidental items to be avoided in Scope of Project (e.g. acceleration &
deceleration lanes)
 In case typical cross sections are developed other than those given in Manual, width of
various components shall be as per Manual. In case of any difference in any component or
absence of paved shoulder, deviation to be mentioned in Schedule B & D.
 Entry and exit arrangement to a grade separator shall be treated as part of grade separator
improvement
 Four lane bridges/grade separated structures to have independent structure for separate
carriageway unless specifically mentioned in Schedule B.
 In case proposed bridge is desired to be cable stayed/suspension cable type or bridge
requires obligatory span, minimum span length etc., the same should be specifically
mentioned.
 Culvert widening part of road work, needn’t be mentioned separately
 In existing bridges wearing coat/ expansion joint older than 15 years shall be replaced
irrespective of whether it is mentioned in Schedule B or not.
 On existing bridges which are to be retained with/without
widening, crash barrier on inside and railing on outside of
footpath shall be provided unless otherwise specified in Schedule
D but the said details are also required to be mentioned in
Schedule B.
 In case of replacement of existing level crossing in built up area
by RoB, 4-lane configuration shall be provided unless otherwise
specified in Schedule D.
Contents:
 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/built-up sections, typical cross
sections along with cross section schedule
 Design Speed
Stretches to be retained with deficient geometrics to

be indicated in Schedule B & D.
Right of way
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, provision of ramp or not
Particulars of at grade intersections
Raising of pavement (stretch, extent, FRL)
 Pavement Design: Type (in case nothing specified, Contractor can
provide pavement of his choice and bituminous overlay on existing
flexible pavement), Design Period, Design Traffic in terms of msa,
Reconstruction Stretches
 Road side drainage (surface, sub-surface and kerb & channel drain in
high embankment zone)
 Details of reconstruction, retention with widening/ repair/
rehabilitation of existing bridges, RoBs, RuBs, Grade Separated
Structures and culverts (reconstruction only)
 Rehabilitation/repair requirements for structures including details of
major rehabilitation works such as repair/replacement of
parapet/railing etc.
 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)
Provision of tunnel, if any
Measures/treatment required for structures located in
marine areas shall be specifically mentioned in Schedule
B.
Details of Road Safety, Traffic Control works, Road
Side Furniture
(Important details such as gantry mounted over head
traffic signs to be furnished, Grading of reflective
Sheeting shall be mentioned)
Details of afforestation
Safety barriers for hazardous locations
 Special requirements for hill roads if any (e.g. climbing lane)
 Environmental mitigation measures to be undertaken by Contractor
pursuant to EMP at his own cost but noise barrier if required shall be
indicated in Schedule B.
 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)
Toll Plaza shall have 8 lanes unless otherwise specified in Schedule B &
D.
Unless otherwise specified in Schedule C or Schedule D, lighting

shall be provided at toll plaza, rest area, truck lay bye, bus bay
and bus shelter, top and underside of grade separated structures
and built up sections (both in median and service road)
• Schedule D:
Design standards to follow applicable Manual (Manual of
specifications and standards for two/ four/ six laning of
highways)
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
• Schedule E:
Maintenance Requirements indicated in Annex I to Schedule E:
Performance Desirable Acceptable Value Time Limit for Repair
Parameter Value
Flexible Pavement
Pothole Nil 0.1% area subject to 10 mm depth 24-48 hours

Cracking Nil < 5% subject to 0.5 sqm for any 50 m length 7-15 days
Rutting Nil < 5 mm 15-30 days
Roughness 2000 mm/km 2400 mm/km 180 days
Skid No. 60 SN 50 SN 180 days
Pavement 3 2.1 180 days
Condition
Index
Performance Desirable Acceptable Time Limit for Repair
Parameter Value Value
Rigid Pavement
Single Transverse (or For d<D/2-Dowel Bar Retrofit within 15 days
Diagonal) Crack For d>D/2-Full Depth Repair within 15 days
intersecting with one
or more joints
w = 3.0 - 6.0 mm
Joint Seal Defects Notable. L > 25%
Clean and reapply sealant in selected locations
within 7 days
Safety Related Items and Other Furniture Items
Retro reflectivity of Testing of each signboard using Retro Reflectivity
Road Signs Measuring Device in accordance with ASTM D
4956-09 bi-annually.
In case of deficiency, replacement within 48 hrs
except for gantry mounted signs for which
replacement has to be done within a month period.
Performance Desirable Acceptable Time Limit for Repair
Parameter Value Value
Structures and Culverts
Spalling of concrete Not more repairs to affected concrete portion with epoxy
than mortar / concrete within 15 days
0.50 sq.m
Hill Roads
Damage to Retaining 7 (Seven) days

wall/ Breast wall
• Tool/equipment and method of testing for determination of
defect specified in Annex-I to Schedule E
• Repair specification (Clause No. of MoRTH Specifications for
Road & Bridge Works/applicable IRC Code of Practice) indicated
in Annex-I to Schedule E
• Any defect not covered in Annex I to Schedule E shall be decided
by AE using Good Industry Practice specifying permissible limit
of deviation and time period for repair of same
• Contractor to promptly take action for emergency
repair/restoration
• Damages due to Force Majeure Event or wilful default or neglect
of the Authority shall be undertaken by the Authority at its own
cost.
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.
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
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
Coordination with other Contractor(s) if any working in Project
Highway
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
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
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.
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.
• Contractor’s obligations for replenishment/fresh submission of
Performance Security within 30 days against part or full encashment
and appropriation by Authority as 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
Performance Security contd……
• Authority to pay interest @9% per annum for delay in release of

• 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
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.
• Signing of Handover Memorandum in three counterparts shall be
deemed to constitute a valid evidence of giving the Right of Way to the
Contractor
• 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
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 of failure of Contractor to attend site inspection or
disagreement as to availability of any part of Site, decision of
Authority’s Engineer will be final.
• 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.
• 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.
• Monthly land possession report till expiry of 180 days from Appointed
Date, in respect of those parts of the site to which vacant access and
right of way was not given to the Contractor
• 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.
• 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.
Appointed Date
• Appointed Date is the project commencement date declared by
the Authority
• Conditions to be fulfilled before declaration of Appointed Date:
Contractor: Submission of Performance Security and Additional
Performance Security, if required
Authority: Handing over of Site in not less than 90% length of
the Project Highway
• 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)
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:
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 between
Authority and Contractor but failing such consensus, decision of AE
shall prevail while 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
Ensure that Contractor carry out tests at such time, frequency
and number as per Specifications and Standards and test check
50% of tests prescribed for each quality characteristic.
Issue of NCR for defective work 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
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.
Supervision of functioning of Authority’s Engineer by Authority critical
for efficient project management
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).
• The Contractor shall appoint a Proof Consultant with prior
consent of Authority (for the consultant as well as its 2 key
personnel, one for Highways & one for Bridge) 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:
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 personnel 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.
Contd….
 AE will approve/give observations on drawings within 15 days (30 days for
major bridge/structure). AE will approve revised drawings within 10 days.
• Contractor responsible to get all drawings approved from AE within 90 days
from Appointed Date.
• Any cost or delay in construction arising from review/approval by the
Authority’s Engineer shall be borne by the Contractor.
• 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.
• Work shall be executed as per approved drawings. No drawing shall be
altered/amended without prior approval of AE.
• Notwithstanding review/approval by Authority’s Engineer or failure to do so,
Contractor shall remain sole responsible for correctness for design and
drawings.
• Contractor indemnifies Authority against any damage, expense, liability, loss or
claim, arising from any breach of the Contractor’s design responsibility.
• 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.
Construction of Project Highway
 Contractor shall construct the project highway as specified in
Schedule- B and Schedule-C, and in conformity with the Specifications
and Standards set forth in Schedule-D following 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,
of Contract Price and start of construction of all bridges.
Project Milestone III – [85%] of the Schedule construction period,
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
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 reckoned from
the date indicated in Schedule J.
• Authority has to notify Contractor about its intention to levy Damages and
Contractor should be given opportunity to submit representation within 20
days of notice.
• Ceiling of Damages is 10% of Contract Price. Damages exceeding 10%
constitute default of Contractor without cure and Authority may terminate
Agreement.
• Damages paid by Contractor for delay in achieving any Project Milestone shall
be refunded back to Contractor without any interest if Project is completed as
per schedule.
• 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 delay is due to Force Majeure or reasons attributable to
Authority
• 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 in the
manner recommended by AE 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)
Delay in approval of GAD of RoB/RuB from Railway authorities, (iii) Change of
Scope, (iv) Force Majeure Event, (iv) Any delay attributable to Authority or
Authority’s other contractors etc.
• Notice from Contractor within 15 days of occurrence of event and no later
than 10 days after close of every month if the cause persists
• EoT to be granted for affected parts of Project Highway or affected works
only
• Quality Assurance & Quality Control:
 Quality Assurance Plan to be prepared by Contractor as IRC: SP: 112 and it will
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.
 Internal Quality Audit System
 AE’s approval to QAP within 21 days
 Cost of QA & QC to be borne by Contractor
 Contractor to give access and facilities to AE to all parts of site, source
locations of materials, production plants etc. for inspection and testing
 Pre-construction review of manufacturer’s test reports and standard samples
of manufactured materials by AE
 Source approval of AE for naturally occurring materials and factory
manufactured materials
 Contractor to carry out tests at such time, frequency and number as per
Specifications and Standards
 RFI by Contractor to AE for all works including tests
 Authority’s Engineer to witness 50% of tests for each quality characteristic of
materials, mixes, compacted layers etc.
 Three business days notice to AE before covering up works by the Contractor
 NCR, remedial work, rejection
 Authority may arrange external technical audit if required
• Monitoring & Supervision:

• Authority’s right to inspect and review the progress and quality of the
construction of Project Highway and issue appropriate directions to the
Authority’s Engineer and the Contractor
• Monthly Progress Report by the Contractor (within 10 days of month
following) containing status of Contractor’s documents, manufacturing
of materials, progress of construction, mobilisation of personnel &
equipment, sub-contracted works, QA & QC documents, safety
statistics, unresolved disputes, status of applicable permits and
compliance thereto, status of insurances, details of royalty payment,
Authority’s defects, Material Adverse Effects, declarations etc.
• Suspension of unsafe construction works
• Preservation Costs to be borne by Contractor
• Contractor’s personnel and labour, orderly conduct of personnel,
exhaustive provision for compliance to labour laws, safety and health
concerns of labour, appointment of Safety Officer, Authority’s direct
payment to labours and recovery from Contractor
Change of Scope
• Change of Scope means any additional work including any
associated Test on completion, change in specification in any item
of Works or omission of any work from Scope of the Project
except Works withdrawn under Clause 8.3
• 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
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 in following manner:
SOR of concerned circle of State PWD as applicable on Base Date. In
case non availability, available SOR to be updated based on WPI. Rates
so determined shall be adjusted 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.
Prevailing market rates to be discounted using WPI to determine
market rates on Base Date
• The costs of existing works or items, which are being changed/ omitted
shall also be valued similar to new works and only net cost shall be
considered.
• Time for completion of CoS shall be determined by AE.
Change of Scope Contd….
• 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 new works.
• The provisions of construction, supervision, monitoring, testing as
applicable to original Scope of the Project shall also be applicable to
Change of Scope.
• Total value of all Change of Scope orders shall not exceed 10% of
Contract Price.
• No Change of Scope shall be executed without issue of Change of Scope
order except emergency works
• 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.
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 (Details of physical tests to be filled up in
Schedule K during RFP)
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
Any other test specified by AE in accordance with Good Industry
Project Completion Contd……
• Upon successful completion of tests and receipt of insurance

details, Authority’s Engineer shall issue the Contractor and the
Authority Completion Certificate in the form set forth in
Schedule L.
• Within 30 days from issue of Completion Certificate Contractor
shall remove equipment, materials, debris, and temporary works
from Site, failing which authority may remove the same and
recover the cost+20% thereof from Contractor.
Defects Liability & Maintenance
• Contractor shall be responsible for all Defects in the Defects Liability
Period commencing from the date of issue 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
(Figure in square bracket shall be suitably filled up in RFP)
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
 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.
• For calculation of maintenance pay out Contract Price will be adjusted
for Change of Scope and works withdrawn and finally price adjustment
done linked to WPI variation
• Maintenance obligations of Contractor:
 Permit safe, smooth and un-interrupted flow of traffic on the Project
Highway.
Undertaking maintenance works as 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
Informing Authority of unauthorized use/encroachment of

Project Highway and any unusual occurrences such as accident,
damage to project highway, flooding etc.
Removal of debris
• No later than 60 days prior to Completion Date, Contractor shall
evolve a Maintenance Manual for regular and preventive
maintenance of Project Highway
• Monthly maintenance programme of the Contractor indicating
condition of road, proposed maintenance works and deployment of
resources 10 days prior to commencement of a month
• 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
• External technical audit of maintenance works at the wish of

Authority
• Vehicle rescue post by the Contractor with one mobile crane
having 30 ton capacity at location to be specified in RFP
• Specific approval of Authority’s Engineer for lane closure
• Damages to be paid by Contractor for delay in re-opening of close
lane @ 0.1% of monthly maintenance payment for each day delay
for every stretch of 250m (applicable for lane closure exceeding
48 hours)
• 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 i.e. to get repair done
through other agency and recover cost of repair +20% thereof
from Contractor
• 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
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
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. BG shall be returned back to
Contractor within 30 days from recovering the respective Advance
Payment.
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 (Figure in square
bracket may be suitably modified in RFP)
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 unrecovered 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
Additional information such as progress of works, RFIs in respect of
completed stages since last invoice, quality control test reports of
materials, mixes and completed parts, documentary evidence of
insurance, labour license, applicable permits, statutory clearances etc.
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 Item 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.
 Percentage weightage for respective stages/items shall be reduced to
account for reduction in Contract price for CoS or works withdrawn but
no impact on other stages/items
 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
 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 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 5 km.
 Length affected due to law and order problem or litigation will
not be considered in total length for the purpose of fulfilling
ceiling requirement of a Stage
 Ceiling for Stage involving culvert construction is 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.
• 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
Length of Stage Sub-base Course under Widening &

Strengthening of road completed: 8.1 km i.e. more than ceiling
length, hence payment can be made for the Stage
Cost per km = Rs. 100*0.47*0.18*1/56 = Rs. 0.15
Value of work done = Rs. 0.15*8.1 = Rs. 1.22
• Illustration 2 (Stage-Foundation: On completion of the
foundation work including foundations for return walls,
abutments, piers under New Major Bridges under Item Major
bridge works and ROB/RUB/elevated sections/flyovers
including viaducts, if any)
Contract Price: Rs. 100
Details of New Major Bridges: Bridge 1-479 m (16 foundations),
Bridge 2-703 m (24 foundations), Bridge 3-82 m (4 foundations)
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 and number
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
Bridge wise quantity of Stage completed and payment

admissibility:
Bridge No. No. of Ceiling no. of Whether Stage
foundations foundations payment
completed admissible
1 3 4 No
2 7 6 Yes
3 1 2 No
Cost of 1 foundation of Bridge 1 = Rs. 100*0.19*0.23*479/1264*

1/16= Rs. 0.10
Cost of 1 foundation of Bridge 2 = Rs. 100*0.19*0.23*703/1264*
1/24= Rs. 0.10
• Cost of 1 foundation of Bridge 3 = Rs. 100*0.19*0.23*82/1264*

1/16= Rs. 0.02
• Value of work done = Rs. 0.10*7= Rs. 0.70
• Within 10 days of receipt of Stage Payment Statement from
Contractor, Authority’s Engineer shall broadly determine the amount
due to the Contractor and recommend release of 90% of the amount.
Within 10 days of receipt of such recommendation from Authority’s
Engineer, Authority shall make payment to the Contractor
• Subsequently, within 15 days of receipt of Stage Payment Statement
from Contractor, Authority’s Engineer shall determine and deliver to
the Authority and the Contractor the IPC. Authority shall make
payment within 30 days from the date of submission of the claim by the
Contractor
• In case, IPC is not issued within 30 days from submission of claim by
Contractor, Authority will pay the claimed amount by Contractor and
discrepancy, if any, to be adjusted later on.
• AE’s view final wrt valuation of work for any Stage.
• Authority’s Engineer may withhold any amount towards inadmissible
works which the AE has notified the Contractor.
• Contractor is entitled to interest @ Bank Rate + 3% for delayed
payment by Authority
• 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 (i) labour, (ii)cement,
(iii) steel, (iv) plant, machinery and spares, (v) bitumen, (vi) fuel and lubricants
and (vii) other materials
 Full compensation for any increase or decrease in costs to the Contractor is
not covered by price adjustment
 The value of work done under a particular IPC is divided 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-group of items i.e., (i) Earthwork, Granular
work, and other works (ii) Bituminous work (iii) Cement concrete pavement (iv)
Culverts, minor bridges and other structures
 Price adjustment shall be applied on completion of specified Stages in
accordance with Schedule H for a particular group/sub-group of items and
separately calculated for each group/sub-group of items.
 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 determined and indicated in
RFP depending upon the nature and scope of the Project
 Price adjustment of the seven components is governed by
following indices :
Input Relevant Index
Labour Consumer Price Index for Industrial Workers for the
concerned circle published by Labour Bureau
Cement WPI for Ordinary Portland cement published by
Ministry of Commerce and Industry
Steel WPI for mild steel – long products published by
Ministry of Commerce and Industry
Plant, Machinery And Spares WPI for construction machinery published by Ministry
of Commerce and Industry
Bitumen Official retail price of Bitumen in nearest refinery
Fuel And Lubricants Official retail price of HSD at the existing consumer
pumps of IOC in the State
Other Materials WPI for all commodities published by Ministry of
Commerce and Industry
Price adjustment for each group/sub-group of items 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 only if Stage Payment Statements submitted
within 30 days of applicable Project Milestone/Scheduled Completion
Date or any EoT granted thereto. In respect of Stage Payment
Statements submitted after such period, price adjustment shall be
applicable considering indices frozen at respective Milestone date.
• 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 (For any defect in a part of 1 km
length, non compliance length shall be considered as 1 km length)
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.
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.
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
(Figure in square bracket may be modified in RFP)
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 including Authority’s property
for any number of occurrence for a [specified amount]
Insurance contd…..
• Insurance in the joint name of Contractor and Authority

• Insurance evidence to be submitted by Contractor within 10 days
from Appointed Date
• Authority may take such insurance in case of default on the part
of the Contractor, pay premia and recover cost from Contractor
• Professional Liability Insurance for [3%] of Contract Price to be
taken by Design Director, evidence to be submitted within 30
days from Appointed Date (Figure in square bracket may be
modified in RFP)
• Insurance against accident to workmen of Contractor
Force Majeure
• Force Majeure Event :
 Derived from “vis major”, Force Majeure is a Latin word that means “Superior
Force”
 Force Majeure Event is one 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. It has four typical characteristics:
 Externality
 Unavoidability/irrestibility
 Unforeseeability
 Causation
 No profit no loss – principle of good faith
 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) interrupting supplies/services
to Project Highway for a continuous period of 24 hours and an aggregate period of
10 days in an accounting year, failure of sub-Contractor only to the extent covered
by another Indirect political Event, judgment against Contractor without any
default on its part etc.
Force Majeure Contd….
Indirect Political Event relates to war, blockade, embargo, riot,
terrorist action, industry wide/ state wide strike for a continuous
period of 24 hours and an aggregate period of 10 days in an accounting
year, civil commotion, boycott, political agitation preventing
construction for an aggregate period of 10 days in an accounting year,
failure or delay by a sub-Contractor caused due to another Indirect
Political Event, 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,
failure or delay by a sub-Contractor caused due to another Political
Event, etc.
• 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 :

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
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
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
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
 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.
• 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
Dispute Resolution
• India ranks 163 in the Enforcing Contracts Rank published by world
Bank in May 2019.
• Dispute Resolution Mechanism needs to be fair, equitable and prompt to
achieve competitive bidding, transparent contract operation and timely
completion of project
Dispute Resolution has 2 stages i.e. Conciliation and Arbitration
Both Contractor & Authority have equal opportunity for dispute
resolution
Conciliation
 Either party has to first try conciliation process before invoking
arbitration
 Conciliation can be done by either (i) Authority’s Engineer/any other
person “Conciliator” mutually agreed by the parties or (ii) Chairman of
the Authority and Chairman of the Board of Directors of Contractor
 In case dispute is not resolved by above conciliation process,
conciliation shall be explored through Conciliation Committee of
Independent Experts set up by Authority before invoking arbitration.
Dispute Resolution contd….
Arbitration
 Process to follow Arbitration and Conciliation Act 1996, amended
in 2015
In case award is challenged in court of law by a party, it will make
75% of award amount to other party pending final settlement of
dispute on furnishing of BG for a sum equal to 120% of above
amount.
Upon final settlement, any balance amount due to be paid or
returned, shall be paid or returned with interest @ 10% per
annum from the date of interim payment to the date of final
settlement.
Dispute Resolution contd….
• Few tips for Authority to minimize dispute:
Clarifications to queries raised by bidders in pre-bid meeting
should be proper, issues requiring amendment to RFP should not
be ignored/postponed to a later date.
Monthly progress reports should be carefully checked to prevent
contradictory statements by Contractor as to site availability,
hindrances, deployment of man & machinery, statutory clearances
& permits, force majeure conditions etc.
Minutes of management meetings/correspondences should be
drafted in consistent with contract provisions.
Time period indicated in contract for different activities should
be adhered to.
Resolution of disputes should be in line with contract provisions
having precedence over departmental procedures, guidelines,
circulars etc.

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EPC Contract Final Mr. Sarangi

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MODEL CONTRACT DOCUMENT ALONG

WITH SCHEDULES & ARTICLES FOR

Authority/Employer’s ultimate objective in all types of contracting

EPC, HAM, BoT (Toll), 1616 57432 607105

EPC 1420 41025 363484

Schedule D: Specifications and Standards

“Good Industry Practice” means the practices, methods, techniques,

Stretches to be retained with deficient geometrics to

Unless otherwise specified in Schedule C or Schedule D, lighting

Pothole Nil 0.1% area subject to 10 mm depth 24-48 hours

Structures and Culverts

Damage to Retaining 7 (Seven) days

• Authority to pay interest @9% per annum for delay in release of

• Contractor is responsible for shifting of utilities, felling of trees and

Determination of Time extension, any additional cost to be paid to the

 Stage Payment requirement for Project Milestones shall be proportionately

• Monitoring & Supervision:

• Upon successful completion of tests and receipt of insurance

• Contractor shall be paid following amount for

Informing Authority of unauthorized use/encroachment of

• External technical audit of maintenance works at the wish of

 Payment for a particular Stage (for example bituminous wearing

 Ceiling for Stage involving culvert construction is 5 numbers

• Illustration 1 (Stage-Sub-base Course under Widening &

Length of Stage Sub-base Course under Widening &

Total linear length of New Major Bridges: 1264 m

Bridge wise quantity of Stage completed and payment

Cost of 1 foundation of Bridge 1 = Rs. 100*0.19*0.23*479/1264*

• Cost of 1 foundation of Bridge 3 = Rs. 100*0.19*0.23*82/1264*

• Insurance in the joint name of Contractor and Authority

• Effect of Force Majeure Event:

• Termination payment for Force Majeure Event :

• Cure of Contractor’s Defaults:

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Cost of 1 foundation of Bridge 1 = Rs. 1000.190.23479/1264

• Cost of 1 foundation of Bridge 3 = Rs. 1000.190.2382/1264