PROJECT MANAGEMENT
budget, which includes all costs
What is a project?
A project is described by its two
fundamental qualities according to the
Project Management Institute (PMI). Every
project is short-lived and carried out to
provide an original good, service, or
outcome. These two straightforward ideas
provide a work environment that
necessitates a different management style
than that of an operations manager, whose
job is focused on long-term, continual
process improvement. To define and carry
out temporary projects successfully, a
project manager needs a different set of
talents. Projects have established
beginnings and ends because they are
transient in nature.
● According to Project Management
Institute Inc in 2008, "Project
management is the application of
knowledge, skills, tools, and
techniques to project activities to
meet the project requirements".
● One client-centered definition of
project management is the
application of knowledge, skills,
tools, and techniques to meet or
exceed the expectations of the
client. This definition focuses on
delivering a product or service to the
client that meets expectations rather
than project specifications.
PROJECT CONSTRAINTS
You will have several project limitations
fighting for your attention on every project.
Cost, scope, quality, risk, resources, and
time are some of them.
● Cost is the project's approved
related to completing the project.
Due to the fact that many projects
obtain funding or grants with "use it
or lose it" contract terms, project
managers inside organizations must
strike a balance between not running
out of money and not under
spending. Poorly designed budget
planning may cause a rush to use
the designated funds at the last
minute. Cost is ultimately a limiting
factor for almost all initiatives; few
projects can run beyond budget
without eventually needing a
remedial step.
● Scope is what the project is
attempting to accomplish. It includes
all the labor necessary to deliver the
project results and the procedures
followed to produce them. It serves
as the project's motivation and goal.
● Quality - the requirements and
criteria that must be met for the
project's products to be delivered in
order for them to function properly
are combined to form quality. The
product must function as intended in
order to offer the anticipated
functionality, address the noted
issue, and give the anticipated
benefit and value. In addition, it must
have an appropriate finish and polish
and satisfy other performance
criteria, such as availability,
dependability, and maintainability.
● “Risk” the term refers to prospective
outside occurrences that, if they
happen, could harm your enterprise.
Risk is the result of weighing the
 likelihood that an event will take
place against its potential effects on
the project. You should classify the
prospective event as a risk and put a
proactive plan in place to manage
the risk if the probability of the
occurrence and the impact on the
project are too high.
● Resources - to complete the
responsibilities of the project,
resources are needed. They can be
any definable resource—typically
something other than labor—needed
to complete a project activity,
including people, tools,
infrastructure, money, and other
resources.
● Time - the duration of the project is
referred to as time. The most
frequent project oversight in
emerging projects is frequently time.
Deadlines that are missed and
deliverables that aren't complete
indicate this. In order to effectively
manage the schedule, it is
necessary to carefully identify the
tasks that need to be completed as
well as estimate their durations,
completion order, and resource
allocation.
PROJECT LIFE CYCLE (PHASES)
Initiation Phase
The project objective or need is identified.
An appropriate response to the need is
documented in a business case with
recommended solution options. A feasibility
study is conducted to investigate whether
each option addresses the project
objectives.
Once the recommended solution is
approved, a project is initiated and a project
manager is appointed.
Planning Phase
Also referred as "scope management" a
project's tasks and resource requirements
are identified, along with the strategy for
producing them. Risk management
identifies and tries to deal with anything that
might pose a threat to the successful
completion of the project. This is also a
good time to identify all project stakeholders
and establish a communication plan. At this
point, the project would have been planned
in detail and is ready to be executed.
Implementation (Execution) Phase
In any project, a project manager spends
most of the time in the implementation
phase. Progress is continuously monitored
and appropriate adjustments are made and
recorded as variances from the original
plan. Once all of the deliverables have been
produced and the customer has accepted
the final solution, the project is ready for
closure.
Closing Phase
The last remaining step is to conduct
lessons-learned studies to examine what
went well and what didn't. Through this type
of analysis, the wisdom of experience is
transferred from the project organization to
future teams.
 KEY SKILLS OF THE PROJECT
MANAGER
In 1991, Hans Thamhain researched the
training of project managers and, based on
the finding, categorized project
management into interpersonal, technical,
and administrative skills:
Interpersonal skills - These skills include
providing direction, communicating,
assisting with problem solving, and dealing
effectively with people without having
authority.
Administrative skills - These skills include
planning, organizing, and controlling the
work.
Technical expertise - Technical knowledge
gives the project manager the creditability to
provide leadership on a technically based
project, the ability to understand important
aspects of the project, and the ability to
communicate in the language of the
technicians.
FRAMEWORK FOR PROJECT
MANAGEMENT
There are two major organizations with
worldwide impact on the practice of project
management: Project Management Institute
(PMI), with world headquarters in the United
States, and the International Project
Management Association (IPMA), with world
headquarters in Switzerland.
Project Management Institute Overview
Project Management Institute (PMI) was
founded by five volunteers in 1969. Today,
PMI is the most widely recognized
organization promoting project management
best practices. PMI first began offering the
Project Management Professional (PMP)
certification exam in 1984. More than
500,000 individuals around the world hold
the PMP designation.
Project Management Body of Knowledge
(PMBOK) is a body of knowledge on project
management. PMBOK was created by
Project Management Institute (PMI) in 1987
to help keep project management terms and
concepts clear and consistent. In 2008, PMI
reported more than 260,000 members in
over 171 countries. The highly regarded
Institute of Electrical and Electronics
Engineers (IEEE) has adopted it as their
project management standard. The PMI is
responsible for developing and promoting
PMBOK, PMI also administers a
professional certification program for project
managers, the PMP.
PMBOK is the fundamental knowledge you
need for managing a project, categorized
into 10 knowledge areas:
1.Managing integration: Managing
integration is about developing the project
charter, scope statement, and plan to direct,
manage, monitor, and control project
change. All types of activities are going on
and there is a need to keep the “whole”
thing moving collectively-integrating all of
the dynamics that take place.
2. Managing scope: Projects need to have
a defined parameter or scope, and this must
be broken down and managed through a
work breakdown structure or WBS.
3. Managing time/schedule: Managing
time/schedule is about definition,
sequencing, resource and duration
estimating. Schedule development, and
schedule control.
4. Managing costs: Projects consume
resources, and therefore, there is a need to
manage the investment with the realization
of creating value.Managing costs is about
resource planning, cost estimating,
budgeting, and control.
5. Managing quality: Projects involve
specific deliverables or work products.
These deliverables need to meet project
objectives and performance standards.
Managing quality is about quality planning,
quality assurance, and quality control.
6. Managing human resources: Projects
consist of teams and you need to manage
project team(s) during the life cycle of the
project. Managing human resources is
about human resources planning, hiring,
and developing and managing a project
team.
7. Managing communication: Managing
communication is about communications
planning. Information distribution,
performance reporting, and stakeholder
management.
8. Managing risk: There is a real need to
properly identify various risks and manage
these risks. Managing risk is about risk
planning and identification, risk analysis
(qualitative and quantitative), risk response
(action) planning, and risk monitoring and
control.
9. Managing procurement: Projects
procure the services of outside vendors and
contractors, including the purchase of
equipment. There is a need to manage how
vendors are selected and managed within
the project life cycle. Managing procurement
is about acquisition and contracting plans,
sellers’ responses and selections, contract
administration, and contract closure.
10. Managing stakeholders: Every project
impacts people and organizations and is
impacted by people and organizations.
Identifying these stakeholders early, and as
they arise and change throughout the
project, is a key success factor. Managing
stakeholders is about identifying
stakeholders, their interest level, and their
potential to influence the project; and
managing and controlling the relationships
and communications between stakeholders
and the project.
FRAMEWORK FOR MANAGING
PROJECTS
Introduction to the Project Management
Knowledge Areas
● Project Start-up and Integration
The start-up of a project is similar to that of
a new organization - the project leader
develops the project infrastructure used to
design and execute the project. The project
management team must develop alignment
among the major stakeholders-those who
have a share or interest-on the project
during the early phases or definition phases.
Flowcharts, diagrams, and responsibility
matrices are tools to capture the work
processes associated with executing a
project plan. During project start-up, the
project management team refines the scope
of work and develops a preliminary
schedule and conceptual budget. The
project manager creates an environment
that encourages team members to fully
engage in the project and encourages
innovative approaches.
● Project Scope
The project scope is a document that
defines the parameters-factors that define a
system and determine its behaviour of the
project. The scope of work (SOW) is
typically a written document that defines
what work will be accomplished by the end
of a project. According to the PMI, the
scope statement should include the
following:
❖ Description of the scope
❖ Product acceptance criteria
❖ Project deliverables
❖ Project exclusion
❖ Project constraints
❖ Project assumptions
● Project Schedule and Time
Management
The definition of project success often
includes completing the project on time.
Compressing the schedule is a term used to
describe the techniques used to shorten the
project schedule. During the life of the
project, scheduling conflicts often occur.
The project manager is responsible for
reducing these conflicts while maintaining
project quality and meeting cost goals.
● Project Costs
Developing and controlling a project budget
that will accomplish the project objectives is
a critical project management skill. The cost
of the project is tracked relative to the
progress of the work and the estimate for
accomplishing that work. If the cost is
significantly higher or lower, the project
team explores reasons for the difference
between expected costs and actual costs.
● Project Quality
Project manager is responsible for
developing a project execution approach
that provides for a clear understanding of
the expected project deliverables and the
quality specifications. The project manager
of a housing construction project not only
needs to understand which rooms in the
house will be carpeted but also what grade
of carpet is needed. A room with a high
volume of traffic will need a high-grade
carpet.
● Project Team: Human Resources
and Communications
A project usually has two types of team
members: functional managers and process
managers. On a construction project, the
functional managers would include the
engineering manager and construction
superintendents. The project controls team
would include process managers who have
expertise in estimating, cost tracking,
planning, and scheduling.
 ● Communication
Completing a complex project requires
teamwork, and teamwork requires good
communication among team members.
Many complex projects in today's global
economy involve team members from
widely separated locations. Teams that use
electronic methods of communicating
without face-to-face meetings are called
virtual teams.
● Project Procurement
The procurement effort on projects varies
widely and depends on the type of project.
Often the client organization will provide
procurement services on less complex
projects. When the procurement department
of the parent organization provides
procurement services, a liaison from the
project can help the procurement team
better understand the project's unique
requirements.
● Project Stakeholder Management
A successful project manager will identify
stakeholders early in the project. For each
stakeholder, it's important to identify what
they want or need. Based on this
information, the need to communicate with
the stakeholder or stakeholder group can be
identified. A stakeholder register is used to
track the interactions between the project
and each stakeholders.
Scrum Development Overview
“Scrum” is another formal project
management/product development
methodology and part of agile project
management.
Scrum methodology defines several major
roles
Product owners: essentially the business
owner of the project who knows the
industry, the market, the customers, and the
business goals of the project.
Scrum Master: Scrum Master’s duties are
essentially to remove barriers that impede
the progress of the development team.
Development team - they participate in
planning and estimating for each sprint.
The Project Managing Office
The PMO may be the home of all the project
managers in an organization, or it may
simply be a resource for all project
managers, who report to their line areas.
Typical objectives of a PMO are:
● Help ensure that projects are aligned
with organizational objectives
● Provide templates and procedures
for use by project managers
● Provide training and mentorship
● Provide facilitation
● Stay abreast of the latest trends in
project management
● Serve as a repository for project
reports and lessons learned
RA 9184
Section 1: Government Procurement
Reform Act
What is Procurement?
Procurement (or purchasing) is the process
for an organization to obtain products or
services from external parties (market
supply) to ensure that production and
business activities are smoothly carried out.
Section 2. Declaration of Policy
• To promote the ideals of good governance
in all its branches, departments, agencies,
instrumentalities, including GOCC’s and
LGU’s.
Section 3. Governing Principles on
Government Procurement
a. Transparency
b. Competitiveness
c. Streamlined Procurement Process
d. System of Accountability
e. Public Monitoring
Section 4. Scope and Application
This act shall apply to the procurement of
Infrastructure Projects, Goods, and
Consulting Services regardless of source of
funds, whether local or foreign by all
branches and instrumentalities of
government.
Section 5. Definition of Terms
• Approved Budget for the Contract
(ABC) - refers to the budget for the contract
duly approved by the Head of the Procuring
Entity.
• BAC – refers to the “Bids and Awards
Committee” established in accordance with
Article V of this Act.
Section 5. Definition of Terms
• Bidding Documents – refers to
documents issued by the Procuring Entity
as the basis for Bids, furnishing all
information necessary for a prospective
bidder to prepare a bid for the Goods,
Infrastructure Projects, and Consulting
Services to be provided.
• Bid – refers to a signed offer or proposal
submitted by a supplier, manufacturer,
distributor, contractor or consultant in
response to the Bidding Documents.
• Competitive Bidding – refers to a method
of procurement which is open to
participation by any interested party
• Consulting Services – refer to services
for Infrastructure Projects and other types of
projects or activities of the Government.
• Goods – refer to all items, supplies,
materials and general support services,
except consulting services and
infrastructure projects, which may be
needed in the transaction of public
businesses
• Head of the Procuring Entity – refers to:
(i) the head of the agency or his duly
authorized official, for national government
agencies; (ii) the governing board or its duly
authorized official, for government-owned
and/or -controlled corporations; or
(iii) the local chief executive, for local
government units.
• Infrastructure Projects – include the
construction, improvement, rehabilitation,
demolition, repair, restoration or
maintenance of roads and bridges, railways,
airports, seaports, communication facilities,
civil works components of information
technology projects, irrigation, flood control
and drainage, water supply, sanitation,
sewerage and solid waste management
systems, shore protection, energy/power
and electrification facilities, national
buildings, school buildings, hospital
buildings and other related construction
projects of the government.
• Portal – refers to a website that
aggregates a wide variety of content for the
purpose of attracting a large number
of users.
• Procuring Entity - refers to any branch,
department, office, agency, or
instrumentality of the government, including
state universities and colleges, government-
owned and/or -controlled corporations,
government financial institutions, and local
government unit procuring Goods,
Consulting Services and Infrastructure
Projects.
Section 6. Standardization of
Procurement Process and Forms
To systematize the procurement process,
avoid confusion and ensure transparency,
the procurement process, including the
forms to be used, shall be standardized
insofar as practicable.
ARTICLE II.
Section 7. Procurement Planning and
Budgeting Linkage
• No government Procurement shall be
undertaken unless it is in accordance with
the approved Annual Procurement Plan of
the Procuring Entity.
• The Annual Procurement Plan (APP) shall
be approved by the Head of the Procuring
Entity and must be consistent with its duly
approved yearly budget.
ARTICLE III.
Section 8. Procurement by Electronic
Means
• To promote transparency and efficiency,
information and communications technology
shall be utilized in the conduct of
procurement procedures.
ARTICLE III.
Section 8. Procurement by Electronic
Means
What is Philippine Government
Electronic Procurement System
(PhilGEPS)?
The PhilGEPS shall serve as the primary
and definitive source of information on
government procurement.
ARTICLE IV.
Section 10. Competitive Bidding
• All Procurement shall be done through
Competitive Bidding, except as provided for
in Article XVI of this Act.
ARTICLE V.
Section 11. The BAC and its composition
• The BAC shall have at least five (5)
members, but not more than seven (7)
members.
• It shall be chaired by at least a third
ranking permanent official.
• Members of the BAC shall have a fixed
term of one (1) year reckoned from the date
of appointment, renewable at the discretion
of the Head of the Procuring Entity.
ARTICLE V. • The GPPB shall establish a sustained
Section 12. Functions of the BAC training program for developing the capacity
of the BACs, BAC Secretariats and
• advertise and/or post the invitation to bid Technical Working Groups of Procuring
• conduct pre-procurement and pre-bid Entities, and professionalize the same.
conferences
• determine the eligibility of prospective ARTICLE VI.
bidders Section 17. Form and Contents of
• receive bids Bidding
• conduct the evaluation of bids Documents
• undertake post-qualification proceedings
•recommend award of contracts to the Head a) Approved Budget for the Contract;
of the Procuring Entity. (b) Instructions to Bidders, including criteria
for eligibility, bid evaluation and
ARTICLE V. post-qualification, as well as the date, time
Section 13. Observers and place of the pre-bid Conference (where
applicable), submission of bids and opening
1. COA representative of bids;
2. Atleast one (1) observer from a duly (c) Terms of Reference;
recognized private group. (d) Eligibility Requirements;
3. Atleast one (1) observer from an NGO.
ARTICLE VI.
ARTICLE V. Section 17. Form and Contents of
Section 14. BAC Secretariat Bidding
Documents
• To assist the BAC in the conduct of its
functions, the Head of the Procuring Entity (e) Plans and Technical Specifications;
shall create a Secretariat that will serve as (f) Form of Bid, Price Form, and List of
the main support unit of the BAC. Goods or Bill of
Quantities;
ARTICLE V. (g) Delivery Time or Completion Schedule;
Section 15. Honoraria of BAC Members (h) Form and Amount of Bid Security;
(i) Form and Amount of Performance
• The Procuring Entity may grant payment of Security and Warranty; and,
honoraria to the BAC members in an (j) Form of Contract, and General and
amount not to exceed twenty five percent Special Conditions of
(25%) of their respective basic monthly Contract.
salary subject to availability of funds.
ARTICLE VI.
ARTICLE V. Section 19. Access to Information
Section 16. Professionalization of BAC,
BAC Secretariat and Technical Working • The Procuring Entity shall ensure equal
Group Members access to information.
 Control
PROJECT MONITORING AND CONTROL
● Based on a comparison of baseline
What is Project Monitoring and Control? plans and contracts with actual
events.
Project monitoring and control will help the
project manager to measure project ● Deciding what to do when there is a
performance. He/she can know the deviation.
progress and status of the project until its
completion at any given point in What is controlled?
time.
● Performance
This phase coincides with the execution
phase of the project lifecycle. ● Costs

What Is the Main Purpose of the Project ● Time

Monitoring and Control Phase in Project
Management? ● Quality

● The primary purpose of monitoring ● Scope

and control in project management
is to identify problems before they ● Risk
occur and make adjustments.
● According to AlanZucker, Founder of Designing a Project Monitoring and
Project ManagementEssentials, Control System
LLC:
● "Project managers regularly track Step 1 ‐ Establish baselines
performance focusing on cost,
schedule, and scope. If the project is Typical baselines will include:
off-track, the project manager takes ● Cost
corrective action." ● Time
● Performance
MONITORING VS. CONTROL ● Scope

● Monitoring is about collecting Step 2 ‐ Monitor & measure performance

sufficient data to measure progress
and making sure that the project
team implements the plan correctly.
● Control is the process of ensuring
that the project delivers everything it
is supposed to according to
schedule , cost and quality by taking
corrective action when necessary.
● Collect accurate information related
to baselines, eg:
● Percentage completion
● Cost expended
● Quality tests
● Scope change reports
Step 3 ‐ Compare performance to
baselines.

● Contrast actual performance against

planned performance ‐variance
analysis .
● Formulation of progress reports and
forecasts to completion.
● Tools ‐ earned value, cash flow
analysis, schedule appraisal.
● Causes & effects analysed and MONITORING PROCESS
understood.
There are many ways in which information
Step 4 ‐ Take corrective action may be gathered and include:
● team meetings
Once deviations are identified then ● regular progress reports
corrective action, if necessary, is taken. The ● specific technical meetings
options available to the project manager
include: Information required by the project manager
must be:
● No action taken if the variances are ● Timely
small. ● Clear
● Re‐planning activities to recover the ● Relevant
ambitions of the original plan. ● Accurate
● Revising the original plan in light of
the current situation PERIODIC RATING
● In extreme situations terminating the
project. Reporting Intervals:
● Causes of change and reasons for
selected corrective action should be • Event based‐ at the end of a particular
documented. stage or task.
• Time based‐ at the end of a particular
time
period.
• DeviatIon based‐ when there has been a
deviation from the plan outside agreed
tolerances.
• Problem or Hazard based‐ when there
has been a significant unplanned event or
occurrence of a known or unknown project
risk.
Effective Reporting
Reporting Intervals:
• There should be defined criteria for control
• The control tools should be simple and
friendly
• Reports should be made at defined
intervals
• Reports should be discussed at formal
meetings
• The reports should stimulate creative
discussions
Tools for monitoring and Control
KEY POINTS
1. S-CURVE
An s-curve in project management is
typically used to track the progress of a
project. In today’s fast-paced business
climate, ensuring that a project is on
schedule and on budget is paramount to its
success.
● EVA breaks down the project task by
task or by work packages and
allocates a value to each.
● It allows project managers to assess
the percentage of completeness a
project using quantitative analysis.
● EVA monitors progress by
comparing the value earned from
completing a task to the planned
value that should have been derived
from that.
● Planning & controlling interlinked:
control is the act of reducing the
difference between plan and reality.
● Plans can never be perfect so
control is inevitable.
● Control identifies changes to plan
that may require re‐planning.

The reason it’s called an s-curve is because

the shape of the graph typically forms a
loose, shallow “S” as shown.

2. Earned Value Analysis (EVA)

● EVA evaluates the projects progress

by merging the cost and time
constraints together.
 MALACAÑANG
Manila

PRESIDENTIAL DECREE No. 1594

PRESCRIBING POLICIES, GUIDELINES, RULES AND REGULATIONS FOR GOVERNMENT

INFRASTRUCTURE CONTRACTS

WHEREAS, the present policies, rules and regulations covering government contracts for
infrastructure and other construction projects are generally fragmented and have been found to
be inadequate to cope with the intricate and complex process involved;

WHEREAS, there is a need to adopt a comprehensive, uniform, and updated set of policies,
guidelines, rules and regulations covering government contracts for infrastructure and other
construction projects in order to achieve a more efficient and effective implementation of these
projects.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the

powers vested in me by the Constitution, do hereby order and decree the following:

Section 1. Policy Objectives. It is the policy of the government to adopt a set rules and
regulations covering government contracts for infrastructure and other construction projects which
shall:

(a) bring about maximum efficiency in project implementation and minimize

project costs and contract variations through sound practices in contract
management;

(b) promote a healthy partnership between the government and the private
sector in furthering national development; and

(c) enhance the growth of the local construction industry and optimize the
use of indigenous manpower, materials and other sources.

Section 2. Detailed Engineering. No bidding and/or award of contract for a construction

project shall be made unless the detailed engineering investigations, surveys, and designs for
the project have been sufficiently carried out in accordance with the standards and
specifications to be established under the rules and regulations to be promulgated
pursuant to Section 12 of this Decree so as to minimize quantity and cost overruns and
underruns, change orders and extra work orders, and unless the detailed engineering
documents have been approved by the Minister of Public Works, Transportation and
Communications, the Minister of Public Highways, of the Minister of Energy, as the case may be.

Section 3. Prequalification of Prospective Contractors. a prospective contractor may prequalified

to offer his bid or tender for a construction project only if he meets the following requirements.

(a) Legal Requirements. The prospective contractor must have been licensed as
a contractor for the current year pursuant to Republic Act No. 4566, must have
paid his privilege tax to practice or engage in the contracting business for the
current year, must comply with the Administrative Order No. 66 of the Office of
the President of the Philippines, and must comply with other existing pertinent
laws, rules and regulations.

(b) Technical Requirements. The prospective contractor must meet the following
technical requirements to be established in accordance with the rules and
regulations to be promulgated pursuant to Section 12 of this Decree, to
 enable him to satisfactorily prosecute the subject project:

1) Competence and experience of the contractor in managing projects similar to

the subject project.
2) Competence and experience of the contractor's key personnel to be assigned
to the subject project.
3) Availability and commitment of the contractor's equipment to be used for the
subject project.

(c) Financial Requirements. The net worth and liquid assets of the
prospective contractor must meet the requirements, to be established in
accordance with the rules and regulations to be promulgated pursuant to Section
12 of this Decree, to enable him to satisfactorily execute the subject project. The
prospective contractor may be allowed to cover the deficiency in the required net
worth through a line of credit fully committed to the subject project by a bank or
financial institution acceptable to the Ministry concerned.

(d) Filipino participation. The Government shall promote maximum participation of

eligible Filipino contractors in all construction projects.

Section 4. Bidding. Construction projects shall generally be undertaken by contract after

competitive public bidding. Projects may be undertaken by administration or force account or by
negotiated contract only in exceptional cases where time is of the essence, or where there is lack
of qualified bidders or contractors, or where there is a conclusive evidence that greater economy
and efficiency would be achieved through this arrangement, and in accordance with provision of
laws and acts on the matter, subject to the approval of the Ministry of Public Works, Transportation
and Communications, the Minister of Public Highways, or the Minister of Energy, as the case may
be, if the project cost is less than P1 Million, and of the President of the Philippines, upon the
recommendation of the Minister, if the project cost is P1 Million or more. A bidder's bond, in an
amount to be established in accordance with the rules and regulations to be promulgated
pursuant to Section 12 of this Decree, shall accompany the bid to guarantee that the successful
bidder shall, within a prescribed period from receipt of the notice of award, enter into account and
furnish the required performance bond for the faithful and complete prosecution of the work
specified in the contract documents.

Section 5. Award and Contract. The contract may be awarded to the lowest prequalified
bidder whose bid as evaluated complies with all the terms and conditions in the call for bid
and is the most advantageous to the Government. To guarantee the faithful performance of the
contractor, he shall, prior to the award, post a performance bond, in an amount to be established
in accordance with the rules and regulations to be promulgated under Section 12 of this
Decree. All awards and contracts duly executed in accordance with the provisions of this
Decree shall be subject to the approval of the Minister of Public Works, Transportation and
Communications, the Minister of Public Highways, or the Minister of Energy, as the case may be.

Section 6. Assignment and Subcontract. The contractor shall not assign, transfer, pledge,
subcontract or make any other disposition of the contract or any part of interest therein except
with the approval of the Minister of Public Works, Transportation and Communications, the
Minister of Public Highways, or the Minister of Energy, as the case may be. Approval of the
subcontract shall not relieve the main contractor from any liability or obligation under his contract
with the Government nor shall it create any contractual relation between the subcontractor and
the Government.

Section 7. Responsibility of the Contractor. The contractor shall assume full responsibility for
the contract work until its final acceptance by the Government and shall be held responsible for
any damage or destruction of works except those occasioned by force majeure. Except likewise
for force majeure, the contractor shall be fully responsible for the safety, protection, security, and
convenience of his personnel, third parties, and the public at large, as well as the works,
equipment, installation and the like to be affected by his construction work.

Section 8. Adjustment Contract Price. Adjustment of contract price for construction projects may
be authorized by the Minister of Public Works, Transportation and Communications, the
Minister of Public Highways, or the Minister of Energy, as the case may be, upon
recommendation of the National Economic and Development Authority, if during the effectivity
of the contract, the cost of labor, equipment, materials and supplies required for the construction
should increase or decrease due to direct acts of the Government. The adjustments of the
contract price shall be made using appropriate formulas established in accordance with the
rules and regulations to be promulgated under Section 12 of this Decree.

Section 9. Change Order and Extra Work Order. A change order or extra work order may be
issued only for works necessary for the completion of the project and, therefore, shall be within
the general scope of the contract as bidded and awarded. All change orders and extra work
orders shall be subject to the approval of the Minister of Public Works, Transportation and
Communications, the Minister of Public Highways, or the Minister of Energy, as the case may
be.

Section 10. Inspection and Construction of Contract Work. Inspection of the contract work shall
be made by the Government while such contract work is in progress to ascertain that the
completed works comply in all respects with the standards and requirements set forth in the
contract documents. Notwithstanding such inspection, the contractor shall be held responsible
for the acceptability of the finished works. The contractor shall promptly replace all materials and
correct all works determined by the Government as failing to meet contract requirements.

Section 11. Government's Right to Take Over Contract Work. The Government may take over
the contract work should the contractor abandon the contract work, or unduly delay the
prosecution of the contract work, or become insolvent, or assign his assets for the benefit of his
creditors, or be adjudged bankrupt, or assign the contract work without written approval by the
Government, or violate any condition or term of the contract. In any of these cases, the
Government may terminate the employment of the contractor and take over the contract work
after giving due notice to the contractor and his sureties.

Section 12. Implementing Rules and Regulations. The Minister of Public Works, Transportation
and Communications, as the lead official, the Minister of Public Highways, the Minister of
Energy, and the Director- General of the National Economic and Development Authority, shall
jointly promulgate the rules and regulations to implement the provisions of this Decree. Once
approved by the President of the Philippines, these implementing rules and regulations shall be
applicable to all contracts for infrastructure and other construction projects of all government
agencies including government-owned or controlled corporations and other instrumentalities.

Section 13. Separability Clause. If any provision of this Decree is held unconstitutional, the other
provisions shall remain valid.

Section 14. Repealing Clause. All Acts, Charters, Decrees, Letters of Instructions, Executive
Orders, Proclamations, rules and regulations or parts thereof in conflict with the provisions of this
Decree are hereby repealed or modified accordingly.

Section 15. Effectivity. This Decree shall take effect immediately.

Done in the City of Manila, this 11th day of June, in the year of Our Lord, nineteen hundred and
seventy-eight.