CONFIDENTIAL EC/JUN 2013/ECM547/575

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE CONTRACT ADMINISTRATION

COURSE CODE ECM547/575
EXAMINATION JUNE 2013
TIME 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) questions.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any material into the examination room unless permission is given by the
invigilator.

4. Please check to make sure that this examination pack consists of :

i) the Question Paper

ii) an Answer Booklet - provided by the Faculty

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 3 printed pages
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CONFIDENTIAL 2 EC/JUN 2013/ECM547/575

QUESTION 1

The selection of the most appropriate procurement method is consequently critical for both
clients and project participants, and is becoming an important issue in construction industry.
A project may be regarded as successful if the building is delivered at the right time,
appropriate price, achieved quality standards and provides the client with a high level of
satisfaction. One important influence on this is the type of procurement method implemented
in that particular project.

a) Differentiate between the traditional and design & build procurement methods.

• Traditional Procurement Method: In the traditional procurement method, also known as the
Design-Bid-Build method, the client first hires an architect or engineer to design the building.
The design is then put out to bid, and the client awards the construction contract to the lowest
bidder. The contractor is responsible for constructing the building according to the design and
specifications provided by the architect or engineer. This method separates the design and
construction phases, with the client responsible for supervising the design and the contractor
responsible for supervising the construction.

• Design & Build Procurement Method: In the design & build procurement method, the client
hires a single contractor to both design and build the building. The contractor is responsible
for both the design and construction of the building and is accountable to the client for the
overall performance of the project. The design & build method can reduce the time required to
complete the project, since the design and construction phases are completed
simultaneously. It can also reduce the level of risk for the client, since the contractor is
responsible for both the design and construction of the building.
(8 marks)

b) Discuss factors that should be considered when deciding which type of contract to be
used.

Factors to Consider When Deciding Which Type of Contract to Use:

Level of Control: In the traditional procurement method, the client has more control over the
design and construction phases, as the design and construction are managed by separate
entities. In the design & build procurement method, the contractor has more control over the
design and construction phases, as the contractor is responsible for both.

Time: The traditional procurement method can be a longer process, as the design and
construction phases are separated. In the design & build procurement method, the design
and construction phases are completed simultaneously, which can reduce the overall time
required to complete the project.

Cost: In the traditional procurement method, the client may have more control over the cost,
as the design and construction are managed by separate entities. In the design & build
procurement method, the contractor has more control over the cost, as the contractor is
responsible for both the design and construction.

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 Quality: In the traditional procurement method, the client has more control over the quality, as
the design and construction are managed by separate entities. In the design & build
procurement method, the contractor has more control over the quality, as the contractor is
responsible for both the design and construction.

Risk: In the traditional procurement method, the client has more risk, as the design and
construction are managed by separate entities. In the design & build procurement method,
the contractor has more risk, as the contractor is responsible for both the design and
construction.

In conclusion, the type of procurement method used in a construction project will depend on
the client's specific needs and objectives. It is important to carefully consider the factors
discussed above when deciding which type of contract to use.
(12 marks)

QUESTION 2

Inspection is the most common method of attaining standardisation, uniformity and quality of
workmanship. It is the cost art of controlling the product quality after comparing with the
established standards and specifications. Hence, inspection is the function of quality control
whereby competent and thorough inspection is one of the most important elements in
achieving a successful construction project.

a) Outline the role of Inspector and the skill needed by them in assuring the quality of
project undertaken.

The Role of Inspector and Skills Needed:

The role of the inspector in a construction project is to ensure that all work is performed in
accordance with the plans and specifications, and to assure that the work is of high quality.
Inspectors must have a thorough understanding of the construction process and the ability to
detect and correct any deviations from the plans and specifications. Inspectors must also
have strong communication skills, as they need to work closely with the contractor, owner,
and other stakeholders to resolve any issues that arise during the construction process.

Skills Needed:

1. Thorough knowledge of construction techniques, materials and methods.

2. Understanding of construction plans and specifications.
3. Ability to detect and correct deviations from plans and specifications.
4. Strong communication and interpersonal skills.
5. Ability to work independently and as part of a team.
6. Attention to detail and ability to identify quality issues.

(5 marks)

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b) Define Quality Assurance (QA) and list down the objectives of Quality Assurance (QA).

Definition and Objectives of Quality Assurance (QA):

Quality assurance (QA) is a systematic and ongoing process that is used to ensure that a
product, service, or system meets the specified requirements and standards. The main
objective of QA is to identify and prevent defects and non-conformities in a product,
service, or system before they reach the customer.

The objectives of Quality Assurance (QA) are:

1. To ensure that products, services, and systems meet customer requirements and
expectations.
2. To prevent defects and non-conformities in products, services, and systems.
3. To improve the overall quality of products, services, and systems.
4. To reduce the cost of poor quality by identifying and correcting defects and non-
conformities before they reach the customer.
5. To increase customer satisfaction by delivering high-quality products, services, and
systems.

(6 marks)

c) Briefly describe Quality assurance (QA) Management Control.

Quality Assurance (QA) Management Control is the process of monitoring and controlling the
quality of a product, service, or system. This process involves regular inspections, testing, and
assessments to ensure that the product, service, or system meets the specified requirements
and standards. The main purpose of QA Management Control is to identify and correct any
deviations from the plans and specifications and to ensure that the product, service, or system
is of high quality. Quality assurance management control is an ongoing process that is
performed throughout the construction project to ensure that the final product meets the
specified requirements and standards.

(9 marks)

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 QUESTION 3

It is well known that construction is a high risk industry. Consequently, more disputes arise
out of construction contract than any other contract.

a) Describe in detail FOUR (4) common areas of construction disputes.

Common areas of construction disputes are:

1. Changes in the scope of work: Disputes can arise when the client requests changes in the
project scope, design, or specifications, and the contractor is not compensated accordingly.

2. Delays and disruptions: Disputes can occur when the project schedule is disrupted due to
unexpected events, such as inclement weather, site access issues, or subcontractor delays.

3. Payment issues: Disputes can arise when payment is not received in a timely manner or when
the contractor believes the amount being paid is insufficient.

4. Quality and performance issues: Disputes can occur when the finished product does not meet
the specifications or when the contractor believes that the client is demanding an unrealistic
level of quality.
(8 marks)

b) Disputes can be settled/resolved through informal resolution method or formal resolution

method. Briefly elaborate for both types of resolution method.

Disputes can be settled/resolved through informal or formal resolution methods:

Informal resolution methods: Informal resolution methods include negotiation, mediation, and
arbitration. These methods are less formal and allow for quicker resolution, but may not have
the same level of enforceability as formal methods.

Formal resolution methods: Formal resolution methods include litigation and arbitration.
Litigation is a legal process in which a dispute is resolved through a court of law. Arbitration is
a more structured process in which a neutral third party makes a binding decision. Formal
resolution methods are more formal, but can be more time-consuming and expensive.

(12 marks)

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QUESTION 4

To terminate a contract means to end the contract prior to it being fully performed by the
parties. In other words prior to the parties performing all of their respective obligations
required by the contract, their duty to perform these obligations ceases to exist. In general,
the effect of the termination of a contract is to discharge the parties from their unperformed
obligations under the contract.

a) Identify SIX (6) conditions that will cause termination of contract.

Six conditions that cause termination of a contract are:

Mutual agreement: Both parties agree to terminate the contract.

Breach of contract: One party breaches the terms of the contract, which allows the other
party to terminate the contract.

Impossibility of performance: The performance of the contract becomes impossible due to

unforeseen circumstances.

Frustration of purpose: The purpose of the contract is frustrated due to circumstances

beyond the control of the parties.

Termination for cause: The contract is terminated because of the wrongful act of one of
the parties.

Termination by operation of law: The contract is terminated due to the passage of time or
because of a change in the law.
(6 marks)

b) Briefly discuss the termination of contract by Employer and explain process involved.

Termination of contract by the Employer: The Employer can terminate the contract if the
Contractor breaches any of the terms of the contract, including failure to perform the work in
accordance with the specifications, delays in completing the work, or unsatisfactory
performance. The process involved in termination by the Employer typically involves giving
written notice to the Contractor, specifying the grounds for termination, and giving the
Contractor an opportunity to cure the default. If the default is not cured, the Employer may
terminate the contract.

1. 14 days notice to the contractor

2. Return all documents (including drawings) to C&S engineer
3. Arrange removal of equipment and temporary works from site under own risk and cost
4. Leave the site
5. Employer may sell contractor’s equipment if the contractor failed to make any payment
to recover the amount due. The balance shall be paid to contractor.

(10 marks)
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c) It is common for written contracts to enable either party to terminate the contract on the
provision of notice. Briefly explain the payment involve after termination of a Contractor's
contract.

Payment after termination of a Contractor's contract: After the termination of a

Contractor's contract, the Contractor is entitled to be paid for any work that has been
completed in accordance with the contract. The Contractor may also be entitled to
payment for any direct costs incurred as a result of the termination, such as the cost of
removing equipment from the site. The Contractor may also be entitled to claim damages
for loss of profits or any other losses incurred as a result of the termination. The exact
payment terms will depend on the terms of the contract and the reason for the
termination.

1. Employer proceed with employer’s claim

2. Withhold further payment to the contractor until the cost of remedying of any defects,
damages for delay in completion have been established.
3. Recover from the contractor any losses and damages incurred by the employer. The
employer shall pay any balance to the contractor.

(4 marks)

QUESTION 5

Closing a contract is associated with a physically completed contract and involves

reviewing the contract and the contract file and the steps taken to close the contract file
and dispose of the contract.

a) Identify the required documentation need to be prepared by Contractor for contract

closeout.

The required documentation needed to be prepared by the Contractor for contract

closeout includes the following:

1. As-built drawings and final documentation, such as Operation and Maintenance

manuals and warranties.

2. Final inspection and punch-list reports indicating the completion of all the work
specified in the contract.

3. Documentation of all the sub-contractors and suppliers, including lien releases,

waiver of claims and final payment releases.

4. Final invoices and billings, including any change orders, claims or extras.

5. Final performance and payment bonds.

Any other required closeout documentation as specified in the contract.

(10 marks)

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b) Briefly discuss duties of Contract Administrator before issuance of final payment can be
made to the Contractor.

The duties of the Contract Administrator before issuance of final payment can be made
to the Contractor include the following:

1. Reviewing the Contractor's closeout documentation to ensure that it is

complete and meets the contract requirements.

2. Verifying that the final inspection has been completed and that all punch-list
items have been resolved.

3. Reviewing and verifying the final payment request and supporting

documentation, including all change orders, claims and extras.

4. Ensuring that all the sub-contractors and suppliers have been paid and that
lien releases, waiver of claims and final payment releases have been obtained.

5. Obtaining all the necessary approvals from the owner/client for final payment
to be made to the Contractor.

Preparing and issuing a final payment certificate and distributing copies to all parties
involved in the project.
(10 marks)

END OF QUESTION PAPER

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