Question I

1. Explain about the capacities of Physical and Artificial Persons. Under what Conditions do physical and
artificial persons lack capacities to conclude contract? Discuss.

2. What are issues that are necessary for a successful Procurement Management Phase?

3. As a procuring entity, to start the tendering phase we need to prepare invitation for tenderers, so if
you are asked to prepare invitation for tenderers, what are the points to be clearly stated?

4. What would be the project delivery systems, if the client goal is to seek integrated delivery system &
why?

5. Discuss the importance of payment provisions in the construction contract from the perspective of
the Contractor;

6. What are the legal instruments used to entertain the issues between the contracting parties in
construction contract or agreements?

7. What are the grounds to say contain consent is defective? Discuss with examples.

8. Imagine the absence of an Engineer in a given construction project, where the Project Delivery
System is design-bid-build (DBB). What possible adverse contractual affects you might observe due to
the absence of the Engineer in project supervision & contract administration?

9. As a procuring entity, to start the tendering phase we need to prepare invitation for tenderers, so if
you are asked to prepare invitation for tenderers, what are the points to be clearly stated?

10. Suppose you are assigned as a procurement manager in a given construction project which is a
public project, so try to answer the following questions.

A. what is tender document and what are the things that should be included in a tender document?

B. What are the factors to be considered in determining the least evaluated bidder?

C. Discuss the importance contract negotiation before contract award.

Answer

1. Physical persons, also referred to as natural persons, possess legal capacity to enter into
contracts. However, certain conditions may limit a person's capacity to conclude a contract,
such as being a minor, under the influence of drugs or alcohol, or suffering from a mental
incapacity. Artificial persons, also referred to as legal persons, include corporations,
partnerships, and other entities that are created and recognized by law. They have full legal
capacity to enter into contracts but may be limited by their articles of incorporation or the laws
that govern their existence.
2. The successful procurement management phase involves identifying project needs, developing
specifications, selecting procurement methods, identifying potential suppliers, issuing solicitations,
evaluating proposals, negotiating contracts, and managing supplier performance. Other important issues
include project budget and cost control, quality assurance, risk management, and stakeholder
engagement.

3. When preparing an invitation for tenderers, it is important to clearly state the project requirements,
procurement method, evaluation criteria, deadline for submission, contract terms and conditions, and
any other relevant information. It is also important to ensure that the invitation is clear, concise, and
transparent to all potential bidders.

4. The project delivery system for seeking an integrated delivery system may include design-build,
construction management at-risk, or integrated project delivery. These systems are selected to provide
better coordination, improved communication, and a collaborative approach to project delivery. They
allow all stakeholders to work together as a team from the beginning to the end of the project.

5. Payment provisions are critical for contractors because they determine the financial structure of the
project and directly impact the cash flow of the company. Payment provisions should clearly define the
payment schedule, payment terms, and any applicable interest or penalties for late payment. They also
establish the procedures to be followed in case of payment disputes, such as mediation, arbitration or
litigation.

6. Legal instruments used to entertain issues between contracting parties in construction contracts or
agreements include dispute resolution boards, mediation, arbitration, and litigation. These instruments
provide different levels of formality, complexity, and cost in resolving disputes.

7. Consent is defective if it is obtained through fraud, misrepresentation, duress, undue influence, or

mistake of fact. For example, if a contractor deceives the client by misrepresenting the quality of
materials used in the construction, the consent of the client is defective.
8. The absence of an engineer in a DBB project may result in adverse contractual effects, such as
difficulties in interpreting contract documents, delays in the project schedule, and errors or omissions in
the work. The engineer is responsible for verifying that the work conforms to the plans and
specifications and that the contractor performs according to the contract terms.

9. When preparing an invitation for tenderers, it is important to clearly state the project requirements,
procurement method, evaluation criteria, deadline for submission, contract terms and conditions, and
any other relevant information. It is also important to ensure that the invitation is clear, concise, and
transparent to all potential bidders.

10.

A. A tender document is a formal request for vendors or contractors to provide detailed proposals for
goods or services. The document should include the project scope, procurement method, evaluation
criteria, contract terms and conditions, and any other relevant information.

B. Factors to be considered in determining the least evaluated bidder include technical capabilities, price
or cost, past performance, and adherence to project requirements and specifications.

C. Contract negotiation before contract award is important to ensure that all parties have a clear
understanding of the contract terms and conditions, and that any issues or concerns are addressed
before the contract is signed. This can help to avoid misunderstandings and disputes during the project
execution phase.
 Case Study Examination (10 points each)
Case Study 1:

 A Construction Management Consultant entered into a turnkey contract with a Contractor to

design and construct a large storage warehouse by the River Side.
 The site information investigated by the Contractor showed 0.5 m of made up ground over 6
m of soft clay overlaying a thick layer of sandy gravel.
 A Foundation Report by the Geo-technical investigation team is driven precast concrete piles
8 m deep to the sandy gravel level.
 After the contract was made and before the piles are driven, the municipality river
conservancy board approved flood protection works which would raise the bank level by 1.5
m. Accordingly; the Construction Management Consultant in consultation with the Employer
provided a work order to raise the floor level of the warehouse by 1.65 m.
 The Contractor following the work order notified that the precast piles already ordered can
not be lengthened and additional piles are required for additional negative skin friction
induced by the rise of the bank level.
 The Construction Management Consultant responds that the foundation type was made by
the contractor and that the valuation should be made by increasing the piling item prices pro
rata and the design should have allowed the negative skin friction even for the 0.5 m fill
originally recommended.

Questions:

 Identify possible effects of the case

 As a Contract Administration expert propose a viable advice if you are working in
o The Construction Management Consultancy Office
o The Contractor Company
Answer
1. Possible effects of the case:
- Delay in project completion due to the need for additional piles

- Increase in project cost due to additional piling and potentially redesigning the foundation system

- Conflicts between the Construction Management Consultant and the Contractor due to differing
opinions on responsibility for the additional costs and changes in the project scope

2. Proposed advice:

A. If working in the Construction Management Consultancy Office:

It is important to carefully review the contract documents and determine the responsibilities of each
party. In this case, it may be necessary to negotiate with the Contractor for a potential cost increase due
to the changes in project scope. However, it may also be possible to argue that the original foundation
design should have considered the potential for negative skin friction and that the additional piles may
not necessarily be solely the responsibility of the Consultant or Employer. It is important to
communicate clearly with the Employer and Contractor and ensure that any changes or deviations from
the original plan are documented and approved.

B. If working in the Contractor Company:

It is crucial to thoroughly investigate site conditions and potential changes in project scope before
finalizing any plans or ordering materials. In this case, it may have been possible to anticipate the need
for additional piles due to the potential for negative skin friction with the rise in bank level. It may be
necessary to negotiate with the Construction Management Consultant and the Employer for additional
payment due to the changes in project scope, but it is important to document all communications and
ensure that all parties are in agreement before proceeding with any changes to the original plan.
Case Study 2:

The Employer was short of budget for five months, and two payment certificates were delayed
for more than they should be due. Consequently, the contractor claimed Time Extension and
Employer’s Default and suspended work after giving notice prior to the Employer. The
Employer then paid both the payments after five months and requested the continuation of the
project. The contractor also requested for compromise to his earlier defaults with regard to his
unjustified delay for four months and refused to continue the project before his request settles
down.

Taking the above case into consideration, if you are;

1. The Consultant, what will be your action / decision?

2. The Employer, what will be your action / decision?
3. The Regulatory Body, what will be your action / decision?

1. As the Consultant, I would review the contract and assess whether the contractor's claims for
Time Extension and Employer's Default are valid. I would also review the contractor's request
for compromise of his earlier defaults. Based on my assessment, I would recommend to the
Employer what actions should be taken to move the project forward, while ensuring that the
contractual obligations of both parties are met.
As the Consultant, my action would be to review the contract thoroughly to determine what
actions are permissible based on the terms of the contract. I would also consult with legal
counsel to ensure that any decision made is in compliance with applicable laws and regulations.
I would then schedule a meeting with both the contractor and the employer to discuss the
issues at hand and seek a resolution that satisfies both parties. If an agreement cannot be
reached, I would provide recommendations for next steps or further action that may be
necessary to ensure the project is completed successfully.
2. As the Employer, I would acknowledge the contractor's claims for Time Extension and
Employer's Default and evaluate the validity of these claims. If the claims are deemed valid, I
would agree to extend the project timeline to compensate for the delay caused by the payment
delays. I would also review the contractor's request for compromise and seek legal counsel if
needed to ensure that any agreements made are in compliance with contractual obligations and
regulations.

As the Employer, my action would be to prioritize the continuation of the project and work
towards resolving the issues with the contractor. I would review the contract to determine if any
breach of contract has occurred on my part and if so, take corrective measures to rectify the
situation. If the contractor is still unwilling to continue work, I would consider legal action or
seeking mediation services to resolve the dispute. I would also conduct an internal review to
ensure that budget constraints do not impact the completion of the project in the future.
3. 3. As the Regulatory Body, I would assess whether the actions of the Contractor and the
Employer are in compliance with the regulations and contractual obligations. If there are
violations, I would take appropriate actions, including investigating the matter further, imposing
penalties or fines, or requiring corrective actions to be taken. I would also aim to facilitate a
resolution that ensures continuity of the project while upholding the principles of fairness and
compliance.
As the Regulatory Body, my action would be to ensure that both the contractor and the
employer are complying with all contractual and regulatory obligations. I would review the
contract to determine if any breach of contract has occurred and if so, take corrective measures
to rectify the situation. If necessary, I would engage in dispute resolution services to ensure the
project is completed successfully. I would also work with both parties to ensure that future
budget constraints do not impact the timely completion of the project.