NOTE

Letter of award
It is the letter which is sent by the client’s party to the contractor who is selected
form the tendering procedure .
Letter of acceptance
It is the letter which is sent by the contractor who is selected from the tendering to
the client’s party to confirm that he accepted the project.
BONDS
 In the field of construction the contractor & client enters into an agreement
& in this transaction ,if the contractor gives some half pay or totally abandon
the contract.The client will have to call for tenders again.
 The cost involves for this process have to be recover from the contractor.The
lost can be recovered ,if a bond is entered into with the contractor.
 There are 3 ways of making bonds.
 Cash
 Bank guarantee
 Insurance
BID BOND
 Reasons for bid bond or refundable deposit
• To avoid submit unnecessary bids
• To order to tenderer withdrawing his tender within the valid period
• In the case of arithmetical errrs in the tender submitting ,he must agreed to
adjust the tender amount.
• If the tenderer fails to make a performance bond within the specify period
,this bond is forfeited.
• Amount of this bond or guarantee is ,0.5%-10%-cash value of contract or
1%-2% bank guarantee & insurance
 NOTE

Performance bond
 This bond is obtain after awarding & before sign the agreement
 Aim of this bond is to ensure maintaining the required progress of the work
 In order to avoid any delay to start the job
 To ensure that the contractor will not abandon the work half way
 This P.B.amount should be more than 5% of the value of the contract
 Duration should be valid 28 days after completion of the job.
Advance bond
 An advance bond is obtain in the event of contract request an advance
pament before work commencement.
 The maximum advance amount is 20% of the contract value .The contractor
is expected through submit an advance bond fo the same value.
Retention money
 Retention of 10% generally is deducted at every part payment to the
contractor.At the final payments 505 of retention money could be released
keeping 5% of retention. This amount is retain until the maintenance period
is over.
 This retention money retain in order to ensure the quality of the work.The
client can get any repairs or rectification done if anything goes wrong.