ETHIOPIAN ROADS AUTHORITY

CONTRACT MANAGEMENT TRAINING

MATERIAL

MODULE No. 4: INTRODUCTION TO CONTRACT MANAGEMENT

• Introduction to Road Maintenance Types

• Introduction to Contract types
• Highlight of Procurement Management

Prepared by: Wubishet Dessalegn

Addis Ababa, Ethiopia

February, 2021
 Table of Contents
1. INTRODUCTION TO ROAD MAINTENANCE TYPES....................................................................................... 1
1.1. Purpose of Maintenance ..................................................................................................................... 1
1.2. Classification of Maintenance ............................................................................................................. 5
1.2.1. Routine Maintenance .................................................................................................................. 5
1.2.2. Periodic Maintenance .................................................................................................................. 6
1.2.3. Emergency Maintenance ............................................................................................................. 7
1.3. Road Components ................................................................................................................................ 7
2. TECHNICAL CONSIDERATION AND IMPLEMENTATION ARRANGEMENTS ................................................. 9
2.1 Introduction ......................................................................................................................................... 9
2.2 Bill of Quantities (BOQ) Contract ...................................................................................................... 11
2.3 Output and Performance Based Road Contract (OPRC) .................................................................. 12
2.4 Lump Sum Contract............................................................................................................................ 12
2.5 Design and Build/Construct ............................................................................................................... 13
2.6 Community Contracting ..................................................................................................................... 14
2.7 Retainer Contracts /framework contract.......................................................................................... 14
2.8 Force Account..................................................................................................................................... 14
2.9 Petty Contracts................................................................................................................................... 15
3. PROCUREMENT MANAGEMENT ................................................................................................................ 15
3.1 Introduction ....................................................................................................................................... 15
3.2 Purpose of Contract Document ......................................................................................................... 16
3.3 Standard Contract Documents .......................................................................................................... 16
3.4 Procurement of Contracts ................................................................................................................. 16
3.4.1 Public Notification of Works Available for Outsourcing ........................................................... 18
3.4.2 Sale of Bid Document................................................................................................................. 19
3.4.3 Eligible Bidders ........................................................................................................................... 19
3.4.4 Qualification of Bidders ............................................................................................................. 19
3.4.5 One Bid per Bidder ..................................................................................................................... 20
3.4.6 Site Visit by Bidders ................................................................................................................... 20
3.4.7 Pre-Bid Meeting ......................................................................................................................... 20
3.4.8 Amendment of Bid Document ................................................................................................... 20
3.4.9 Submission of Bid ....................................................................................................................... 20
 3.4.10 Bid Opening ................................................................................................................................ 21
3.4.11 Bid Validity ................................................................................................................................. 21
3.4.12 Bid Data Sheet (BDS) .................................................................................................................. 21
3.4.13 Bid Security (Earnest Money) .................................................................................................... 21
3.4.14 Performance Security ................................................................................................................ 21
3.4.15 Award of Contract ...................................................................................................................... 22
3.5 Contract Management of Works ....................................................................................................... 22
3.5.1 Key Stakeholders of Contract .................................................................................................... 22
3.5.2 Conditions of Contract ............................................................................................................... 23
3.5.3 PPPAA’s Conditions of Contract and ERA Maintenance Specifications ................................... 23
3.5.4 Technical Specification for Road Maintenance Works (2nd Edition August, 2003) .................. 24

List of Tables

Table 1: Possible implementation arrangements for road maintenance ............................................................ 9

Table 2: Advantages and disadvantages of BoQ contracts ................................................................................ 11
Table 3: Advantages and disadvantages of performance based contracts ........................................................ 12
Table 4: Advantages and disadvantages of force account ................................................................................. 15

List of Figures

Figure 1: Illustration of deterioration effects on a non-maintained road ............................................................ 1

Figure 2: Illustration of corrective maintenance cost .......................................................................................... 2
Figure 3: Illustration of the effects if routine maintenance is implemented ....................................................... 2
Figure 4: Effects of maintenance on road design life ........................................................................................... 3
Figure 5: Benefits of roads and the importance of maintenance ........................................................................ 4
Figure 7: Effects of neglecting maintenance of roads .......................................................................................... 5
Figure 11: Typical road components .................................................................................................................... 7
Figure 12: Drainage components ......................................................................................................................... 9
Figure 13: Sections of a bid document................................................................................................................ 18
Training Module No. 4
Introduction to Contract Management

1. INTRODUCTION TO ROAD MAINTENANCE TYPES

1.1. Purpose of Maintenance

All roads require maintenance as they are subjected to traffic and the forces of weather. Even with
the highest possible quality of construction, maintenance is essential to get optimum service from
the road structure during its life period. By applying preventive maintenance, the deterioration of
the road and its components can be slowed down, thus postponing the need for costly investments
in rehabilitation and securing the planned design life.

Road deterioration is generally slow at first and not very visible, taking the form of wear and tear
and minor damage to the road surface and the drainage system (see phase A in Figure 1).

Figure 1: Illustration of deterioration effects on a non-maintained road

At this time the rate of deterioration tends to increase, as the road base and the foundations of the
physical road structures start to become affected (Figure 1 phase B). This is especially due to water,
which is no longer guided safely away from the road as a result of deterioration of the carriageway,
shoulders and other drainage system, and thus damaging and weakening the road and making it
more susceptible to damage by traffic. Although the damage to the road can be observed at various
scattered locations at the beginning of this phase, it spreads out until the entire road can be said to
be in poor condition. Once the road condition has become very poor, the deterioration tends to
decrease, as traffic levels goes down severely, and because there is little left to deteriorate (Figure 1
phase C).

The condition of the road can be improved by carrying out corrective maintenance. Repairs are
made to the road surface and shoulder, the drainage system and other physical road structures. The
more deteriorated the road is, the more intensive and thus costly the repairs will be (Figure 2). For
instance, corrective maintenance when the road is still in good or fair condition (Figure 2 arrow 1)

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may entail patching potholes and minor repairs to the drainage system and other road structures.
However corrective maintenance carried out once the road is already in poor condition (Figure 2
arrow 2), is likely to entail complete resurfacing and possible reconstruction of the road base. The
distance from the line (in black colour) indicating the road condition, to the desired good or very
good condition of the road is therefore indicative of the level of corrective maintenance required
and thus for the cost of this maintenance.

Figure 2: Illustration of corrective maintenance cost

By carrying out regular routine maintenance the deterioration of the road is slowed down
considerably, as can be seen in the blue line (line 3) in Figure 3. Consequently, the corrective
maintenance is required less frequently (Figure 3 arrow 1) leading to reduced overall maintenance
costs, and the road is generally in better condition, resulting in lower travel times and costs.

Figure 3: Illustration of the effects if routine maintenance is implemented

The need for maintenance depends upon a number of external factors such as traffic, terrain, soil
types and climate. It is also very much determined by the original technical designs applied and the
quality of the works when the road was constructed. Depending on these parameters, it is possible
to devise maintenance solutions and corresponding management systems that optimise
maintenance costs and efforts. To make the most out of available funding, emphasis should always

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be on preventive measures in the planning and management of road maintenance. In terms of non-
emergency related works, experience clearly shows that it is the regular or routine maintenance
activities related to preserving the drainage system which have the most significant effect in terms
of extending the lifetime of a road as shown in Figure 1.4. Most of these works do not involve any
sophisticated technology or skills, can be carried out using manual labour and simple hand tools,
and are inexpensive.

Figure 4: Effects of maintenance on road design life

As shown in Figure 4, providing routine and periodic maintenance in a planned manner has a
significant impact in terms of achieving an extended service life of a road. The periodic
maintenance, e.g. resurfacing, is equally important, but on a different time scale with longer cycles
in terms of years rather than months. Depending on the performance of the pavement, there may
be several cycles of periodic maintenance works on the road before its service life is exhausted.

The above figure also clearly shows that if routine maintenance is not provided, it advances the
point of time when periodic maintenance is required. The experience actually show that on roads
where basic access is the main priority, the point at which periodic maintenance is performed can
be further delayed if the routine maintenance levels are increased (also linked to the defined service
levels). However, at a certain point of time, periodic maintenance will eventually be required since
the maintenance challenges become too large to be effectively dealt with through routine
maintenance interventions. Beyond a certain stage, the road becomes “unmaintainable” and runs
the risk of returning to the vicious cycle in which substantial rehabilitation works are once more
required. Periodic maintenance is therefore also in effect preventive although the operations are
reactive in nature, i.e. triggered by a condition level where corrective actions are required.

Maintenance ensures that the road remains serviceable throughout its design life. Maintenance is
important because it:

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▪ Prolongs the life of the road by reducing the rate of deterioration, there by safe guarding
previous investments in construction and rehabilitation,
▪ Lowers the cost of operating vehicles on the road by providing a smooth running surface,
▪ Improves the reliability of the road allowing it to remain open for traffic on a continuous
basis and thus contributes to more reliable transport services, and
▪ Sustains social and economic benefits of improved road access.

Figure 5: Benefits of roads and the importance of maintenance

Federal roads have in recent years received increased attention, partly due to a growing recognition
to its role in poverty reduction. However, it is not the construction of roads that ensures access
overtime. If roads are not provided with adequate maintenance then their access value will be lost.
It is the maintenance applied to roads that provides the sustained access and contributes to the
improvement of livelihoods and economic development.

In addition, with insufficient maintenance, the road will deteriorate and the operation costs for the
road will also increase. It needs to be noted that this example does not consider the costs of any
negative socio-economic impacts due to a lack of maintenance and a possible negative impact on
accidents.

As a result, the preventive action required as part of an effective maintenance system often consists
of minor repairs to the drainage system before water causes any major damage to the road assets.
If this is not carried out in a timely manner, the pace of deterioration increases, leading to and
accelerating increases in rehabilitation costs.

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Figure 6: Effects of neglecting maintenance of roads

The direct implications of poor maintenance are four fold:

1. Depreciation of the value of the road network;

2. Increasing transport costs;
3. Declining access; and
4. Loss of economic development and employment opportunities.

1.2. Classification of Maintenance

The maintenance of Federal roads can be classified into:

i) Routine maintenance,
ii) Periodic renewal, and
iii) Emergency maintenance works.

Maintenance activities are also categorised based on where the works are located:

Off-carriageway works consist of maintaining shoulders and drains, clearing of cross drainage
structures, removal ofdebris, cutting of grass and bushes. The works also include minor repairs to
drainage and other structures in the road side area, maintenance of road signs and pavement
markings, side slope sand all surface areas within the road reserve. Off-carriageway maintenance is
normally a routine activity.

On-carriageway works relate to road pavement and surface repairs. This work mainly consists of
maintaining a good running surface on the road, free from any obstructions and damage and with
the necessary camber or cross-fall to secure proper surface drainage.

1.2.1. Routine Maintenance

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Every road requires routine maintenance to be carried out once or more to upkeep pavement,
shoulders and other facilities provided for road users, as nearly as possible in their constructed
condition under normal conditions traffic and forces in nature. These are typically small-scale or
simple, but widely dispersed and most can be performed using manual labour. The need for routine
maintenance can a degree be estimated and planned and are carried out on regular basis at fixed
times during the year.

Routine Maintenance activities may further be defined as either cyclic or reactive as stated below.

Cyclic activities are performed at predetermined intervals throughout the year purely as a
preventive measure because of events we know will occur (e.g. cleaning of drains before and
during seasonal rainfall).

Reactive activities are performed in response to a triggering condition that requires action before
the problem gets out of hand (e.g. blocked culvert, crack sealing and pothole patching).

Routine maintenances could also be done in the form of term maintenance as exercised in ERA in
some projects whereby consultants shall enter a long term (say 3 to 5 years) contract to perform
mainly the following tasks:

• Road Condition survey, Work order preparation, prioritization for maintenance;

• Maintenance budget overrun control, quality control;
• Construction Supervision and Project management.

With that the contractors who have entered for term maintenance shall perform the maintenance
works accordingly.

1.2.2. Periodic Maintenance

The Periodic Maintenance consist of the provision of a surfacing layer/bituminous overlays over the
pavement at regular interval of time; so as to preserve the required characteristics of the pavement
and offset the wear and tear caused by traffic, weathering etc. Furthermore, the strengthening of
pavements and major repairs to damages of drainage structures are also undertaken under
periodical renewal works. In effect, periodic maintenance represent preventive care which is
needed to prevent deterioration of the pavement characteristics and to ensure that initial qualities
are kept up for the future requirements of traffic during the design life of the pavement.

Depending upon the traffic levels, pavement type, geographical and climatic conditions periodic
renewal works are typically carried out after a period of 5 to 7 years. The work activities involved
are normally larger and require more equipment and specialist skills. As a result, this work is
considerably more costly and requires more detailed planning. The most common periodic
maintenance activities include renewal works such as bituminous overlays, strengthening of

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pavements and major repairs of damaged drainage structures. As such, periodic renewal works are
more costly and requires more detailed planning.

1.2.3. Emergency Maintenance

Emergency maintenance responds to occasional, unforeseen events such as landslides, washouts,
large trees or debris on the road and broken drainage structures. Such damages require immediate
attention in order to keep the road open, secure the stability of the road/or to ensure the safety of
the road users. Emergency maintenance can be categorised into

(i) temporary restoration works, re- opening safe passage on the road, and
(ii) permanent restoration, securing the stability of the road and reinstating all its
components to its former (or a better) condition.
1.3. Road Components
Below are the most common road components and terminology used in road works.

Figure 7: Typical road components

Roadway: Width of the road normally used by traffic, consisting of shoulders and carriageway.
Carriageway: The portion of road, intended for use by vehicles but excluding shoulders.
Off-carriageway: The portion of road component starting from shoulder up to back slope of the
drain.
Centre line: The theoretical line running along the longitudinal axis (middle) of the road.
Camber (cross-fall): The lateral slope(s) on the road from the centre line to the shoulder break
point, constructed to drain rainwater from the carriageway to the side drain.
Crown: The highest point on the road cambered carriageway, usually on the road centreline.
Cut Slope: The constructed inclined soil surface in a cut.

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Side Cut: Excavation of the natural soil to construct the road to its designed cross section and level.
The excavated soil may be used elsewhere for construction (cut to fill) or disposed of outside the
formation area (cut to spoil).
Side Drain: The function of road side drain is to collect surface water from the roadway and lead it
to an outlet.
Shoulders: Paved/Unpaved edges of the roadway, between the edge of the carriageway and the
shoulder break point. The shoulder provides side support for the pavement or gravel surface and
allows vehicles to stop or pass in an emergency.
Embankment: Constructed and compacted soil base-course (or sub-base course) fill below the
roadway and the natural ground level.
Embankment/Side slope: The side slope of the embankment, usually constructed at 1:2.
Formation level: The top of the subgrade.
Formation width: Full width of the road, including drains and embankments.
Wearing course: Is the layer of compacted gravel or sealed surface on the carriageway, which
supports the traffic load.
Base course: Is the immediate course below the wearing course and is the medium through which
the stress imposed from the traffic load are distributed evenly.
Sub-based course: The layer below the base course which provides additional help in distributing
the loads.
Sub-grade: The compacted natural earth immediately below the payment layer.
Catchwater drain: Catch water drain is a ditch constructed on the up hillside designed to intercept
or collect and drain away surface runoff water flowing towards the road from the uphill side, and
lead it to a suitable point of disposal.

Culvert: A drainage structure allowing water to pass under the road to be discharged on the lower
side of the road.

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Figure 8: Drainage components

Mitre Drain: Mitre drain leads the water out of the side drains and safely disperses it onto adjoining
land.

Scour Check: Scour check is a small structure placed across the drain on steep gradients and is
designed to slow down the flow of water to prevent erosion of drain invert and slopes.

Super elevation: Inward tilt or transverse inclination given to the cross-section of a carriageway
throughout the length of a horizontal curve to reduce the effects of centrifugal forces on a moving
vehicle. Super elevation is expressed as a percentage.

2. TECHNICAL CONSIDERATION AND IMPLEMENTATION ARRANGEMENTS

2.1 Introduction
The maintenance and operation of roads are closely linked to the ownership of such assets. The
government, at central and local level, through its relevant agencies, holds the ownership of and
responsibility for the maintenance and operation of the public road network. Within this context
there are a number of available arrangements that can be used for implementing the actual
maintenance works as shown in Table 1.

Available Implementation Arrangements

1 Paid permanent staff supported by equipment (force account)
2 Paid casual workers for defined tasks
3 Direct contracts with individuals or groups (payment by result) (eg. Length person)
4 Contracts with small, medium and large scale contractors
5 Agreements with communities (eg. Like community/URRAP roads)
Agreements with defined village level organizations (eg small scale cont. or community but specific to a
6
kebele or woreda)
Table 1: Possible implementation arrangements for road maintenance

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The combination of approaches 1 and 2 was normally used in the past by the road agencies in
charge of road maintenance. When road works are carried out as a force account operation,
equipment, materials and labour are provided directly by the road agency. The effectiveness of
these approaches is largely dependent on the availability of equipment, materials and adequate
supervision.

The third approach covers the length-person system, which has been applied with reasonable
success in other countries. Although this arrangement in principle relies on a contract in which the
workers are paid on the basis of outputs, it is often experienced that due to limited supervision
resources, the payments instead end up being based on attendance – and in effect resembling
previous force account arrangements. The drawback with these systems is that, (i) due to the lack of
production related incentives, productivity rates can be low, and (ii) with the limited supervision
provided to the individual workers, the work performed is often ineffective or not addressing the
real maintenance priorities.

There has been a drive in recent years to move away from public sector execution of civil works and
instead relying more on the services of the private sector. Certainly for routine maintenance it could
be possible to contract out work to petty contractors and community groups. Since many
maintenance activities can be effectively carried out using manual labour, such works can also be
integrated into employment generation schemes.

The alternative approaches 3 to 6 as shown in Table 1 are likely to require more technical and
managerial inputs, certainly in the development phase. Despite this initial organisation requirement,
it is often the experience that contracts with specific groups eventually demand less supervision, are
more transparent and by basing payments entirely on work outputs, become more cost effective.
When engaging contractors, communities or other local organisations, agreements are made based
on work outputs or performance indicators. The actual supervision of the individual workers is then
delegated to the contractors, and is no longer the concern of the road agency.

To effectively apply any of these approaches, the key elements are (i) the establishment of a
performance or output based system, and (ii) proper guidance and motivation of the workers and
their supervisors.

Before, the decision to choose a particular form of execution of maintenance is finalized, the
implementing road agency should package the maintenance work into appropriate quantities and
sizes that match the resources available for the execution.

Some of the most important aspects to consider while selecting the method of execution by the
road agency are:

▪ Type and quantity of maintenance to be carried out

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▪ Budget available for execution

▪ Availability of personnel, tools and plants available with the road agency
▪ Availability of local resources including labour, skilled and unskilled and
▪ Availability of contractors and their capabilities in terms of manpower, equipment, and
finances
▪ Check the contract types to be followed among the available contract types:
o Contracts based on bill of quantities,
o Performance based contracts,
o Community contracting,
o Retainer contracts, and (A retainer agreement is a work-for-hire contract. It falls
between a one-off contract and permanent employment, which may be full-time
or part-time.)
o Force account.
Each contract method is discussed in detail in the subsequent sections.

2.2 Bill of Quantities (BOQ) Contract

The most common form of engaging a contractor for a civil works project is to enter into a contract
based on bill of quantities, which is also called an “ad-measure contract” or a “standard contract”.
In this contract, works are split up into a comprehensive list of work activities. The quantities of
activities under each is carefully estimated and entered into a Bill of Quantities (BoQ).

Payment of works in BoQ contract is based on unit rates agreed for each work activity by the road
agency and the contractor. The contractor, at any given time, is paid only for the quantity of
completed works.

The advantage and disadvantage of this type of contract is shown in Table 2.2.

ADVANTAGES
• They are simple and easily prepared
• Progress of work can be done through
financial control as contractor is paid
for only the work completed
• Cost comparison is easier with
standard schedule of rates or other
similar contracts
Table 2: Advantages and disadvantages of BoQ contracts
DISADVANTAGES
• It compounds labour and material costs by
combining them into a single rate that is then
adjusted in regards to material quantities
• Some of the costs such as construction plant and
temporary works not included and thus it may
prevent contractors from developing effective cost
control systems
• It is very difficult to trace the effect of changes in
quantities on the changes and costs

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2.3 Output and Performance Based Road Contract (OPRC)

Performance base maintenance contracts have in recent years become an increasingly popular
approach to road maintenance. The basic principle is to define a desired performance standard to
which the road needs to be maintained during a certain period of time instead of specifying a
contract based on quantified volumes of work. The Contractor is paid a specified amount,
irrespective of the inputs, if the pre-defined conditions or standards are met with.

OPRC is an approach to contracting that provides disincentives, incentives or both to the contractor
to achieve performance standards or targets for measurable outcomes and sometimes outputs.
Measures of performance are often expressed in terms of levels of service (LoS) represented by
specific rating scales corresponding to the condition of different assets achieved or to the outcomes
of a particular type of maintenance service.

The advantage and disadvantage of this type of contract is shown in Table 2.3.

ADVANTAGES
• Potential reduction in costs
• Improved level of service (could cost more)
• The transfer of risk to the contractor
• More innovation
• More integrated services
• Enhanced asset management
• Ability to reap the benefits of partnering
• Building a new industry
• Achieving economies of scale
Table 3: Advantages and disadvantages of performance based contracts
DISADVANTAGES
• A more costly procurement process
• A reduction in competition
• Uncertainty associated with long-term
contracting relationships
• Challenges in mobilizing
• Loss of agency control and flexibility (e.g.
to reallocate funds when there are large
long-term commitments)

2.4 Lump Sum Contract

In a lump sum contract, the client agrees to pay a specified amount to Contractor on completion of
some predefined stage or milestone during the execution of the work. In this case cost break down
or the quantities of the executed work are not required for payment.

It is called a Lump Sum because the Contractor is required to submit a total (lump sum) price
instead of bidding on individual items. A lump sum contract is the mostly used on projects with a
well-defined scope.

In this type of Contract, the complete design of the project before start , estimation of the
quantities and the knowledge of effective unit prices (at the time of execution) of the activities
which constitute the completion of a stage or milestone, by the Engineer (and the Contractor) is
very important. The client has reduced risk in this type of Contract and has essentially assigned most

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of the risk to the Contractor. If the actual cost of the project is underestimated, the underestimated
cost will reduce the Contractor’s profit by that amount. An overestimate has an opposite effect.

2.5 Design and Build/Construct

This type of contract is mostly used internationally for important buildings, major works and other
infrastructure when an Employer wishes to explore, on a competitive basis, the most innovative
designs and the special expertise and technology of individual contractors, which may not be
available to the Employer’s own Engineer/Architect, such as works superstructures and
buildings might using a variety of configurations in steel, reinforced or pre-stressed concrete,
etc., to provide a common structural equivalence, while substructures using wells,, caissons,
conventional or proprietary piling, etc. might equally provide foundations. Expression of Interest
for consulting services and Prequalification for works contractors are essential features of the
tender process in order to select qualified combinations of engineer/architect/contractor.

A comprehensive site and subsoil survey is provided by the Employer as part of the tender
documentation which should also include the parameters of structural design and loading.
Competitive designs and lump sum tenders are called from qualified tenderers who provide
comprehensive design calculations, quantities and drawings. Tender evaluation includes:

• Design checks and quantification of design errors,

• Times of completions,

• Payment schedules, and

• Assessment of the aesthetics of the different proposals.

Tenderers and Applicants are sometimes compensated, on a sliding scale according to merit,
for the preparation of responsive proposals.

c) Turnkey

Turnkey contracting is used for the procurement of complex industrial process facilities and
plants such as steel mills, food processing, petroleum refineries, etc. when alternative systems
and processes could not provide satisfactory end product requirements, and it would therefore
be undesirable or impractical to prepare definitive designs and complete technical
specifications in advance. A two-step tender procedure is normally followed, first inviting
unpriced technical proposals and outline designs which are subject to clarification and
adjustment by the Employer, followed by the submission of detailed technical proposals and
priced tender in the second step.

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The turnkey contractor undertakes to provide detailed designs, production process plant and
equipment, manufacturers’ authorization, related construction, procurement licenses,
guarantees, recruitment and training of operating staff, commissioning, start-up, initial
operation and maintenance and final handover of the “key” to the Employer for him to “turn”.
The contract price is normally quoted LS with periodic payments against specified stages of
partial completion. Price adjustment clauses may be provided for contracts of longer duration
than about two years and contractors may be encouraged to tender on a fixed price basis and
absorb the risk of future price fluctuation with payment in a hard foreign currency.

2.6 Community Contracting

Community contracting has become a popular arrangement for minor works that are targeted
towards a limited group of beneficiaries such as rural village or a particular neighbourhood in an
urban/rural setting. It is an approach often championed by development agencies in order to secure
a high level of local participation by the end users in all stages of the project from conception,
planning to works implementation.

While acknowledging the limited technical skills and capacity of local communities operating as a
contractor, there is still a need to follow the basic concepts of contracting. This includes establishing
a contract agreement in which the works are properly quantified and priced. Equally, this
agreement also requires clearly defined procedures for supervision, measurements and payments
of works- similar to conventional contracting of civil works.

2.7 Retainer Contracts /framework contract

Retainer contracts with agreed schedule of rates are sometimes used for establishing standby
arrangements for dealing with emergency maintenance works. Incidences such as major landslides
and washouts can render roads impassable and therefore require immediate action in order to
reinstate access as well as limiting the extent of damages. When serious damage takes place as a
result of freak weather, there is a need to quickly mobilize resources to reopen the road. In most
cases, force account units in the public works departments took care of emergency works, now
days, however, most agencies totally rely on private contractors to carry out maintenance.

When a major incidence has occurred, the road agency can then quickly mobilize a contractor who
has already submitted unit prices for emergency works. Technical staff from the road agency then
carries out a rapid assessment of the works required and estimates the quantities of work. The total
cost of work is then calculated on the basis of these quantities together with the already agreed unit
prices.

2.8 Force Account

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Force account refers to maintenance activities undertaken by the Client using its own departmental
labour and machinery. Gangs of departmental labour maintain stretches of roads in their sections,
and the material and machinery for carrying out maintenance activities was provided by the
department.

In ERA’s case the contract agreement is made in the form of Memorandum of understanding (MoU)
whereby the relevant clauses of the conditions of contract shall be applied accordingly for effective
execution of the project and contract. These pertinent conditions of contract shall be the basis of
agreement between the implementer of the operations and the branch office RNSMD who mostly
be responsible for the supervision of the maintenance works. Sample MoU is annexed for reference
in Annex 1.

ADVANTAGES
• Contains many of the prerequisites for a successful
road maintenance programme such as:
▪ Clear mandate
▪ Available human resources
▪ Technical and administrative procedures
▪ Sound planning and resource management
system.
• Easily mobilized at short notices for emergency
works than executing them through contractors
since force account operations do not require a full
description of the activities and works quantities
and time consuming contract procedures in
advance of commencement of works.
Table 4: Advantages and disadvantages of force account
DISADVANTAGES
• Maintenance of large work force by the road
agency may be additional administrative
burden on the executives and may prove to be
uneconomical if not used optimally.
• Lack of supervision may lead to inefficiency of
the workforce in the long run.
• Legal provisions may lead to litigation by the
labour for permanence in the government
thus affecting the downsizing of the agencies

2.9 Petty Contracts

When dealing with activities such as off-carriageway maintenance, the volume of works and
contract amounts are much smaller, and may not justify the use of the comprehensive contracts
intended for larger civil works projects. Due to the limited size of these contracts, a simplified
system can be applied. In such a case petty (very small) contracts can be an effective arrangement
for smaller simple works dispersed over a large geographical which can be let through direct
selection (with limited competition), applying standardized unit rates and simplified contract
documents.

3. PROCUREMENT MANAGEMENT

3.1 Introduction
Due to limited institutional capacity with the government department to execute planned works,
the most suitable option is to outsource the execution of these works to a third party. Earlier only
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road construction works or major maintenance works such as rehabilitation, renewal of surface
were tendered but with the continuous decrease in the number of departmental labour, now even
the routine maintenance works are also being carried out by engaging Contractors in many
Countries.

The intent of this training module as well tries to highlight the Engineering staff to understand the
whole life cycle of procurement which is generally followed, with a brief introduction on various
options available for contracting, an overview of the procurement process including the bid
documents, and generic conditions of a works contract. Concluding part covers the guidelines for
effective management of such contracts by the Engineering Staff, listing roles and responsibilities of
the managing staff, some do’s and don’ts during execution of contract and the role of effective
communication in contract management.

3.2 Purpose of Contract Document

The Contract Documents define the materials and products and how they are installed together
with all the management procedures. A Contract Document may also be seen as a Tender
Document with the blanks filled in and the Form of Agreement signed by the parties to the contract.
The contents of the Contract depend on the contents of the Tender Document and the nature of the
tender.

They mainly contain all the documents necessary to define;

▪ the Works for construction,

▪ the conditions pertaining to the contract and are binding on both the Employer and
Contractor.

3.3 Standard Contract Documents

Government agencies usually rely on standard documents when preparing a public works contract.
These documents form part of the government procurement regulations and as such must be
adhered to. Making use of standardized documents, simplifies contracts management. As the same
procedures are applied again and again, department staff and Contractors are familiar with the
prevailing regulations and conditions applied in the contracts. PPPAA’s Standard Bidding Documents
(SBD) is the one that is being used by ERA for the local tenders and other standard documents ( such
as the wold bank) are also applied in ERA tenders.

3.4 Procurement of Contracts

Standard civil works contracts are designed to cater for a certain size of works. The larger and more
complicated projects use more comprehensive documents. Smaller works contracts, such as the

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ones issued for routine road maintenance works, do not need to be the same level of sophistication
and therefore contain less clauses and regulations.

The procurement of works is preceded by assessment of the scope of work (Employer’s

requirements), estimation of the costs, and the administrative approval / technical sanction from a
competent authority to undertake these works. Thereafter for each work or package of works a Bid
Document / Contract Document is prepared at the Directorate level, for which inputs come from
the respective concerned branches (Drawing/Administrative) of the Directorate office. In most
cases, the work to be executed under each contract is tabulated in the form of BoQ (Bill of
Quantities) in the Bid Document.

It is necessary to prepare specifications for the required works which is a clear, complete and
accurate statement of the particular technical needs or essential characteristics of
goods/works/services that is required. A good specification will:

• State the requirements clearly, concisely and logically.

• State how the item is to be used, including the context of usage.
• Contain enough information for suppliers to accurately scope a solution and offer.
• Be able to be used as the fundamental basis of the contract between buyer and seller.

Thus a good specification is one that is clear, concise and should be capable of being understood
and assessed for compliance by both parties. Specifications can be broadly categorized into three
types as follows – most specifications will be combination of these types: Technical Specifications:
Defines in detail the physical characteristics, materials, and requirements of the goods, works and
services. This is the type of specification that will be most commonly used.

Performance specifications: This type of specifications describes the purpose of the product or
service in terms of its capability of performance. It quantifies input/output criteria and detail
performance characteristics. Including Brand Names in specifications should be avoided where
possible as it will discourage competition and limits attainment of procurement principles. If on rare
occasions it is necessary to quote a brand name to clarify a specification the words “or equivalent”
must be added after such reference.

The ITB (Instructions to Bidders) section of the Bid document lists out methodology,
terms/conditions and other information specifying how the Employer intends to undertake
procurement of works.

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Figure 9: Sections of a bid document

3.4.1 Public Notification of Works Available for Outsourcing

A public notification (mostly an advertisement in Newspaper) is issued which specifies the name
/brief detail of the work(s) available for outsourcing, estimated costs, important dates of
procurement (start date of availability of bid, last date of bid submission, date of bid opening, date
of pre-bid etc.) and contact details of the concerned office.

The Bid Document also carries a copy of the detailed notification termed as IFB (Invitation for Bids).
In some cases, Client advertises the entire IFB in the press/media particularly on the local print

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media such as Ethiopian Herald. These days with the advent of E-procurement the Bid notice is also
placed on the Client’s website.

3.4.2 Sale of Bid Document

The Bid document is issued to the interested/prospective Contractors against a specified payment.
[Mostly, the cost of the Bid Document depends on the approximate cost of the bid work and the
targeted category of the Contractors]. For the works procured under e-procurement, the Contractor
has the option of downloading the Bid document from the Employer’s website, and deposit bid
document cost at the time of Bid submission. In case the bid submission is also online, the
Contractor uploads a copy of the demand draft of the value equal to cost of the bid document, and
submits the original draft at the time of submission of technical documents.

3.4.3 Eligible Bidders

The ITB specifies the eligibility criteria of the Bidders who can submit the Bids. Mostly those who are
registered under Public Procurement and Property Administration Agency (PPPAA) in Ethiopia) list
of suppliers/contractors are eligible. For local tenders the PPA requests that Bidders shall provide
such evidence of their eligibility satisfactory to the Public Body, to verify that the Bidder:

(a) Is not insolvent, in receivership, bankrupt or being wound up, not have had their
business activities suspended and not be the subject of legal proceedings for any of the
foregoing
(b) Appropriate documentary evidence demonstrating its compliance, which shall include:
• Valid business license indicating the stream of business in which the Bidder is
engaged,
• VAT registration certificate issued by the tax authority,
• Valid Tax clearance certificate issued by the tax authority (domestic Bidders only);
• Relevant professional practice certificates, if required in Bidding Data sheet (BDS).

3.4.4 Qualification of Bidders

The Employer seeks information and documents from prospective Bidder to prove that he is
qualified to undertake the works under Contract and same shall be filled in ‘Qualification
Information’. This is generally based on Bidders experience in executing similar works, and Bidders
financial capability to manage the Contract. In ERA case the Employer seeks details of the following:

i. Legal Registration of Bidder’s company as per law of the country

ii. Financial turnover of the Bidder’s company (Generally it is somehow equal to the estimated
value of the work to be Contracted)
iii. Financial Liquidity or capability to finance the project for some time before the bidder
obtains its first payment, etc.

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iv. Amount of total works, and works of similar nature executed by the Bidder in a specified
period (The qualifying criteria depends on the nature and importance of work, and is
generally one single work of 80% of the value of work to be contracted having been
completed in last 5 years etc.)

Apart from above, the Employer also checks the reputation of Bidders in managing disputes on
previous contracts.

3.4.5 One Bid per Bidder

For any Contract the Bidder can submit only one bid, otherwise the submitted bids are not
considered for evaluation.

3.4.6 Site Visit by Bidders

In order to make its assessment for bidding, if the bidder is allowed to visit the site of works but the
cost of visit and associated expenses for data collection etc. is borne by the Bidder. Sometimes the
client may wish to arrange and conduct a joint site visit whereby all the bidders could take part.

3.4.7 Pre-Bid Meeting

The pre-bid meeting should be held early, e.g., two to three weeks after the availability of the
tender document. This allows potential bidders time to thoroughly review the tender documents
and gives enough time to prepare their proposals once they have received important clarifications,
if applicable. The tendering process should also allow for written requests for clarification or
comments, but this should be limited to a certain deadline.

3.4.8 Amendment of Bid Document

If required, the Employer can make modification / amendment to issued Bid Document before close
of bidding date. This is notified by issuing a corrigendum / addendum in the same medium where
the original Bid Notice was given. The Employer also extends the deadline of bid submission, allow
bidders to account for changes made. Generally at least two weeks’ time is given. The Employer
needs to notify all the bidders who have purchased the bid document about the issued corrigendum
/ addendum.

3.4.9 Submission of Bid

The Bidder prepares his Bid using only the purchased version of the Bid Document. The rates of the
items are quoted (if its item rate contract) in the BoQ provided in Bid, and the total quoted price of
Bidder for that Contract is provided in Letter of Bid. Generally following are part of the submitted
bid.

i. Form (letter) of bid

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ii. Bid Security

iii. Qualification information with supporting documents and undertakings
iv. Purchased Bid document, filling the information where indicated

3.4.10 Bid Opening

On the specified date and time, the Employer opens the bids received by the deadline and reads the
Bid prices quoted by respective Bidders. This is done in the presence of the Bidders and/or their
representatives. Other documents such as availability of the requested Bid Security, its validity
dates, the demand draft for Bid document (if downloaded from website) etc. are also confirmed. A
record of the proceedings is prepared, and shared with all the participating Bidders.

3.4.11 Bid Validity

The Employer requires that the submitted Bid should be valid till the time procurement process is
complete, and the Contract is awarded to the successful Bidder. Normally this period is taken as 90
days after the deadline date for bid submission. On expiry of original Bid validity period, the
Employer can seek the extension of the Bid validity from the Bidder but the Bidder has prerogative
to agree to such extension.

3.4.12 Bid Data Sheet (BDS)

BDS contains specific data for the Works to be procured and complement, amend, or supplement
the provisions in the Instructions to Bidders (ITB). Whenever there is a conflict, the provisions in BDS
prevail over those in Instructions to Bidders.

3.4.13 Bid Security (Earnest Money)

The Employer seeks a Bid Security from the participating bidders which normally is 1% to 2% of the
estimated cost of works under the Contract. The Bid Security can be in the shape of a Fixed Deposit
Receipt or Demand Draft, and in general has validity of 28 days beyond the Bid validity period. All
Bidders are refunded their bid security, after the successful Bidder submits the Performance
Security to the Employer and signs the Contract agreement. In some cases, the Bid Security of the
successful bidder is converted as part of the required Performance Security.

3.4.14 Performance Security

The Contractor is to provide performance security for the proper performance of the contract.
Generally it is 10% of the contract price, and is kept valid till the completion of defects liability
period. Performance security is obtained from the Contractor in the form of Bank Guarantee, on a
format annexed with the Bid Document. Performance security is to be provided by Contractor
within 28 days (or as decided by Employer) of the receipt of the Letter of Acceptance from
Employer.

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3.4.15 Award of Contract

The Contract is awarded to the lowest evaluated bid/tender, assuming it is substantially responsive.
The successful bidder is notified in writing, in the form of Letter of Acceptance. All other bidders are
also informed about the Employers decision on award of Contract.

The formal agreement is signed within 28 days (or as decided by the Employer) along with
submission of performance security.

Note: Employer has right to accept or reject any or all bids and even to annul the bidding process
any time prior to award of contract.

3.5 Contract Management of Works

3.5.1 Key Stakeholders of Contract

Three key stakeholders of any works contract are (i) Employer, (ii) Contractor and (iii) Engineer. First
two are signatories (parties) of the Contract agreement, while the Engineer is the entity which
facilitates management of the contract (generally) on behalf of the Employer.

o Employer

Employer means the person named as such in BDS or Contract Data, and the legal successor in the
title to such person.

Normally in Public Works Contracts in Ethiopia, the Employer is the Director General acting on
behalf of the Government Entity (ERA).

o Engineer

Engineer means the person appointed by the Employer to act as Engineer for the purpose of the
Contract. He can be a departmental officer (generally Executive Engineer) or a PMC (Project
management consultant).The Engineer represents the Employer to carry out duties as specified in
the conditions of Contract. On some issues the Engineer may require to seek prior approval of the
Employer, such as cost increase or time extension. The Engineer has no authority to relieve the
Contractor of any of its obligations under the contract, but has authority to act in an emergency.
The Engineer may delegate to his representative any of his duties and authorities. The Engineers
approval does not absolve the Contractor of his duties and responsibilities under the contract. The
Engineer shall instruct in writing and oral instructions shall be confirmed by written communication.
The Engineer shall act impartially on all matter entrusted to him.

o Contractor

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Contractor means the person whose tender has been accepted by the Employer and the legal
successor in title to such person.

Contractor or Contracting Agency is responsible for execution of the listed Works under the
Contract against some agreed amount of payments, subject to specified terms and conditions of the
agreement.

o Sub-Contractor

Sub-Contractor means any person/agency named in the contract or proposed by the Contractor as a
sub-Contractor to whom a part of work has been sub contracted with the consent of Engineer and
the legal successor in title to such person.

If allowed in the Contract, the Contractor can Sub-contract some works to another Contractor. This
happens mostly in cases where specialised jobs are required to be undertaken within the contract.
The Contractor cannot subcontract the whole of the Works.

Consent to Sub-Contract does not relieve the contractor from any of his obligations and liabilities
from that part of work. The Contractor is completely responsible for the acts, defaults and neglects
of any subcontractor.

Generally, the contractor is not required to obtain consent for:

a. The provision of labour

b. The purchase of materials
c. The sub-contracting of any part of the Works for which the Subcontractor is named in the
Contract.

3.5.2 Conditions of Contract

Normally, there are two sub-groups of conditions of a Works Contract

i. General Conditions (GC or GCC)

ii. Particular Conditions (PC or PCC)/ Special Conditions (SC or SCC)

General Conditions of Contract are not changed from the conditions provided in the base Contract
Document (mostly FIDIC Contract template or the PPPAAs Conditions of Contract found in Standard
Bidding Document (SBD)). These are being applied to any Project without change. Particular
Conditions are amended General conditions supposed to take care of issues specific to any given
project, but within the limits clearly set out by Client department. Particular Conditions have
precedence over respective clauses of the General Conditions.

3.5.3 PPPAA’s Conditions of Contract and ERA Maintenance Specifications

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The conditions of contract are construed as part of the main contract and both the client and the
contractor shall abide by the conditions that are stipulated in the contract. The clauses are carefully
and seriously interpreted during project execution to help smooth progress and without taking
undue advantage of one party over the other. Some pertinent clauses of the general and special
conditions include the following:

• Sub-clause 2: Relationship Between the Parties

• Sub-clause 6: Interpretation
• Sub-clause 7: Contract Documents
• Sub-clause 10: Notices and written communications
• Sub-clause 15: Modifications by Change Orders
• Sub-clause 24: Cessation of Rights and Obligations
• Sub-clause 25: Cessation of Works
• Sub-clause 26: Settlement of Disputes
• Sub-clause 27: Liquidated Damages
• Sub-clause 31: Access to the Site
• Sub-clause 32: Payment
• Sub-clause 33: Delayed Payments to the Contractor's Staff
• Sub-clause 37: Control and Supervision of the Works
• Sub-clause 40: Insurance to be Taken Out by the Contractor
• Sub-clause 41: Program of Implementation of Tasks
• Sub-clause 58: Performance Security
• Sub-clause 86: Partial Acceptance
• Sub-clause 87: Provisional Acceptance
• Sub-clause 88: Defects Liability
• Sub-clause 89: Final Acceptance Payments to the Contractor
• Etc.

These and other pertinent clauses shall be carefully understood by the contract administrator.

3.5.4 Technical Specification for Road Maintenance Works (2nd Edition August, 2003)

The Road Maintenance Specification is an update of ‘Part II – Technical Specification’ of ERA’s

‘Standard Procedure & Technical Specification for Road Maintenance Works, September 1999’.

A. Replacement Clauses

1.1. In all instances of Part I – Standard Specification, The Term “The Employer’s Representative”
is deleted and replaced with “The Engineer’s Representative”.

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1.2. Under PREAMBLE to technical specification, the Last Sentence in the Second Paragraph of
sub-section 1.6 (Quarries, Borrow Areas and Dumps (Tips) ), is deleted and replaced with the
following:

“The Engineer’s Representative shall provide all reasonable assistance in securing consents and
licenses. Royalties in respect of the extraction of material from borrow pits and quarries for use in
connection with the works shall be paid by the employer. The contractor shall be liable for all
payments or compensation, if any, levied in connection with the dumping of materials.”

1.3. Under PREAMBLE to technical specification, Section-5,Meaning of Terms, the 45th term is
deleted and replaced as follows

The term “Period for notifying defects” is deleted and replaced with “Defect correction period”

1.4. Activity Specifications, Activity No. 510, Overhaul, Delete the activity specification entirely
and replace it with the following,

“Overhaul of the Standard Specifications does not apply to this project and that overhaul will not
be paid on any item under any division of the Standard Technical Specification. The unit rates are
deemed to covered all haulage costs over any distance throughout the project. Any reference to
free haul and overhaul elsewhere in the Standard Technical Specification should be considered null
and void.

B. Additional Clauses

2.1 Addition to “section III. LIST OF MAINTENANCE ACTIVITIES BY CATEGORY”

The following Maintenance Activities will be added toPART I “III. List of Maintenance Activities by
Category”

Act.
Category Scope Activity Name Unit
No.

423 Road Traffic Marking and Road Studs Km

424 Guardrails M
Road
420 Concrete Posts for signs Each
Signs
421 Sign Boards Each
General

422 Kilometre & Guide Posts Each

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Act.
Category Scope Activity Name Unit
No.

425 Laboratory Building, equipment and supplies LS

as specified under the spec

426 Laboratory testing to be carried out in Prov.

Others external laboratory, as ordered by the
Sum.
Engineer

Allow Percentage on-cost to invoiced amounts Percent

for laboratory testing under item 14.17(a) (%)

2.2 Additions to “IV PREAMBLE”

The following clauses will be added to PART I “IV. PREAMBLE”

5 Meaning of Terms

Add the following terms and definitions to Part I of the specification.

Term Meaning

Shoulder The part of the roadway next to the traveled way or auxiliary lanes. It
provides lateral support of base and surface courses and is an
emergency stopping area for vehicles.

Specifications Provisions and requirements for the prescribed work.

Structure Bridges, culverts, catch basins, drop inlets, retaining walls, wing walls,
foundation and other features found during work that the contract may
or may not classify as a structure.

Roadbed: The graded part of the roadway within top and side slopes, prepared as a
foundation for the pavement structure and shoulders.

Special Provisions: Supplemental specifications and modifications to the standard

specifications and the amendments to the standard specifications that
apply to an individual project.

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Project Engineer: The Engineer’s representative who directly supervises the engineering
and administration of a construction project

The Engineer Means the person appointed by the Employer to act as Engineer for the
purposes of the Contract

Engineer’s Means a person appointed from time to time by the Engineer in writing
Representative to the contractor

6 Drawings

The drawings for Road Traffic Marking and Road Studs, Guardrails, Road Sign Boards, Concrete
posts, Kilometre & Guide posts, Laboratory Building and for any work shall be as per the existing
road design or as approved by the Engineer.

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