Quantity Handout

CHAPTER 1
PROCUREMENT AND CONTRACT
1.1 GENERAL
Procurement is a process used to select the lowest competitive (cheap)

and qualified bidder for procuring services or works or goods from
potential competitors based on reasonable relevant criteria.
Contract is a legally binding agreement between two or more parties in

which each party binds itself to the other party to do something and each
party acquires the right to what the other party promises
Friday, March 20, 2020 1
STAKEHOLDERS AND STAGES IN CONSTRUCTION INDUSTRY
• Construction Industry is an industry which is involved in the planning,

execution and evaluation of all types of civil works.
• The Construction Industry can be categorized into three major sectors;
namely,
1. Transport and Communication; (Road, Railway, Airway, and Telecommunication
related physical works)
2. Water and Energy Works; [ dam, hydro power, Water supply, Irrigation,] and
3. Buildings and Other Physical Infrastructures.

Major Stakeholders in the construction industry
These are:
• Client: is initiator and owner of the project
• Consultant: transfers the wish of the owner in to realizable form
• Contractor: is the one who executes or performs the work as per contractual
norm/trade corrective measure.
• Insurance Companies: A Contractor is required to provide bid bonds as a

condition of being allowed to bid, and then they must provide insurance for
Performance bonds and payment bond prior to award of the contract.
Cont…
• Financial institutions (Banks): provide the working capital the project contractors need
to build.
• Banks also provide bonds for bid and performance.
• Suppliers: The quality of a construction project is very dependent on the quality of the
suppliers used by individual contractors which will provide qualified construction material.
• Permitting Agencies: represents the interests of public safety. They administer publicly
funded projects, and they ensure private construction projects comply with current zoning
laws and building codes.
• Public: The public is a group of people or community impacted by every construction

activity. Impacts
Friday, March 20, 2020 are both good and bad. 4
Resources for the Construction Industry
1, Physical Resources such as Materials, Equipment, plant, tools and Other Assets
Materials: very large portion of a project cost is gone to material cost. E.g. cement,
aggregate, rebar
Equipment: is a moveable instrument or machineries involved on the project for

different works
e.g. Mixer, excavator, vibrator…
Plant: is small factory installed permanently up to completion of the project for project
achievement.
e.g. asphalt mixing plant, concrete batching plant…

Cont..
2. Services and Management. Such as acquisition of land, consultancy
service, provision of water supply, Provision electric power,
Telecommunication …
3, Human Resources / Laborer Workmen
4, Financial Resources / Fund
5, Information Resources.

Stages in Construction industry
Inception and feasibility: At this stage the owner puts his visions and wishes
and with this as the starting point, the various groups (professionals) try to
conceptualize the project and prepare conceptual design.
• At this stage the owner will hire a consultant to formally design and develop
the concept in to a practicable project.
Planning and Design stage: Planning is a function of devising the cause for
future with a vision, formulated for the future state of organization or project.
• At this stage the consultant plans and designs the project based on owner
requirement and possible constraints.
Cont…
Tendering stage: At these stage contractors are invited to offer their best technical and
financial offers as per the conditions and specifications depicted in the contract
documents.
Usually a 2% of bid bond is required so as not let him disappear.
• Construction Stage: is the actual execution of the works takes place as per scheduled.
• Commissioning and Acceptance
• Commissioning: is a process whereby the contractor makes sure that all installed
mechanical, landscape, check dams, electrical parts and other required accessories are
existing and operational.
Cont..
Acceptance: has to stages:
a. Provisional acceptance: In this acceptance, the client accepts the completed

works on provisional basis for a period one year.
• During this period all payments except the retention money are paid.
• The other option is to release the retention money and required for a bank or
insurance security.
b. Final acceptance: At this stage the owner completely accepts the works
executed and the retention money is released to the contractor.
INTRODUCTION TO PROCUREMENT
• Procurement is a process used to select the lowest competitive (cheap) and
qualified bidder for procuring services or works or goods from potential
competitors based on reasonable relevant criteria.
• It can also be expressed as a method used to employ or buy services or works

or goods for the value (in the form of money) which includes reasonable profit.
• Construction Industry involves procurement and contract management

systems in order to ensure fair competition and distributions of obligations and
rights among stakeholders.

Cont..
competition helps:
• The Project Owners’ to acquire the five rights (Counterpart, Cost, Time, Quality
and Quantity) s/he is entitled to:
• The Project Financiers’ and Regulators’ to value market principles and effective
utilization of finance such that lowest qualified bids take the project
• The Project Providers’ to get impartial and neutral Opportunity for business.
• Physical infrastructures are cost extensive and appropriate savings obtained

through competition are the main factor behind the procurement process.
Cont..
• An effective and efficient procurement method ensures the following rights
called the "Five Rights".
These are:
• Right Quality
• Right Quantity
• Right Time
• Right Cost / Price
• Right Counter Parts

Types of procurement
• Procurement types can be classified based on the things to be procured and the
way how they are procured.
• There are may bases for classifying procurement methods.
These are:
1. Based on Things to be procured: [Goods, Services and Works]
Procurement of Goods: Physical resources used as components for undertaking
consultancy services and/or construction works such as Materials and
Equipment’s are available using Procurement of Goods.

Cont..
Procurement of Services:
❖These include services like:
• Pre-feasibility and feasibility studies
• Design and contract administration of projects
• Construction management consultancy services
• Research or study based consultancy services, etc.
Procurement of Works: In the Construction Industry procurement of works
mean the procurement of contractors to carry out the actual physical
infrastructures.
Cont..
2. Based on bidders’ Coverage: [Competitive and Negotiated Tendering]
Competitive Tendering: The objective of competitive bidding is to acquire the

goods, or works, or services at the most economic cost to the project owner.
• This type of tendering is commonly used for the selection of better and capable
winning bidder among the various eligible firms. Competitive bidding can either
be Open or Limited Competitive Bidding in the form their invitations.
Open competitive bidding: as their name implies, while Open competitive bidding
allows all eligible bidders to participate all competitors in equal way.
Cont..
✓ allows a number of selected firms decided by the Project Owners in consultation
with concerned parties for qualification.
✓The major difference between open and limited competitive bidding is the
addition of qualifying criteria beyond eligibility imposed on the procurement type
for limited competitive bidding.
✓ often used when the nature and urgency of the work justifies to do so.
✓ In this case limited numbers of eligible firms are invited to participate for the bid.

Cont..
Negotiated Tendering: Under certain circumstances, which shall be rare in
practice, direct appointment of a negligible firm can be exercised by Project
Owners.
✓ The nomination of this direct invitation is usually based on good

performance, acquaintance with the Project Owner, for supplementary
agreements etc.
3. Based on geographical Coverage: [International, National, regional and

Local Tendering]

Cont..
✓Such types of procurements are generally caused by four major
factors. These are:
✓Local Capacity,
✓efficiency required,
✓Financial Sources and
✓Globalization.

Cont..
4. Based on Procurement Awareness: [General and Specific
Procurement Notice Tendering]
✓ Following this requirement, General Procurement Notice is made

during projects planning phase and it is only interests of the bidders
are aroused because sufficient tender documents are not available.

Cont…
This approach issued:
I. The Project Owners to
✓identify interested bidders to issue Invitations by letters and save time;
✓ identify bidders relevant for the procurement required; and
✓ protect loss of cost in preparing lots of tender documents.
II. The Bidders to:
✓ give sufficient time to assess the cost of the project;
✓ protect loss of cost only to participate; and
✓encourage competent bidders who wary about law-balling to participate.
Cont..
General Procurement Notice (GPN): is of two types.
✓ These two types are based on their purpose why and when they are
notified.
✓The first type is when the purpose is to create awareness and let bidders’
prior information about upcoming projects such that they can follow up its
development and include them in their plan.
✓ This type of GPN is used for procurement of works and goods and is often
announced as soon as the design implementation service is started.

Cont..
Specific Procurement Notice (SPN): is an Invitation for Tender or a Request for
Proposal when the project is ready for implementation. SPN can be sent to those
interested bidders identified following GPN directly.
5. Based on Procurement Steps: [Single or Two Staged; and Pre or Post-

Qualification tendering.]
✓Single or Two Staged Tendering: Procurement can be made using a single or

two staged tendering process.
✓ They are related with whether tender packaging for submission separately and
their evaluations are staged for a single or two steps when invitations are made.
Cont..
✓Often two staged biddings are made for the submission of technical and
financial proposals separately and their evaluations one after the other.
Pre or Post Qualification Tendering
✓Pre-or Post-Qualification processes based on succession events of technical

qualification and financial evaluation.
✓ Prequalification: is an internationally accepted practice in procurement

management.
✓It would normally be required for civil works contract of which its nature
and cost is large and complex.
Cont..
Pre - qualification can be of two types.
✓The First is when companies are already considered qualified during their licensing
requirements which entitled them for a single stage tendering process.
✓ For such types of tendering, the most important tender evaluation criteria become the
low priced bid.
✓The Second is when two staged tendering is used to pre-qualify tenderers for their
technical competency.
✓ Once bidders qualify for the tender, either the lowest priced bidder or the lowest bidder
based on the weighted average of the technical and financial scores will be
recommended for award.
Cont..
• Pre- qualification should be based entirely on the ability of the bidder
to carry out the required works satisfactory.
• The basic relevant criteria used in determining this ability of the
bidder:
✓ Experience and past performance
✓Health, Safety and Environment Records if any
✓Capability in respect of personnel and equipment
✓ Organizational arrangement and facilities
✓ Financial Status and
✓Schedule of Commitments

Cont..
Post- qualification: is a tendering type where Financial Evaluation is
carried out first and rank bidders on the basis of their offer for tender
price.
✓That is, Technical Evaluation will be done after the financial evaluation.
✓ However, Post qualification approaches often cause to fix evaluators

on financial results and be locked and biased for successive technical
evaluations.

PROCUREMENT AND CONTRACT MANAGEMENT
✓Procurement and Contract Management involves three major processes:
those are:
✓Contract Planning, [contract delivery system, procurement method and

contract types]
✓Procurement Management [procurement preparation, tendering, and

tender evaluation] and
✓Contract Management [contract formulation, contract administration,

and contract closing]

Cont..
Contract Planning
✓ Includes: decisions on proposed Delivery Systems, Procurement

Methods and Contract Types to be followed and used together with its
provisions for alterations.
✓Procurement and Contract Management processes shall be based upon

the approved contract planning provisions; that is, the contract delivery
system, the procurement method and contract types decided upon.

Cont..
Contract Delivery Systems there are six types of Contract Delivery systems
✓ Contract Delivery system is the way Project i. Force Account,

Owners together with Project Regulators
ii. Design Bid Build (DBB),
and Financiers determine the assignment of
iii. Design Build (DB) or Turnkey,
responsibilities to Project Stakeholders
along the Construction Process. Contract iv. Finance / Build Operate System (BOT),
Delivery system is often determined during v. Construction/Facility Management Consultancy,

the Basic Planning phase of Construction
Vi. Alliances and Outsourcing.
Project.

Procurement methods
[Procurement methods for Ethiopian public procurement-federal negarit
gazeta- classifies procurement methods into the following six types]
1, open bidding
Advertisements:
1) Invitation to bid shall be advertised in at least one national newspaper of

general circulation;
2) The time allowed for preparation of bids shall not be less than a minimum
number of days stated in the procurement directives.

Cont..
Invitation to Bid:
• The invitation to bid shall contain, as a minimum,
1) The name and address of the procuring entity,
2) a brief description of the goods, works or services to be obtained, including
desired time limit for delivery or completion,
3) the means and conditions for obtaining the bid documents and the place from
which they may be obtained,
4) the place and deadline for the submission of bids and
5) The place and time for opening of bids, along with an announcement those
bidders’ representatives are allowed to attend the opening of bids.
Cont..
Bid Documents
1) The bid documents shall contain sufficient information to enable competition among
the bids to take place on the basis of complete, neutral and objective terms.
In particular, bid documents must include:
a) Instructions for the preparation and submission of bids;
b) Information on the final date for receipt of bids, the address to which bids must be
sent, the date, hour and place of opening, as well as an announcement that bidders’
representatives are allowed to attend the opening
c) forms of bid and, where applicable, forms of bid security to be provided

Cont..
d) The number of copies to be submitted with the original bid
e) Conditions of contract, general and special
f) Specification of requirements, including time limit for delivery or completion, as appropriate
g) Evidence to be provided by the bidder to demonstrate its qualifications as well as its standing
with regard to fiscal and registration in the suppliers list.
h) The period during which the bid must remain valid;
i) criteria & points given to each criterion for evaluation of bids & award of the contract and
j) A reservation to the effect that the procuring entity may reject all bids at any time prior to the
acceptance of a bid.

Cont..
Provision of bid documents
• Bid documents shall be made available to candidates in an expeditious manner,
at a price not exceeding the cost of reproduction and delivery to candidates,
and otherwise in the manner specified in the invitation to bid.
Modifications to bid documents:
1) At any time prior to the deadline for submission of bids, the procuring entity
may, on its own initiative or in response to an inquiry by a candidate having
purchased the bid documents, modify the bid documents by issuing an
addendum, which becomes an integral part of the bid documents
Cont..
2) Any addendum shall be communicated promptly to all candidates
having purchased the bid documents.
3) If the procuring entity considers it necessary to amend the bid

documents and if it determines that there is no enough time to incorporate
the modification shall postpone the closing date by a number of days,
depending on the procurement object, which is sufficient to enable the
bids to take the addendum into account in preparing their bids.

Cont..
Bid Security
1) Unless otherwise provided in this Proclamation, the procuring entity shall
include in the bid documents a condition that bids must be accompanied by
security in the form of a deposit or bid guarantee.
• The amount of such security shall be sufficient to discourage irresponsible
bids and shall remain within limits stated in the procurement directives.
2) Any bid security will be forfeited if a bidder withdraws his bid within the
validity period thereof or, in the case of a successful bidder, if the bidder
repudiates the contract or fails to furnish performance security, if so required.

Cont..
Submission and receipt of bids
1) Bids shall be submitted in writing, signed and in a sealed envelope, to the

place and before the deadline stated in the invitation to bid.
2) The procuring entity shall give a receipt to the bidder indicating the time
and date on which the bid document is submitted, where it becomes impossible
to put the bid document in a bid box due to its large size.
3) A kind of bid document stated under Sub Article 2 above is received after
the deadline for submission shall be returned unopened to the bidder.

Cont..
Opening of Bids
1)At the time stipulated in the bid documents for opening of bids, which should
follow immediately after the deadline for submission of bids, the procuring
entity shall open all bids received before the deadline.
2) Bidders, or their authorized representatives, shall be allowed to attend the
opening of bids.
3) The name of the bidder and the total amount of each bid shall be read out
aloud and recorded and a copy of the record shall be made available to any
bidder on request

Examination and Evaluation of Bids
1) The procuring entity may ask bidders for clarification of their bids in order to assist in the
examination and evaluation of bids.
✓ No change in the substance of the bid, including changes in price, shall be sought, offered or
permitted.
2) Nevertheless Sub-Article (1), the procuring entity shall correct purely arithmetical errors that
are discovered during the examination of bids.
✓The entity shall give prompt notice of any such correction to the bidder that submitted the bid.
3) Subject to Sub-Article (4), of this Article, the procuring entity may regard a bid as
responsive only if it conforms to all requirements set forth in the bid documents.

4) The procuring entity may regard a bid as responsive even if it contains minor
deviations that do not materially alter or depart from the characteristics, terms, conditions
and other requirement set forth in bid documents or if it contains errors or oversights that
are capable of being corrected without touching on the substance of the bid.
5) The procuring entity shall not award a contract when:
a) The bidder has failed to demonstrate, in the manner foreseen in Article 33(g), that it is
qualified
b) The bidder does not accept a correction of an arithmetical error made pursuant to Sub-
Article (2) of this Article;
c) The bid is not responsive.

6) The procuring entity shall evaluate and compare the bids that have been held
responsive in order to ascertain the successful bid, as defined in Sub-Article (7),
of this Article, in accordance with the procedures and criteria set forth in the bid
documents.
• No criterion shall be used that has not been set forth in the bid documents.
7) The successful bid shall be:
a) the bid with the lowest evaluated price; or

Cont..
b) If the procuring entity has so stipulated in the bid documents, the lowest
evaluated bid ascertained on the basis of factors affecting the economic
value of the bid which have been specified in the bid documents, which
factors shall, to the extent practicable, be objective an quantifiable and shall
be given a relative weight in the evaluation procedure or be expressed in
monetary terms wherever practicable
8) The procuring entity shall prepare an evaluation report, containing a

summary of the examination and evaluation of bids.
Cont..
Notification of award and signing of contract
1/ Prior to the expiry of the period of bid validity, the procuring entity shall
notify the successful bidder that its bid has been accepted.
The notification of award shall specify the time within which the contract must
be signed.
The unsuccessful bidder shall also be informed who the successful bidder is and
why he has lost the bid
2/ the existence of a contract shall be confirmed through the signature of a
contract document incorporating all agreements between the parties.

3/ The contract shall not be signed by the procuring entity prior to the receipt of
the notice by the unsuccessful bidder and before the period specified under
Article 52 has lapsed.
Contract Security
• A supplier shall provide the procuring entity with a contract security to make
good on any default by the supplier under the contract.
• The type of procurement for which contract security is required and the type
and amount of contract security shall be determined by a directive to be
issued by the Minister.
• [Mostly 10 % performance bond for construction sector]
2. Restricted Tendering Procedures
Restricted tendering procedures are the same as those applied in open tendering,
except that:
1/ The invitation to bid is addressed to a limited number of qualified candidates which

have declared an interest in submitting bids.
The selection should be made in a nondiscriminatory manner and the number of

candidates invited should be, if possible, sufficient to ensure effective competition;
2/ Procuring entities shall select candidates to be invited to bid from among those
registered in the suppliers list.

Cont..
• Any selection shall allow equitable opportunities for suppliers on the list.
• The procuring entity may also advertise the opportunity to bid in the
manner provided for under Article 31 (5) , inviting candidates to submit
expressions of interest in being invited to bid.
3/The time allowed for preparation of bids shall not be less than a
minimum number of days stated in the procurement directives and
4/ The procuring entity may decide, depending on the circumstances, if bid

security will have to be submitted or not

Cont..
3. Direct Procurement Procedure
1/ when the procuring entity engages in direct procurement according to Article

27(2), it shall prepare a description of its need and any special requirements as to
quality, quantity, terms and time of delivery, and shall be free to negotiate with
the sole candidate.
Any agreement reached to conduct the procurement according to Article 27(1)

shall be confirmed by a contract signed by both parties.
2/ Direct procurement according to Article 27 (2) requires no signed contract.

Cont..
4. Request for Proposals Procedure
1/ Requests for proposals shall be addressed to not less than three,

not more than seven candidates selected by the procuring entity.
✓The selection of candidates for consultancy services above a

threshold to be determined by a directive shall be made after
inviting candidates to submit expression of interest in being invited
to bid.
Cont..
2/ A request for proposals shall contain at least the following information:
a) The name and address of the procuring entity
b) Description of the services required, normally through terms of reference
c) In the case of consultancy assignments which may involve potential

conflicts of interest, a reminder that candidates for such assignments must
exclude themselves from procurement of goods and works which may follow
as result of or in connection with the consultancy agreement

d) The criteria for evaluating the proposals, the relative weight to be given to price and other
criteria, and the manner in which they will be applied in the evaluation of proposals;
e) Place and deadline for the submission of proposals.
3/ Candidates shall be given adequate time in which to prepare their proposals
4/ the procuring entity may negotiate with the first ranked candidate with respect to the nature,
volume and organization of the services included in their proposals and may seek or permit
revisions thereof.
5/ Any award by the procuring entity shall be made to the candidate whose proposal is most
advantageous, determined in accordance with the criteria and procedures for evaluating proposals
set forth in the request for proposals.

5 Request for Quotations Procedure
1/ The procuring entity shall request 3/ Candidates shall be given adequate time
quotations from many candidates, but from to prepare their quotations
at least three, if possible. 4/ A purchase order shall be placed with the

candidate who meets the requirements of the
2/ The request shall contain a clear
procuring entity stipulated in Sub-Article (2)
statement of the requirements of the and who quotes the lowest price.
procuring entity as to quality, quantity, 5/Procuring entities shall ensure that
terms and time of delivery and other suppliers registered in the suppliers list have
equal opportunity.

6 Two-stage Bidding
1/ The solicitation documents shall call upon suppliers to submit, in the
first stage of the two stage bidding proceedings, initial tenders containing
their proposals without a tender price.
The solicitation documents may solicit proposal relating to the technical,

quality or other characteristics of the goods, works or services as well as to
contractual terms and conditions of supply and where relevant the
professional and technical competence and qualifications of the suppliers.

Cont..
2/ In the second stage of the two-stage tendering proceedings, procuring entities shall
invite suppliers whose bids have not been rejected to submit final tenders with prices
with respect to a single set of specifications.
• In formulating those specifications, procuring entities may delete or modify any aspect
originally set forth in the solicitation documents of the technical or quality
characteristics of the goods, works or services to be procured and any criterion
originally set forth in those documents for evaluating and comparing bids and for
ascertaining the successful bids and may add new characteristics or criteria that
conform with this Proclamation

Cont..
• Any such deletion, modification or addition shall be communicated to suppliers
in the invitation to submit final bids.
• A supplier not wishing to submit a final bid may withdraw from the bid
proceedings without forfeiting any bid security that the supplier may have been
required to provide.
3/ The final bids shall be evaluated and compared in order to ascertain the
successful bidder pursuant to Article 39 of this Proclamation.
4/ The procuring entity may engage in negotiation with the first ranking bidder
concerning any aspect of its bid, except price.

Procurement Management
• Is a process of selecting individuals or Organizations to carry out the intended
services and / or works.
• Is carried out based on the provisions made during the contract planning phase
of the Procurement and Contract Process.
• It involves the preparation of procurement documents, their invitation and

submission of tender proposals, and Opening and Evaluation of tenders.
• On the bases of results from tender evaluations, the procurement team will
recommend the lowest responsive bidder for Contract Management Phase.
Cont..
Procurement Preparation: is meant for the formation of a Procurement Team;
the preparation of tender Documents and their approval for procurement
implementations.
Procurement Team: Ethiopian Procurement Regulation states that a

Procurement team consisting of a minimum of five members shall be
established.
• As Tender evaluation is a joint technical and commercial exercise, the project

owner shall consider that the necessary experts shall be composed in the
procurement team.
Cont..
• Tender Documents: in procurement management, a full tender documents are
prepared to:
• Instruct bidders on the procedures for the preparation and submissions of bids,
• Inform prospective bidders about the nature of things to be procured,
• Inform bidders about the criteria for evaluation and selection of the successful
bidder
• Lay down contract conditions, delivery system, procurement methods and

contract types of project.

Cont..
Necessary tender documents for effective procurement management are the following:
1, Form of Invitation to Tender or Request for Proposals:
• Form of Invitation for Tender (IFT) is a requisition for interested bidders to

participate for the procurement of services/ works / goods.
They shall be:
• In accordance with the approved provisions of the contract planning phase and
applicable laws
• Made public through the wide covering media, newsletter, notice boards, etc

Cont..
Usually Invitations for Tender include: ✓ Brief descriptions of the project
✓ Name and address of Institutions issuing ✓Sources of Fund and Eligibility
the invitation and Clarification if requested, requirements
✓ Objective and Requirements of the ✓ Completion time, if necessary
Invitations, ✓Date, Place, Time and Conditions to
✓Stages and accordingly qualification terms obtain, submit and open tender document.

. Instruction to Tenderers (Standard and / or Particular
information) or Terms of References;
• Instruction to Bidder (ITB) is intended to:
• acquaint potential competitors with the nature of the tender
• provide all the necessary information to enable bidders to prepare

their offer in accordance with the requirements of the Project Owners.
• Whenever necessary, it will be supplemented by particular information

which cannot be standardized or generalized in the General ITB
document
Cont…
The ITB document includes
• Introductory Parts covering sources of fund
• description of the project
• eligibility and qualification requirements and
• necessary obligations concerning the cost of tendering, site visits, etc
• Tender document parts eliciting the contents
• clarification, and amendment processes.
• Tender preparation parts which states the language
• documents comprising and their precedence
• form of tender and appendix thereto requirements and
• alternative offer and formats and signing of bids requirements.
Cont...
• Tender submission part stressing sealing and marking of bids
• deadline for submission of tenders and
• modification and withdrawals.
• Tender opening and evaluation parts covering procedures and criteria
for opening and evaluation of tenders and
• preference for domestic preferences.
• Tender award parts stating award criteria and procedures and
• rejection rights and obligations.

Con…
3.Prequalification Documents if necessary: [technical or financial
issues for prequalification or post qualification processes]
4. Forms of Tender: This is a document where the contractor:
• Confirms, that he has examined all the tender documents
• Confirms that he will perform the work
• Promises that the validity of the tender is open for a certain period
• Shows his/her understanding that the lowest bid or any after may be
rejected
• States that part of the work may only be accepted
• Confirms that he will enter into an agreement if awarded

Cont..
5. Forms of Contract Agreement
6. General and Particular Conditions of Contract
7. Bill of Quantities and Drawings:
8. Technical Specifications& Methods of Measurement:
9. Other Forms, Formats and Schedules [ADDENDAS]
Approval of Tender Documents: Approval of Tender Documents

includes checking, renewal and approval of tender documents.

Con..
Regulatory requirements enforced for:
• Budgeting, Credit, Assistance and Grant Policies; Health, Safety
and Environmental Requirements; and Professional, Ethical and Legal
Requirements
Tendering Phase: includes Invitation, Clarification, Submission and
Opening of tenders.
• Invitation: Normally open tenders are floated for a period between
30 to 45 days.
• Limited and Negotiated tenders can be invited between 7 to 15 days.
• Invitations shall widen opportunities to the project owner by reaching
all potential and eligible competitors.

Cont..
The invitation to tender shall clearly state:
• the owner and his desirous service or works
• eligibility requirements,
• place to get further information,
• where to purchase & submit tender documents,
• how long the tender will be floated?
• how should the tender offer be packed, and
• when and where submission and opening of tender will take place.

Cont..
• Clarifications: can either be requested by interested bidder or carried
out using a pre - tender clarification meeting.
• In both cases, issues clarified shall be sent (written) to all bidders

participating for the intended services or works.
• Submission: The bidders shall submit their offer on or before the

submission date and time. Late bids are automatically rejected.

Cont..
• Tender Opening: Bids shall be opened in public on the date, at the
time and place mentioned in the invitation to tender and stipulated in
the tender documents.
• Ethiopian practice intender opening for Public construction projects is

that, two representatives from MWUD in addition to the Project
Owner, Consultant (if available) and Contractors (Who wish to attend)
representatives shall attend during the tender opening ceremony.

Cont..
The following activities will be carried out during tender opening: -
• Tender Attendee members shall take their place and be registered,
• Tender box opened and checked for faulty things
• Check the tender is the right one
• Bids will be opened one after the other
• All necessary data which deem useful such as Project Name, Name of
bidder, Bid Bond Amount, tender Price, etc. will be read aloud and
recorded at the opening of bids.
• Bidders representative shall sign a register to attest their presence during
opening and
• Tender committee members shall sign on the Tender documents.

Cont..
Tender Evaluation Phase: is made to determine and make award
recommendation for the least evaluated bidder using preliminary and detail
evaluations.
• The recommended winner may or may not necessarily be the lowest bidder.
• Factors such as technical qualification, completion time, commercial
terms of the offer, etc. are used in determining the least evaluated bidder.
Preliminary Evaluations: are made for Eligibility and Arithmetic Review
requirements.
Before commencing the actual evaluation, it is useful and recommended to
complete a Basic Data Sheet for each tender to record key information and
enable coding.
Eligibility Requirements: Tenders are subjected to eligibility qualifications
before they enter to bid and their respective evaluations.

Cont..
Most often sited issues considered in eligibility requirements are:
• Valid & Up to date Trade and Professional License
• Valid & Up to date Membership to Financier Organizations
• Valid provision of Bid Security or Bond
• Completeness and submittals of all required documents
• Turnover requirements fulfilled
• Power of Attorney, Signature & Sealing Requirements and
• Appropriate Invitation, Packaging and Submission Requirements

Cont..
• These eligibility requirements together with basic alterations of the conditions of the tender will be considered for
responsiveness or not.
• If the bidder offers provided considers a major deviation from the tender condition, the tender will be considered
non- responsive and could not be further considered.
Major Deviations are differences which:
• Affecting the validity of the bid
• Rejection or Disqualifying conditions stated
• Substantial effect on the Bid Price
Minor deviations are differences which:
• Do not result in change of Bid Price
• Are Non conditional tenders
• Do not affect the triple constraints of the project

Cont..
Arithmetic Review: Most tenders are often submitted hastily.
• As a result, tenders are not arithmetic error free.
Detail Evaluations: include Technical, Commercial and Financial

Qualification requirements.
• Evaluations at this stage should first and foremost critically see the
technical and commercial offers and establish system that can ensure
common bases for comparison.
• Finally, the financial offer will be updated using Absolute Results from
Commercial comparisons.
Cont..
Technical Requirements: are Pre-Qualification criteria’s used for keeping
technical standards or quality of works for the intended project.
Commercial Evaluation
This includes:
✓Benefit Forgone due to Completion Time;
✓Additional Costs [due to differences in Foreign Currency Exchange and Advance
Payment requirements]; and
✓Provisions of Domestic or Regional Preference Margins.

Benefit Forgone due to Completion Time:
• When tenders are offered with different completion times, comparisons are made to
determine the benefit forgone taking into account the least acceptable completion time as a
basis for competitions.
• It can be computed using the following expressions:
𝐹𝑉−𝑇𝑂
BF= , FV=TO(1+i)n
1+𝑖 𝑛
• Where: BF = benefit foregone due to additional completion time
• FV = future value
• TO = tender offer after arithmetic check
• n = late completion time in days, weeks or months
• i = discount rate [0.05%/day, 0.35%/week, 1.5%/month]

Additional cost due to Foreign Currency Exchange requirements:
• When tenders have provisions to quote different currencies, their
comparison will be made based on determining their effects due to the
additional cost incurred fro variations in currency exchange requirements
Additional cost due to Foreign Currency Exchange requirements can be

determined using selling rates at:
• 15 days prior to tender submission date
• At tender Opening Date
• Decision for Award or Expiry of Tender Validity date.

Chapter TWO (2) contract
Contracts in General (Arts. 1675-2026)
1. Definition and types of Contract
2. Elements of Contract-Formation
3. Effects of Contract
4. Extinction of Contractual obligations
5. Proof of Contract
Cont.
Definition of Contract (Art. 1675 of the Civil Code):
A contract is an agreement whereby two or more persons as between
themselves create, vary or extinguish obligations of a proprietary nature
This definition contains the following elements:
 That the contract is an agreement

 The agreement is to be made between two or more persons
 The agreement is binding between such two or more persons

The agreement is to create, vary or extinguish obligations
Cont.
The agreement is to create obligation
That the nature of obligation is proprietary.
The construction contract, in principle, is only binding between the

employer and the contractor.
This concept is related to the doctrine of the privity of contract.
Privity of contract: means that the contract is binding only the

parties who have made it.
Cont.
The main contract only applies between the employer and the main
contractor. for example, It does not apply to sub-contractors or to engineers.
These are some exceptions to this rule.
Third parties may come to the original contract. Some means for example
by:
✓Succession
✓Assignment
✓Subrogation (one person or party stands in the place of another. i.e
Insurance law) and other grounds
The construction between the original employer and the original contractor
could be binding to the successor of the employer or the contractor.
Assignment of rights may bring third parties to the contract.
Construction Contract
Construction Contract is one type of ordinary contracts
✓it is only different from ordinary contracts in that it deals
with the construction of various infrastructure.
✓ A major distinguishing feature between construction

contracts and ordinary contracts is that the former is bilateral,
affecting only two parties, whereas the latter involves more
than two parties.
Purpose of contract
✓The purposes of a contract are:
✓ To describe scope of work
✓ To establish time frame
✓ To establish cost& payment provisions
✓To Set forth obligations & relationships
✓ To Manage multiple risks
✓To Establish control mechanisms
✓To Minimize disputes
✓ To Improve economic return on investment

Types of contract as general
1. Contracts on onerous vs gratuitous title (reciprocity)
2. Commutative vs aleatory contracts (time)
3. Consensual vs solemn contracts (form)
4. Contracts of consultation vs contracts of adhesion (freedom of
negotiation)
Contract may be classified based on different criteria. for example,
✓Reciprocity of rights and obligations
✓Time parameter for the performance of the assumed respective obligations
✓Form requirement
✓The presence of freedom of negotiation or not
✓Obligation of result or diligence and
✓Other criterion
Cont.
Based on Reciprocity:
✓Based on the criterion of reciprocity, a type of contract could be classified into:

-Contract on onerous title and Contract on gratuitous title.
✓Contracts on onerous title create reciprocal rights and obligations on both

parties to the contract.
✓The contractor is obliged to execute, complete and remedy any defects in the
works, if any.
✓Whereas, the employer is also obliged to pay the contract price to the contractor.

Cont.
• Contracts on Gratuitous title create a unilateral obligation in the contractual
agreement (one party is obliged to the other, whereas the other party to the
contract owes nothing to the other party).
Based on Time:
This Contracts may be classified into:
1. Commutative contracts and
2. Aleatory contracts
• Commutative Contracts- are types of contracts in which the performance of the
contract by both parties to the contract is made at the same time (i.e. If one gets
service and pays the service fee instantly).
Cont.
Aleatory Contract:
There is a certain time interval between the performance of the obligation of one party to
contract and the other (i.e. Insurance contracts and construction contracts).
Based on Form:
✓1. Consensual contracts or
✓2. Solemn contracts
✓Consensual contracts require no written form, whereas solemn contracts do.
✓The construction contract, especially if it is made with the public body should
necessarily be made in writing.

Cont.
Based on Freedom of Negotiation:
1. Contract of Consultation and
2. Contract of Adhesion
Contract of Consultation: both contracting parties have full freedom to negotiate
and determine the entire terms of their contract.
Contracts of Adhesion: one party has already prepared the terms of the contract
and the other party has no freedom of negotiation.
- By whom the contract document is prepared has its own effect in terms of
interpretation of contracts (see Article 1738 of the Civil Code).
Types of Civil Engineering Contracts
a. Item/percentage rate contract
b. Lump sum Contract
c. Labor contract
d. Materials supply contract
e. Piece-work agreement
f. Cost plus percentage rate contract
g. Cost plus fixed fee contract
h. Cost plus fluctuating fee contract
i.Target contract
Cont.
a. Item/percentage rate contract(BOQ)
✓For this contract, contractors are required to quote rates for individual items
of work on the basis of schedule of quantities furnished by the client’s
department.
✓Also, in this form of contract, the client’s department draws up the schedule
of items according to the description of items sanctioned in the estimate with
quantities, rates, units and amounts shown therein.

Cont.
b. Lump sum contract
✓ In this form of contract, contractors are required to quote a fixed

sum (lump sum amount) for execution of work complete in all
respects i.e., according to the drawings, design and specifications
supplied to them with the tender with in the specified time.
✓ It is where the contract sum is largely determined before full

construction starts
Cont.
c. Labor contract
• This is a contract where the contractor quotes rates for the item work
exclusive of the elements of materials which are supplied by the client’s
department.
d. Material supply contract
• In this form of contract, the contractors have to offer their rates for supply
of the required quantity of materials, inclusive of all local taxes, carriage
and delivery charges of materials to the specified site within the time
fixed in the tender.

Cont.
e. Piece-work contract
• As the name signifies the piece-work agreement, it is that for which only a
rate is agreed upon without reference to the total quality of work to be done
or the quantity of work to be done within a given period.
f. Cost plus percentage rate contract
• In tendering for work on a “cost plus” basis, the contractor is paid the
actual cost of the work, plus an agreed percentage in addition, to allow
for profit.
Cont.
g. Cost plus fixed fee contract
• In this type of contract, the contractor is paid by the owner an agreed lump-
sum amount over and above the actual cost of work.
h. Cost plus fluctuating fee contract
• In this type of contract, the contractor is paid by the owner the actual cost of
construction plus an amount of fee inversely variable according to the
increase or decrease of the estimated cost agreed first by both the parties.

Cont.
i. Target contract
✓This is the type of contract where the contractor is paid on a cost-plus

percentage work performed under this contract.
✓In addition, he receives a percentage plus or minus on savings or

excess effected against either a prior agreed estimate of total cost or a
target value arrived at by measuring the work on completion and
valuing at prior agreed rates.

Elements of Contract
According to Art. 1678 of the Civil Code, no valid contract shall exist unless:
1) The parties are capable of contracting (Lawful and Capable).
2) The object of the contract is sufficiently defined and is possible and lawful
(Legal and Distinct).
3) The contract is made in the form prescribed by law(Standard).
CAPACITY of the contracting parties (competence to enter into a legally

binding agreement)
Cont..
4) willingness or consent by the contracting parties to create a legal
contract: (Intent) .
5) Payment for the Promise: (Consideration)
6) Constitute two parts: (Offer and Acceptance) an offer is an

indication that one party is willing to be bound by specific terms set out
in the contract
7) Parties enter into Agreement: (Agreement)

Contract Documents
⁎The contract documents contains:
⁎Specification (General and
⁎ Invitation to tender Particular)
⁎ Instruction to tender ⁎Bill of Quantities
⁎ Form of tender ⁎ Drawings
⁎The Agreement ⁎ Addenda and
⁎ Condition of contract (General ⁎Appendix to Tender
and Particular)
Cont..
Agreement: The agreement is the document that represents and Reflects the
legal contract between the owner and the contractor.
⁎ Obviously there is also a contract between:
⁎ The owner and the designer
⁎ The general contractor (GC) and the sub-contractors, or
⁎ The contractors and the suppliers for those contracts.
• It is simply a letter that constitutes legal evidence that a contract exists, and
forms the basis for its enforcement.
Sample form of contract agreement
• This Construction Contract Agreement (this “Agreement”) is made as of the ____ day of ______________by
and between __________, an individual located at __________ (“Owner”) and __________, an individual
located at __________ ("Contractor"). Owner and Contractor may each be referred to in this Agreement
individually as a “Party” and collectively as the “Parties.
• WHEREAS, Contractor is a duly licensed general contractor in good standing, with contractor’s license
number ___________; and
• WHEREAS, Owner owns the property located at _____________________ (the “Property”) and desires to
have certain work performed by Contractor at the Property.

Cont..
• NOW THEREFORE, in consideration of the mutual promises and for other good
and valuable consideration exchanged by the Parties as set forth in this
Agreement, the Parties, intending to be legally bound, hereby mutually agrees as
follows:
1. Description of Work.
Contractor shall perform the work described in Exhibit A(appendix) (the

“Work”), in accordance with Owner’s contract plans and specifications, attached
as Exhibit B, this Agreement and any Change Order, as defined herein,
(collectively, the "Contract Documents") at the Property.
Cont..
2. Contract Price and Payments.
Owner agrees to pay Contractor for the Work the total amount of ETB__________ (the “Contract Price”).
Payment of this amount is subject to additions or deductions in accordance with any mutually agreed to
changes and/or modifications in the Work, and the other documents to which this Agreement is subject.
Payment for the Work will be by cash, according to the following schedule:
(a) ETB _____________ deposit, due upon the execution of this Agreement.
(b) ETB ____________ due every week from the date of this Agreement.
(c) ETB _____________ due upon _________________.
(d) ETB _____________ due upon _________________.
(e) ETB _____________ balance due upon completion of the Work.

3. Certificate of Completion.
Upon completion of the Work, Contractor shall notify Owner that the Work is ready for final inspection and
acceptance. When Owner finds the Work acceptable and this Agreement fully performed, Contractor shall
issue Owner a “Certificate of Completion” stating that the Work has been completed in accordance with the
Contract Documents and the entire balance of the Contract Price is due and payable. Owner shall make the
final payment within ____ days after receiving a Certificate of Completion. Owner by making final payment
waives all claims except those rising out of:
(a) any faulty Work appearing after completion
(b) any Work that does not comply with the Contract Documents and
(c) outstanding claims or liens.
Contractor, by accepting final payment, waives all claims except those previously made in writing, and
which remain unsettled at the time of acceptance.

Cont..
4. Materials and Labor.
Contractor shall provide and pay for all labor and equipment, including tools,
construction equipment, machinery, transportation and all other facilities and services,
and all materials as described in Exhibit C necessary for the completion of the Work.
All materials shall be good quality and new, unless the Contract Documents require
or permit otherwise. Contractor may substitute materials only with the prior written
approval of Owner.
5. Starting and Completion Dates.
The Work under this Agreement shall begin on ________, and shall be completed by
__________.
Cont..
6. Instructions. Owner shall give all instructions to Contractor and shall furnish
all necessary surveys for the Work.
Unless otherwise provided in the Contract Documents, Owner shall secure and
pay for all necessary easements, assessments or other approvals necessary for
permanent structures or permanent changes in existing structures or facilities
which are necessary to complete the Work.
7. Licenses and Permits. Contractor shall obtain all licenses and permits necessary
for proper completion of the Work.
Contractor is responsible for the cost of any necessary permits or licenses.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written
above.
Owner Full Name Owner Representative Signature Owner Representative Name and Title
Owner Signature Owner Full Name
Contractor Full Name Contractor Contractor Representative Name and T

Representative Signature
Contractor Signature Contractor Full Name

Contract management
• Contract Management is the management of its Processes, Stakeholders and
their Performances along the Planning, Implementation and Monitoring +
Evaluation Cycle of the functions of Management.
• Contract Management process can be idealized in to three major processes.
These include:
• Contract Formulation, [negotiations and signing of contract agreement]
• Contract Administration, [contract implementation, changes management, and
claims and disputes management] and
• Closing of Contract Processes [closing of accounts and contract evaluations]
Contract administration
Contract Administration is a process that ensures the successful completion of the project
under consideration with substantial compliance of the Terms of the Contract involves in
main processes contract implementation, changes management, and claims and disputes
management.
following activities are included in Contract Administration services:
✓Identifying contractual responsibilities of Stakeholders.
↗Reviewing the Terms of Contract Documents
↗Extract Monitoring Responsibilities
↗Preparing Monitoring Responsibility Summary Sheets

✓Determine and understand the construction components of the project.
➢Reviewing the Contract Drawings and Technical Specifications
➢Extract the Construction Methods and Sequences
➢Prepare Construction Methods and Over all Sequences Sheets
↗Review submitted (Integrated) Schedules and Break downs for
operations such as Organizational Breakdowns, Resources Breakdowns &
Schedules and Time Schedules.
↗ Record, Monitor and Evaluate Progress of Mobilizations, Works and
Completions.
↗Report Project Status daily and / or periodically and Completions.
↗ Certify qualities of materials, shop drawings, samples, workmanships
and works.

↗Measure Works, Record Site Potentials and Certify Payments and
Completions
• Take off sheet and Bending Schedules are used for Measurement of Works
• Method of Measurement is according to standard practices
• Site Potentials such as material, equipment and Manpower on site together
with appropriate
site organization is recorded
• Advance, Interim and Final Payments are certified
• Mediate disputes.

Dispute and Claim Management
Definition and Types of Claims
✓Dispute in simple term is a difference in a line of thought.
✓ Claim is mostly concerned with entitlements and liabilities arising under, or as a
result of, a legally valid contract (Hughes & Barber, 1992).
❖ A construction claim is therefore can be:
✓a demand for payment of additional compensation
✓ adjustment of the parties' respective contractual obligations
✓Extension of Time or compensating delay damages, or any other change with regard
to the contractual conditions or terms.

Cont..
❖Claims can be associated with three major categories
➢ Time Related Claims: Claims associated with delay or in time completion of

projects where either of the following six Entitlements or Penalties are subjected to:
➢ Time Extension only
➢Liquidated Damages only
➢Time Extension and Cost Compensation
➢Concurrent Compensations and Bonus
➢ Reliving of Obligation

Cont..
Cost Related Claims: Claims associated with monetary compensation where
either of the following entitlements or penalties are entertained:
✓Additions requiring rate adjustments Price Changes
✓Provisional sum adjustments
Default by Contracting Parties: Claims associated with non performances of

contractual obligations such as:
✓Delay in Payment Certificates
✓ Suspensions and Terminations

Claim Administration Processes
✓Claim administration process is understood as the process for the
compensation of any damage, and/or changes resulted during the
implementation of Construction projects which are called entitlements
with quantum.
✓ This is because claims require establishing both the liabilities as well

as the damages incurred in any construction contract.
✓ Construction contracts allow that all contracting parties will be

entitled to make claims.
Cont..
❖ claim administration process can generally fall into three major functions.
A, Claim Submittal: This is a process by which the claimant is obliged to claim

within a reasonable period of time (28 –30 days in most contracts) followed by
her/his preparation for all substantial documents and legal aspects supporting
hers/his entitlements for an official submittal.
This constituted that a claim has been filed for its consideration if all these three
sub processes called Claim Notification, Claim Preparation and Claim Submittal
are fully undertaken by the claimant.

Cont..
B, Claim Processing: covers claim handling, dispute resolution and claim approval.
❖Claim handling: This process initiates checking of the claim whether, it is legally or
contractually Supported or not
• documents provided are valid and reliable to substantiate the claim for consideration
or not and overall procedural requirements have been followed or not.
• After verifying the validity of the claim proper computations and evaluations will be
carried out to present the proposed compensation for the contractual parties the claim
is applicable to.
• Generally, the sub process that undertakes these requirements is termed as Claim
Handling.
❖Dispute resolution
3 types of dispute resolution systems
1. Preventive Dispute Resolution System: including
Partnering, Use of dispute resolution advisors and Use of Facilitators for early neutral
evaluation and advise to prevent the happening of claims or their consequential disputes
2. Amicable Dispute Resolution System
✓Negotiation
✓conciliation
✓Mediation
Con..
Conciliation: is an alternative dispute resolution method in which expert is appointed to
settle the dispute by persuading parties to reach an agreement
Mediation: is a process of resolving issues between parties wherein the third party assist
them in arriving at an agreement
3. Judgmental Dispute Resolution System Including:
➢Adjuration or use of Dispute review board
➢ Arbitration and
➢Litigation where the formal adjuratory or common law system is applicable to bring
the closure of claim processing.
Cont..
❖Claim approval: Once the contractual parties agree on the final outcome of the
claim process then they have reached into a stage where the claim is approved.
C, Claim Enforcement: includes claim enforcement and claim closure.
Claim enforcement: This is a stage where the approved claim is enforced and
finally becomes a closure therefore two sub processes are included.
✓ The claim enforcement process will entertain the inclusion of the approved
claim into payment certificates where their enforcement is due.

Cont..
Claim closure: Once this compensation or entitlement is due in accordance
to the approved claim and its Enforcement requirements, then it is
concluded for its closure.
In order to account for such an administration process contracts, provide
claim clauses within their provisions in their conditions of contract.

Contract Conditions related to Claims
✓ Claim clauses which are set out in the MoWUD's SCC for construction of civil work projects in
Ethiopia, 1994.
✓ These claim clauses are largely similar to FIDIC's SCC, 1996 except in the case of delegating Duties and
Power of the Engineer by MoWUDS. Some contract conditions related to claim:
✓ Cumulative Time Extension Exceeding 15% of the contract time under clause 44,
✓ Fixing rates under clause 52.2,
✓ Variation exceeding 10% under clause 52.3,
✓ Increase or decrease of costs under clause 70,
✓ Termination of contract under clauses 63 & 69,
✓ Repayment of contractor under clause 26.3, etc.

Major clauses for claims
✓Generally, deviations from performance requirements among contractual stakeholders
whether it is related to completion time, or construction cost, or the fulfillment of its
quality and its intended purpose, or safety, health and environmental consequences can
trigger claims in construction contracts.
❖Levy, 2000 outlined 11 reasons why claims can be initiated.
➢ They are related to Causing changes due to variations in requirements:
✓poor or unclear tender and/or contract documents
✓poor or inadequate administration of responsibilities by stakeholders and
✓ Unforeseen or uncertain situations during execution

CHAPTER - THREE SPECIFICATION
General
Specification is defined as the designation or statement by which written

instructions are given distinguishing and/or limiting and describing the
particular trade of work to be executed by describing the required materials
and products including their quality and workmanship.
In short specification is a statement of particular instructions of how to

execute some task.
Specification is one part of the contract documents.

cont..
• Specifications are written based on the prepared design,
drawings, general and scientific trends of workmanship, quality
expected, equipment involved and materials to be used for the
particular trade of work.
The specifications should clearly specify: -
• Design and drawing, Labor employment, Materials to be used,

Construction method and Equipment’s used.
cont..
• Specifications should be clear, concise and brief descriptions
of what is required to execute the proposed trade of work.
• The information that is needed for construction is usually

conveyed by two basic communication lines.
• They are Drawings (pictorial) and Specifications (written).

cont..
• In so doing the methods of communication should complement
each other and neither should overlap nor duplicate each other.
• Specifications are devices for organizing the information

depicted on the drawings and they are written descriptions of
the legal and technical requirements forming the contract
documents.

cont..
❖Their difference is that the drawings should generally show the
following:
► Dimensions, extents, size, shape and location of component
parts
►Location of materials, machineries and fixtures
► Interaction of furniture, equipment’s and space
► Schedules of finishes, windows and doors
cont..
❖Specifications generally describe the following: -
► Type and quality of materials, equipment’s, laborer workmanship
► Methods of fabrication, installation and erection
► Standards, codes and tests
► Allowance, submittals and substitutions
►Cost included, insurance and bonds
►Project records and site facilities.

Purposes of specifications
The purposes of specification generally includes:
♣ Guide the bidder at the time of tendering to arrive at a reasonable cost for
the work
♣ Provide guidance for execution and supervision of works.
♣Guide the contractor for the purchase of materials
♣ Serve as a part of contract document to limit and describe the rights and
obligations of each contracting parties.
cont..
♣Guide the bidder to identify his capacity to execute the work.
♣ Serve as fabrication and installation guide for temporary and
permanent works.
♣ Guide the contractor for the purchase and/or hiring of
equipment.
♣Serve for the owner to know what he/she is entitled to
receive
cont..
♣Serve for the manufacturers of construction materials, equipment,
tools etc to grade, classify and improve qualities of their
produces.
♣ Indirectly, the specifications are very much related to the legal

considerations, insurance considerations, bidding requirements,
alternates and options, rights, obligations and remedial measures
for the contracting parties.
Types of Specifications
❖In general, specifications can be broadly classified into four
categories as follows:
1. Manufacturer’s specification:
Manufacturers prepare specification of their product for the

guidance of their users, which may include property
description and installation guide lines.

Cont..
2. Guide Specification :
Specifications prepared by an individual or group of

individuals based on manufacturer’s specifications,
established trends of workmanship, service and laboratory
tests and research findings to be used as guide lines for
preparation of contract specifications

Cont..
3. Standard Specification:
Specifications which are intended to be used as a

reference standard in the construction of a project.
The guide specification which has been standardized

by a recognized authority is considered as standard
specification.
Cont..
4. Contract (Project) Specification:
✓ The specification prepared for a particular project to

accompany the drawings and other contract documents.
✓ The specifications described above can be prepared

following the format which has general and specific parts
(general specification and specific specification).

General specification
• In the general part of the standard specifications the following items are
included:-
➢Administrative and Procedural Requirements
➢ Scope definitions
➢ Reference organizations and Standards
➢Project description and site facilities
➢ Submittals and quality assurance
➢ Delivery, storage and handling
➢ Project records, Insurances and Other general requirements
Specific specifications
➢In the specific part of the standard specifications, detailed
description of the quality of items to be used is given.
➢ In addition to this, preparatory actions and methods of

incorporating the items into the project are indicated.

The Ethiopian perspective
• “Technical Specification and Methods of Measurement for
Construction of Buildings”, of March 1991 is the standard

specification which has been in use for many years as one
of the contract documents in our country
• This document has the general requirement part and the

specific part.

cont..
• The general requirement part contains the following items, which may
be applied to any project and any trade of work are described in
general terms:
• Item - 011 - General
• Item - 012 - Site Description
• Item - 013 - Quality Assurance
• Item - 014- Project Records
• Item - 015 - Site Facilities
• Item - 016 -Cleaning up

Cont.…
• In the specific part the different trades of works (excavation
and earthworks, concrete works, etc.) are described in details
and the method of measurements are given.
• Refer the Ethiopian standard
• Present a sample document – explain
• Show sample EBCS (Sanitary)
• BDE’s material spec

cont…
Provisional specification:
• In the specific part of the standard specifications, detailed description

of the quality of items to be used is given.
• In addition to this, preparatory actions and methods of incorporating

the items into the project are indicated.
• In the specific part the different trades of works (excavation and

earthworks, concrete works, etc.) are described in details and the
method of measurements are given.
Types of specification based on writing techniques
Specifications could be written in several ways, with the prime emphasis

given to either the producer company’s brand or the performance capacity
of the material and so on.
Accordingly, there are the following types of technical specifications.
1. Proprietary Specifications
These specifications call for desired materials, producers, systems and

equipment by their trade names and model numbers.

cont..
For detailed descriptions reference should be made to manufacturer’s
specifications.
They are of two types; closed (sole) source and open or equal source.
2. Performance Specifications
specifications which define products based on desired end results which

are performance oriented; most appropriate when new or unusual
products or systems are required or when innovation is necessary.

cont..
• Describing the problems or conditions under which the
products or systems must operate, and the parameters for
the acceptable solutions is difficult and challenging.
• Testing methods and evaluation procedures for defining

the required performances must be explicitly specified.

cont..
3. Reference Specifications
• Specifications which refer to levels of quality established by

recognized testing authority or standards set by quality control
authorities.
• These specifications are also used in conjunction with other

types of specifications.

cont..
4.Descriptive Specifications
• Specifications which describe all components of products, their

arrangements and methods of assembly, physical and chemical
properties, arrangement and relationship of parts and numerous
other details.
• The specifier shall take total responsibility for the function and
performance of the product.
cont..
5. Cash Allowance Specifications
Specifications meant to direct bidders to set aside a

specified amount of money to be applied to the
construction work at the direction of the specified.

Specification writing
✓Basically specifications are not to be created; they are
prepared based on existing standards, codes, guidelines,
and laws.
✓ Specification writing embodies certain methods of

presenting information and instructions.
✓Considerations for specification writing

cont..
Concepts to be taken into consideration When writing specifications : -
A.) Specification writing requires:
✓Visualization (having clear picture of the system)
✓ Research (to know the legal impact correctly)
✓ Clear thinking (understanding things directly without misleading)
✓ Organizing (organizing what we know to write the specification)

Cont..
B) Specification writing requires professional ability to read
drawings:
C) Specification writing require wide knowledge of the construction

materials, various levels of workmanship, different construction
equipment’s and method of construction to be employed
D) Specifications use simple and clear language such that it can

readily be understood by the parties.
Cont..
E) Specifications shall be brief and short as much as possible
(avoid long sentences without punctuations)
F) Specifications shall include all items affecting the cost of the

work
G) Specifications shall be fair and do not attempt to throw all

risks and responsibilities on one of the parties signing the
contract, the employer or the contractor.
Cont..
H) Specifications shall avoid repetition of information shown on
drawings to avoid mistakes and duplications within the
specifications and drawings
I) Specifications shall not include inapplicable text and do not

specify the impossible or anything not intended to be enforced.

Useful references in specification writing
• The following are useful references in Specification Writing: -
• Codes and ordinances of governments, cities, or municipalities. For

example, Ethiopian Building Code of Standards (EBCS), ERA manual
Standards prepared by distinct societies and government agents.
• For example, ACI standards, ASTM standards, BS, ES.

Cont..
• Standards or model specifications prepared by manufacturers,
professional societies, and government bodies.
• Master specifications and previously written specifications.
• Information or experience acquired by personal observation and contact

with trained or experienced people in the construction industry.

Specification language
❖In specification writing, the specification writer should present

instructions regarding the particular work under consideration in such a
manner that:
✓The drawings are more clearly interpreted, not duplicated.
✓ Rights, obligations, and remedial measures shall be designated without

ambiguity or prejudice.

Cont..
✓Clearly express the extent of works under consideration; therefore, the

phraseology used in this regard shall be
I, Judged by its quality not its length
II, should be concise and short and written with commonly used words
III, Punctuations are important but their usage shall be limited to few

Cont..
IV, Capitalizing the first letters is mandatory for the following expressions: -
a) Parties to the contract; e.g. Employer/Client /Contractor/ Engineer
b) Space within the building; e.g. Bed Room, Toilet, Living Room
c) Contract documents; e.g. Bill of Quantity, Working Drawing, Specification
V, minimize pronouns, better to repeat nouns
VI, Minimize the use of symbols
VII, Do not use foot notes, do not underline within a sentence for emphasis

Cont..
VIII, Words shall be used as follows: -
a, shall in place of must; use “shall” for the duties of the contractor or the
consultant to represent the word “must”
b, “will” is used for the duties of the employer to represent the word “must”
c) “must” –avoid the use of the word “must” and substitute by the word shall to
prevent the inference of
different degrees of obligation.
d) Avoid the use of words which have indefinite meanings or limitless and
ambiguous in their meanings. For example, any, either, same, similar, etc.
CHAPT-4 Measurement of Different Works
• The general approach to measurement will require the separation
of works between substructure and superstructure.
• The terms ‘substructure’ and ‘superstructure’ describe all

structural works below and above ground level respectively.

Measurement of Different Works…
The substructure is likely to include:
• Ground work
• Concrete work
• Masonry work

• The superstructure most likely includes:
• Concrete work
• Masonry work
• Roofing
• Carpentry and joinery

Measurement of Different Works..
•Metal work
•Finishing
•Glazing
•Sanitary installation
•Electrical installation

• The demarcation between the substructure and
superstructure should be taken as the damp proof
course in structural walls.
• The ground floor slab would be measured with

substructure work.

Groundwork
• Site Preparation/Over site Excavation
It includes removal of trees and tree stumps

and clearing site vegetation.

• Removal of trees and tree stumps is measured as

enumerated item.
• Tree girths are measured at a height of 1.00m
above ground and stump girths at the top.
• Clearing site vegetation is measured in m2 and
embraces bushes, scrub, undergrowth, hedges,
trees and tree stumps < 600 mm.

1. Excavation
It includes the following items:
• Topsoil excavation
• Excavation to reduce levels
• Excavation for foundation/ Deep excavation
• Backfilling
• Disposal of excavated material

A) Topsoil Excavation
• The surface of most ‘green field’ sites comprises a
compactable layer of vegetable matter called ‘topsoil’.
• It is measured in m2 stating the average topsoil depth in

the description.

• A clearance around the entire basic plan must be left,
usually about 1.0-1.5m is allowed on each side of a
building
• Disposal of this material off the site is measured in m3,

giving details of specified locations and handling where
appropriate.
B) Excavation to Reduce Levels
• Where the site is sloping then further excavation is
required to reduce the level of the ground to the
specified formation level; this excavation is measured
in m3, giving the maximum depth range in the
description.
C) Deep Excavation /Foundation Excavation
• It is the actual excavation for the foundation and is

measured in m3.
• All excavation is measured net with no allowance for

increasing in bulk after excavation.

D) Backfilling
• Once the foundation of the building is constructed, one

of the next steps in construction is the backfilling.
• It is the put back of soil that is removed during the deep

excavation or selected material from somewhere else

E) Disposal of Excavated Materials
Removing excavated material from the site often costs more
than the initial excavation.
For this reason it is always necessary to measure disposal of
excavated materials as a separate item in m3.
It is necessary to describe where and how the material is to be
transported.
Measurement of Different Works
2. Masonry work
• The measurement of masonry work requires the separation
between substructure and superstructure.
• With some exception, the principal unit of measurement for

masonry work is m2.
• The two dimensions needed to provide this area are the centerline
length and the height of the walling.

• The description will identify the walling thickness, the type of
masonry unit, the bond, the type of mortar and the pointing.
• Rather than repeating these details in every description, a heading

can be established to include the majority of this information.
• The subsequent descriptions need only make reference to the

wall’s thickness and whether it is face work on one or both sides.

• The normal order of measurement is:
➢External walls
➢Internal walls
➢Chimney breasts and stacks

External walls
• The length of external walling will be obtained by the method of girthing
and the height will normally be taken up to some convenient level, such as
the general eaves line.
• Any additional areas of external wall, such as gables, parapets and the like
will be then taken off.
• Finally, adjustment of walling for windows and door openings will be made.

Internal walls
• The measurement of external walls is usually followed
by internal walls, which may be of bricks or blocks.
• A careful check should be made on the type and

thickness of each partition

3. Concrete Work
• The Measurement of concrete work comprises the measurement of the
concrete (Plain concrete) and the reinforcement bars.
The order of measurement is:
I. Concrete
II. Formwork
III. Reinforcement bars
• The unit of measurement for the concrete is m3.
• The descriptive part of the measurement identifies the type

(characteristic compressive strength), the mix proportion,
and the work for the placement and compaction.
• And formworks are measured in m2 stating the type and

size of the material.
• The steel bars are measured in kg.
• Quantities are taken from the structural drawing and

recorded on specially lined paper known as bar schedule.

Shape of bending
Bar  Length (m) No. Total Weight
mark (Dimensions in length (m) (kg)
(mm) cm)
{1} 10 11 20 220

Linear density for the determination of the quantity
of bars (kg)

(m 6.0 8.0 10.0 12.0 14.0 16.0 20.0 22.0 25.0 28.0 32.0 36.0
m)
Densit
y
0.22 0.39 0.62 0.89 1.21 1.58 2.47 2.98 3.85 4.85 6.31 7.99
(Kg/m
)

4. Measurement of Roofs
• The principal unit of measurement for roof coverings is m2.
• The descriptive part of the measurement must identify the

kind, quality and size of materials, together with the method
of fixing.

• The measurement of pitched and flat roofs conveniently divides
between the roof structure and the roof covering.
• In practice the measurement of roof coverings will follow the

measurement of the roof structure.
• Eave and barge boarding together with guttering and down pipes are
normally included as part of the measurement of roof coverings

• The measurement of the main roof slope area should be
followed by adjustments for chimneys and dormers.
• No adjustment is made to the roof covering area for voids of

less than one square meter in area.
• Ridges, hips, valleys, eaves and the like are all measured in
linear meters.
Measurement of Roof Structure
• The Unit of measurement for roof structure naturally falls between

enumerated items (trusses) and linear meters, (rafters and purlins).
• In the case of the latter the description must include the cross
sectional dimensions of the material being used; whist the former
must fully describe the truss

Pitched roofs
Measurement of Pitched Roof Coverings
The area of roof coverings is unaffected by the inclusion

of hipped ends and valleys as long as the roof pitch
remains constant

• When measured, all three will provide the same roof
slope area, regardless of whether they are hipped,
gabled or a combination of the two.
• In each case the sloping roof area can be established
by initially ignoring any projects, valleys or hips and
simply measuring the main length (L) multiplied by
the roof slope length (s).

• Some surveyors choose to enter the dimensions for the roof slope area by
recording the plan area of the roof in the dimension column and timesing
this by the natural secant of the roof slope in the timesing column.
• Others prefer to establish the roof slope length as a waste calculation first
and then record the plan length and the roof slope length in the dimension
column.
• This is them timesed by two for each roof slope in the timesing column.

• Others prefer to establish the roof slope length as a waste
calculation first and then record the plan length and the roof
slope length in the dimension column. This is them timesed
by two for each roof slope in the timesing column.

Measurement of Flat Roof coverings
• Measurement of flat roof coverings should follow the same

pattern as pitched roof coverings, with the roof structure
being measured first, followed by the covering
• Asphalt coverings to flat roofs are measured in m2.

Fascia, eaves and verge boarding
• Eaves soffit boarding (fascia and soffit) together with verge (barge)
boards not exceeding 300 mm girth are measured in linear meters
giving their size in the description.
• Where boards exceed 300 mm wide they may be measured

superficially

Rainwater gutters and down pipes
The measurement of rainwater goods completes the work associated with

roof coverings.
Gutters and down pipes are measured in linear meters over all fittings.
The description should include reference to the type of pipe or gutter, its
nominal size, and the type, method and spacing of fixings.

• Fittings, such as running outlets, stopped ends,

offsets and connecting shoes, are enumerated and
measured extra over the pipe or gutter on which
they occur.

5. Measurement of Finishing
• The term ‘Finishing’ includes operations

associated with the completion of the floors,
walls and ceilings of a building.
• These are screeding, plastering, wall and floor
tiling, wallpapering and painting
Sequence of Measurement
• In the measurement of this work, it is essential to adopt a
logical order in taking off work. The order of measurement of
finishing on each floor will normally be:
• Ceiling
• Walls
• Floors
• Linear items like skirting will follow the measurement
of the main areas of wall finishing.

General rules of measurement

• Work to attached beams is included with ceiling
finishes, whilst work to attached columns is
included with wall finishes. Finishes to isolated
beams and columns must be given separately as
should work in staircase.

• The principal unit of measurement for

wall, floor and ceiling finishes is m2.
• Where the width does not exceed 300
mm the unit of measurement is
linear.

Ceiling Finishing
• The ceiling area is measured in m2 between wall
surfaces, stating in the description the thickness and
the number of coats.
• In cases where the ceiling finishes are identical
throughout a floor, it may be appropriate to measure
gross, over internal walls, and subsequently deduct
the plan area of internal walls from the gross ceiling
area.

Wall Finishing
• The measurement of wall finishing is taken from floor
to ceiling.
• The perimeter length of each room should be
established as a waste calculation and then
transferred to the dimension column where it is
followed by the floor to ceiling height.

• Where the wall finishing are of tiles, full

particulars of the finishing are to be given, such
as kind, quality and size of materials, and
method of fixing.

Skirting
• Skirting are measured in linear meters and usually included
with the measurement of wall finishing.
• All are based on room girths and can be ampersanded to

the dimensions established for wall plaster purposes
(assuming the constant dimension approach is adopted).

Floor Finishing
• Cement and sand screeds together with tiled or wood block floors
are measured in m2.
• In some situations it is possible to utilize the previously booked
ceiling areas for the measurement of floors.
• The use of an ampersand to link these two sets of dimensions can
save a great deal of time, but care should be taken to ensure the
respective areas are consistent.

Painting
• The unit of measurement for painting is based on the
girth of the surface to be painted.
• Where it exceeds 300 mm it is measured as an area and

where it is an isolated surface and does not exceed 300
mm in girth, it is measured in linear meters.

6. Measurement of Sanitary Installation

• Plumbing installations in domestic buildings involve a
number of different systems associated by the supply,
distribution and disposal of water within and out of a
building - above the ground and below the ground.

Order of Measurement
• Connection to water authority’s main and all work up to
boundary of site
• Underground service and rising main from site boundary up
to cold water storage tank
• Branches to rising main

• Cold water storage tank or cistern and associated work
• Down services with branches
• Sanitary appliances such as sinks, wash basins, baths and water
closets
• Discharge pipes – waste, soil and vent pipes
• Any other work connected with the plumbing installation

Pipe work
• Pipes are measured in linear meters over all fittings and branches, stating the type,
nominal size and the method of jointing and fixing.
• Fittings are enumerated and measured as extra-over the pipe work on which they
occur.
Equipment
• In a domestic situation this will include such things as boilers, pumps, cisterns and
cylinders. These are enumerated giving in the description the type, size, pattern, rated
duty, capacity and method of fixing.
Sanitary Appliances
• This includes washbasins, urinals, baths, bidets, shower

trays and sinks.
• These appliances are enumerated giving details in the

description of their type, size, capacity and method of
fixing.
Waste pipe work
• It embraces all the pipe work and fittings that are associated with the disposal of used or soiled water,
and vent pipe. The following diameters of pipe are required for the different appliances:
• Washbasin -------------- 32 mm dia.
• Bath/shower/sink --------- 40 mm dia.
• Water closet (WC) -------- 110 mm dia.
• Waste pipe work is measured in linear meters, giving in the description details of the type of the pipe, its
nominal size, the method of jointing and the type of pipe brackets.
• Fittings – elbows, tees and the like – are enumerated as extra-over the pipe work on which they occur.

• Drainage work
• It is the disposal of used and surface water from a building to a point
of disposal or treatment.
• Drains include excavation of pipe trenches, drain pipes and fittings.
Pipes are measured over all fittings and branches in linear meters,
stating the kind of pipe work, the nominal size and the method of
jointing.

• Pipe fittings, such as bends and branches, are enumerated extra-over
the pipe on which they occur.
• The excavation, concrete work, brickwork and rendering associated
with manholes and septic tanks are measured in accordance with the
rules for the appropriate work section.

7. Measurement of Electrical Installation
• Electricity can only be transmitted through a conductor when

there is a complete circuit from the source, via a conductor, back
to the source. Each conductor cable contains a ‘live’ wire
carrying the power to an appliance, a ‘neutral’ wire carrying the
power back to the source and an earth wire which reduces the
risk of shock by carrying the current to a circuit breaker or the
ground in the event of a short-circuit..
• The conductor used for the domestic supplies is copper wire
• Cables are identified by the cross sectional area of the conductors
and this is expressed in mm2.
• The more common cable sizes and the number of wiring circuits
found in domestic wiring installations are given below.
• Cabling
• Conduit and cable are each measured separately in linear meters
stating in the description the type and size of cabling.

Switches, Socket outlets and Light Points
• As a separate enumerated item socket outlets, light points (luminaries)

and other accessories should be enumerated.
Appliances
• Separately fused circuits will be necessary for the cooker, immersion

heater and electric heating units, and are enumerated items.

CHAPTER- FIVE
PROJECT COST ESTIMATION AND VALUATION
5.1. General
❖Terms used in estimation and valuation:
Crew: are groupings of the various labor classifications along with the tools
and equipment (not installed equipment) required to accomplish activities.
✓Productivity is a production rate for each crew type.
Escalation: is the provision in a cost estimate for increases in the cost of

equipment, material, labor affected by continuing price changes over time.
Cont..
✓Escalation costs change continuously following changes in: such as technology,
availability of resources, and value of money (e.g., inflation).
Contingency: The quantitative method used to analyze project contingency should

consist of objective analysis of cost and schedule estimate uncertainties and discrete
project risks.
✓The analysis should aggregate the probability and consequences of individual risks,
and cost and schedule uncertainties to provide an estimate of the potential project
costs.
Breakdown: is the determination of necessary amount of materials for unit volume of

work.
5.2 project cost estimation
➢Project cost estimation is the process of valuing on monetary expression,
including the cost of all possible entrants necessary for the planning,
implementing and monitoring stages of the proposed project under consideration.
The possible entrants are:
➢ preliminary investigation (project appraisal costs)
➢ design and supervision (consultancy cost)
➢Construction works (contractor’s cost)
➢Land owning cost, and
➢ monitoring costs
Cont..
• Cost due to construction is given special attention here; it includes cost due
to material, cost due to labor, cost due to equipment, overhead costs and
contractor’s profit.
• In order to facilitate estimation of cost due to material, it is important to

know the quantities of various elements involved in construction of various
parts of the building work i.e. material breakdown is essential.
• Project Cost Estimate: The reason for estimating is to provide the most
realistic prediction of cost at any given stage in a project.

Cont..
• The estimate should be evaluated not only for its quality or accuracy, but also to
ensure that it contains all of the required information and is presented in a way that
is understandable.
• Estimation Support the budget process by providing estimates of the annual funding.
• All estimates take the form of base estimates, plus allowances for uncertainties and
specific contingencies as required.
• Classes of cost estimation [purpose oriented]
• Cost estimates can be considered to fall into four basic classes based on the purpose
the estimate serves.

Cont..
• Feasibility estimates: These are used for comparing estimates of potential
alternative proposals.
• A feasibility estimate should comprise all costs which will be charged to the
project so that the best estimate of expected total cost is provided.
• The accuracy of the Feasibility estimates shall be not more than ± 20%.
• Appraisal estimate: An estimate for the chosen scheme and is generally based
on a preliminary design and design study specifications and produced as a
cash estimate to support the case for the development of an outline design.

Cont...
Engineer’s Estimate (Pre-tender estimate): is based on the detailed design work
using the information supplied in the tender documents.
• It is generally used as a indicator against which tender evaluation are gauged.
• The accuracy of the Engineer’s estimates shall be not more than ± 10%.
Achieved cost: is a record of the actual costs of the project.
It is used to review performance and to provide data for future projects.
• It is useful to compare the actual use and expenditure of allowances and

contingencies with those included in the various estimates.
Cont..
Purposes of Cost Estimation
❖The main purposes of costing or estimating are to:
• Know the volume of work in reference to the fund available
• determine actual cost per unit of item
• identifying engineering estimate of the work for bidding purpose
• work out economical use of materials , labor and equipment
• in cases of variations to determine the extra cost to be incurred
• when changes in cost due to legislation happens, to work out the escalation in cost

Cont..
❖The following information is required to define cost per unit of work
1. Correct information of the market price of the materials at the time of need to
be used as a basic price
2. Correct information of the rates of various categories of skilled and unskilled
laborers as wage rates to be used for daily work rate
3. Output of laborers per day for various types of items (productivity)
4. Correct information of the rates of various categories of equipment’s and
tools as rental rates to be used for major items of rates
5. Up-to-date knowledge of the construction methods
Cont..
❖Factors affecting cost estimation • Construction facilities /tools and
• Type and documentation of the method of construction
project • Location of the site
• Construction scheduling • Transportation charges
• Bidding environment • Proper management
• Quality and availability of material • Land charges (lease)

and labor (given in specification) • Nature of subsurface condition
Types of Costing or Estimation
❖Estimation can be broadly classified as preliminary (approximate) and

detailed.
1, Preliminary /approximate costing:
This type of cost estimation is required to know the financial position of the
client before costly detailed designs are carried out.
❖Such estimates are based on practical knowledge and cost of similar previous
works

Cont..
Examples of approximate cost estimations are as follows:
A. Cost per functional unit
❖Services quantity dependent on types of function served. eg.
• Hospital =cost per bed, Dormitory= cost per student, Cinema or theatre =
cost per seat, residential buildings = cost per area, road works = cost per
kilometer length, culverts or bridges =cost per meter span, water supply or
sewerage projects = cost per head of population.

Cont..
B. Plinth area method
• This estimate is prepared on the basis of plinth area of the building or

project.
• The rate per meter square is deduced from the cost of similar building
projects in the locality.
• The plinth area shall be calculated based on the roof area, by taking
external dimensions of the building at the plinth level.
• Courtyard and other open area shall not be included in the plinth area.
Cont..
C. Cubical Content method
• The estimate is based on cubical contents of various buildings, i.e. plinth area of the building x
height x cubic content rate.
• Height should be taken from the top of flat roof (or halfway of the sloped roof) to the top of
concrete in foundation.
• Detailed cost estimate (based on item rate)
• This is the most reliable and accurate type of estimate.
• The quantities of items are carefully prepared from the drawings and the total cost worked out from
up to date market rates.
• A detail cost estimate thus requires quantity surveying and analysis of the different rates for the
quantities prepared.

cont..
Rate Analysis
• Rate Analysis is the process of fixing cost per unit of measurement for the
different item of works.
• Cost due to construction (contractor’s cost) is given special attention here.
• Total cost per unit of work (TC) maybe grouped into two components;
direct cost and indirect cost.
• The direct cost (DC) includes cost due to material, cost due to labor, cost
due to equipment, whereas the indirect(IC) cost covers overhead costs,
contractor’s profit.
• Overhead costs are expenses for general office facility, rents, taxes,
electrical light, water, and other miscellaneous items.
• Whereas contractors profit is variable between contractors, types of work,
working environment

Cont..
• Total cost, TC= [DC + IC]
• Direct cost, DC = direct [material cost + labor cost+ equipment cost]
• Indirect cost, IC = [overhead cost + profit]
• In order to facilitate estimation of cost due to material, it is important

to know the quantities of various materials involved in construction of
various parts of the building or construction work i.e. material break
down is essential as shown above.

Cont..
• Different formats, Excel sheets and software (like CONMIS) are used
for rate analysis; a typical format is shown below.
Example: - By preparing the breakdown of materials, compute the rate

analysis for 1 m3 of C-20 concrete work including 15 % contractor
profit and 15% overhead cost with the following given data (formwork
and reinforcement rated separately).

Cont..
Data:
- dry base analysis= 1.5
- Cement [1]: sand [1.5] : aggregate ratio[3] = [1 : 1.5 : 3 ] by volume
- Density of cement= 0.035per bag.
- Water to cement ratio = 0.6
- The concrete will be mixed in mechanical mixer and compacted by vibrator
- Crew productivity 2
- Crew consists- engineer [serve for two foremen’s], 1 concrete foreman, 2 mason, 10
daily laborers and 1 mixer operator
Material rate:
- cement- 100 birr/bag
- Sand- 150 birr/ m3
- Aggregate- 120 birr/ m3
- Water- 0.25 birr/ m3
Cont..
Labour rate:
- site engineer salary- 5000 birr/month
- Concrete foreman salary- 2000 birr/month
- Mason- 150 birr/day
- Daily laborer- 50 birr/day
- Mixer operator- 100 birr/day
Equipment rate:
- mixer- 30 birr/hr.
- Vibrator- 10 birr/hr.
Cont..
Solution: -
✓Total cost (TC) = Direct Cost (DC)+ Indirect Cost(IC)
✓IC= (15%+ 15%)of DC= 30 % of DC
✓Direct Cost (DC) = Material Cost (MC) + Labour Cost (LC) + Equipment Cost(EC)
Material
✓cost (MC) – First calculate the material breakdown:
✓Materials required for 1:1.5:3 cement concrete mix – a commonly used grade of concrete
for slab structural works.
✓1 cement + 1.5 sand + 3 aggregate = 5.5 Wet (fresh) concrete mix ……..……= 1 m3
A. Quantity for dry base analysis...=1.5 m3

Cont..
1∗1.5
B. Volume of cement = =0.27272 m3 cement
5.5
0.27272 𝑚3
Bags of cement = = 7.79 bags of cement
0.035 𝑚𝟑 𝑝𝑒𝑟 𝑏𝑎𝑔
1.5∗1.5
C. Sands = =0.40909 m3 sand
5.5
3∗1.5
D. Coarse aggregate =0.81818 m3 aggregate
5.5
E. Water ………(given w/c, 0.6)……0.27272*0.6 = 0.163636 m3 of water

Cont..
Cement 7.79 bags of cement * 100 birr/bag 779 birr
Sand 0.40909 m3 of sand * 150 birr/ m3 61.3635 birr
Aggregate 0.81818 m3 of coarse aggregate * 120 98.1816 birr

birr/ m3
Water 0.163636 m3 * 0.25 birr/ m3 0.0409 birr
Total material cost for 1 m3 c-20 concrete 938.59birr~ 939 birr

Cont...
Labour cost (LC)
• The crew consists of 1engineer [serve for two foremen], 1 concrete foreman, 2
masons, 10 daily laborers and 1 mixer operator and a productivity of 2 m3per hr.
• based on Table on page 102,
DC = MC + LC+EC
DC = 939 birr + 69 birr + 20 birr = 1028 birr/ m3
IC = 30 % OF DC, IC = 30/100 (1028 birr) = 308.4 birr/ m3
TC = (1028 + 308.4 ) Birr/ m3
= 1,337.00 birr/ m3
5.3 Project valuation
• Evaluation is the art of determining present value of a property such as
a building, a factory or other engineering structure.
• By evaluation the present value of property is fixed.
• The present value of property can be determined on the basis of rent,

or in come it may fetch. It is determined or decided by its selling price.
• The value of property depends on its structure, life, maintenance,

location, etc.

Important Definitions:
❖The following terms need to be understood in property valuation:
• Market Value,
• Taxes,
• Salvage Value, Book Value, and Assessed Value,
• Obsolescence,
• Gross Income,
• Net Income,
• Annuity,
• Capital Cost,
• Capitalized Value, and Depreciation.
Purpose of evaluation
• For rent valuation – valuation of a property is done to fix the rent.
• Rent is fixed on the basis of certain percentage of the valuation.
• It is generally 6% to 10% per annum.
• For buying or selling– every seller or buyer is willing to sell or

purchase the property up to certain limiting price and that is only arrived
at by valuation

Cont..
• For Security of loans or mortgage – when it is required to have loan against
the security of any property or when the property is to be used for collateral
for security like performance or advance payment bond, valuation is
necessary.
• Acquisition – when a property is compulsorily acquired by government,

compensation is given to the owner for the valuation is necessary.
• For Tax assessment – to determine the property tax. House tax, etc.,
valuation is necessary.

Valuation of Building
• Valuations of a building depends upon, the type of building, its structure, shape,
size, locality, the quality of material used and present day prices of the materials.
• This also depends upon the height of the building and plinth area.
• Building in market area will have higher value than building in residential area.
• The valuation of a building can be determined after knowing the contents of

each item of work, specifications and physical condition of the building.
• It can also be calculated on its cost of construction at present day rate after
deducting a suitable depreciation.
The following are the different methods of valuation:
1. Rent Return Method: based on the net rent value, capitalized for the future
life of the building.
2. Valuation on land and building basis: in this method the cost of land is
added on the depreciated cost of the building.
3.Valuation on profit basis: suitable for commercial buildings like hotels,
cinemas, etc.
• In such cases the net profit is calculated after deducting all outgoings and
interest of capital invested.
• The net profit is multiplies by future life of the building.
Cont..
4.Valuation on cost basis: in this method the actual cost incurred in
construction of property with due consideration of depreciation, is taken as
the basis to determine the value of the property.
5.Development method of evaluation: this method is used for properties that

are underdeveloped or partly developed or if the building requires renovations
by alteration. The anticipated future net income is renovated and multiplied
with the future life of the property to get the value.
6. Depreciation method of valuation: the property value is determined based

on the book value for the year by deducting the deprecation

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CHAPTER 1

PROCUREMENT AND CONTRACT

Procurement is a process used to select the lowest competitive (cheap)

Contract is a legally binding agreement between two or more parties in

• Construction Industry is an industry which is involved in the planning,

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• Client: is initiator and owner of the project

• Consultant: transfers the wish of the owner in to realizable form

• Insurance Companies: A Contractor is required to provide bid bonds as a

• Banks also provide bonds for bid and performance.

• Public: The public is a group of people or community impacted by every construction

Equipment: is a moveable instrument or machineries involved on the project for

e.g. Mixer, excavator, vibrator…

e.g. asphalt mixing plant, concrete batching plant…

3, Human Resources / Laborer Workmen

4, Financial Resources / Fund

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Usually a 2% of bid bond is required so as not let him disappear.

• Commissioning and Acceptance

a. Provisional acceptance: In this acceptance, the client accepts the completed

• It can also be expressed as a method used to employ or buy services or works

• Construction Industry involves procurement and contract management

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• Physical infrastructures are cost extensive and appropriate savings obtained

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Competitive Tendering: The objective of competitive bidding is to acquire the

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✓ The nomination of this direct invitation is usually based on good

3. Based on geographical Coverage: [International, National, regional and

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factors. These are:

✓Financial Sources and

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✓ Following this requirement, General Procurement Notice is made

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5. Based on Procurement Steps: [Single or Two Staged; and Pre or Post-

✓Single or Two Staged Tendering: Procurement can be made using a single or

Pre or Post Qualification Tendering

✓Pre-or Post-Qualification processes based on succession events of technical

✓ Prequalification: is an internationally accepted practice in procurement

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✓ However, Post qualification approaches often cause to fix evaluators

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✓Contract Planning, [contract delivery system, procurement method and

✓Procurement Management [procurement preparation, tendering, and

✓Contract Management [contract formulation, contract administration,

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✓ Includes: decisions on proposed Delivery Systems, Procurement

✓Procurement and Contract Management processes shall be based upon

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✓ Contract Delivery system is the way Project i. Force Account,

Delivery system is often determined during v. Construction/Facility Management Consultancy,

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1) Invitation to bid shall be advertised in at least one national newspaper of

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In particular, bid documents must include: