Contract Specs & QS Course

Course Title: Contract specifications and Quantity surveying
Compiled by Hunde Hailu (Msc.) 1
CONTRACT
Compiled By: Hunde H. (Msc.)
Year: 2023 10/22/2023

COURSE DESCRIPTION
This course is intended to cover:
1. Procurement and Contract:
2.Specifications: Types of specifications,
Specification writing,
3. Quantity surveying: material take off preparation
and writing of bill of quantities,
4. Project cost estimation; unit rate analysis and
value of work.
10/22/2023 Compiled by Hunde Hailu (Msc.) 2

Objectives
At the end of this session student will be able to:
◦ Define contract
◦ Identify requirements of contract
◦ Identify purposes of contract
◦ Discharge of contract
◦ Classify contract
10/22/2023

Lecture 1. Contract
1.1. Definition of Contract
According to Article 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.
 The construction contract clearly fulfils all the
elements given to the definition of contract.
10/22/2023

Cont’..
 A construction contract is a product of an
agreement between the employer & the contractor
& it is enforceable at law.
 Generally, a contract is an agreement or willful
promise enforceable at law.
 However, not all agreements or promises are
contracts. Some may lack enforceability at law.
10/22/2023

Activity
‘All contracts are an agreement but not all
agreements are contract.’
why???
10/22/2023

1. 2. Requirements of contract
 To be enforceable in front of law contract should satisfy the
following requirements
 According to civil code of Ethiopia (Art. 1678) No valid
contract shall exist unless this requirements:
 Offer and acceptance
 Competent parties
 Consideration
 Legality of the object
 Formalities
10/22/2023

1. Offer and acceptance
Offer
Is an indication that one party is willing to be bound by
specific terms set out in the contract.
According to civil code of Ethiopia Art. 1681 , an offer or
acceptance can be made:
 In writing
 Orally
10/22/2023

Offer and acceptance
Acceptance
 Contract is complete when an offer by one party is
accepted without complaint by the party.
 An Acceptance is the key for the formation of a
contract which must be;
 Absolute ; accepting all the terms of the offer.
 An indication of consent; silent does not indicate
acceptance. (Art. 1682)
10/22/2023

Cont’d
2. Competent parties (legal capacity)
 Competent parties are those people who have the
legal and mental ability into binding contract.
 The following persons are incompetent to enter into
a contract.
◦ Minors (under the age of 18)
◦ Those considered mentally incompetent
◦ Mentally ill
◦ Under the influence of alcohol and other drugs
10/22/2023

3. Consideration
 Consideration involves a benefit moving from the
offeree to the offeror in exchange for the promise.
 It involves price for promise.
 There must be payment for the service performed
4. Object of contract
 The object of contract is the obligation to perform
something.
 The subject matter of contract must be :
 Defined
 Possible
 Lawful and
 Freely determined by the parties (art.1715)
10/22/2023

Cont,…
5. Formalities
 Usually, the form of contract is provided by the law.
 If no form is provided by law, contracts can be in any
form the parties agreed with.(Art. 1719)
 For example:
◦ A contract involving an immovable object should be in a
written form and needs to be registered by the authorities.
◦ Long term contracts such as guarantees insurance etc. and
those entered with public organization should be in writing.
10/22/2023

1.3. purposes of a contract
The purposes of a contract are :
 To bind conditions between or among the parties
 To clearly show the Terms and Conditions of
contracts the parties agree upon
 To clearly show the Rights and Obligations of
contracting parties
 To clearly show remedial measures in cases for non
– performances
10/22/2023

Cont’d
In other ways the purpose of the contract is to produce:
 A quality construction project
 On time construction project
 Construction project with in budget
 Safely executed project
 To protect parties against defaulting by their contracting
party, if so provide adequate compensation:
 It is one way of managing risk!
10/22/2023

1. 4. Types of contract
As a general Contract can be of three types;
namely,
1. Unilateral or Optional or If Contract
2. Bilateral, and
3. Multilateral
I. Unilateral or Optional or If Contracts are
contracts which are recognized by law, where the
promise by one party is binding and if the
performance is carried out by the other party who is
not bound merely by embarking on the performance
required.
10/22/2023

Unilateral contracts….
 A one to all contract
Example :
X promises a reward to anyone who will find his lost wallet.
X bound himself to the promise, but no one is bound to search for the lost wallet.
But if Y, having seen the offer, recovers the wallet and returns it, he is entitled to
the reward.
1 Offeror Many
Offerees
10/22/2023

II. Bilateral Contracts are contracts entered to promise
for an obligation performed in the future where both
(two) parties are mutually bound.
 A one to one contract
III. Multilateral Contracts are contracts entered to
promise for an obligation performed in the future where
all (three or more) parties are mutually bound.
17
Offeror
The person who make
the offer
Offeree
The person to whom
the contract was made
Example : Sale of goods contract
• The Buyer promises to pay the price
• The Seller promises to deliver the goods
Compiled by Hunde Hailu (Msc.)
10/22/2023

TYPES OF CONSTRUCTION CONTRACT
In Construction Industry, the following
eight contract types are so far practiced:
◦ Lump Sum Contract,
◦ Bill of Quantities or Unit Rate Contract,
◦ Cost plus Fixed Fee Contract,
◦ Cost plus Percentage of Cost Contract,
◦ target contract,
◦ Labor Contract,
◦ Hybrid Contract, and
◦ Special Contract
10/22/2023

1. Lump Sum Contract
 When the Project or Tender price is determined and
quoted as a total sum of money without individual
ratings to execute the whole of the works and / or
services according to the drawings and specifications,
it is called a Lump Sum Contract.
 It is more suitable for :
• Works of smaller in size and Contracting parties have prior
experience of similar projects.
 Not advisable for projects with considerable
uncertainties such as;
◦ Difficult sub surface situation,
◦ Unusual projects,
◦ Maintenance projects, etc.
10/22/2023

2. Bill of Quantities Contract
 The Bill of Quantity includes short description of
specifications, unit of measurement, quantities and
columns for pricing the unit rate and its total amounts.
 Contract is based on BoQ.
 Payments are made based on measurements of
executed works and material on site provided on
site.
10/22/2023

Assignment
Q1. Explain in detail the all following types of
construction contracts:
 Cost plus Fixed Fee Contract,
 Cost plus Percentage of Cost Contract,
 Target contract
 Labor Contract,
 Hybrid Contract, and
 Special Contract
Identify the difference between them.
10/22/2023

Contract Team and Relationships
 Construction Team commonly consists of:
 The Client /Employer
 The Contractor
 The Consultant
 Relationships Between the Parties:
 There is a formal legal contract between the
Client and the Contractor
 There is a formal legal contract between the
Client and the Consultant
 There is no formal legal contract between the
Contractor and the Consultant
10/22/2023

1.5. Discharge(Termination) of contract
 There are four ways in which a contract can be discharged.
1. Performance
 In order to be fully discharged from a contract the parties must
have completed all the obligation set in the terms of contract.
2. Agreement
 By mutual agreement
◦ The parties may mutually agree to release each other from their
contractual obligation and cancel the contract,
 By novation:
◦ The parties may substitute the existing contract with new contract.
10/22/2023

1. 5.Discharge(Termination) of contract…
3. Frustration
 Occurs when the contracts was executable at the
time of agreement but subsequent events, over
which the contracting parties have no control, makes
it impossible to fulfill the contract obligations.
 Example
Force majeure (war, earth quake, natural hazard )
4. Breach
 Occur when a parties fail to carryout its
fundamental contractual obligations under the
contract. Compiled by Hunde Hailu (Msc.) 24
10/22/2023

2. Contract management and
it’s Process
10/22/2023

Contract Management
 Contract Management: is a process of reaching
contractual agreement for implementation, its
administration and finally concluding the contract.
It involves
◦ Contract Formulation
◦ Contract administration
◦ Closing of contract

Compiled by Hunde Hailu (Msc.)
27
Contract
Formulation
Contract
administration
Closing of
contract
• Negotiation
• Contract agreement
• Contract document
• Closing of accounts
• Contract evaluation
• Contract Implementation
• Change management
• Claim & dispute management
10/22/2023

Contract Documents

Contract Documents
 Is the documents used for making the
construction contract.
 Contract Documents are the basis on which
a construction contract is carried out.
10/22/2023

Contract Documents…
A Construction Contract Document includes the following
by their order of precedence:
Contract Agreement (Signed and Sealed )
Letter of acceptance
Form of Tender with Appendix,
Particular Conditions of Contract
General Conditions of Contract,
Technical Specification
Drawings
Priced Bill of Quantities
Forms, Formats and Schedules.
10/22/2023

A. Agreement
 is a short document signed by both parties
Form of Contract Agreement varies from contract to
contract but is generally composed of:
The date on which the agreement shall come into
force
The contracting parties and their addresses
The THINGS to be procured in brief
The general provisions such as words, meanings and
expressions; order of precedence and Payment Terms
The Agreement Considerations, the Signing and
Sealing places
CONTRACT DOCUMENTS:
10/22/2023

Sample Form for Contract Agreement
Form of Agreement
This Agreement hereinafter called “the Contract” is made on the ___ day of __
20 __ between on the one part _____________ hereinafter called “the
Employer” and on the other part _______ hereinafter called ‘the Contractor” /
“the Consultant”.
Whereas the Employer is desirous that certain works / services should be
executed by the Contractor / Consultant, viz. _________________ and has
accepted the tender for the execution / implementation and completion of such
works / services and the remedying of any defects therein.
Now this Agreement witnesses as follows:
1. In this Agreement words and expressions shall have the same meanings
as are respectively assigned to them in the conditions of contract herein
after referred to.
2. The following documents shall be deemed to form and be read and
construed as part of this Agreement, viz:
a. The Letter of Acceptance
b. The said Tender
c. The Conditions of Contract (I+II)
d. The Specifications
e. The Drawings, and
f. The Priced Bill of Quantities.
3. In Consideration of the payments to be made by the Employer to the
Contractor as hereinafter mentioned, the Contractor hereby covenants with the
Employer to execute and complete the Works and Remedy any defects therein in
conformity in all respects with the provisions of the Contract.
4. The Employer hereby covenants to pay the Contractor in consideration of
the Contract Price of such other sum as may become payable under the provisions
of the Contract at the times and in the manner prescribed by the Contract.
In Witness Whereof the parties hereto have caused this Contract /
Agreement to be signed in their respective places as of the day, the month and the
year first above written.
For and on behalf of the Employer
_________________ _______________
Signature Date
For and on behalf of the Contractor
__________________ _______________
Signature Date
10/22/2023

Contract Documents…
B. Letter of acceptance:
This is a confirmation of acceptance by the employer
of the contractors offer.
The letter of acceptance contains:
Acceptance of contract price
Instructions;
To Submit the Contract Security specified
in the Contract by the date stated.
To proceed with the execution of the works
10/22/2023

Contract Documents …
A Letter of Acceptance must not be issued
prior to obtaining all required approvals,
including
From the Tender Committee
From head of the Procuring Entity
10/22/2023

C. Form of Tender and its appendix
The appendix to tender mainly defines the following
Amount of performance bond
Minimum amount of insurance
Time for commence
Time for completion
Amount of liquidated damage
Limit of liquidated damage
Period of maintenance period
Percentage of adjustment of provisional sum
Percentage of retention
Minimum amount of interim certificates
Rate of interest up on unpaid sums
10/22/2023

D. Conditions of contract
Conditions of Contract is the administrative law
applicable to the contract which is legally enforcing
the contracting parties.
(PPA Section 7 & section, 8)
It includes
General condition of contract:
Special condition of contract,
10/22/2023

Generally, conditions of contract cover:
Definitions and interpretations of terms
used in the contract
Contract documents priorities, supply of
drawings, supplementary documents
Obligations, Rights and Remedial Rights
Services / Goods / Works, their
Measurement and Certifications
Alterations, Claims and Dispute Settlement
10/22/2023

The General Conditions
 GCC are usually prepared to set out procedures of
general application which can be used for
different types of projects without any
modifications.
 Define the responsibilities of the parties
 Spells out the procedures for administration of the
contract
 Most important tools to control risk on a
construction project
CONTRACT DOCUMENTS …
10/22/2023

The contents of GCC
 Lists and gives a brief description of the documents
that form the contract
 Document precedence incase of discrepancy
 Duties and responsibilities of the of the all
parties
 About award of work to a subcontractor
 The time, cost, quality Control for the work
 The mode and frequency of payment
10/22/2023

The contents of GCC…
 About bonds and insurances
 Definition of change of work and the steps to
be followed incase of change orders
 The system for dispute resolution
 Miscellaneous provisions such as
◦ The governing laws
◦ Requirements for inspections and tests
10/22/2023

Special conditions of contract (SCC)
Are used to supplement, modify, or expand the General
Conditions
Are modified as a standard contract to a specific
project.
Clauses in both conditions of contract shall be the
same.
10/22/2023

Contents of SCC
 Number of copies of contract documents
 Survey information to be provided by the owner
 Materials provided by the owner
 Site visits
 Start date of the construction
 Procedure for submittal and processing
 Cost and scheduling reporting requirements
 Responsibilities for testing of materials
 Actions to be taken
10/22/2023

E. Specifications
Specification defines the quality expected to each
trade of items.
Specifications are statements describing
The nature and class of work,
Materials to be used,
Labor to be employed and methods of work,
Equipment and tools to be used,
Quality of works and workmanships and
Submittals and sampling for tests and approvals.
10/22/2023

Specifications govern when it does not fit with
drawings and it serves for the following purposes:
Guide bidders to arrive fair tender prices during
procurement
Be bases for execution and supervision Of works
Help in purchasing of materials, hiring of
workmen and provisions of equipment,
E. Specifications…
10/22/2023

F. Drawings
Drawings have the following functions:
Drawings form a model of designers idea
Drawings have the following functions:
It is a means to convey intentions of designers to
contractors.
G. Bill of quantities
Bill of quantities are list of items defining briefly the works
to be done and quantities of the work
10/22/2023

cont…
H. Forms, Formats, Schedules…
The following Forms, Formats, Schedules and
Breakdown Structures are used in Construction
Contracts and are tabulated bellow:
Compiled
by
Hunde
Hailu
(Msc.)
46
Forms Formats
Form of Contract Agreement Handing Over Site Formats
Form of Tender Change Order Format
Form of Bid Security Progress Reporting Formats
Form of Performance Security Payment Certificate Format
Form of Adv. Payment Guarantee Price Indices Format
Form of Maintenance Security Comp. Certificate Formats
10/22/2023

cont…
Schedules Breakdown Structures
Work Schedule Organization BS
Material Schedule Work BS
Equipment Schedule Material BS
Labor Schedule Equipment BS
Cash flow Schedule Labor BS
Payment Schedule Cost BS
10/22/2023

Thank you !!!
Compiled
by
Hunde
Hailu
(Msc.)
48
10/22/2023

Contract Specs & QS Course

Recommended

Recommended

More Related Content

Similar to Contract Specs & QS Course

Similar to Contract Specs & QS Course (20)

Recently uploaded

Recently uploaded (20)

Contract Specs & QS Course