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Date: [insert date]
Procurement Ref. No.: [insert tender reference no]
Page [insert page no] of [insert total n0 of pages] pages
To: [insert complete name of Employer]
We, the undersigned, declare that:
We have examined and have no reservations to the Bidding
Documents, including Addenda No.: [insert the number and
issuing date of each Addenda];
We offer to execute the [insert the name & procurement ref.
no of the Contract] in conformity with the Bidding Documents
for the Contract Price of [insert amount in no & words]
Ethiopian Birr, excluding any discounts offered below;
The advance payment required is …..…. Ethiopian Birr:
The discounts offered & the methodology for their application
are: …………………
Our bid shall be valid for a period of [specify the no of days
that the bid is valid for] calendar days from the date fixed for
the bid submission deadline in accordance with the ITB, & it
shall remain binding upon us & may be accepted at any time
before the expiration of that period;
We, including any subcontractors / suppliers for any part of the
contract, have nationality from the following eligible countries:
[insert the nationality of the Bidder, including that of all
parties that comprise the Bidder, if the Bidder is a JV, and
the nationality of each subcontractor and supplier]
We have no conflict of interest in accordance with the ITB;
Our firm, its affiliates or subsidiaries - including any subcontractors
/ suppliers for any part of the contract - has not been debarred from
participation in public procurement by the Government of the
FDRE, in accordance with the ITB ;
We have read & understood the provisions on fraud and corruption
in the ITB and we undertake to abide by the Code of Ethical
Conduct for Bidders during the procurement process and the
execution of any resulting contract;
We understand that this bid, together with your written acceptance
thereof included in your notification of award, shall constitute a
binding contract between us, until a formal contract is prepared and
executed.
We understand that you are not bound to accept the lowest
evaluated bid or any other bid that you may receive.
We accept / do not accept the appointment of [insert name of
……. proposed in the BDS] as the ………... and propose instead
that [insert name] be appointed as ……. Whose fees and
biographical data are attached.
Signed: [insert signature]
In the capacity of [insert legal capacity of person signing the
Bid]
Name: [insert complete name of person signing the Bid]
Duly authorized to sign the bid for and on behalf of: [insert
complete name of Bidder]
Dated on ____ day of _________ , _____ [insert date of signing]](https://image.slidesharecdn.com/ch-4contractmanagement-221212102414-37f92e9d/85/CH-4-Contract-Management-ppt-24-320.jpg)
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CH-4 Contract Management.ppt
- 1.
- 2. Contract Management Processes 2 Contract Closing Contract Administration Contract Formulation Negotiations ContractAgreement Closing of Accounts Contract Evaluations Contract Implementation Changes Management Claims and Disputes Management
- 3. Introduction Points tocover Rights, Obligations and Remedial Rights! Scope, Relationships, Processes and Resources! Negotiation, Agreement and Administration! Measurement, Payment and Certification! Can they be Binding Contractually!!! 3
- 4. Contract defined writtenagreement between or among two or more parties whereby each party promises to do or not to do something and agrees to terms (conditions and Warranties) set out in the contract. These promises and terms shall be enforceable by law and incorporates the rights, obligations and Remedial rights of each contracting parties. In other words, A Contract is an Agreement between two or more parties to do or not to do something for a certain consideration that fulfill the following seven requirements: 4
- 5. Part 1: Contract 1.Definition 2. Requirements 3. Purposes 4. Bases 5. Entitlement & Promises 6. Management Processes 5 Part II: Formulations 1. Negotiations 2. Contract Agreement 3. Contract Document Part III: Administration 1. Preparation & Startup 2. Implementation + QA 3. Price + / - Time Variations Part IV: Closing 1. Acceptances & Completions 2. Outstanding issues settlement 3. Closing of Accounts 4. Contract Evaluation 5. Extra Contractual Liability
- 6. 6 Agreement • Legal documentwhich is binding • Proves the existence of a contract • Establish Contract Document Promises • To do (create) and / or • To vary and / or • To extinguish something Terms • Conditions the parties are governed with • Warranties for remedies
- 7. Legal & Distinct Capabl e & Lawful Contract Intent& Agreement Standard, if any Offer & Acceptance Promises & Consideration 7
- 8. Parties entering into contractshall be capable of contracting Contract Capable & Lawful 8 Minor / Infant Bankrupt Aliens enemy Non – Eligible Mentally Disable
- 9. Object of thecontract shall be sufficiently defined, possible and lawful Contract Legal & Distinct 9 Drawings Bill of Quantity Preambles Technical Specification Terms & Conditions
- 10. To carry outand / or vary or exchange and / or extinguish something for a certain compensation Contract Promises & considerations 10 Promises Constructing a building Constructing a road Constructing a dam Demolishing a bridge Considerations Payment Other Benefits Exchanges Rewards
- 11. Willingness to bebound by specific terms set out & indication of consent. Contract Offer & Acceptance 11 offer Form of Tender Priced BoQs Bid Security Alternative, if any Acceptance Conditional Acceptance Unconditional Acceptance
- 12. Contract forms prescribed bylaw. Contract Standards ,If any 12 Terms Technical specifications Forms, Formats, Schedules Instructions
- 13. Consent of contracting partiesis necessary Contract Intent & Agreement 13 Signature Sealing (Optional for Individuals)
- 14. purposes of contact 14 •Bind Terms • Execute Entitlements • Assigning Responsibilities • Sharing Risks • Uncertainties • Changes Handling Provisions Allocating Risks Defining Terms Enforcing Law • Rights • Obligations • Remedial Rights
- 15. 15 Contractual Arrangements Delivery System Contracting Method Contract Type Contracting Methodssuch as: Total Contracting General Contracting Sub Contracting Special Contracting
- 16. 16 Contract Type Cost plus Fixed/ Percentage/ IncentiveFee Hybrid Contract Special Contract Bill of quantities/ Unit Rate contract Lump Sum Contract Item/Schedule Rate Contract
- 17. 17 IF Contract Offers tonegotiate Offers to receive offer Subject to contract Definite Contract Unconditional Acceptance Battle of forms Setting Essential Terms Negotiations Offer Acceptance Promises Consideration Contract Agreement (Contract Document)
- 18. 18 1. Alternatives includedin the offer 2. Employer’s issues raised for negotiations, if any 3. Mobilization issues • Site layout or Camp construction • Quarry, Borrow pits and Plant sites • Mobilization advance disbursement schedule • Subsequent Mobilization requirements, if any 4. Tender Documents discrepancies and gaps, if any 5. Programs: Works, Resources Deployment, Financial Disbursement and Request schedules 6. Assignments and Subletting Issues 7. Submittals, Samples, Workshop drawings, etc 8. Necessary and relevant cooperative issues, if any
- 19. 19 1. Revise allterms & requirements in accordance with the negotiation results, or 2. Attach Minutes of Contract Negotiation and provide as priority in the contract agreement or in the Special Condition of Contract 3. Ensure the following contents are not left out: • Contract Signing Date • Parties Contracting and their addresses • Construed parts of the contract and / or their priority • Interpretation as per the Conditions of Contract • Recitals on desirous works or services including project name and their acceptance • Consideration for the promises including such other sums and remedy of defects as per the conditions of contract • Signature (in the capacity of), Seal and Witnesses as applicable 4. Appendix to Contract Agreement (Serves as a summary only)
- 20. 20 Sample Form forContract Agreement Form of Agreement This Agreement hereinafter called “the Contract” is made on the ___ day of __ 20 __ between on the one part __________ of ________ 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
- 21. 21 Conditions of ContractPertinent Clauses Conditions Language of Contract Clause … English Applicable Law Clause … Ethiopian Law Mobilization Time Clause … … Cal. Days Contract Time Clause … … Cal. Days Maintenance Period Clause … … Cal. Days Liquidated damages Amount Clause … … per days of delay Limit Clause … … % of CP Performance security Clause … … % of CP Advance Payment Clause … … % of CP Interim Certificate Time Clause … … Cal. Days Amount Clause … … Interest Rate Clause … Bank’s Selling Rate Currency Types Clause … ….. Amount Clause … … % of CP Exchange Rate Current / Base Retention Amount Clause … … % of CP
- 22. 1. Signed &Sealed Form of Contract Agreement with appendix if necessary (See Slide No. 35 & 36) 2. Signed & Sealed Minutes of Contract Negotiations, if any and are not incorporated elsewhere 3. Signed & Sealed Form of Tender with appendix, if necessary 4. General & Particular Conditions of Contact 5. Scope of Requirements including 1. Terms of References, if any 2. Technical Specifications and Methods of Measurement 3. Price Bill of Quantities, Drawings and their Preambles if necessary 6. Necessary Contractual Forms, Formats & Schedules 22
- 23. Signed & SealedForm of Tender • General provisions such as • Date, Tender Reference no., Name of Project, Number of Pages and to whom it shall be addressed • Declaration on • No reservation or With reservation on tender documents • Contract price considered as offer including currencies and proportions, if any • Advance Payment Requirement including currencies and proportions, if any • Discounts or Rebates offered and their methodology of applications • Validity period of the offer • Nationality of the offeror’s and any sub contractors • Non existence of conflict of interest with contract administration entities • Non debarring from public procurements or fulfilling all eligibility requirements • This offer and the letter of acceptance formulated an if contract • Acceptance of Dispute resolution mechanisms and name of institutions or individuals as applicable • Signature (in the capacity of) and Sealing 23
- 24. 24 Date: [insert date] ProcurementRef. No.: [insert tender reference no] Page [insert page no] of [insert total n0 of pages] pages To: [insert complete name of Employer] We, the undersigned, declare that: We have examined and have no reservations to the Bidding Documents, including Addenda No.: [insert the number and issuing date of each Addenda]; We offer to execute the [insert the name & procurement ref. no of the Contract] in conformity with the Bidding Documents for the Contract Price of [insert amount in no & words] Ethiopian Birr, excluding any discounts offered below; The advance payment required is …..…. Ethiopian Birr: The discounts offered & the methodology for their application are: ………………… Our bid shall be valid for a period of [specify the no of days that the bid is valid for] calendar days from the date fixed for the bid submission deadline in accordance with the ITB, & it shall remain binding upon us & may be accepted at any time before the expiration of that period; We, including any subcontractors / suppliers for any part of the contract, have nationality from the following eligible countries: [insert the nationality of the Bidder, including that of all parties that comprise the Bidder, if the Bidder is a JV, and the nationality of each subcontractor and supplier] We have no conflict of interest in accordance with the ITB; Our firm, its affiliates or subsidiaries - including any subcontractors / suppliers for any part of the contract - has not been debarred from participation in public procurement by the Government of the FDRE, in accordance with the ITB ; We have read & understood the provisions on fraud and corruption in the ITB and we undertake to abide by the Code of Ethical Conduct for Bidders during the procurement process and the execution of any resulting contract; We understand that this bid, together with your written acceptance thereof included in your notification of award, shall constitute a binding contract between us, until a formal contract is prepared and executed. We understand that you are not bound to accept the lowest evaluated bid or any other bid that you may receive. We accept / do not accept the appointment of [insert name of ……. proposed in the BDS] as the ………... and propose instead that [insert name] be appointed as ……. Whose fees and biographical data are attached. Signed: [insert signature] In the capacity of [insert legal capacity of person signing the Bid] Name: [insert complete name of person signing the Bid] Duly authorized to sign the bid for and on behalf of: [insert complete name of Bidder] Dated on ____ day of _________ , _____ [insert date of signing]
- 25. 25 1. Standard &Particular Conditions of Contract is the administrative law applicable to the contract which is legally enforcing the contracting parties to their terms. 2. The special conditions are meant for those particular contexts and requirements that can not be standardized and generalized into common conditions of contract. 3. Clauses in both conditions of contract shall be the same. 4. Generally, conditions of contract cover: a. Definitions and interpretations of terms used in the contract b. Construed Contract document parts with priorities, supply of drawings, supplementary documents c. Obligations, Rights and Remedial Rights d. Services / Goods / Works, their Measurement and Certifications e. Alterations, Claims and Dispute Settlement. Samples: MWUD 1994, FIDIC 1999, Harmonized FIDIC 2006 and Other General and Particular Conditions of Contract
- 26. 26 1. Standard &Particular Terms of References / Scope of works or Services 2. Standard & Particular Technical Specifications including Methods of Measurement & Manufacturers’ technical specifications 3. Drawings & Priced Bill of Quantities including BoQs’ technical specification in short form & with preambles as applicable 1. Form of Contract Agreement and Tender 2. Form of Tender, Contract or Performance and Defect Liability or Maintenance Security 3. Form of Advance Payment Guaranty 1. Handing over site Format 2. Change order / instruction format 3. Progress Reporting Formats 4. Price Indices Formats 5. Measurement & Payment Cert. Formats 6. Completion Cert. Format
- 27. 27 Schedules and Breakdowns 1.Work Schedules and Breakdowns • Trades / Items of works, Day, Provisional and Temporary works 2. Organization Breakdowns • Head office and Site 3. Resources Schedules and Breakdowns • Workmen, Material and Equipment / machinery 4. Cost Breakdowns 5. Financial Schedules • Cash flow and Payment
- 28. 28 1. Extrinsic evidenceis not admissible for cases when • Blank to complete is left in the contract & requested for consideration during contract implementation • Disregarded terms after negotiation is not part of the contract • Subsequent conduct not in line with the contract 2. Extrinsic evidence is admissible for cases when • Factual background such as aim of the contract and evidence of the genesis • Surrounding circumstances when the agreement was entered into • When words and expressions are related to special customs or usage of the business or locality in the contract • When an agreed assumption in the contract determines the outcome of the conduct of the contract such as third party instructions, approval, etc • When contract conduct is dependent on an unfulfilled condition precedent had taken place and the event has not occurred either at all or within the agreed time
- 29. 29 Preparation and Startup 1. Review the contract documents • Identify Contractual Responsibilities of Stakeholders • Determine and Understand the construction components of the project • Identify Contract discrepancies 2. Review submitted/ Prepare Work, Resources and Financial programs • Consider contract discrepancies (at least for in house planning) • Determine Crew following the construction method selected • Develop Organization Breakdowns • Identify resources and financial sources • Revise / Prepare Programs and get approval
- 30. II) Contract administration Contract Implementation ChangesManagement Claims and Disputes Management 30
- 31. 31 Reviewing the ContractDocuments 1. Identify Contractual Responsibilities of Stakeholders • Review the terms of the contract conditions • Review the terms of references • Extract monitoring responsibilities • Prepare monitoring responsibility summary sheet
- 32. 32 2. Determine/Understand the constructioncomponents of the project • Review the contract drawings and technical specifications • Develop Work breakdown structures • Extract the construction methods and sequences of operations • Prepare overall construction methods and overall sequences sheet
- 33. 33 3. Identify ContractDiscrepancies • Compare design or plan and actual site conditions • Compare specification, bill of quantities and drawings • Determine potential extra works, excess in quantities, variations (additions and omissions) • Determine potential design changes, cost overrun, time overrun • Communicate findings to Consultant and Employer • Request clarifications and amendments, if necessary
- 34. 34 4. Review submitteddocuments / Prepare programs 4.1. Consider contract discrepancies (at least for in house planning) • Determine when these discrepancies affect the program • Assume how fast shall the response be on clarifications and amendments • Communicate your assessment on the impact of these discrepancies
- 35. 35 4.2. Determine Crewfollowing the construction method selected • Define work components into self and sub contract • Define sub contractors for sub contracts • Define standard crews for use (MoWUD pre - norms, ERA standard crews) • Define Labor and Equipment requirements and their productivities • Determine schedules per crews
- 36. 36 4.3. Develop OrganizationBreakdowns • Develop (WBS) • Develop site Organization structure • Develop relationships with head office Organization structure • Develop new requirements at head office level, if necessary and as applicable 4.4. Identify resources and financial sources • Determine type and quantity of resources • Decide on Head office Vs Site Supplies • Decide on Self purchase Vs Suppliers Credit for materials • Decide on Owned Vs Rented Vs Leased options for Equipments
- 37. 37 5. Revise /Prepare Programs and Get Approval • Determine sequences of operations • Determine resources requirements • Prepare the program and get it approved • Introduce and make known your program to all involved (a continuous process) 6. Quality assurances 6.1. Request Rights as early as possible • Submit clarifications with possible interventions • Request for joint assessment of critical issues • Request payments
- 38. 38 6.2. Carry outObligations • Construction Methods, Resources and Works Approval on time • Study Instructions and Orders; Process and Plan for Implementation; Submit impact and Execute as per agreement • Carry out works in accordance with the contractual conditions and schedules of requirements • Record, Supervise or Monitor and Evaluate progresses of mobilizations, supply of resources and construction works • Measure completed works • Insure works, resources, sites and third parties
- 39. . 39 6.3. Demand andObtain Remedial Rights • Carry out exhaustive effort to prevent causes for claims • Notify intent to claim • Submit substantiated claims when effect(s) occurred • Use amicable settlement as much as possible for dispute settlement
- 40. 40 Consultant’s perspective 1. TheContractor shares, in most cases, the Owner’s desire for a final product of high quality; however, a contractor who becomes caught in an irreconcilable conflict between providing that level of quality and realizing what he believes to be a reasonable profit will usually choose to pursue the profit. 2. Construction is recognized as much an art as a science and that the attainment of something less than perfection is accepted by the Owner and several Courts. 3. Contract Administrator of the consultant is not a party to the contract between the Owner and the Contractor, but is a participant in the construction process to promote the successful performance of projects in compliance with the contract. 4. Successful contract administrators will know and admit the limits of their knowledge and will seek the assistance of experts in the interpretation and, if necessary, the legal enforcement of the contract. 5. An overzealous contract administrator is a disservice to both the Owner and the Contractor and himself. 6. It is clearly in the financial interest of the contractor that interim payments be maximized, and It is clearly in the interest of the owner that such payments not exceed the value of work completed; In this situation, the contract administrator shall determine what is critical for the success of the project in the interests of fairness to both the owner and contractor. 7. Contract Administrator’s difficult task is to represent the owner’s interests effectively by monitoring and influencing the activities of the contractor without jeopardizing those interests by intruding upon prerogatives to the contractor.
- 41. 41 Contractor’s Perspectives 1. TheConsultant shares, in most cases, the Owner’s desire for a final product of high quality; however, uses contractors to cover his deficiencies to do so. 2. Consultants do not recognize construction as much an art as a science and that the attainment of something less than perfection is not accepted for them. 3. Even though Contract Administrator of the consultant is not a party to the contract between the Owner and the Contractor, it is a decisive party in the construction process and substantially affects the successful performance of projects in compliance with the contract. 4. Consultant Contract administrators would not often like to admit the limits of their knowledge and seek the assistance of experts in the interpretation and, if necessary, the legal enforcement of the contract. 5. An overzealous contract administrator is a disservice to both the Owner and the Contractor and himself. 6. It is clearly in the financial interest of the contractor that interim payments be maximized, and It is clearly in the interest of the owner that such payments not exceed the value of work completed; In this situation, the contract administrator shall determine what is critical for the success of the project in the interests of fairness to both the owner and contractor. 7. Contract Administrator’s difficult task is to represent the owner’s interests effectively by monitoring and influencing the activities of the contractor without jeopardizing those interests by intruding upon prerogatives to the contractor.
- 42. 42 Acceptances and Completions 1.Provisional / Temporary Acceptances (Partial + Total) 2. Provisional / Temporary Completion Certificates (Partial + Total) 3. Remedying of defects 4. Final Acceptance 5. Final Completion Certificates Maintenance Period, Remedial works, Dealing with Left Over Claims and Disputes, Closing of Accounts and Completion Certificates.
- 43. 43 Outstanding Issues Settlement (leftoverclaims) 1. Temporary rates assigned 2. Defects or non completions valuations 3. Payments Withheld 4. Claim issues unsettled 5. Dispute issues unsettled Closing of Accounts 1. Final Completion Certificate Issued 2. All Payments and Entitlements are due 3. Retentions, Bonds and Guarantees Released
- 44. 44 Contract Evaluations 1. EvaluateContracts Closed 2. Determine Lesson Learned 3. Propose Interventions Extra Contractual Liabilities 1. Limitation of Actions 2. Professional fault 3. Warranty due by the contractor 4. Warranty in respect of defects of construction 5. Arbitration
- 45. 45 Limitation of Action(Art. 1845 & 1846; Civil Code) 1. Unless Otherwise provided by law, actions for the performance of a contract, actions based on the non – performance of a contract and actions for the invalidation of a contract shall be barred if not brought within 10 years. 2. The period of limitation shall run from the day when the obligation is due or the rights under the contract could be exercised.
- 46. 46 Professional fault (Art.2031; Civil Code) 1. A person practicing a profession or a specific activity shall, in the practice of such profession or activity, observe the rules governing that practice. 2. He shall be liable where, due regard being had to scientific facts or the accepted rules of the practice of his profession, he is guilty of imprudence or of negligence constituting definite ignorance of his duties.
- 47. 47 Warranty due bythe contractor (Art. 3039; Civil Code) 1. The Contractor shall guarantee during ten years from its delivery the proper execution and the solidity of the work done by him. 2. He shall be liable during this period for such loss or deterioration of the work as is due to a defect in its execution or to the nature of the soil on which the work has been done. 3. Any provision shortening the period laid down in 1 above or excluding the warranty due by the contractor shall be of no effect.
- 48. 48 Warranty in respectof defects of construction (Art. 3282; Civil Code & Clause 71 of SCC) 1. Unless Otherwise provided, the contractor shall be liable to the administrative authorities for the defects of construction of the works during 10 years from the day on which they have entered into possession of the works. 2. The warranty shall not be due, however, in respect of the defects which were apparent at the time of the final acceptance of works. 3. The warranty shall apply to such defects only as prevent the works from being used for the purpose mentioned in the contract or as render such use more onerous or less profitable.
- 49. 49 Arbitration (Art. 315 (2);Civil Procedural Code) 1. No Arbitration may take place in relation to Administrative Contracts as defined in Art. 3132 of the Civil Code or in any other case where it is prohibited by law.
- 50. 50 Contractual Stakeholders andtheir Roles and Relationships Assignment III explore the rights, responsibilities, obligations and remedial rights of four key stakeholders (employer, contractor, Engineer, regulatory body) provided in: GCC-MoWUD, 1994