The document discusses various aspects of contract management processes. It covers contract formulation, negotiations, agreement, administration, implementation, changes management, claims, disputes and closing. Key aspects covered include defining a contract, its requirements, purposes, bases, entitlements and promises. The document also discusses contract types, formulation, administration including preparation, implementation, price and time variations, acceptance, and evaluation. Various contract documents, clauses and schedules are also outlined.

1. 1

2. Contract Management Processes
2
Contract
Closing
Contract
Administration
Contract
Formulation
Negotiations
Contract Agreement
Closing of Accounts
Contract Evaluations
Contract Implementation
Changes Management
Claims and Disputes Management

3. Introduction
 Points to cover
 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
 written agreement 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 document which 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
contract shall be capable of
contracting
Contract
Capable &
Lawful
8
Minor / Infant
Bankrupt
Aliens enemy
Non – Eligible
Mentally
Disable

9. Object of the contract shall
be sufficiently defined,
possible and lawful
Contract
Legal &
Distinct
9
Drawings
Bill of Quantity
Preambles
Technical
Specification
Terms & Conditions

10. To carry out and / 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 be bound
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 by law.
Contract
Standards ,If
any
12
Terms
Technical specifications
Forms, Formats,
Schedules
Instructions

13. Consent of contracting
parties is 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 Methods such as:
Total Contracting
General Contracting
Sub Contracting
Special Contracting

16. 16
Contract
Type
Cost plus Fixed/
Percentage/
Incentive Fee
Hybrid
Contract
Special
Contract
Bill of quantities/
Unit Rate contract
Lump Sum
Contract
Item/Schedule
Rate Contract

17. 17
IF Contract
Offers to negotiate
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 included in 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 all terms & 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 for Contract 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 Contract Pertinent 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 & Sealed Form 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]
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]

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 evidence is 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 Start up
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
Changes Management
Claims and Disputes Management
30

31. 31
Reviewing the Contract Documents
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
construction components 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 Contract Discrepancies
• 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 submitted documents / 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 Crew following 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 Organization Breakdowns
• 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 out Obligations
• 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 and Obtain 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. The Contractor 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. The Consultant 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
(leftover claims)
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. Evaluate Contracts 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 by the 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 respect of 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 and their
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