Construction Contracts and Contract Administration by 7vg4m5Lb



                       Witoon Keoma
              B.Eng. Civil Engineering ( K.U. )
     M.Sc. Construction Engineering ( U. of Leeds U.K. )
Construction Project Process

    Feasibility Study        Programming


       Schematic               Detailed

       Contract Documents & Tender
     Construction       Contract Closeout
Composition of Project Construction

•   Project Initiation Documents
•   Detailed Design Documents
•   Tendering Process Documents
•   Contract Documents & Appendices
•   Construction Execution Documents
•   Contract Closeout Documents
•   Final Account & Reports
 Project Initiation Documents
• Project Initiation & Feasibility Studies
• Conceptual , Budgeting & Detailed Design
  Pre-Qualification Invitation Issuance
• Term of References ( TOR )
• Technical Proposal
• Evaluation Criteria for Technical Proposal
• Tender Documents
• Evaluation Criteria for Tender
• Project Financial Obligation Documents
    Detailed Design Documents
•   Design Scope and Concept Requirements
•   Design Standards and Specification
•   Sequential Diagrams
•   Calculation Sheets
•   Cost Estimates
•   Drawings and Associated Documents
•   Construction Specification and Standards
•   Professional Registrations and Permits
•   User Interfacing Design Reports
    Tendering Process Documents
• Consultants & Contractors PQ Documents
• Terms of Reference & Technical Proposal
• Tender Invitation & Bid Clarification
• Technical & Financial Tender Documents
• Evaluation for Technical & Financial Offers
• Prices Negotiation & Contract Documents
• Awarded The Contract & N.T.P
    Contract Documents & Appendices
•   Form of Contract Agreement
•   General Conditions of Contract
•   Particular Conditions of Contract
•   Drawings
•   Specifications
•   Bill of Quantity and Contract Prices
•   Technical Proposal and Attachments
•   Organization Registration and Requested
    Construction Execution Documents
•   Project Procedures
•   Project Handbook
•   Technical, QA & QC Procedures
•   Documents Control Procedure
•   Environmental Health and Safety Procedures
•   Interim Payment & Measurement Procedures
•   Variation & Changes Procedures
•   Claims & EOT Procedures
•   Disputes Resolution & Arbitration Procedures
•   Loan, Financial & Budget Administration
Contract Closeout Documents
•   Instructions & Variation Orders Procedure
•   Substantial Completion Certificates
•   Completion Reports of Outstanding Works
•   Taking Over Procedures
•   Test & Commissioning Certificates
•   O & M Manuals Submission
•   As-Built Drawings
•   Defect & Liability Settlement Reports
    Final Account & Reports
• Defect & Liability Certificates
• Releasing of Bonds & Guarantees
• Releasing of Retention Money
• Balance Account with Breakdown Final
  Statement Details
• Provision of Contract Warranties
• Project Records & Conclusion Reports
• Extra Stock Material & Parts with Lists
Mitigation of Project Disputes
Causes of Construction Disputes
• Ambiguous Owner’s Requirements
• Inappropriate Procurement Practices
• Insufficient Preparatory Planning & Design
• Poor Project & Commercial Management
• Ineffective Communication Procedures
• Inappropriate Risk Allocation Contracts
• Inadequate Experiences Human Resource
Classification of Construction Disputes

 •   Time Related Disputes
 •   Financial Related Disputes
 •   Inappropriate Contract Disputes
 •   Technical Related Disputes
 •   Ambiguous Owner Requirements
 •   Human Related Disputes
 •   Third Parties & Society Related Disputes
       Time Related Disputes
• Hand over construction premises and its
• Issuance of contractual documents
• Untimely submission and approval
• Availability of utilities during construction
• Recompense and time extension allowed
  when uncalculated hindrances occur
• Poor Interface Management Among
  Project Packages
  Financial Related Disputes
• Ambiguous conditions of payment &
• New Rates to be Negotiated
• Hidden Work Items
• Valuation and payment based on
  remeasurement of quantities
• Daily damages to be recovered by the
  contractor when the owner causes delays in the
Inappropriate Contracts Disputes
• Contractual risks must be properly allocated
• General Conditions not applicable can be
• Emphasis changed to party responsible for
• All claims, from either Party, have to follow a
  strict procedure
• Time or information is insufficient before contract
• Construction Document Review Defines and
  clarifies the contract and construction
• Evaluates contractor constructability
  Technical Related Disputes
• Plans and specifications errors
• Professional negligence standard.
• Constraints on fee as they relate to ability to produce
  high-quality documents
• Level of completeness required for design & pre-bid
• Review the construction documents before submitting
  the bids to identify patent, or obvious errors, in the
  contract documents
• Effect of failure to catch errors with no additional
  compensation and liability to owner
• Allocation of risk for unexpected site conditions
Ambiguous Owner Requirements

•   Change Objective by Market Demand
•   Additional Works by Technology Advance
•   Inadequate Pre-contract Information
•   Scope Change by Third Parties Influence
•   World Economy Impact Changes
    Human Related Disputes
• Inadequate Experience Professional
• Inappropriate Skilled Workers
• CSC, whose job is principally to supervise
  and monitor the work
• Consultant is no longer stated to be
  ‘impartial’: he ‘shall be deemed to act for
  the Employer, except when fair
  determinations are required
• Untimely Submittals & Approvals
Third Parties & Society Disputes

• Site Access and Routing Maintenance
• Construction Pollution Impacts
• Construction Site Environmental
  Protection and Its Impact
• Surrounding Societies Mutual Interests
• Local Authorities and Governing Bodies
• Underground Protected Properties at Site
             Disputes Prevention
• Hire experienced design professionals.
• Provide the designers sufficient time and budget.
• Early negotiation to creating a cooperative team approach
  Pre-contract reviews to properly assess and allocation risks
• Risk audits, Improper risk allocation frequently leads to disputes
• Training to provide competent, experienced field personnel
• Compliance audits to contract clauses that outline a flexible
  framework for dispute resolution
• Realistic allocation of risks
• Open communication & incentives for cooperation
• Partnering
      Dispute Resolution Board
•   An impartial third party at the onset of any potential dispute can bring real
    benefits, support relationships and bring a collaborative and creative
    problem-solving attitude to the project.
•   The third party can be used to facilitate negotiations, discussions,
    consensus-building and relationship-building, or to manage existing or
    potential difficulties in a wide variety of situations
•   The dispute board members are appointed at the outset of a project by the
    parties as individuals whose views and decisions will be respected.
•   Dispute Resolution Boards (DRBs) are typically a panel of three neutrals
    appointed by the parties that become part of the project team.
•   They attend periodic meetings, review essential project documents and
    assist in the identification and resolution of issues and potential problems.
•   DRBs are usually, but not always, established in the contract documents. A
    dispute is presented to a DRB at a hearing, and the DRB’s determination is
    generally presented as a recommendation or a non-binding decision.
•   The readily available dispute resolution system to handle those disputes not
    only will allow the project to continue with little loss of time and money, but it
    will also allow the Parties to continue to work together on the project after
    an understanding is reached or a neutral ADR Specialist renders a decision
      The Partnering Process
• Creating a cooperative team approach
• Partnering is a voluntary process, and joint costs are
  typically shared by the parties
• Partnering includes working together as a team,
  developing a common set of project goals that the
  combined project team supports
• Open communication and access to information,
  empowering participants to resolve issues at the lowest
  appropriate organizational level,
• Reaching decisions and solving problems quickly and by
• Maintaining the relationship throughout the project
      Design-Bid-Build Project
    Coordination & Communication
                     Owner as Employer

     Design          Project Management
    Consultant        Consultant ( PMC )


                 Main Construction Contractors
    Design Build Project
Coordination & Communication
             Employer’s Representative

               Project Management

                   Main Contractor

       Designers – Construction
                                     QA & QC
      Design Build Contract
• Most suitable for too many packages
• Better for time constrained project
• Project completion time is a must
• Limited budget with minimal allowance
• Best suit to rehabilitation & expansion
  project with sensitive working environment

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