Week 5 Monitoring & Roles Administrative PDF

School of Civil Engineering ECM578 WEEK 5 TOPIC 4: Monitoring Contract Performance ASSOC PROF TS DR EEYDZAH AMINUDIN [email protected] T1-17-15/16B  TOPIC 4: Monitoring Contract Performanc...

School of Civil Engineering ECM578 WEEK 5 TOPIC 4: Monitoring Contract Performance ASSOC PROF TS DR EEYDZAH AMINUDIN [email protected] T1-17-15/16B  TOPIC 4: Monitoring Contract Performance WEEK 5 LEARNING OUTCOMES (CO2-PO3) Understand the Role of Contract Administrator Understand the Monitoring Contractor Performance Identify the Site Records to monitor the Contract Performance  CONTRACT ADMINISTRATION JKR 203 A (Rev 2010) standard form of contract Role of Contract Administrator a. To represent the employer/client/owner in all project meetings and other field matters relating to the construction of the project. b. To make periodic site visits to the project, record observations and make a report all observations related to status of completion, quality of workmanship and compliance with the Contract Documents c. To responsible for the comprehensive and timely administration of all project related documentation, transmission of paper work and project information (project name, project address, project number. d. To cultivate a partnering relationship between owner, contractor and consultant (architect, engineers etc)to share same goals into project’s success. - 81 clause - written documents that define the roles, responsibilities of contractual parties - Ex: Delay and extension of time, variation order, completion of work  S.O and S.O.’s Representative (clause 3.0) a) Superintending Officer (S.O) - overall supervision and direction of the works - watch, supervise, manage and administer the works b) S.O Representative - Individuals appointed from time to time by the S.O to represent him in certain areas of work - Appointment is by written instruction Who is SO?  S.O and S.O.’s Representative (clause 3.1) Duties and responsibilities of S.O and S.O Representative - Ensure the project is carried out in accordance with the requirements of the contract in terms of material quality and workmanship - To ensure smooth implementation of the project and according to the work schedule that have been mutually agreed - Ensure to comply with all local laws, requirement of council and any regulations that require to be adopted at the place where the project is implemented - Ensure all the instruction and decisions provided to the contractor is within reasonable period to avoid disruption with work progress - Ensure the site valuation is carried out at an agreed time and the progress payment are made within reasonable time  S.O Instruction (clause 5.0) S.O Instructions – clause 5.1 a) to i) a) The variation b) Any discrepancy in contract documents c) The removal from the site of any materials or goods, substitutions of any other materials or goods d) The removal and/or re-execution of any works of contractor e) The dismissal from works of any person f) The opening up for inspection of any work covered up g) The amending and making good of any defects h) Any matter which is necessary and incidental to the carrying out and completion of the works i) Any matter in respect of which the S.O is empowered by this contract to issue instruction  S.O Instruction (clause 5.0) a) Written instruction. If Oral instruction given, should issue a written instruction within 7 days b) If contractor’s fail to comply within 7 days after receipt the written instruction– employ other contractor/undertake the work, cost recovered from contractor  Obligations of Contractor Construct, complete, test, commission Perform work in good manner Take appropriate measure to comply with contract Exercise professional judgment, practice, OBLIGATIONS skill, care, deligence Clause 10.0 (a) –(k) Safeguard and protect government interest  Obligations of Contractor Inform government any event that affect the work Provide qualified and competent personnel to perform works Instruct and supervise staff and sub-con OBLIGATIONS Clause 10.0 (a) –(k) Make good defects, damage etc. Carry out other obligations as required  Possession of Site (clause 38.0) a) No work shall be commenced unless the Performance Bond and insurance policies have been deposited with the Government or the S.O. b) Possession of the Site as complete shall be given on or before the “date for Possession” stated in the Letter of Acceptance a) Usually, the site possession will be given 2 weeks after issuance of Letter of Acceptance  Possession of Site (clause 38.0) c) Restrictions upon possession of the Site shall be stated in the Appendix in the Contract Documents (ex: site may be given in section, parts and any other restrictions) Delay in giving site possession less than 3 months - S.O. may issue instructions to the revision of the “Date for Possession” and “Date for Completion” if delay in giving section or part of site possession. - Contractor shall not be entitled to any claim for loss or damage caused by delay or have intention to terminate the contract  Possession of Site (clause 38.0) Delay in giving site possession more than 3 months: - S.O. shall give written notice to the Contractor if the delay in possession of the site is beyond three months from “Date from Possession”. - Contractor may notice S.O. within fourteen days to agree to proceed with the works or request S.O to terminate the contract.  Insurances and Performance Bond INSURANCE - Once LA is received, contractor is required to submit the insurance and performance bond - To protect the client, contractor, workers and public Importance of insurance: - Claims by the public and employees in the event of an accident or damage - Clients and contractors can feel comfortable and secure in their work - Protect the contractor in the event of an unwanted incident as soon as the contractor begins work on the site  Insurances and Performance Bond INSURANCES a) Insurance of Work (clause 18.0) Guarantee given by the 3rd party as a protection to the client and contractor if there is anything happen to the construction site Ex: fire, explosion typhoon, floods and riots b) Insurance of public liability Guarantee given by the 3rd party as a protection to the client and contractor Protection if any accident happen which caused to injury or death to the public, damages to public property who were at the site or surrounding of the site c) Insurance of Work + Insurance of Public Liability = Contractor All Risk c) Social Security Organization (SOCSO) (clause 17.0) Guarantee given by the 3rd party as a protection to the workers of contractor and workers for nominated subcontractor if accident happen on construction site or other places (depends on scheme) which caused to injury or death  Insurance and Performance Bond PERFORMANCE BOND (clause 13.0) Guarantee given by the 3rd party as a protection to the client on the compliance of contractor to take the responsibility to complete the project as required in the contract Three types of performance bond: a) Guarantee Insurance - Guarantee given by the insurance company in respect of the contractor’s compliance in fulfilling the responsibilities in performing his work as agreed in the contract - Insurance company will pay the compensation for any loss or damages if the contractor failed to fulfil the contract obligation. - The contract will have to pay a certain amount of premium set by the insurance company a) Guarantee Bank The contractor must make the application and the collateral required. Collateral is in the form of permanent assets such as land, houses and etc. a) Guarantee sum - The guarantee is in the form of money but it is taken gradually. - Interim payment is deducted by 10% of the amount needed until the accumulated amount reaches to 5% of the total contract price.  Variations (clause 24.0) Variation is defined as any works that change from the original contract in terms of design, materials or quantity generally instruct by S.O a) The S.O. is empowered to issue variation order which has to be confirmed in writing. These changes would not weaken the contract and contractor shall comply with the instruction. b) Variations can be: Addition, omission or substitution of works Alteration or modification of the design, quality or quantity of works shown in the drawings, BQ and specifications. Removal in the kind or standard or any materials or goods to be used in the works for the contract.  Payment to Contractor and Interim Certificates (clause 28.0) Interim payment: a sum of money to be paid to the contractor on a regular basis as stipulated in the contract for completed works including construction materials supplied and any other items that are eligible for consideration under the contract Interim certificate: a certificate issued by S.O conforming the amount payable to the contractor by the client and issued on a regular basis as specified by the contract a) After Contractor has executed work, S.O. shall make evaluation of the work so that payment can be made to Contractor. b) Within 14 days from valuation, S.O. shall issue Interim Certificate to Contractor.  Payment to Contractor and Interim Certificates (clause 28.0) Sum to be certified in Interim Certificate subject to agreement between parties. It is estimated based on the total value of work properly executed and the value of unfixed materials is up to 90% Government shall make interim payment on the amount certified to Contractor within 30 days (min)  Advanced Payment (clause 69.0) Advanced payment: A sum of money lent by the client to the contractor in the early stages of construction as a financial aid to begin work and has to repay to the client through interim payments deduction. Contractor shall entitle advance payment at 25% of the builder’s work (contract sum less provisional sum and prime cost sum) but subject to a maximum RM10 million. Receiving the advance payment is subjected to: a. Contractor shall submit and signed the Letter of Acceptance, performance bond, insurance and SOCSO b. Guarantee bank/insurance for advance payment  9f. Bills of Quantities 8(i). Prime Cost Sum (P.C. Sum) Items To denote work to be carried out by NSC, Nominated Suppliers under the direction of the Main Contractor; Estimated Amt. The example of PC Sum bills as follows: Item Description Unit Amount A. Provide the Prime Cost Sum of Ringgit 400,000.00 Malaysia Four Hundred Thousand for the Electrical Works Specified the nature Allow for Profit of Work % To be filled B. By the MC C. Allow for Attendance Lump Sum Carried To Summary of Tender:  9f. Bills of Quantities 8(ii). Prime Cost Sum (P.C. Sum) Items – Who? GOVERNMENT Select & Direct MAIN CONTRACTOR Payment NSC CONSULTANT 1. Architect SUB-CONTRACTOR 2. Engineer SUPPLIER 3. QS VENDOR SUB-LABOUR BANK/FINANCIAL INSTITUTION  9f. Bills of Quantities 9. Provisional Sum Items Actually sum to be included in the tender by Employer: – Work that anticipated to be carried out; and – Which either cannot be foreseen or cannot be accurately design/determined at the time of tender The example of Prov. Sum bills as follows: Estimated Amt. Item Description Unit Amount A. Provide the Provisional Sum Cost of 50,000.00 Ringgit Malaysia Fifty Hundred for Guard House Specified the nature Of Work 26 Carried To Summary of Tender: 50,000.00  Completion of works (clause 39.0) a) The Contractor shall complete the whole Works on or before the “date for Completion” or extended date as per clause 43 (Extension of Time) b) When the whole works reached practical completion and achieve the satisfaction of the S.O. certificate of practical completion will be issued. Practical completion: the execution of work has comply with the terms of the contract that allows the project to function and can be used comfortable by the client Certificate of practical completion: a certificate issued by S.O to confirm that the contractor has completed a project to a practical completion stage.  Sectional Completion (clause 41.0) This clause is invoked when there is separate dates for completion and rates for LAD Sectional completion: the condition of contract that sets different completion dates for a project or building that allows the client to take over the part while the other part is still under construction  Partial Occupation by Government (clause 42.0) Partial Occupation: a condition in which a client takes over a portion of a project or building that has been completed earlier than the project completion date provided that the contractor gives the approval Stated that government can take possession on part of works done with consent of Contractor under conditions: a) S.O. shall issue Certificate of Partial Occupation within 7 days from date of possession. b) Relevant part shall reached practical completion. c) Contractor shall repair relevant part before end of Defects Liability Period, and if complete, certificate making good defects will be issue by S.O d) Liquidated Ascertain Damages (LAD) after certification of practical completion shall be reduced in proportion with the total value of the relevant part bear to Contract Sum. e) Contractor shall issue and keep insured the works f) Performance Bond shall be released or refunded only after completion of making good all defects.  Damages for Non-completion (clause 40.0) Under this clause, contractor should be responsible for failure to complete work on time, as stated in the Appendix or extended time under Clause 43 Damages known as Liquidated and Ascertained Damages (LAD) with issuing of Certificate of Non-Completion. LAD: Damages that the contractor must pay to the client if he fails to complete a project within the agreed period as specified in the contract Certificate of non-completion: certificate issued by S.O to certify that the contractor has failed to complete the project as agreed in the contract or the extension of time given  Delay and Extension of Time (clause 43.0) Extension of Time It is an extension of time given for completion of construction work provided by the S.O to the contractor for reasons permitted by contract Certificate delay and extension of time - Certificate issued by S.O - To indicate the contractor was unable to complete the work on the date stated in the contract for reasons allowed by the contract and on this basis, the completion date was extended to a new date according to the contractor's qualifications and certified by the S.O.  Delay and Extension of Time (clause 43.0) Extension of time permitted with written notice of causes of delay by Contractor to S.O. Causes of delay, example a) By force majeure (act of God) b) By exceptionally inclement weather c) By direction of S.O. d) By loss or damage, referred to Clause 36 e) By S.O.’s instruction under Clause 5. f) Delay in receive instructions by S.O to nominate sub-cont g) Delay in site possession h) Delay on the part of artists, tradesmen i) Delay to secure goods, materials j) Delay on the part of Nominated sub-cont/ Nominated suppliers to perform their work  Delay and Extension of Time (clause 43.0) Process to Apply for Extension of Time Work progress is late The contractor applied for the extension by giving the reason for the delay The S.O determines whether the reasons No S.O Inform contractor are included in clause 43 a-j yes Contractor inform to S.O determines whether the delay caused No arbitrator delays in the overall project S.O Inform contractor yes Result of S.O assess by Assessment of extension of time by S.O arbitrator An extension of time is approved  Nominated Sub-contractors/suppliers (clause 60.0) a. Nominated Sub-contractors Contractor which appointed by S.O to perform certain works which are generally expert work, which has been provided in the tender document as a prime cost sum (P.C Sum) b. Nominated supplier Supplier which appointed by S.O to supply certain materials which has been provided in the tender document as prime cost sum (P.C Sum) c. Prime cost sum Sum of money allocated in the tender document / list of materials for a specific work which is generally a specialist work to be performed by nominated sub-contractor or for the supply of specific building materials to be supplied by the nominated supplier appointed by S.O d. Provisional Sum Sum of money allocated in the tender document / list of materials for a specific work which cannot be specified or to make it in detailed during the preparation of tender document (ex: landscape work, signage, telephone rental)  Nominated Sub-contractors/suppliers (clause 60.0) All expertise personnel undertaking the works or supplying materials for works under the P.C. Sums in the BQ shall be nominated by the S.O. and employed by the contractor. The S.O. shall not nominate a nominated sub-contractor or nominated supplier if: a. Reasonable objection made by the contractor within 21 days of the instruction by the S.O. b. The person does not enter into a sub-contract terms and conditions stated in the government standard form of sub-contract under PWD 203N or PWD 203P c. The person that give no indemnity against government as required under the Conditions of the Contract  Nominated Sub-contractors/suppliers (clause 60.) The S.O. shall undertake one of the following in the event of the refusal of the contractor to enter into a sub-contract: Nominate an alternative sub-contractor or supplier Vary the works in accordance to the variation clause Arrange for the contractor to undertake the works as per clause 34.4  Nominated Sub-contractors/suppliers (clause 60.) Interim certificates will separately state the amounts due to each nominated sub-contractors or suppliers. The amount shall be paid by the contractors to them after the contractor receives the payment from the government ‘pay when paid’  Nominated Sub-contractors/suppliers (clause 60.) The contractor is fully responsible for the defaults, breach, acts of the nominated subcontractor or nominated supplier and the government is not liable to the contractor inn any way. If the nominated subcontractor or supplier abandons the contract, the contractor can: - Engage another subcontractor with the consent of the S.O. - Undertake the subcontract works himself.  Defects After Completion (clause 48.0) Defects – any deficiencies, imperfections, shrinkage caused by materials and/or quality of work that does not comply with the requirements of the contract. Defects liability period – A period stipulated in the contract starting from the date of practical completion been issued until to a specified period for which the contractor is responsible for repairing any defects at his own expense. Certificate of making good defects – certificate issued by S.O to indicate that the contractor has properly repaired all defects listed in the schedule of defects or as per instructed by S.O and it also signifies that the contractor has fulfilled all of the obligations contained in the contract.  Defects After Completion (clause 48.0) Defects Liability Period – as stated in Appendix. If not stated usually 12 months from the date of practical completion Types of Instructions a. Written instruction - S.O shall issue written instruction to the contractor to make good such defects, imperfections, shrinkages or any other fault b. Schedule of Defects - Issued for defects that does not required for immediate action - S.O also shall issue schedule of defects to the contractor not later than 14 days after the expiration of Defects Liability Period. - Contractor shall made good all the defects, imperfections, shrinkages or any other fault not later than 3 months after receiving the schedule. - S.O shall not issue any further instruction to the contractor to make good any defect, imperfections, shrinkages after the issuance of the schedule or after 14 days from the expiration of the Defects Liability Period.  Defects After Completion (clause 48.0) Failure of contractor to make good any defects - Failure of the contractor to follow the instruction, S.O may fixed in such manner as it thinks fit. - The cost incurred to him must be deducted from the balance of money to be paid to the contractor. - If no balance is available, the cost shall be recovered from the performance bond or to claim other money  Final Account (clause 31.0) Final Certificate: A certificate issued by S.O to confirm that the contractor has complied and carried out the responsibility of completing the project and repairing all defects in accordance with the contractual requirements. The certificate also specifies the payment to be received by contractor. Final Account: An account statement showing all the adjustments that have been made to the original contract price in order to determine the actual contract price. Thus, it shows the balance of payments due to the contractor and client  Final Account (clause 31.0) The importance of final account: Contractor: - the contractor will be entitled to the final payment has to be paid by client - the contractor can close all accounts for the project - Contractors will be able to determine the amount of profits and losses for projects Client - allows the client to know the final payment amount to be paid to the contractor - can determine the amount to be received from contractors - allows the client to know the total cost or total investment incurred for the project  Final Account (clause 31.0) - Contractor shall submit all the receipts, vouchers records not later than 3 months after the issuance of Certificate of Practical Completion - If the contractor fails to submit full particulars of all claims within the stipulated period, the S.O, the S.O shall make assessment based on the available documents submitted by contractor - Within 3 months after the expiry of Defects Liability period OR 3 month after the issuance of Certificate of Making Good Defects, S.O shall issue final certificate  Understand the Monitoring Contractor Performance Identify the Site Records to monitor the Contract Performance  Monitoring Contractor Performance a) Duration ✓ From date of possession of site / commencement of contract up to issue of final certificate Purpose + To ensure that the contract is completed within time + to warn the contractor/employer on the need to take remedial measures if delay occurs b) Methods + through regular progress meetings + through proper site records c) Basis + through the use of the contractor’s program of work + every activity/sequence of activity is compared against a base program to identify any consequent delay d)Frequency and nature of checks + as the work progresses, regular checks of at least once a month (preferably at every monthly site meeting) must be made of the actual progress achieved against the programme of work + if at any time it is discovered that the contractor is behind schedule he must; i. identify the cause(s) of delay ii. Immediately speed up work iii. Revise the work programme and resubmit for approval e) Meetings + Site Possession + Site Progress + Coordination/Project Management + Sub-Contractor’s + Ad-hoc  Site Possession Meeting a)Timing + on the date of commencement of site possession Purpose + To officially handover possession of site to the contractor Matters to Deal with i) to explain the general requirements of the Contract to the Contractor ii) to introduce the various project team members to each other iii) To handover the various contract documents e.g. a) the letter of delegation of powers b) a copy of contract documents c) a priced copy of the B.Q., a set of construction drawings, etc d) a copy of the Main Contractor’s Work Program to the NSC iv) To set out the procedures pertaining to: a) document submittals and approval b) sample submittals and approvals c) inspection of work d) Interim valuations e) Claim procedures Site Progress Meetings Timing + Normally at least once a month + More frequent when situation warrants Purpose + To enable the contractor to: i. present officially his progress report ii. Present problems encountered in the execution of the works so that these can be discussed and resolved iii) To permit progress of work to: + be reviewed on a regular basis + to identify the areas of delay + to establish the cause/s of delay iv) To enable the Employer/Contract Administrator to: + take appropriate action to remedy delay caused by him + to keep a check on the money expended and to be allocated  Issues to be dealt with + only site issues or other issues dealing to the Contract + Financial issues pertaining to the Contract + Issues pertaining to 3rd Parties affecting the Contract Procedural Matters + Contract Administrator to chair meeting, prepare and circulate minutes + Participants to include: - Main Contractor - NSCs(by invitation only) - Consultants - Employer to be observers only  Coordination/Project Management Meetings Timing + As and when necessary from time to time + usually it is held on a monthly basis Purpose + to enable the employer to discuss all matters pertaining to the Contract with his project team – Design, Progress, Financial etc + to enable particular issues to be discussed without the Contractors presence: - Design matters affecting the contract with the consultants - Administration matters with the Contract Administrator - Matters affecting the Contract with 3rd Parties  Procedural Matters + Employer/Employer’s representative chairs the meeting, prepares and circulate minutes + Participants include - Employer/Employer’s Representative - Users - Contract Administrator - Consultants - 3rd parties involved in the contract Note: Neither the Contractor nor the NSCs are to attend this meeting NSC Coordination Meeting Issues to be dealt with + Coordination problems – Design and Work + Site Problems – possession, access security etc + Financial issues – Payments, V.O.s, claims + issues involving 3rd Parties Participants to include: + Main Contractor + Nominated Sub-Contractor + Domestic Sub-Contractors + Others (by invitation only) Ad Hoc Meeting Time as necessary from time to time Purpose is to discuss specific issues e.g. + Emergency issues + Testing and Commissioning + Financial – Claims, Payments, V.O.s + Training, Defects, Maintenance etc  Site Records Evidential value – all site records must be properly prepared and endorsed/signed off immediately on preparation by Site agent or Contract Administrator or Sub- contractor’s representative Official Work records - submission on daily, weekly or fortnightly information on + Work/Activities Carried out + Workers, Plant, Machinery etc + Weather + Instruction received/Carried out + problems encountered  Site Duty – each and every site personnel of the Contractor must keep an official diary for work records Attachments – Site Diary must be supplemented with As-built/As-installed drawings, diagrams, sketched etc Day work records – to enable an assessment to be made in the evaluation of additional works carried out by the contractor THANK YOU Q&A