INDEX

SL.
DESCRIPTION PAGE
NO.
MAJOR CLAUSES OF A SUPPLY AND SERVICE AGREEMENT
ORGANIZATION CHART AT A GROUP LEVEL

1.0 PROJECT NAME

 DVC, 2 X 250 MW Mejia, Thermal Power Station extension unit 5 & 6 - Coal

Handling Plant.

2.0 SCOPE OF WORK

The scope of work covers design, manufacture, supply, construction, erection and

commissioning, testing and delivery at site of the complete coal handling plant

equipment and accessories only, including mechanical, civil & structural, Electricals,

and control & instrumentation.

3.0 MAJOR CLAUSES OF A SUPPLY & SERVICE CONTRACT AGREEMENT

1. Definition of terms:

Here the meaning of the following terms is clearly defined which reflects in the contract

agreement document, the meaning herein assigned holds good unless there is something

in the subject or context inconsistent with such construction.

The owner / customer

Contractor

Sub- contractor

Engineer

Consulting Engineer / consultant

Inspector

Equipment / plant / materials/ stores / works

Contract

The word approved

Effective date of contract

Site

Test on completion
 Pre-commissioning

Initial operation

Trial operation

Commissioning

Commercial operation date

Performance guarantee test

Provisional take over

Final take over

Warranty period

On establishment of site office

Month

Writing

Services

2. Scope of supply & services of the contractor:

In this clause the following main scope of supply & services of the contractor are

defined & listed.

Civil works

Transportation of equipment / materials

Insurance,

Storage,

Erection,

Testing

Commissioning.
 Providing of all labors

Discrepancy reports on loss/ damages

Monitoring and coordination as per L1 network.

Construction of office and labor barracks for contractors own worker.

Satisfying statutory requirements etc.

3. Responsibility of the owner:

Here all the facilities / services to be provided by the owner to the contractor free of

all charges except whether specified are stated. Some of them pertaining to the

project are.

Unloading bay

Approach roads

Space for storage

Lighting at roads and open stores.

Land for building of site office

Electricity and water etc.

4. Price:

Here the total price of the project is given on a break up basis as follows

Price Rs. (in

Sl. No. Description
crores)
A. Inland transportation (freight charges) from manufacturing units,

sub-vendors works, port of entry to the site

B. Complete civil works for entire scope as mutually agreed
C. Erection, supervision, testing and commissioning including PG

test, commercial operation, comprehensive insurance till

commercial operation and project management charges for

entire scope.
5. Terms of payment:

Here the break up of the total price to be paid to the contractor defined based on the

supply and service milestone achievement.

6. Mode of payment:

Here the mode of all payment including advance payment is mentioned. If there is

any delay in the payment, which is due to contractor, beyond specified days from the

date of submission of invoice with complete document, then the owner pays

specified interest rate higher than the prevailing bank cash credit interest rate.

7. Completion schedule:

Time is the essence of the contract and this clause ensures that the contractor shall

erect, commission, put into commercial operation complete in all respect in the

agreed time.

8. Insurance:

This clause defines that the contractor shall cover on behalf of the owner, the MCE

insurance of all equipment during transit, storage, erection, testing commissioning till

successful completion of trial operation of each unit and shall remain responsible for

lodging claims and arrange settlement/ reimbursement of such claims with / from the

insurance company.

9. Liquidated damages for delay in completion:

Subject to force majeure conditions, if the contractor fails to complete the project on

or before commercial operation date agreed then owner shall have the right to

recover as Liquidated damages (LD) and not by way of penalty a sum equivalent to

0.25% of contract value for delay of each week. The liability for delay shall not in any

case exceed 5 % of the contract price.

10. Sub- letting the contract:

Here the provision is made so that the contractor shall prepare a list of sub vendor

for the supply and services and furnish the same with necessary documents for

approval of the owner.

11. Indemnity:

Here the provision is made so that the contractor shall indemnify the owner for all

damages or injuries occurring because of negligence of the contractor.

12. Inspection and permits:

Here it is mentioned that no person other than the contractor or his duly appointed

representative should be allowed to do work at site.

Engineer/ inspector shall have at all reasonable time access to the contractors

premises of work and shall have the power at all reasonable time to inspect

workmanship of the equipments, structures, fabrication and erection.

13. Test at site:

Here it is mentioned that on completion of erection of the equipment, the contractor

shall carry out all necessary tests preparatory to starting up of the plant as per

contractors standard/ standard codes.

And the final tests as the PG tests for total plant would be conducted as per L1

schedule.

14. Cancellation / termination:

Here it is specified that no order shall be cancelled after issue of the order or the

understanding to proceed with the work. In event of cancellation, the contractor shall

discontinue the work on the date and stop all further subcontracting or purchase

activity related to the work. In the event of such cancellation the contractor shall be
 paid compensation as mutually agreed to depending upon circumstances prevalent

at the time of cancellation.

15. Arbitration:

This clause makes sure that if at any time question, dispute or difference whatsoever

shall arise between the owner and the contractor upon or in relation to or in

connection with the contract, either party may forthwith give to the other, notice in

writing to the existence of such question, dispute or difference and the same shall be

referred to the adjudication to two arbitrators- one to be nominated by the owner and

the other to be nominated by the contractor, and the two arbitrators shall appoint a

third arbitrator who shall be the presiding arbitrator as per provision contained in the

arbitration and conciliation Act.

16. Contract and jurisdiction:

Here it is mentioned that the contract or an order will be considered as having been

accepted only when the contractor has confirmed it in writing. No legal proceedings

to enforce any claim and no suit arising out of any contract shall be instituted except

in a court of competent jurisdiction located within the jurisdiction of Kolkata.

17. Progress report:

Here it is mentioned that the contractor shall submit to the owners engineer for

approval prior to start of erection a detailed schedule in the form of L1 network

showing the programme and the sequence in which contractor proposes to carry out

the work with dates and erection completion time. There shall be regular co-

ordination meetings between the representative of the contractor and the owner.

And during the progress of the work, the contractor shall furnish monthly progress

report to the owner.

18. Trial operation:

 Here it is mentioned that on completion of erection under the supervision of the

contractor each item of equipment shall be thoroughly inspected by both parties for

correctness and completeness and acceptability for pre-commissioning tests at site.

19. Taking over:

Here it is mentioned that the unit shall be considered as provisionally taken over

after successful completion of commercial operation and it shall be considered as

finally taken over after successful completion of PG tests during post- commercial

operation.

20. Force majeure:

Here it is mentioned that the contractor or the owner shall not be liable for failure in

performing his obligation resulting directly or indirectly from any force majeure cause

as referred to and / or defined in the paragraph below.

Force majeure is herein defined as:

1. Any natural cause which, is beyond the control of the supplier or the

purchaser as the case may be.

2. Natural phenomena limited to weather conditions, floods, draughts,

earthquakes and epidemics.

3. Acts of any governmental authority, including war, embargoes.

4. Accidents and disruptions including fires, explosions

5. Strikes, lockouts and sabotage.

21. Warranty:

Here it is specified that the warranty of the plant in respect of erection, workmanship

and quality shall cover a period of twelve months from the date of successful

completion of commercial operation of units.

 The contractor shall be responsible for any defects / faults / damage done to the

plant / equipment/ machinery due to faulty/ defective erection during the warranty

period.

22. Extra works:

Modification work of any nature arising out of faults not attributable to contractor

shall be treated as extra work and shall be executed by the contractor when asked

in writing by the owner subject to resources at site fr4o which payment shall be

made by the owner.

23. Interruption and extended stay:

This clause specifies that due to causes not attributable to the contractor or for

reasons over which contractor has no control, if the contactors work is either

prevented to commence / interrupted / stopped as per schedule such of the

conditions with time loss and financial compensation shall be intimated in writing by

the contractor to the owner as and when the situation arises

24. Removal of excess and scrap material:

Here it is mentioned that all materials brought by the contactor to meet erection

requirement on no charge basis shall remain contractors property and the

contractor may take any final excess back.

25. Safety:

On safety point of view it becomes contractors responsibility to provide normal safety

precautions against fire and other accidents for the materials and personnel working

under the contractor.

26. Site-in- charge:

 Here provision is made so that for fulfilling the obligation under the subject contract

and within the contract period, the contractor shall provide from time to time

necessary personnel as required for supervision purposes.

27. Co-operation with other contractors and consulting engineers:

This clause compels the contractor that contractor shall fully cooperate with the

owners other contractors/ sub-vendor for associated erection & consulting

engineers for better coordination to avoid unnecessary duplication of work.

28. Rejection of defective plant:

This clause ensures that if the complete plant or any portion is found to be defective

or fails to fulfill the requirements of the contract due to faulty erection &

commissioning, the Engineer shall forthwith give the contractor notice setting forth

particulars of defects and if the contractor accepts the defects in working, shall

forthwith make defects good or alter the same to make it comply with the

requirements of the contract. If the contractor fails to do so within a reasonable time

the owner may reject and replace at the cost of the contractor.

29. Limits of contract:

Here the limit of scope of contractors work is defined.

30. Quality of workmanship:

This clause ensures that all the activities like erection, testing and commissioning is

carried our as per relevant Indian / International (latest) codes and standards and

recommendations of manufacturer / contractor as approved by purchaser.

31. Demurrage, wharf age etc.:

Here provision is made so that all demurrage, wharf age incurred by the owner due to

reasons attributable to the contractor shall be to the account of the contractor.

32. Contract performance guarantee:

Here provision is made that contractor shall furnish Contract performance guarantee for

10 % of total contract price in the form of a Bank guarantee of equivalent value and the

same shall remain till expiry of warranty period.

33. Contract drawing & instruction manuals:

Here the required drawing & instruction manuals are mentioned for erection and

commissioning and services.

34. Consignee:

Here the address of the consignee for all the erection materials / equipments including

the supply material of civil is mentioned.

35. Contract amendments:

Here provision is made for taking care the mutually agreed changes covered in the

minutes of meeting by suitable amendments to the contract as and when necessary.