Contract Management - Fidic 1999

PRESENTATION
PROJECT MANAGEMENT
Prepared / Presented by:
PROJECT CONTROL DIVISION Karthi
PROJECT CONTROL DIVISION
PROJECT MANAGEMENT
DISCIPLINES of PROJECT MANAGEMENT

CONTRACT MANAGEMENT
CONSTRUCTION MANAGEMENT
RISK MANAGEMENT
FINANCE MANAGEMENT
HUMAN RESOURCES MANAGEMENT
SAFETY MANAGEMENT
LEGAL MANAGEMENT
CONTRACT MANAGEMENT
PRESENTATION
CONTRACT MANAGEMENT
CONTRACT MANAGEMENT
TAISEI CORPORATION
CONTENT OF PRESENTATION
Content of Presentation
Part
Name
I.
Introduction of Contract Management
II.
FIDIC based Contracts
III.
Contract Administration
IV.
Claims and Counter Claims
Conclusion of Presentation
CONTRACT MANAGEMENT
TAISEI CORPORATION
Part I: INTRODUCTION
Part I: Introduction of Contract Management

Chapter
Name
1.
Merit of Contract Management
2.
Contract Management Participants
3.
General Types of Contracts
Back to Content of Presentation

CONTRACT MANAGEMENT
MERIT OF CONTRACT MANAGEMENT
TAISEI CORPORATION
A, Contract Management is PROCESS of managing:

Contracts
Deadlines
Deliveries
Customer satisfaction
CONTRACT MANAGEMENT
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B, Phases of the Contract Management from time point of view:

Pre-award Contract Management involving
preparatory activities with adequate investigations to cover all aspect:
1. that Influence design
3. Study possible technological

alternatives
2. to Minimize uncertainties that

may arise at the time of execution
4. Preparation of detail designs,

construction drawings and estimates
based on above CONTRACT DOCUMENTS are PREPARED
CONTRACT MANAGEMENT
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B, Phases of the Contract Management from time point of view:

Post-award Contract Management
Contractor performs during project execution => Main Topic of Presentation
to fulfill Contractual obligations to Customer, the Contractor need:
To be equipped with latest technology
Proper mobilization
To have sufficient skilled personnel
Efficient schedule control
Expect unforeseeable events and prepare countermeasures
CONTRACT MANAGEMENT
TAISEI CORPORATION
C, Contract Management influences Companys:

Budget
Customer Service
Operation
Public Image
D, Therefore through proper Contract Management, Company can have

the following benefits:
increase in production and reduced inventory
improvement in product quality and customer satisfaction
reduction in purchasing costs, scheduling conflicts and manufacturing waste
transformation of fixed contract costs into cash that goes directly to the bottom line
Back to Content of Part I

CONTRACT MANAGEMENT
CONTRACT MANAGEMENT PARTICIPANTS
TAISEI CORPORATION
CONTRACT MANAGEMENT Organization Chart

Project Manager
Administration Manager
Project Control Manager
Construction Manager
Accountant
Contract Engineers
Site Engineers
Quantity Surveyor
Geologists
Schedule Controller
Document Controller
Passive Members
Active Members
Passive Members
CONTRACT MANAGEMENT
GENERAL TYPES OF CONTRACTS
TAISEI CORPORATION
General Types of CONTRACTS

International Contracts
Domestic Contracts
Contract parties in General:

Employer Contractor
Employer Designer/Consultant
Contractor Contractor
(Joint Venture)
Contractor Subcontractor
Contractor Designer/Consultant
Contractor Supplier
Types of Contract in General:

Lump Sum Contract
Item Rate Contract / Remeasurement Contract
Cost plus percentage contracts
Cost plus fixed fee contracts
Maximum Price Contracts
Turnkey Contracts

CONTRACT MANAGEMENT
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Part II: FIDIC based Contracts
Part II: FIDIC based Contracts

Chapter
Name
1.
Background & History
2.
FIDIC Forms of Contracts and its Concepts
3.
FIDIC First Edition 1999 Red Book

CONTRACT MANAGEMENT
Part II: FIDIC BASED CONTRACTS
Background & History
TAISEI CORPORATION
FIDIC Background & History:

FIDIC acronym for Federation Internationale des Ingenieurs-Conseils
(International federation of Consulting Engineers).
founded in Ghent, Belgium in 1913 by the national associations of consulting
engineers of Belgium, France and Switzerland
FIDIC has its Secretariat now in Lausanne, Switzerland
one of the first 5 committees established in 1913 was Contract Documents
Committee having the following terms of reference:
a, To monitor Contract documents of interest to Consulting Engineers

regarding:
Construction of objects or works
Maintenance of installation in operation
Erection and installation of works
Supply of materials
b, To inform contractors, suppliers and officials concerning contract documents

recommended by FIDIC
Back to Content of Part II

CONTRACT MANAGEMENT
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FIDIC Forms of Contracts and its Concepts:

A, Conditions of Contract for Works of Civil Engineering Construction
For Building And Engineering Works
Designed By The Employer
(Red Book)
Edition:
1.
First Edition in 1957, presently fourth edition from 1987 reprinted with
amendments in 1988 and 1992
Basic Feature: Design is provided by the Employer

Type of Contract: Item Rate Contract / Re-measurement Contract
Note: Fourth Edition reprinted with amendments from the year 1992 was used in
our Sitina Tunel project in Slovakia
CONTRACT MANAGEMENT
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B, Conditions of Contract for Electrical and Mechanical Works including

erection on site (Yellow Book)
Edition: First Edition in 1963, presently third edition from 1987
Basic Feature: Design is Contractors responsibility
Note: Third edition was used in our Sitina Tunel project in Slovakia
CONTRACT MANAGEMENT
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C, Conditions of Contract for Design-Build and Turnkey (Orange Book)

Edition: First Edition in 1995
Basic Feature: Turnkey type of Contract
=> Engineering - Procurement Construction is Contractors responsibility
Type of Contract: Lump Sum Contract
Note: in 1999 replaced by new FIDIC concept => Silver book (explained later)
Common feature of the above mentioned Forms of Contracts

(i.e. RED, YELLOW and ORANGE book) is:
Contract parties: Employer Main Contractor
PROJECT CONTROL DIVISION MIDDLE EAST BRANCH
CONTRACT MANAGEMENT
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D, Conditions of Sub-contract for Works of Civil Engineering construction
Basic Feature:
- coming from the RED Book concept, therefore it is most suitable for Civil
Engineering Subcontract Works
- after adjustment, it is possible to use, even if the Main Contractor follows YELLOW
book
- the Main Contractors responsibilities covers with the Subcontractors
responsibilities within his scope of Works
Type of Contract: depends upon the circumstances
Contract parties: Contractor Subcontractor
Note: First Edition was used in our Sitina Tunel project in Slovakia
CONTRACT MANAGEMENT
TAISEI CORPORATION

E, Client/Consultant model services agreement (White Book)
Edition: Third Edition from 1998
Basic Feature: General use for the purpose of pre-investment and feasibility
studies, design and administration of contract and project management
Type of Contract: Lump Sum Contract (Schedule of Payments)
Contract parties:
Employer Designer/Consultant
Contractor Designer/Consultant
CONTRACT MANAGEMENT
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F, Sub-Consultancy Agreement
Basic Feature:
- This Form of Agreement relates to the Client/Consultant model services
agreement (White book)
- It is Sub-contract Form for the Client/Consultant model services agreement
Type of Contract: Lump Sum Contract (depends on the Client/Consultant Form of
Contract)
Contract parties: Main Designer/Consultant Sub-Designer/Consultant
CONTRACT MANAGEMENT
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G, Joint Venture (Consortium) Agreement
Basic Feature:
- can be used irrespective of Form of Contract
Type of Contract:
Contract parties: between Main Contractors, if its Join Venture
Note: Some conditions are used in our JV Agreement
CONTRACT MANAGEMENT
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H, Tendering Procedure
Edition: First Edition in 1982, Second Edition 1994
Basic Feature:
- useful for the Employer/Engineer/Consultant within the process of Tender
preparation
- possible to use by the Main Contractor
CONTRACT MANAGEMENT
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J, FIDIC 1999 Four NEW Forms of Contracts
Conditions of Contract for Construction

For Building and Engineering Works
Designed By The Employer
(Red Book)
Edition: New concept following the Fourth Edition of Red book, 1999
Basic Feature: Design by Employer
Differences compared to Fourth Edition of RED Book:
- position of the Engineer Fourth Edition independent 1999 Edition fair determination
- different structure Fourth Edition - has 72 Clauses 1999 edition has 20 Clauses
CONTRACT MANAGEMENT
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Conditions of Contract for Plant and Design-Build

for Electrical and Mechanical Plant, and for Building and Engineering Works
(Yellow Book)
Edition: New concept following the Third Edition of Yellow book
Basic Feature: Design by Contractor
Type of Contract: Lump Sum Contract
Differences compared to Third edition of YELLOW Book:
-position of the Engineer -Fourth Edition independent 1999 Edition fair
determination
- different structure - Fourth Edition - has 72 Clauses 1999 Edition has 20
Clauses
CONTRACT MANAGEMENT
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Conditions of Contract for EPC/Turnkey Projects

(Silver Book)
Edition: First Edition of Silver book
Basic Feature: Engineering, Procure, Construct is Contractors responsibilities
Type of Contract: Turnkey Contracts (similar to Lump Sum Contract)
Note: Successor of Orange book
CONTRACT MANAGEMENT
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First Edition of the New Green Book FIDIC 1999
Edition: First Edition
Basic Feature: Short Form of Contract Agreement
Content:
- General Conditions
- Rules for Adjudication
- Notes for Guidance
CONTRACT MANAGEMENT
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Common feature of the mentioned Forms of Contracts

(i.e. RED, YELLOW, ORANGE, Subcontract Conditions and WHITE book) is:
Each Form of Contract contain Two Main Parts:
Part I Standard Conditions
Part II Conditions of particular application / Special conditions (in Yellow book)
Adjusting the Standard conditions considering the local conditions
CONTRACT MANAGEMENT
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Aspects to consider when selecting suitable FIDIC Form of Contract:
Whereas there are so many FIDIC Forms of Contract, developed for

different conditions, the Promoter (Employer or Owner) of the project
should consider following aspects while selecting appropriate form:
1) The allocation of the essential FUNCTIONS found in a construction or
engineering project and in particular the design function
2) The allocation of the RISKS inherent in the projects
3) The allocation of the MANAGEMENT role
4) The method and timing of REMUNERATION for the Contractor
CONTRACT MANAGEMENT
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1) Allocation of FUNCTIONS:
The following functions are allocated to certain parties:
Promoter/Employer
Engineer
Adjudicator
Financier
Designer
Self financing
A simple lender
A lender in BuildTransfer
A lender in BuildOwn- Transfer (BOT)
A lender in BuildOwn-operate-transfer
(BOOT)
A lender in BuildOwn-operate (BOO)
A lender in Build-Rent-Transfer (BRT)
BLT in leasing rather than renting
Sketch design
Preliminary
design
Final design
Contractor
Subcontractor,
supplier and
manufacturer
CONTRACT MANAGEMENT
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2) Allocation of RISK:
Allocation of Risk to party:
-
Which party can BEST FORESEE the risk?
Which party can BEST CONTROL the risk?
Which party can BEST BEAR the risk?
Which party MOST BENEFIT or SUFFER if the risk eventuates?
Details pertaining to RISK are in Presentation RISK MANAGEMENT.
CONTRACT MANAGEMENT
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2) Allocation of RISK:
FIDIC RISK DIAGRAM
RED BOOK
YELLOW BOOK
Increased Employer Risk

Increased Design Control
Greater Design Certainty
SILVER BOOK
Increased Contractors Risk

Increased Project Price
Greater Time & Cost Certainty
CONTRACT MANAGEMENT
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3) Allocation of MANAGEMENT ROLE

4) Allocation METHOD and TIMING of REMUNERATION:
Allocation of Management Role & Method and Timing of Remuneration
is closely linked with the RISK sharing.
From the point of RISK sharing. i.e. RISK accepted by the
Promoter/Employer, there are the following categories of contracts:
(a) cost-reimbursable contracts

(b)re-measurement contracts based on unit rates and
prices
(c) lump sum contracts
CONTRACT MANAGEMENT
TAISEI CORPORATION
FIDIC
First Edition
Edition 1999
1999 Red
Red Book:
Book:
FIDIC First
Documents forming the Contract:
Document
Purpose
Priority
Bid
Contractor Tender offer/price

proposal
Pre Tender Correspondences

including addendums
Clarification within the Tender period
Letter of Acceptance
Employer send to successful bidder
Contract Agreement
Agreement between Employer /

Contractor
General Conditions of Contract
Standard FIDIC Form of Red book
Special Conditions of Contract
Adjustments to Local conditions
CONTRACT MANAGEMENT
TAISEI CORPORATION
FIDIC First Edition 1999 Red Book:
Documents forming the Contract:

Document
Purpose
General Technical Specifications
Standard specification for particular

type of project
Special Technical Specifications
Adjustments to Local conditions
Drawings
Provided by the Employer
BOQ
Items, Description of Items,

Estimated Quantity priced by the
Contractor
Any other documents forming

part of the contract
Any other document provided by the

Employer along with the Tender
Document such as Geological
reports, Environmental report, etc.
Priority
6
CONTRACT MANAGEMENT
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Contractual obligations
Contractors obligation
Engineer's obligation
Employer's obligations
Two main categories

1, Coming from AGREEMENT
between parties
(as specified in the
CONTRACT CONDITION)
2, The obligations which

apply under APPLICABLE
LAW of Contract
Note: this second category extends in legal terms beyond the Contractors
obligations under the Contract with the employer and in time beyond the
completion of that contract.
CONTRACT MANAGEMENT
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MAIN AREAS:
1. CONSTRUCTION & COMPLETION: with DUE DILIGENCE / WITHIN
TIME
2. MATERIAL, PLANT & WORKMANSHIP according to CONTRACT/
INSTRUCTION
3. Provision of SECURITIES (Bank guarantees/Bonds), INDEMNITIES
and INSURANCES
4. Provision of INFORMATION required for EXECUTION / COMPLETION
ALERTING the Employer => IMPORTANT EVENTS / COST
INCREASE / TIME EXTENTION
5. Performance of ADMNINISTRATIVE & other FUNCTIONS
CONTRACT MANAGEMENT
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In STAGES:
1st
2nd
Tendering Stage
LETTER OF
ACCEPTANCE
SUBSTANCIAL
COMPLETION of
WORKS
3rd
AFTER
SUBSTANCIAL
COMPLETION of
WORKS
CONTRACT MANAGEMENT
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1st - Tendering Stage

Contractors Contractual obligations
Clause
Description of event
Time schedule
Inspect the Site

4.10
Tendering period
Inspect any information

Satisfy himself as to form and nature of the Site
Interpret the data provided by the Employer
Base tender on the data
4.11
Satisfy himself as to correctness and sufficiency of

the tender and of the rates and prices
13.1
Consider the provision in Part II regarding increase

or decrease of cost
Price
Adjustment
Tender Submission, Analyses and Decision on Award

18.1
Agree general terms of insurance

Insurance
CONTRACT MANAGEMENT
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1st- Tendering Stage

Contractors Other obligations
Arising from Technical specifications and/or other documents:
We have to pay attention to other documents as well.
Contract Negotiations:
Always there will be a meeting between the Employer and the
Contractor prior to sign the agreement.
The Contractor must carefully put few conditions such as possession of
site, permission from third parties etc.
CONTRACT MANAGEMENT
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2nd - LETTER OF ACCEPTANCE SUBSTANCIAL COMPLETION of WORKS
Clause Description of event
Time schedule
Issue of Letter of Acceptance

Initiating Mobilization formalities
Finalizing commitments with Subcontractors and
Suppliers
4.2
Provide security for proper Performance
Performance Security
14.1(d) Provide breakdown for each of Lump Sum items

(The Contract Price)
8.3
Submit Construction schedule (Programme)
14.4
Schedule of Payment - Submit Cash flow
Up to 28 days
Issue of Notice to Commence

18.1
Provide evidence prior to the start of work at the Site General

that required Insurance have been effected
Requirement
for Insurances
CONTRACT MANAGEMENT
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2nd - LETTER OF ACCEPTANCE SUBSTANCIAL COMPLETION of WORKS

Clause
Description of event
Time schedule
Commencement Date
8.1
Commence the works as soon as reasonably

possible (Commencement of Works)
18.1
General Requirement for Insurances - Provide

Insurance policy
4.1
Carry out Design (to the extend of Contract)

Execute and complete the Works
9.1
Test on Completion Contractors Obligations
10.2
Notice of Substantial Completion - Written

14 days before
undertaking to Finish Outstanding Works within Taking Over Cert.
issuance
Defect Liability Period
Issue of Taking Over Certificate
Contractors General
Obligations
CONTRACT MANAGEMENT
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AFTER SUBSTANCIAL COMPLETION of WORKS

Clause Description of event
Time schedule
Issue of Taking Over Certificate = Substantial Completion of Works

4.23
Clear away site and leave clean
14.10
Submit Statement at completion
Within 84 days
End of Defect Liability Period

11.1
Completion of Outstanding Work and

Remedying Defects
On or before the
expiry of the Defects
Notification Period
Defect Liability Certificate

14.11
Submit Draft Final Statement /

Submit Final Statement
14.12
Give Written Discharge
Within 56 days
Final Certificate
CONTRACT MANAGEMENT
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FIDIC 4th Edition 1987 Red Book:

Two main categories
1, The Engineer as DESIGNER
2, Engineers role in
PRE-CONTRACT and POSTCONTRACT
ENGINEERS DUTIES AND AUTHORITIES:

PROACTIVE DUTIES
REACTIVE DUTIES
PASSIVE DUTIES
CONTRACT MANAGEMENT
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FIDIC 4th Edition 1987 Red Book:

In principle, most of the Employers obligations are very closely

associated with the Engineers obligations.
All the payment as certified by the engineer shall be made by the
Employer.
CONTRACT MANAGEMENT
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CLAUSES referring to COMPLETION:

Clause
CLAUSE Title
1.1.3.2
Commencement date
3.3
Supplementary Drawing and Instruction
4.1
Contractors General Responsibilities
4.11
Sufficiency of the Accepted Contract Amount
3.3
Instructions of The Engineer
8.3
Programme to be submitted
8.3
Revised Programme
3.1(c)
Contractor not relieved of duties and responsibilities
6.8
Contractors Superintendence
CONTRACT MANAGEMENT
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CLAUSES referring to COMPLETION :

Clause
CLAUSE Title
4.8, 4.18,
4.22 & 6.7
Safety Procedures, Protection of Environment, Security of the

Site and Health and Safety
18.2
Insurance of works and Contractors Equipment
17.1
Indemnities
18.3
Insurance against Injury to Persons and Damage to property
18.3(d)
Exceptions
1.13
Compliance with Laws
6.4
Labour Laws
4.14
Avoidance of Interference
8.2
Time for completion
8.4
Extension of Time for Completion
8.7
Delay Damages
CONTRACT MANAGEMENT
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CLAUSES referring to COMPLETION:

Clause
CLAUSE Title
10.2
Reduction of Liquidated damages
10.1& 10.2
Taking-Over of the Works and Sections / Taking Over of Parts

of the Works
11.1
Completion of Outstanding Work and Remedying Defects
12.4
Omissions
14.9
Payment of Retention Money
14.10
Statement at Completion
11.9
Performance Certificate
19
Damage to Works by Special Risks / Force Majeure
19
Outbreak of war / Force Majeure
CONTRACT MANAGEMENT
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CLAUSES leading to EXTENTION OF TIME:

Clause
CLAUSE Title
1.9
Delayed Drawings or Instructions
4.12
Unforeseeable Physical Conditions
17.4
Consequences of Employers Risks
4.24
Fossils
7.4
Testing - Engineers determination where tests are not provided for
8.9
Consequences of Suspension
2.1
Right of Access to the Site
8.4
Extension of Time for Completion
8.4
Extension of Time for Completion - Determination
19
Force Majeure - Special Risks
16.1
Contractors Entitlement to Suspend Work
CONTRACT MANAGEMENT
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CLAUSES referring to SECURITIES, INDEMNITIES & INSURANCE:

Clause
CLAUSE Title
4.2
Performance security
17
Risk and Responsibility
18
Insurance
1.13
Compliance with Laws
17.5
Intellectual and Industrial Property Rights
4.14
Avoidance of Interference
4.15
Access Route
4.16
Transport of Goods
4.17
Contractors Equipment
CONTRACT MANAGEMENT
TAISEI CORPORATION
CONTRACTORS ADMINISTRATION FUNCTIONS:

Clause
CLAUSE Title
1.1
Definitions
1.7
Assignment
4.4
Subcontractors
1.8
Care and Supply of Documents
1.6
Contract Agreement
4.6
Co-operation
Staff and Labour
CONTRACT MANAGEMENT
TAISEI CORPORATION
CONTRACTORS ADMINISTRATION FUNCTIONS:

Clause
CLAUSE Name
4.15
Access Route (to the site and maintenance of)
14.3
Application for Interim Payment Certificates
15.2
Assignment of Benefit of Agreement to Employer incase of

Termination
20.5
Amicable Settlement of disputes to be attempted
7.3
Inspections Give full opportunity to the Employers Personnel

/ Engineer to inspect by giving notice when work is ready
8.11
Prolonged Suspension Entitled for payment if suspension

exceeds 84 days
4.15
Access Route Satisfy as to the suitability of the route, be

responsible to maintain and put up signs
4.16
Transport of Goods Give 21 days notice to the Engineer
4.17
Contractors Equipment Will take the consent of the Engineer

before removal
CONTRACT MANAGEMENT
PAYMENT related CLAUSES:
Clause
TAISEI CORPORATION
CLAUSE Title
1.9
Delayed Drawings or Instructions
4.12
Unforeseeable Physical Conditions
4.24
Fossils
7.4
Testing Engineers requirement for Additional Test
7.3
Inspections Delay by the Engineer
8.9 & 8.10
Consequence of Suspension & Payment for Plant and

Materials in the Event of Suspension
42.2
Right of Access to the site
11.8
Contractor to search
CONTRACT MANAGEMENT
Clause
TAISEI CORPORATION
CLAUSE Title
13
Valuations and Adjustments
14.3(f) &
20.1
Payment of Claims
5.3
Payments to Nominated Subcontractors
14
Contract Price and Payments
15.4
Payment after Termination
17.4
Consequences of Employers Risks (War, rebellion, roit, etc.)
15 & 19.6
Payment if Contract is Terminated
19.7
Release from Performance under the Law
16.4
Payment on Termination
CONTRACT MANAGEMENT
Clause
TAISEI CORPORATION
CLAUSE Title
16.1
Contractors Entitlement to Suspend the Work
13.1
Right to Vary
13.7
Adjustment for changes in Legislation
13.4, 13.7
&14.15
Currency and Rates of Exchange
CONTRACT MANAGEMENT
TAISEI CORPORATION
INFORMATION and ALERTS required to be PROVIDED BY the

CONTRACTOR during CONSTRUCTION PERIOD
1, DESIGN INFORMATION
2, PROGRAMME
3, CASH FLOW ESTIMATE
4, GEOLOGICAL AND ARCHEOLOGICAL FINDS
5, DETAILS OF LABOUR AND EQUIPMENT
6, PARTICULARS OF EXTENSION OF TIME
7, EMERGENCY WORK
8, VARIED WORKS
CONTRACT MANAGEMENT
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INFORMATION and ALERTS required to be PROVIDED BY the

CONTRACTOR during CONSTRUCTION PERIOD
9, CONTEMPORAY RECORDS
10, MEASUREMENT
11, LUMP SUM ITEMS
12, PROVISIONAL SUMS
13, PAYMENT TO NOMINATED SUBCONTRACTOR
14, MONTHLY STATEMENT

CONTRACT MANAGEMENT
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Part III: CONTRACT ADMINISTRATION
Part III: Contract Administration

Chapter
Name
1.
General
2.
Project Records
3.
Project Control Division and its Members

CONTRACT MANAGEMENT
GENERAL
TAISEI CORPORATION
FACTORS to be CONTROLED within CONTRACT ADMINISTRATION:

Performance
Cost
Time
To CONTROL above mentioned, FOLLOWING IS NECESSARY:

Well understanding of obligations to be fulfilled by the parties
Cooperation between each party
Deployment of right personnel for right job
Timely mobilization
Prompt decision making
Settlement of Payment
CONTRACT MANAGEMENT
GENERAL
Contract
Administration
focuses on:
Variation
Procedure
Claim Check
List
TAISEI CORPORATION
Claim
Administration
Project
Records
To be presented in
Part IV Claims
and Counterclaims
Back to Content of Part III
Preparation of
List of Submittals
by Contractor
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION
PROJECT RECORDS
Documentation of FACTS & FIGURES = Key Element
in preparation of CLAIMS
In prevention / defends against CLAIMS
ORAL Interpretation DO NOT SUBSTITUDE Written RECORDS

Written RECORDS IDENTIFY RESPONSIBILITIES
provide SUBSTANTIATION for DELAY & ADDITIONAL COST
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION
PROJECT RECORDS
DOCUMENTATION RECORD
is BURDENSOME TASK
PERSON in charge DO NOT

SEE immediate BENEFIT
PERSON in charge
BECOMES NEGLIGENT
FOLLOWING NEED TO BE SPECIFIED / ARRANGED:
DATA to be COLLECTED
COLLECTION INTERVALS
PERSON in charge of RECORDING / CHECKING
SYSTEM OF FORMS FILLING-UP / ITS STORAGE
DOCUMENT FLOWCHART is HELPFULL

CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION
CATEGORIES of PROJECT RECORDS / FILES:
LEGAL FILES:
CORRESPONDENCE
Contract documents
(Condition of Contract)
Specifications,
(e.g. GTS,STS etc.)
Change orders
Related materials
Chronological files
for all INTERNAL and
EXTERNAL
CORRESPONDENCE
SUBJECT-MATTER
FILES:
Subject-matter files
for each
subcontract,
construction phase,
or other readily
identifiable unit of
the project
E.G. - Exchange Loss

- Temp. Stock Yard
- Acceleration
- Time Extension
- Monthly Progress
Report
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION
PROJECT RECORDS / FILES should specifically INCLUDE at least

following:
1) Record for Works Progress and Schedule
2) Daily Report
3) Cost Record for Labour, Equipment, Materials
4) Project Photographs
5) Project Diary
6) Tests Report
7) Variation Order
8) Drawing Change Log
9) Incoming and Outgoing Correspondence Log
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION
FORMS used within PROJECT RECORD ADMINISTRATION:

1) WORK DISRUPTION REPORT (WDR)
Purpose: Reporting DISRUPTION WORK occurred, in the course of daily
construction activities
Flowchart:
Site Engineer /
Forman prepare
WDR
Chief Engineer /
Construction
manager review
WDR
Contract Engineer / Proj.

Contr. Manager record
WDR to WD Log incl.
details (QS,Time Impact)
Engineer receive Notice

on Work Disruption
Note:
If WORK DISRUPTION is due to Employer/Engineer Risk =>

Contractor raise CLAIM.
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION

2) AVOID VERBAL INSTRUCTION (AVI)
Purpose: Reporting of VERBAL INSTRUCTIONS (VI) received from
Engineer / Employer
Flowchart:
Site Engineer
record VI to
DAILY REPORT
Chief Engineer /
Construction
Manager
prepare AVI
Contract Engineer /
Engineer / Proj. Contr.
Manager review AVI
alt. put record to
VARIATION LOG
AVI from Notice to
Employer/Engineer
Note:
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION

3) REQUEST FOR INFORMATION (RFI)
Purpose: Request for Additional INFORMATION / CLARIFICATION /
INSTRUCTION to be provided by Employer/Engineer
Flowchart:
Site Engineer /
Chief Engineer
request INFO/
CLARIFICATION
Note:
Contract Engineer
prepare RFI Form
& record it to RFI
Log
Notice to Employer /
Engineer
RFI Log is essential tracking system monitoring status of all RFI

(IDENTIFICATION OF OUTSTANDING)
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION

4) DAILY REPORT (DR)
Purpose: Recording of essential daily events of given day & shift
Flowchart:
Individual Site
Engineers
prepare DAILY
REPORT
Chief Engineer review

DR and select
IMPORTANT
INFORMATION
Contract Engineer check

CONTENT of IMPORTANT
INFO; TAKE STEPS
according to CONTRACT
Note:
Construction
Manager review
IMPORTANT
INFO
Notice to
Employer/Engineer
IMPORTANT INFORMATION:
WEATHER
TEMPERATURE
WORK EXECUTED
WORK COMMENCEMENT
DISRUPTION
ACCIDENT
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION

5) DRAWING LOG (DL)
Purpose: Control system
Tracking/Comparison of SCHEDULED and ACTUAL DATES of:
DRAWING RECEIPT
DRAWING ISSUE
Identification of MISSED SUBMITTAL DATES => early ALERT
for DELAY
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION

6a) MANPOWER DAILY REPORT (MDR)
Purpose: Recording of total MANPOWER for PROJECT COST CONTROL
Flowchart:
Forman/Site
Engineer prepare
MDR
Chief Engineer
check MDR
Construction
Manager approve
Cost Control
Engineer/Quantity
Engineer for Data
Processing
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION

6b) TIME CARD (TC)
Purpose: Recording of WORKING HOURS for calculation of PAYMENTS &
WAGES
Flowchart:
Forman record
WORKING
HOURS on TC
Site Engineer
review TC
Section Manager
approve TC
Personal Manager
prepare WAGES
Note:
MDR & TC both relate to LABOUR recording Administration

CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION

7) EQUIPMENT DAILY REPORT (EDR)
Purpose: Recording of DAILY OPERATING HOURS per EQUIPMENT
Flowchart:
OPERATOR / DRIVER
CONTROLER records
Operating hours
EQUIPMENT
CONTROL
ENGINEER review
PROJECT
CONTROL
MANAGER
approve
Cost Control
Engineer for Data
Processing
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION

8) MATERIAL ISSUING REPORT (MIR)
Purpose: Recording of MATERIAL CONSUPTION / NECESSITY for
PROJECT COST CONTROL
Flowchart:
Store Controller
prepare MIR
Purchase
Manager check
MIR
Cost Control
Engineer for Data
Processing
CONTRACT MANAGEMENT
PROJECT RECORDS
TAISEI CORPORATION

9) PROJECT PHOTOGRAPHS + PHOTOGRAPH INDEX
Purpose:
Recording is helpful for:

Accurate Asses of Work Progress
Dispute Settlement
Future Claims
Good Public Relations

CONTRACT MANAGEMENT
PROJECT CONTROL DIVISION - MEMBERS
TAISEI CORPORATION
PROJECT CONTROL DIVISION ORGANIZATION STRUCTURE
Contract Engineer
Quantity Surveyor
Document Controller
CONTRACT MANAGEMENT
TAISEI CORPORATION
RESPONSIBILITY to the Project Manager
HOLD overall RESPONSIBILITY of SECTION
CO-ORDINATION with Other Section Heads for Effective Functioning
TEAM DEVELOPMENT with his Experience
PERFORM as CONSULTANT in the Organisation
CONTRACT MANAGEMENT
TAISEI CORPORATION
Contract Engineer
STUDY the Contract Documents (CC, GTS, STS etc.)
PREPARE the STATEMENT of SUBMITTALS / APPROVALS requirement

from Engineer
CO-ORDINATION with Construction Division (Method statements,

Quality etc.)
VARIED Works Identification => Notice to Engineer
CLAIM Identification => prepare FACTS and GROUND
STUDY INCOMING CORRESPONDENCE
PREPARE OUTGOING CORRESPONDENCE in cooperation with Project

Manager
CONTRACT MANAGEMENT
TAISEI CORPORATION
Contract Engineer
Prepare KEY DATES of CONSTRUCTION:

(Commencement date, Possession of Sites, other important dates)
Prepare NEW CONTRACTS
ORGANIZATION of MEETINGS (Weekly, Monthly)
SCHEDULE CONTROLLING with the Engineer and the Subcontractors
INFORM concern DIVISIONS of any CONTRACTUAL LACKINGS
MONITOR status of other CONTRACTUAL ADMIN. ISSUES

(Bank Guarantees, Retention money etc.)
Preparation of ADDENDUMS to Contract / Subcontract

CONTRACT MANAGEMENT
TAISEI CORPORATION
Quantity Surveyor
STUDY: - BOQ & Description of items

- Measurement/Payment part of Technical specifications
Prepare MONTHLY STATEMENT in coordination with Site Engineers
CLAIM of PROVISIONAL PAYMENT (non-approved Varied works)
PRICE INDICES collection & CLAIM of PRICE ADJUSTMENT
Subcontractor/Other parties INVOICE evaluation
QUANTITY PREPARATION (revised drawing)
RECONCILIATION TABLE
(certified QUANTITY Engineer vs. Subcontractor)
Preparation of REVISED CONTRACT PRICE

CONTRACT MANAGEMENT
TAISEI CORPORATION
Quantity Surveyor
Flow chart of Preparation of Monthly statement (Invoice)
Subcontractor submit
SUMMARY OF WORKS
23rd day of Actual month
Contractor prepare
SUMMARY OF WORKS
Submissions of SITE
DIARIES to Engineer
26th of Actual month
Substantiation of
SUMMARY OF WORKS
APROVAL
BY
ENGINEER
Preparation/Submission
of INVOICES Object wise
Signature of INVOICES
Object wise by the
Engineer / Contractor
Finalization of INVOICE
SUBMISSION to the
EMPLOYER
8pcs / 7th day of next
month after actual
Preparation/Submission
of CLAIM FORM,
COVER LETTER,
OBJECT SUMMARIES,
GENERAL ITEMS,
INVOICE for whole
PROJECT
Signature of SUBMITTED
documents
CONTRACT MANAGEMENT
TAISEI CORPORATION
Document Controller
CORRESPONDENCE SUBMISSION to relevant parties
CIRCULATION of incoming / outgoing correspondences
DOCUMENT CONTROL RECORD Updation
MONTHLY PROGRESS REPORT preparation to Employer / Internal
DRAWING Control
ASSISTANCE to QS within MONTHLY STATEMENT / INVOICE

submission
ASSISTANCE to CONTRACT ENGINEER within REMINDERS / REPLIES

to Various parties
Keeping RECORDS of QUALITY CONTROL, SITE DIARY etc.

CONTRACT MANAGEMENT
TAISEI CORPORATION
Part IV: CLAIMS AND COUNTERCLAIMS
Part IV: Claims and Counterclaims

Chapter
Name
1.
Definition
2.
Claim Administration
3.
Variation Procedure

CONTRACT MANAGEMENT
DEFINITION
TAISEI CORPORATION
Literal meaning of CLAIM:

A statement that something is true
that you have no definite proof
Back to Content of Part IV

CONTRACT MANAGEMENT
CLAIM ADMINISTRATION
TAISEI CORPORATION
ORIGIN of CLAIM:
ADVERSE OBSTRUCTIONS
or CONDITIONS
ENCOUNTERED
MAIN PURPOSE OF
CONTRACT :
DISTRIBUTE RISK
AMONG PARTIES
EMPLOYER
vs.CONTRACTOR
RISK
For example:
NON-DELIVERY or DELAY IN
DELIVERY OF MATERIAL/
APPROVAL/ DRAWING
ABNORMAL RAINFALL
etc.
Raise of CLAIM
by CONTRACTOR or
EMPLOYER
Additional/ Reduced PAYMENT
TIME Extension
CONTRACT MANAGEMENT
TAISEI CORPORATION
SOURCE of CLAIM:
No.
Source Name
Remark
1)
Authorities, Instructions, Approvals of

the Engineer including Engineer's
Representative
2)
Discrepancy or description of contract

documents
3)
Underground and physical conditions
4)
Time for completion, construction

method and temporary work plan
5)
Setting-out, exploratory excavation and

boreholes
6)
Possession of site
Delay, Third party rights
7)
Occurrence of Employer's risks or force

major
War, Rebelien. Missile
8)
Arising of damage and insurance
Variation of Geology
CONTRACT MANAGEMENT
TAISEI CORPORATION
SOURCE of CLAIM:
No.
Source Name
Remark
9)
Damage to third party (crack, noise,

traffic, fishery etc)
Damage to adjacent houses,

buildings etc.
10)
Test and inspection (attendance on

inspection, excess inspection, results,
timing, contents)
11)
Labour, working hours, night and rest day Extention of working hours to
work, foreign labour, local preference)
accelerate the progress
12)
Supply of samples
13)
Increase or decrease of quantities in BQ
14)
Variations, additional works, scope

change
Different character of the

Works
15)
Completion and taking-over (list of

outstanding works, date of certificate)
Issue of Taking Over

Certificate
More samples than required
CONTRACT MANAGEMENT
TAISEI CORPORATION
SOURCE of CLAIM:
No.
Source Name
Remark
16)
Statement and payment
17)
Suspension
Disruption of Works due to

Employer fault
18)
Employer supplied materials

(electricity and water)
Interruption in delivery/supply
19)
Fluctuation of materials and labour
20)
Works done by other contractors
21)
Changes or enactment of legislation
22)
Design
23)
Licenses and permission
24)
Defects liability
Delay in completion
25)
Currencies and rate of exchange
Exchange loss/gain
Change of VAT, tax, levy
CONTRACT MANAGEMENT
CLAIM PROCEDURE:
TAISEI CORPORATION
Procedures
according to
CONTRACT
Occurrence of
Adverse Condition
Forecast of Additional Cost

and/or Delay in progress
resulted from Condition
Notice of Occurrence to
Engineer/Employer
Recognition of Entitlement
with Contract Documents
Keep and maintain records
Recognition of Extend of
Claim
Notice to Claim
Preparation of Claim
Documents Facts, Record,
Ground Quantum
Submission of Claim /
Documents
Preparation/
substantiation
of CLAIM
Claim Negotiation
CONTRACT MANAGEMENT
VARIATION PROCEDURE
TAISEI CORPORATION
To PROPERLY COMPLETE the WORKS

The ENGINEER has RIGHT to make CHANGES of:
FORM
QUALITY
QUANTITY
IT REPRESENTS:
Increase or decrease of the Work quantities
Deletion of a part of the Works
Changes in the specification, levels, dimensions
LIMITATION:
- VARIATION are ONLY WORKS necessary for the Purpose of the Works
CONTRACT MANAGEMENT
VARIATION PROCEDURE
TAISEI CORPORATION
ISSUE of VARIATION:
VARIATION shall be made IN WRITING
IF made VERBALLY => CONTRACTOR shall confirm VERBAL VARIATION

through AVI Form (AVOID VERBAL INSTRUCTION explained before)
Under FIDIC: Variation shall be made in form of:
INSTRUCTION BY ENGINEER
Additional Cost / Expenses shall be VALUED Using:

A) RATES/ UNIT
PRICES set in
CONTRACT
B) PRO-RATA RATES
from CONTRACT
RATES
C) NEW RATES
CONTRACT MANAGEMENT
VARIATION PROCEDURE
TAISEI CORPORATION
ISSUE of VARIATION:
Under FIDIC: Contractor execute Engineers Instruction
WITHOUT VARIATION ORDER
CONTRACTORs CLAIM on:

A) ADDITIONAL COST
Contractors INTENTION:
to contend the application of
HIGHER RATES since in the
CONTRACT RATES is included the
DISCOUNT made during negotiation
B) TIME EXTENSION
ENGINEERs INTENTION:
NOT to ADMIT VARIATIONS and
ARGUES it is WITHIN the ORIGINAL
SCOPE of the works.
CONTRACT MANAGEMENT
VARIATION PROCEDURE
TAISEI CORPORATION
CLAIMS by the EMPLOYER:

Cl.
CLAUSE Name
10.3
Performance Security
16.2
Engineers at Liberty to Object
22.1
Damages to persons and property

due to Contractors fault
29.1
Interference with Traffic and

Adjoining properties
30.1
Avoidance of Damage of Roads
30.3
Transport of Materials or Plant
39.2
Default of Contractor in Compliance
47.1
Liquidity Damages for Delay
49.4
Contractors Failure to Carryout

Instructions
63.1
Default of Contractor
Remark
CONTRACT MANAGEMENT
TAISEI CORPORATION
CONCLUSION OF PRESENTATION
THANK YOU VERY MUCH

FOR YOUR KIND ATTENTATION AND PATIENCE
WITHIN THE PRESENTATION OF:
CONTRACT MANAGEMENT
NEXT PRESENTATIONS:
RISK MANAGEMENT
LEGAL MANAGEMENT

Contract Management - Fidic 1999

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PRESENTATION

PROJECT CONTROL DIVISION

DISCIPLINES of PROJECT MANAGEMENT

HUMAN RESOURCES MANAGEMENT

PROJECT CONTROL DIVISION

PROJECT CONTROL DIVISION

Introduction of Contract Management

FIDIC based Contracts

Claims and Counter Claims

Part I: Introduction of Contract Management

Merit of Contract Management

Contract Management Participants

General Types of Contracts

Back to Content of Presentation

A, Contract Management is PROCESS of managing:

PROJECT CONTROL DIVISION

B, Phases of the Contract Management from time point of view:

3. Study possible technological

2. to Minimize uncertainties that

4. Preparation of detail designs,

based on above CONTRACT DOCUMENTS are PREPARED

PROJECT CONTROL DIVISION

B, Phases of the Contract Management from time point of view:

To have sufficient skilled personnel

Efficient schedule control

Expect unforeseeable events and prepare countermeasures

PROJECT CONTROL DIVISION

C, Contract Management influences Companys:

D, Therefore through proper Contract Management, Company can have

Back to Content of Part I

CONTRACT MANAGEMENT Organization Chart

Project Control Manager

General Types of CONTRACTS

Contract parties in General:

Types of Contract in General:

Back to Content of Part I

Part II: FIDIC based Contracts

Part II: FIDIC based Contracts

Background & History

FIDIC Forms of Contracts and its Concepts

FIDIC First Edition 1999 Red Book

Back to Content of Presentation

FIDIC Background & History:

a, To monitor Contract documents of interest to Consulting Engineers

Construction of objects or works

Maintenance of installation in operation

Erection and installation of works

b, To inform contractors, suppliers and officials concerning contract documents

Back to Content of Part II

FIDIC Forms of Contracts and its Concepts:

Basic Feature: Design is provided by the Employer

PROJECT CONTROL DIVISION

FIDIC Forms of Contracts and its Concepts:

B, Conditions of Contract for Electrical and Mechanical Works including

PROJECT CONTROL DIVISION

FIDIC Forms of Contracts and its Concepts:

C, Conditions of Contract for Design-Build and Turnkey (Orange Book)

Common feature of the above mentioned Forms of Contracts

PROJECT CONTROL DIVISION MIDDLE EAST BRANCH

FIDIC Forms of Contracts and its Concepts:

PROJECT CONTROL DIVISION

FIDIC Forms of Contracts and its Concepts: