Contents

1. Tender
• Document and its contents
• Types of tenders- their advantages and dis-advantages
• Tender notices, openings scrutiny process of selection and award
• Architect’s role in tender process.
• Earnest money, security deposits, retention amount, mobilization amount bonus and penalty
clauses.
• Issues arising out of tender process and role of architect in such cases

2. Contract
• Types of contracts, General principles, Contract Document
• Contract management
• Conditions and scope of contract
2
I.
3.1
Document and its
Tender
II.
contents
Types of tenders-
What is a Tender ?
their advantages It is a written offer by one party to another to execute a work/supply material required for construction/provide
and dis-
service, within a stipulated time under certain conditions of quotation
advantages

III. Tender notices,

openings scrutiny
process of Objectives of Tendering
selection and • Provide publicity through newspapers, print media, journals, electronic media, notice board of client offices,
award
IV. Architect’s role in intimation to working contractors and to contractor’s association.
tender process.
• To obtain competitive bids from eligible contractors.
V. Earnest money,
security deposits, • To provide equal opportunity to all contractors eligible to tender.
retention amount,
• Article 299 of constitution prescribes a procedure for execution of Govt. Contracts/tenders. These definite procedures
mobilization
amount bonus include:
and penalty
1. It must be in writing.
clauses.

VI. Issues arising out 2. It must follow a format

of tender process 3. It must be signed by person duly authorized by President of India for central works/ Governor of state for state works.
and role of
architect in such For private tenders it is signed by Board of Directors/ Managing Director or authorized general manager. It is signed by
cases client or any authorized person. 3
I.
3.1
Document and its
Tender
contents CONTENTS OF A TENDER
II. Types of tenders-
their advantages 1. Notice inviting Tender.
and dis-
2. Instructions for offline/online Bid Submission
advantages

III. Tender notices, 3. Annexure-I (General Terms and Conditions)

openings scrutiny (Security deposit, bonus/fine, stages of payment, escalation
process of variations, defective work, arbitration, defect liability period)
selection and
award 4. Annexure-II (Specification)
IV. Architect’s role in (Schedule of quantities may have tender drawings and
tender process. specifications)
V. Earnest money,
security deposits,
5. Annexure-III ( Technical BID and Undertaking)
retention amount, 6. Declaration
mobilization
amount bonus 7. Annexure- IV (Financial BID)
and penalty 8. Tender Acceptance Letter
clauses.
VI. Issues arising out
of tender process
and role of
architect in such

cases 3
I.
3.1
Document and its
Tender
II.
contents
Types of tenders-
Additional Stipulations
their advantages 1. Owner/client does not pay for the material for tender application work.
and dis-
2. All documents submitted for tender must be attested.
advantages

III. Tender notices, 3. Work should commence within stipulated date from the date of issue of work order. (LOI)
openings scrutiny
process
4. Detailed tender notice is accessed through client’s website/office. (These are charged)
of
selection and 5. Certificate of familiarization should be furnished by tenderer along with his tender.
award
6. Information regarding minimum turn over relating to similar projects earlier, work experience is attested in the
IV. Architect’s role in
tender process. tender documents submitted.
V. Earnest money,
security deposits,
retention amount, Pre-requisites for tendering (For client) Pre-requisites for tendering (For Contractor)
mobilization
amount bonus • Availability of clear site, free from physical and • Site visit for familiarization.
and penalty legal obstructions or site will be made available in • Market survey for materials, labor and machinery.
clauses. parts • Seed capital to commence work.
• Funds are made available to make payments for • Funds to pay upfront Performance guarantee (5% of
VI. Issues arising out
mobilization, secured advance payment for work tendered value)
of tender process
done. • Resource mobilization
and role of
• Free accessibility to site. • Arrange for all materials and identify sub-contractors
architect in such • Statutory clearances to commence work. and vendors.
cases 4
I.
3.1
Document and its
Tender
Type of tender Description Advantages Disadvantages
contents
II. Types of tenders- 1 Item Rate Tender • This tendered rate will be inclusive • There is no requirement of • Total cost of project is
their advantages
(% rate Tender) of all the labor, material, overhead detailed drawing and the known only after
(Tenders based on Measurement) cost and profits. detailed cost analysis can completion of
and dis- tender in which the contractor agrees • A bill of quantities (BOQ) will be be obtained from construction.
advantages to carry out the work as per drawings prepared by the client during the contractor against each • profit is not assured &
Tender notices, and specifications considering the tendering stage item. depends on economy
III.
payment made entirely on the basis of • contractor quotes a unit price • Smooth functioning of achieved in construction.
openings scrutiny measurements taken as the against each item of work. project is attained
process of work proceeds and at the unit price • Basis of agreement is the unit rate • Profit of contractor is
selection and
tendered by the contractor in the bill of for each item of work plus a linked to actual cost of
quantities. It is also called Unit Price reasonable variation margin that project and thus it leads to
award
Contracts or Remeasured will be accepted by both parties. early completion.
IV. Architect’s role in Contracts.
tender process. 2 Cost plus Fees Tender • Tenderers quote fixed price • Eliminates risk for the • These ate more
V. Earnest money, Tender in which the contractor gets • ‘cost’ includes all the types of cost contractor paperwork and
security deposits, paid all of their expenses plus and (direct, indirect and overhead • Focus is on quality of work administration heavy
additional payment to allow for profit. costs) done • Leads to longer project
retention amount, • ‘plus’ refers to the profit which will • Covers the entire timeline
mobilization be a specific percentage or a fee expenses related to • It leads to disputes when
amount bonus over and above the total contract project trying to recover the
cost. • It can be used to put a construction related
and penalty
limit or cap on the amount expenses
clauses. of money that the • Requires additional
VI. Issues arising out contractor can spend on a resource to reproduce
project. and justify all related
of tender process
• Contractor gets flexibility costs.
and role of • Budget friendly contract • Accounting of all indirect
architect in such • Helpful in outsourcing costs creates difficulties
research and development for contractor
cases
activities • Total cost is uncertain 5
I.
3.1
Document and its
Tender
Type of tender Description Advantages Disadvantages
contents
II. Types of tenders- 3 Lumpsum Tender • This sum includes the cost of • Since contract features one • Proves ineffective
their advantages
Tender in which the contractor agrees to work, any general condition overall price, without for commercial
complete the project for a predetermined, costs, and the contractor’s fee. consideration of the actual building and
and dis- set price. Under a lump sum agreement, • Payment is tied directly to the costs, the contractor had renovation projects.
advantages the contractor submits a total project price percentage of work completed. better get that price right. • Any deviation from
Tender notices, instead of bidding on each individual item.. • Scope of work is clearly defined • Financing is easier. the design
III.
It is also called Stipulated Sum Contract with no alterations. • Paperwork is straightforward. specifications may
openings scrutiny • Cash flow is easier as per affect the cost.
process of scheduled completion of • Unbalanced bids are
selection and
stages of construction. common
award
IV. Architect’s role in
4 Turnkey Tenders • A contractor may agree, to build • One Company to Contact. • The firm that enters
Tender under which the contractor is a fully equipped ad operational Reduces the efforts of co- a turnkey project
tender process. responsible for both the design and building under the turkey ordination with multiple may create a
V. Earnest money, construction of a facility. . contract. The responsibility of the agencies competitor
security deposits, contractor ends when he hands • One Company Sending
the completed installation over Invoices.
retention amount, the client.. • Design and Manufacturing in
mobilization Sync.
amount bonus • Costs are Cut.
• Greater Quality.
and penalty
clauses.

VI. Issues arising out

of tender process
and role of
architect in such
cases
7
I.
3.1
Document and its
Tender
Type of tender Description Advantages Disadvantages
contents
II. Types of tenders- 5 BOOT Tenders (BuilD, Own, • Adopted for infrastructure projects to • Collects tolls based on • Construction risks
their advantages
Operate Transfer) involve private parties. approved tariff • It can only work for large
Variations include • Private sector party invests, builds and • Transfer of risk is to projects
and dis- BOT (Build Operate Transfer) maintains these structure concession company • Requires fund raising to be
advantages BOO (Build, Own, Operate), • Better management successful.
Tender notices, BLT (Build, Lease, Transfer) for private company • may require substantial
III.
BLOT (Build, Lease, Operate, operational revenues to be
openings scrutiny Transfer). successful
process of
6 Tenders based on labor • Owner supplies material and contractor • Cost saving. • Contractor is solely
selection and component and Miscellaneous gets in labor, machinery, plant etc. • Reduction in disputes responsible for execution of
award material • This is a popular contract as both related to material. work.
IV. Architect’s role in
materials and workmanship is of high • Effective supervision. • Payments are restricted to
standards. labor charges
tender process. • Suitable for all types of buildings,
V. Earnest money, extension work, alterations and repair
security deposits, works
retention amount, 7 Fixed price tenders • Fixed price means that a price has been • These contracts offer • Such tenders may cost a
set for goods or services, and in most financial stability buyer more money up front.
mobilization
circumstances no bargaining is throughout the length •
amount bonus permitted over that price. The price is of contract.
and penalty held constant regardless of the cost of
clauses.
production.

VI. Issues arising out

1. without provision for escalation Major risk is borne by the contractor
of tender process
and role of 2. With provision for escalation Risk is limited to difference in market
rates. Factors are considered in escalation
architect in such
formula.
cases
8
I.
3.1
Document and its
Tender
Tender notice official letter provided by companies to complete large-scale services and deliver goods.
contents
II. Types of tenders-
• A tender notice is prepared in the form of tabular or serial or paragraph form.
their advantages • The tenders are open to all the parties and are mainly done for pre-qualification purposes.
and dis- • Projects which require heavy technology or sophisticated machinery can be offered through global
advantages tenders.
Tender notices,
III. Notice Inviting Tender (NIT)
openings scrutiny It is the clear brief and must contain the following:
process of
selection
1. Brief description of work. It will help contractors decide and apply for the project after understanding the timeline,
and
award value of work, location.
IV. Architect’s role in
tender process.
2. Estimated cost put to tender.
V. Earnest money, 3. Period completion of work
security deposits,
4. Earnest money deposit
retention amount,
mobilization 5. Cost of tender documents
amount bonus
6. Eligibility criteria for tender tendering
and penalty
clauses. 7. Production of documents for obtaining blank tender documents
• Detailed NIT is appended to
VI. Issues arising out 8. Last date for issue of bank tender forms contract documents.
of tender process
9. Placement and period of issue of tender documents
and role of • Client reserves the right to reject or
architect in such 10. Last date of receipt of tenders to accept any tender without
cases assigning any reason 9
11. Validity of tender
I.
3.1
Document and its
Tender
Method of Inviting Tender
contents
II. Types of tenders-
1. Public tenders- for govt. works, public tenders are invited from registered contractors of
their advantages appropriate sections. Stipulation/Pre-requisite is mentioned in the tender notice regarding work
and dis- experience, financial solvency and annual turnover.
advantages

III. Tender notices, 2. E-Tendering- electronic tendering is the process of receiving bid tender and awarding tenders
openings scrutiny
using online procurement platforms. These kind of tenders offer improved visibility, compliance and
process of
decision-making across source-to-pay (S2P) operations.
selection and
award 3. Limited Tenders- tender notice is sent to some selected contractors of repute and no press notice
IV. Architect’s role in is issued. Lowest tender bid is selected, and negotiations are done if required. This method is
tender process. practiced /adopted in private sector
V. Earnest money,
security deposits, 4. Single Tender- Only one tender is received. There is no response to secure additional tender .
retention amount, Single tender with approval from higher authority is accepted. Adopted for small value works.
mobilization
amount bonus 5. Nomination- Selection of contractor is through nomination. Adopted for works for small works or
and penalty emergency works. The contract is awarded based on prevailing market rates. Such works may also
clauses. relate to special skills or construction which are not readily available.
VI. Issues arising out
of tender process
and role of

architect in such
cases 9
I.
3.1
Document and its
Tender
Method of Inviting Tender
contents
II. Types of tenders-
1. Public tenders- for govt. works, public tenders are invited from registered contractors of appropriate
their advantages sections. Stipulation/Pre-requisite is mentioned in the tender notice regarding work experience,
and dis- financial solvency and annual turnover.
advantages

III. Tender notices, 2. E-Tendering- electronic tendering is the process of receiving bid tender and awarding tenders using
openings scrutiny
online procurement platforms. These kind of tenders offer improved visibility, compliance and
process of
decision-making across source-to-pay (S2P) operations.
selection and
award Opening of Tenders
IV. Architect’s role in
• Justification statement is prepared by the client’s organization to arrive to a probable justified amount of work.
tender process.
• Tenders may be received on or before the prescribed date and time through tender box, post, couriers or
V. Earnest money,
digital platforms.
security deposits,
• Competent authority opens the tender on specified date, time and place.
retention amount,
• Sometimes organizations constitute a committee for opening tenders. This may comprise of owner’s
mobilization
representative, finance representative, a person related to the project work and may involve consultant in the
amount bonus
and penalty
committee.
clauses.
• Tenders are marked in fraction with tender number in numerator and total number of tenders received as
denominator.
VI. Issues arising out
• Particulars of all tenders are recorded in the tender register.
of tender process
• Quoted rates are announced for information and recorded in the registered signed by representatives of the
and role of
company/firm and the organizers present.
architect in such
cases 10
I.
3.1
Document and its
Tender
contents Evaluation of Tenders
II. Types of tenders-
their advantages • Arithmetical accuracy is checked. Quantity x Rate = Amount for each item and sum of tendered amounts
and dis- for all items is computed.
advantages • Consider the effect of conditions. Financial loading is done over the quoted amount.
III. Tender notices, • Evaluated bids are arranged from LI (First Lowest) L2,L3,L4…and so on.
openings scrutiny
process
Karnataka PWD stipulates that if there is discrepancy between the rate in figures and rate in digits,
of
then lowest one shall be considered.
selection and
award
IV. Architect’s role in Award of Tender
tender process.
V. Earnest money,
There is no uniformity in practice while awarding tender.
security deposits,
retention amount,
1. Tender may be awarded to the lowest evaluated tenderer.
mobilization
2. Tender may be awarded to lowest evaluated tenderer after negotiations. These negotiations are
amount bonus
done with few/all applicants and is kept confidential. Tenderers do not know the negotiable bid of
and penalty
the competitors
clauses.
3. Tender may be awarded after giving an opportunity to all or few tenderers to lower their bids. This is
VI. Issues arising out
kept confidential and is known only to owner.
of tender process
and role of
architect in such
cases 11
I.
3.1
Document and its
Tender
contents
II. Types of tenders- Selection Criteria of Consultants
their advantages
and dis- • Quality Based Selection (QBS) : For specialized assignments and projects (urban scale
advantages planning, executions, dams etc.)
III. Tender notices,

openings scrutiny • Selection under Fixed Budget (FBS) : For simple and precisely defines assignments.
process of
selection and • Selection on Basis of Least Cost (LCS) : Adopted for standard or routine nature
award assignments (Engineering works)
IV. Architect’s role in
tender process. • Selection based on Consultants qualifications (CQS) : For small assignments where
V. Earnest money, evaluation of competitive proposal is not justified.
security deposits,
retention amount,
mobilization
amount bonus
and penalty
clauses.

VI. Issues arising out

of tender process
and role of
architect in such
cases 12
I.
3.1
Document and its
Tender
contents
II. Types of tenders- Architects Role in Tender Process
their advantages
and dis- • Architects suggest in selection of the contractors for different activities of construction.
advantages

III. Tender notices, • After receiving the tender, the architect carries out a tender analysis report. These results are
openings scrutiny compared with the client’s expectations and budget.
process of
selection and • The architect assists in issuing documents for bid, soliciting bids, holding pre-bid conferences,
award providing clarifications, and so on.
IV. Architect’s role in
tender process. • Usually, architect holds the charge of responding to RFI’s (Request for Information) posed by
V. Earnest money, prospective contractor.
security deposits,
retention amount,
mobilization
amount bonus
and penalty
clauses.
VI. Issues arising out
of tender process
and role of
architect in such

cases 13
I.
3.1
Document and its
Tender
Earnest Money (EMD)
contents
• It is the amount paid to confirm a contract.
II. Types of tenders-
• A contract is written up during the exchange of the earnest money that outlines the conditions
their advantages
for refunding the amount.
and dis-
• Earnest money deposits can be anywhere from 5–10% of the cost of project work
advantages
Security Deposit
III. Tender notices,

openings scrutiny • Security deposit is the amount of money paid to prove the intent to commit to a deal.
process of • It is the amount equivalent to 5% of the tendered value of work.
selection and • The amount is refunded after completion of work.
award Retention Amount
IV. Architect’s role in • It is the amount held back from a payment made under a construction contract.
tender process.
• It is usually a percentage of the amount payable of each instalment.
V. Earnest money,
• Generally held to ensure that a contractor performs its obligations under the contract and is
security deposits,
then released either on practical completion or after the end of a defect's notification period.
retention amount,
Rescission of Contract
mobilization
amount bonus • Owner may rescind the contract due to failure to rectify defective work.
and penalty • This can be due to slow progress.
clauses. • Due to disproportionate progress.
VI. Issues arising out • Due to non-confinement to labor laws
of tender process • Due to failure to complete work in stipulated time.
and role of Unbalanced Bid
architect in such • Appreciable variation in quoted rates of some items as compared to estimated rates.
cases 14
I.
3.1
Document and its
Tender (Technical Terms)
Bank Guarantee
contents
• Contract to perform the promise or discharge liability of third person in case of default.
II. Types of tenders-
• It is a credit note received by the bank in favor of the person/firm.
their advantages
• Bank Guarantees are on different level and must be allowed to be honored free from
and dis-
interference by courts.
advantages
Tender notices,
Letter of Intent
III.
openings scrutiny • Official notice issued by the owner notifying the contractor that the proposal is accepted.
process of • After the notice agreement is signed between the parties.
selection and Liquidated Damages
award • When the agreement between the parties stipulates the sum payable for non-performance, the
IV. Architect’s role in damages hence paid are known as liquidated damages.
tender process. • Court may award reasonable compensation for damages.
V. Earnest money, • Damages suffered due to non-performance of work done by contractor.
security deposits, Un- Liquidated Damages
retention amount,
• Damages that are claimed for losses unforeseeable are called Unliquidated Damages from the
mobilization
amount
responsible party.
bonus
and penalty
• These damages are commonly awarded for cases involving a breach of contract.
clauses.
• These damages apply to any breach of contract that does not contain a liquidated damages clause.
VI. Issues arising out
Performance bond
of tender process • Upfront payment to be made by contractor to the owner to assure him that he will complete
and role of the work within stipulated time and agreement conditions.
architect in such • This is discharged on completion of work
cases • 5% of contract value/estimated cost of work. 16
I.
3.1
Document and its
Tender (Technical Terms)
Pre-Bid Conference
contents
• For major works owners convene a pre-bid conference.
II. Types of tenders-
• It is held to understand what is required and what is offered
their advantages
• Bidders are expected to study the tender documents and visit site before pre-bid meeting.
and dis-
• Bidders seek clarification on scope, stipulations, constraints, time frame, further assistance in
advantages
these meetings.
III. Tender notices,
• In case any changes are necessary as a result of pre-bid then they are issued through
openings scrutiny
corrigenda which becomes part of the tender document.
process of
• Minutes of pre-bid is circulated to all bidders.
selection and
award
• Pre-bid meetings give clarity to bidders which thereby makes it easier for owners to evaluate
IV. Architect’s role in
the bid.
tender process. Bid Rates
V. Earnest money, • These rates are finalized by the bidder after visiting site, doing thorough market analysis.
security deposits, • Factors such as owner’s promptness in taking decisions and making payments have effect on
retention amount, bid rates.
mobilization • Rates are dependent on rates of material, labor charges, hiring of sub-contractors, profits and
amount bonus overheads.
and penalty • Provision is made for contingencies to cover unforeseen items and slight increase in scope of
clauses. work.
Market rates of Overheads
VI. Issues arising out
of tender process
and role of
Bid Rates Materials, labor,
machinery + Contingencies
architect in such Contractor’s
cases profit
17
I.
3.1
Document and its
Tender (Technical Terms)
Overheads
contents
• Administrative and executive costs related to management supervision or conduct of the capital.
II. Types of tenders-
• These are different from operating costs.
their advantages
• These charges do not belong exclusively to the particular service/item/part of the work
and dis-
• For major works lesser percentage provision is feasible.
advantages
• Several factors on which overheads depend include: labor welfare, litigation, security, mobilization and
III. Tender notices,
storage, supervision, Interest and bank guarantee charges, Infrastructure, Extra escalation, Idle labor and
openings scrutiny
machinery etc.
process of
• 5% for overheads provision seems realistic for large value works and much more for smaller works.
selection and
award
IV. Architect’s role in
tender process. Market Rate Analysis
V. Earnest money, • A practice to provide contractor’s profit.
security deposits, • In private sector these are basically 25% of estimated cost.
retention amount, • Of this 10 % is contractor’s profit, 10% is profit accounted for sub contractor’s and vendors
mobilization and 5% is accounted for overheads.
amount bonus • These are dependant on factors such as extent of competition, work commitments etc.
and penalty
clauses.

+- +
VI. Issues arising out
of tender process Final Contract Value Price variations Effect of Scope Claims allowed
variation
and role of
architect in such
cases 17
I.
3.1
Document and its
Tender (Technical Terms)
Alternative Design Bids
contents
• With innovation in technology including new materials, optimal design solutions overpower the
II. Types of tenders-
their advantages
basic design. Hence it is desirable to invite alternative bids based on design.
and dis-
• Innovative, competitive and economical bids are encouraged.
advantages
• Adequate time is given to tenderers to evolve design.
Tender notices,
• Conformance to BIS code of practice, Avoiding low capital cost and high maintenance cost,
III.
proof checking of designs may have to be stipulated before alternative bid is invited.
openings scrutiny
process
• These bids are advantageous for the owners as professional experience and expertise of
of
selection and
reputed consultants is availed.
award
IV. Architect’s role in
tender process.
V. Earnest money,
security deposits,
retention amount,
mobilization
amount bonus
and penalty
clauses.

VI. Issues arising out

of tender process
and role of
architect in such
cases 18
I.
3.1
Document and its
Tender
Issues encountered while opening of Tender
contents
II. Types of tenders- • Inadequate documents: client may reject the tender/Refuse issue of tender in case
their advantages contractor does not produce required documents
and dis-
advantages • Late Receipt: Client may return the tender without opening in case of late submission by
III. Tender notices, contractor.
openings scrutiny
process of • EMD not deposited: Client may reject the tender if contractor fails to deposit EMD.
selection and
award • Invalid Tender: The tender if not signed by the contractor then it is not valid for evaluation and
IV. Architect’s role in acceptance hence shall be rejected.
tender process.
V. Earnest money, • Discrepancy in rates and amount: The tender documents issues guidelines regarding
security deposits,
discrepancy and hence action can be taken.
retention amount,
mobilization
• Withdrawal of Tender before opening: Legally valid to withdraw tender by contractor.
amount bonus
and penalty
• Withdrawal before expiry of validity period
clauses.

VI. Issues arising out • Poor response: Tenders shall be reinvited, and eligibility criteria shall be liberalized.
of tender process
and role of
• Bids are unbalanced: Rationalizing of tenders is done keeping tendered amount unaltered
architect in such
cases 19
 Contents

1. Tender
• Document and its contents
• Types of tenders- their advantages and dis-advantages
• Tender notices, openings scrutiny process of selection and award
• Architect’s role in tender process.
• Earnest money, security deposits, retention amount, mobilization amount bonus and penalty
clauses.
• Issues arising out of tender process and role of architect in such cases

2. Contract
• Types of contracts, General principles, Contract Document
• Contract management
• Conditions and scope of contract
20
 3.2 Contract
Variation in Scope of Work A
I. Types of contracts, • An agreement enforceable by law is a contract of
General principles, Indian Contract Act,1872
Contract Document

• Agreement is-When two or more persons with common

intention communicate to each other to create some
II. Contract common obligation between them. Reduced
management Scope

• Proposal is a willingness expressed to do or abstain

from doing a work. Person making the proposal is
Conditions and
III. called promiser and person accepting the proposal is
scope of contract
called promise. E F
Normal
Scope
• Contract is founded upon mutual agreement of the
parties with essentials like consideration, legality, Enlarged
B C Scope
capacity, mutual identity of consent and form.

• The guiding principles needed while drawing a contract

and its effective execution must include C D
reasonableness ,fair play, natural justice, equality, non- Variation in Scope of Work
discrimination in dealings, public interest, absence or
arbitrariness and elimination of favoritism.

21
 3.2 Contract
I. Types of contracts, Types of Contracts
General principles,
Contract Document
• Express Contract: Agreement is stated either verbally or in writing

• Implied Contract: When agreement is a matter of inference and deduction implied.

II. Contract
management • Bilateral Contract: Defined as agreement between two parties who have made certain promises forming
considerations which are enforceable at law..

III. Conditions and • Simple Contracts: these ay be in writing or parole or may be implication of law from the acts..
scope of contract
• Executed Contracts: Where nothing remains to be done by either of the parties and where transaction is
completed at the moment when the arrangement is made.

• Executor Contracts: Where future act is to be done for example where an agreement is made to build
the project.

• Entire Contract: is where consideration of which is entire on both sides

• Severable Contract: is a contract that is actually composed of several separate contracts concluded
between the same parties, so that failing (breaching) one part of such a 'severable' contract does not
breach the whole contract.

• Contingent Contract: contract to do or not to do something if some event, collateral to such contract
23
does or does not happen.
 3.2 Contract
I. Types of contracts, Types of Contracts adopted by Govt. or Private bodies for execution of works
General principles,
Contract Document Non-Turnkey Design by owner and Measurement Cost plus fee Lumpsum
construction by contract Contracts Contracts Contracts

II. Contract Turnkey total responsibility of design, Cost plus fixed Fixed price no
construction and commissioning given Item Rate
management fee escalation
to contractor
Cost plus % Fixed price
Labor contract materials by owner Percentage
fee subject to plus provision
III. Conditions and
execution by contractor Rate
scope of contract max. for escalation

Demolition contract,Contractor pays

owner
contracts
Types of

O thers-piece work,day work

Build- Own-Operate-Transfer (BOOT)

Design-Finance-Build-Own-Operate-
Transfer (DFBOOT)
24
 3.2 Contract
I. Types of contracts, Classification of Contracts based on Purpose and Economics
General principles,
Contract Document Measurement Contracts (includes
Full Contracts- For entire scope of work percentage and item rate contracts)

Lumpsum Contracts (construction

II. Contract drawings, detailed specifications are given
Labor Contracts- Owner supplies to tenderer but schedule of quantities may
Types of contracts based on Purpose

management
materials contractor provides labor not be art of the tender)

Cost+Fee (preferred for miscellaneous

Types of contracts based on

Turnkey Contracts- For complex and

Economical classification
Conditions and specialized works. Entire Responsibility rests and emergency works for which scope is
III.
with contractor for design, construction & not clearly defined)
scope of contract
commissioning Turnkey Contract (Contractor takes full
responsibility of design, construction and
Procurement Contract- Contract can be commissioning defined in scope for a fixed
for a year or specific period for procurement lumpsum price)
of materials
BOOT Contracts (Private entrepreneur
Transport Contract Contract can be for a recovers his investments in the period he
year or specific period for procurement of owns before the transfer of the asset)
materials

Erection Contract- For installation Labor Contracts

erection, commissioning of plant and
Demolition Contracts
machinery given by the owner

Consultancy Contracts- To avail services Piece work contracts

of the consultant for project formulation, DPR, Consultancy Contracts
construction, supervisions, progress
monitoring etc. Day work contracts 25
 3.2 Contract
I. Types of contracts,
Contract Management
General principles,
Contract management is the process of managing agreements, from their creation through to their
Contract Document
execution by the chosen party, and to the eventual termination of the contract.
The primary objective of contract management is
• To ensure that both parties meet their respective commitments efficiently.
II. Contract
• To meet the intended outcomes of the contract.
management
• To complete project work entrusted to the construction agency with least complications and
with specified quality.
• To ensure harmony among key stakeholders.
III. Conditions and In public sector a contract is
scope of contract supervised by engineers and in
private sector these are
supervised and monitored by
Completion of work within an Architect.
time and cost conforming to quality
and without sacrificing harmony

Completion of work within time and cost

conforming to quality

Completion of work within time and cost

Completion of work Within time

Completion of Work

Hierarchy of Objectives
25
 3.2 Contract
I. Types of contracts, Contract Management
General principles,
Contract Document Management of contract must ensure that the construction/design contractor or consultant gets what is due to
the agency and owner gets full value of investment all within the bracket of Conditions of Contract

II. Contract
Common
management
objective
Overall objectives
III. Conditions and Contractor Owner
scope of contract Divisional
objectives

Departmental
Maximum rate of Best value for objectives
returns on money
investment Individual
objectives

Completion
of Work
26
 3.2 Contract
I. Types of contracts, Scope of Contract
General principles,
Contract Document defines the extent, range, coverage, area or space of the contract works.

The basic elements required for the agreement to be a legally enforceable contract are:
II. Contract 1. Mutual assent
management 2. Expressed by a valid offer
3. Acceptance
4. Adequate consideration
III. Conditions and 5. Capacity
scope of contract 6. Legality
Selection of Contractors

This is an important part of contract management. Factors such as Factors Guiding the selection of
quality, speed, economy and harmony are considered for selection contractor include
of suitable contractor. • Works of similar nature completed
Selection is done on principles of Equity and Fair play. The client • Financial solvency
selects the contractor by any one of the following processes: • Availability of qualified technical personnel.
• Possession of technical equipment.
1. Public Tenders. • Registration and class as registered with
2. Pre-Qualification respective Govt. body and location.
3. Post Qualification
4. Limited Tenders
5. Single Tender
6. Nomination 28
 3.2 Contract
I. Types of contracts, Selection of Contractors
General principles,
Contract Document
1. Public Tenders: 2. Pre-Qualification: Suitable weightages 3. Post-Qualification:
Especially for Govt. Especially for major works, are assigned to 3 cover system is followed.
Works tenders are invited specialized works of these criteria EMD- Technical Bid-Financial
II. Contract from registered multidisciplinary involvement, Bid
management contractors. contractors are pre-qualified to Suitable number of
ensure competition is only contractors are pre- In separate covers. EMD
Stipulation regarding work amongst the capable bidders. qualified. must be submitted in the
experience, financial prescribed format for the
III. Conditions and solvency and annual This basic requirement is not to Tender Notices are other two covers to be
scope of contract turnover is made in select the best contractor but to sent to these checked.
tender notice in addition eliminate incompetent and selected contractors
to registration. insincere contractors only. No press notice In the second stage the
follows. technical bid containing all
Before award of contract Pre-qualification notice is particulars required to check
the general reputation published in news papers with Process of selection eligibility of the contractor is
and amount of work done relevant details of work, eligibility, is based on the checked and contractors and
by the bidders is estimated cost, location, period processes and after post-qualified.
considered. of completion. conducting
negotiations. Price bids of the post
Contractors are pre-qualified qualified contractors are
based on the work ex., quality of opened and evaluated on
works executed, organization same day or later.
and plant machinery possessed.
Present workload and quality of
work of contractors are
considered.
28
 3.2 Contract
I. Types of contracts, Selection of Contractors
General principles,
Contract Document
4. Limited Tenders: 5. Single tender: 6. Nomination:
Method is generally adopted this is adopted for very small this is adopted for works of
in private sector works. works. Or for works from small magnitude or for
II. Contract For govt. works it is restricted manufacturer where choice is not emergency works.
management to emergency works and available in the market.
decision making is through Contract is awarded based
stipulated channel. Response to NIT is received on prevailing market rates.
from only one tenderer.
III. Conditions and Tender notice is sent to In private sector this method
scope of contract selected contractors of repute. The client thus liberalizes the is adopted for selection of
norms/pre-requisites in tender reputed contractor.
No press invited are issued. conditions.
Rates are negotiated
Lowest bid tenderer is called Even if no response is received, keeping in view the market
for negotiations. the single tender with approval rates.
from higher level officers is
accepted.
These works may be related
to special skills or
construction which are
normally not available.

29
 3.2 Contract
I. Types of contracts,
Terms generally used in contracts
General principles, S. No Term Definition/Remark
Contract Document
01 Arbitration A simple method by which two or more parties agree to refer a dispute existing
between them to a third person of their choice for a binding decision.
02 Clerk of Works A person approved by the architect and appointed and paid by the owner to act
II. Contract under the orders of the architect to inspect the works in the absence of the architect . He
management has no authority to other variations. He has power to issue notice to the contractor for
non- approval of any material or work.
03 Cartel It is a combination of contractors to keep up prices and to kill the competition in
III. Conditions and tendering process.
scope of contract 04 Contingencies Allowance made to cover unforeseen errors and omissions.

05 Damages Monetary compensation for injury (loss) suffered.

06 Day Work Work which under the terms of contract to be paid for time and materials consumed
and not by measurements
07 Deviation Increase or decrease of plan, estimate with respect to what is committed/accepted in
contract.
08 Defendant The person defending or denying/respondent/accused the person against whom recovery
is sought
09 Escalation Compensation for price rise, or allocation for the risk of price rise

10 Extra Item Any item of work not included in schedule of quantities forming part of the agreement.

11 Frustration of Contract Duty to perform a promise made in the contract is discharged

12 Force Majuere An unexpected event. An irresistible and superior force. 30

 3.2 Contract
I. Types of contracts,
Terms generally used in contracts
General principles, S. No Term Definition/Remark
Contract Document
13 Latent Defects Defects which could only have been identified after the issue of the final certificate. For latent
defects of materials , other than those due to faculty specification or workmanship, the Architect is not
liable to his client but the contractor is liable to his owner. For latent defects of design, or specification,
II. Contract the contractor is not liable to the owner, But the Architect is liable to his client if it can be proved that
management there was negligence or incompetence on the Architect’s part.
14 Lien Legal write to hold other’s property until debt on it is paid.

Conditions and 15 Negotiation A process of amicable settlement of an issue in the spirit of give and take.
III.
scope of contract 16 Patent Defects Defects which can be identified before the issue of final certificate. The architect is liable to his
client for patent defects which he should have noticed during his supervision but which he failed to
notice or failed to instruct whose list is generally sent to the contractor at the end of defect liability
period.
17 Plaintiff A person who brings a case against another in a court of law

18 Prime Cost If the specifications for any item or material or fixatures or fittings are not finalized by the Architect,
the contractors are asked to quote prime cost to be adjusted later when the same is selected or
approved. Prime cost relates to materials to be supplied by the vendors.
19 Provisional Sum An allowance included in a fixed price construction contract for an item of work that cannot be
priced by the contractor at the time of entering the contract.
20 Quantum Meruit A legal action based on equitable compensation. It is an alternate remedy to an action on a
contract which can be brought for partial performance. A claim in quantum meruit can at best be
described as residual equity.

31
 3.2 Contract
I. Types of contracts,
Terms generally used in contracts
General principles,
Contract Document S. No Term Definition/Remark

21 Variations Alterations, modifications of designs, quality, quantity or specification of work shown

in contract.
II. Contract
22 Work Order A written order issued by the owner or his authorized architect or engineer to the contractor,
management
intimating him that his contract has been accepted for commencement of the work.

III. Conditions and

scope of contract

32