Thursday, October 2, 2008

Project Concept

INTRODUCTION

Nowadays the construction contracts and sub-contracts become more and more comprehensive and with huge amount of contract sum. In previous years , the traditional contracts , particularly the sub-contracts are always of one major activity or a combination of a few site activities such as excavation , backfilling and compaction for Earthworks ; trenching , pipe laying, trust anchoring and manholes for Drainage Works ; formation , sub-base laying and road paving for Roadwork’s ; formwork , reinforcement and concreting for Concreter’s Works , Utility Relocation Works for facilitate the construction etc .
However, probably being learnt by former mistakes or negligence that triggered out the subsequent disputes, the recent Clients / Developers are now trying to stay away from claims and to keep the project cost within budget by award of some sort of a lump sum contract. This type of contract is a fixed-price contract that includes the entire tendered work of which the extent is thoroughly covered under the various terms and conditions of contract , bills of quantities , method of measurement , specifications , master program and tender drawings , and hardly would have any further price adjustment once the contract is entered into .




While the contractor is awarded the contract under the condition that it bears all the responsibility and obligation for the completion of the whole of works, no doubt this practice is preferred by the Client / Developer and will continue. Thus, the awareness of site works with a wide variety of trades and activities by the site staff becomes more and more important and sometimes even significantly affects the profit and loss of the contractor.


No matter which form of contract is being performed on a construction site, the site staff (such as the foremen, works supervisors, site engineers, or quantity surveyors) should have wide experience and knowledge about the activities to be carried out. Some staff might have ample experience on some trades of work but might be lacked of knowledge about the other trades. As being an aggressive duty staff, one should be courteous and humble enough to try the best to learn more from the seniors, peers, subordinates, sub-contractors, and particularly the “old men” whom had worked on construction sites for years.




Basic engineering knowledge could be easily obtained from school class and reference books , however the valuable practical on-site experience might be learnt perhaps only during the “ afternoon tea break ” or “ happy hour ” after the site work . Honestly speaking , a friendly 20 minutes chatting may come up with a contributive solution that already screens out the mistakes and failures made by someone in the past 10 years .


Pre-Contract Stage

Winning a construction contract is not easy . This chapter introduces briefly to the site staff the scope of works that have to be or already carried out by their employer and seniors before the contract is awarded . The site staff should appreciate their seniors and preceding staff’s hard efforts for getting the contract and at least should have some knowledge about the background of the project before one resumes duty on site .

The pre - contract stage can be breakdown as follows


1. Project/ Construction cost
2. Preparation of Contract Documents
3. Types of Contracts
4. Tender of Construction Projects
5. Feasibility Stage
6. Site Investigation
7. Engineering Design

Project / Construction Cost

Naturally the client wants to know as close as possible the forthcoming expenditure that will incur for the project , and also wish to see the project work will be finished at a minimum cost compatible with satisfactory materials , workmanship and time .

So , when the set of engineering drawings is available together with the determination of materials to be used , the apparent cost of the project will be then evaluated for the client’s consideration . The cost of the project will have to be amended as the revised architectural / engineering design demands , or vise versa until the decision of final design is made .
In case the financial status mainly governs the size and sequence of the project , the client itself should know well about the schedules of its capital investment and expenditure .




Schedule of Quantities


After the architectural / engineering design is determined , a schedule of quantities for all the proposed works will be prepared and to ascertain the true cost of the project by entry of estimated unit rate against each work item . For the sake of not changing the design , the cost of budget can only be fine toned by the change of building material or lower requirement of specifications .

Estimation / Cost Planning


An estimate of capital cost ( direct cost and indirect cost ) and an estimate of capital expenditure ( plant , labour , material , temporary works , fixed overhead , subcontractors , suppliers , operation and maintenance ) will be well prepared in some kind of financial schedule to assess the economic viability . At the same time , an income schedule shall also be prepared to foresee the profitability and rate of return in case of a commercial project .

Financial Support


Financing of a project , particularly for a commercial project , may significantly affect the choice of size of project and type of contract to be selected by the client . In case the financial status mainly governs the size and sequence of the project , the client itself should know well about the financial schedule of its capital investment and expenditure . If short of funding , it should look for supports well in advance from outside parties or banks whence necessary .

Contingency


No matter how much time and efforts have been spent on preliminary investigations and in engineering design stage , there are always unforeseen problems encountered in civil engineering projects after the commencement of work . In order to eliminate the situation of running out of budget , the client or its engineer usually allows a contingent sum of money to cover the unexpected additional works

Preparation of Contract Documents

During the design stage , the engineer should recommend to the client which type of contract will be used for construction and an early decision should be made for the engineer to prepare the right form of contract documents . Ample time must be allowed for careful preparation of contract documents or otherwise may lead to unexpected additional expenditure .

There is common forms of contract currently being used , namely : -



a) FIDIC Contract

Preparation of Tender Documents
At the time of calling for tenders , it is the best to portray the full design , detailed requirements , stage completions of works , contractor’s responsibilities , terms of payment and any other special conditions into tender drawings , specifications , bills of quantities , works programme and the contract documents . With more comprehensive indications , the tenderers will more easily understand the entire scope of work such that they can submit a competitive but accurate quoted price to cover the whole of the work . Lack of adequate information in the tender documents will consequently lead to disputes and claims during and at the end of the contract .
The list of tender documents is generally as follows : -a) Instructions to tenderersb) Form of Tenderc) General Condition of Contractd) Special Condition of Contracte) General Specificationf) Particular Specificationg) Bills of Quantitiesh) Methods of Measurementi) Tender Drawingsj) Additional appendicesk) Form of Agreement

Preparation of Bills of Quantities ( BoQ )

The bill of quantities is a schedule of preset work items for individual portion of contract works . It lays out the brief description of the required work and with approximate quantity taken off from the tender drawings . The contract may contain a series of bills to cover the whole of the work .
These series of BQ will form a part of the tender documents for the tenderers to quote against each item with a unit rate or unit price . The total tendered price will then be built up on basis of the provided quantity .
Valuation of the BQ items will be based on the “ preamble ” and in accordance with the procedure set forth in the “ Standard Method of Measurement ( SMM ) ”. Absolute care must be taken to check whether there are typing errors in regards of the “ BQ unit ” and the numerical figures of the “ BQ quantity ” .
Particular Specification ( PS )

Contractually the provisions contained in the Particular Specification and the Drawings shall prevail over the provisions contained in the General / Standard Specification .
Preparation of Specifications
Specification is a set of documents that describes the details of each trade of works and set out the requirements for quality of materials , workmanship , and method of tests, sequence of works, stages of inspection, acceptance criteria and any other obligations of the contractor that are not covered by the Conditions of Contract .
When drafting the specification , it is important that the clauses should be written in good and simple English so that the site staff can readily understand what the requirements are . Absolute care must be taken to avoid having conflicts with the other contract documents or otherwise may trigger out disputes during or after completion of work .
General / Standard Specification ( GS / SS )

Contractually the provisions contained in the General Specification shall prevail over the provisions contained in the standard documents such as the British Standards ( BS ) , British Standard Codes of Practice ( CP ) , American Society for Testing and Materials ( ASTM ) Standards , etc .
Preparation of Drawings

The set of tender drawings should provide all the details of proposed works that are required by the contract , however this is always not practicable owing to many reasons . One of the main reasons is that when time is of an essence , the client may want to commence the project within short time such that the client’s engineer in fact does not have sufficient time to finish up the detailed design , and sometimes even working concurrently after the work is commenced .
Nevertheless the incomplete tender drawings will most likely influence the preparation , execution and cost of work which in turn will consequently affect the tendered price . Failure to provide sufficient and correct information in the tender drawings will unavoidably lead to follow up disputes and claims

Types of Contracts
All-in Contract

This type of contract is sometimes known as “ package contract ” or “ turnkey contract ” or “

design and build contract ” and can be on lump sum basis or re-measurement basis .
The client or its engineer will set out the requirements in board or particular terms and invite the tenderers ( usually pre-qualified ) to submit a comprehensive proposal for the design and construction of the project .
Lump Sum Contract
This type of contract is binding with a fixed lump sum price of which the contractor has to undertake all the works as shown on the tender drawings , bills of quantities , specifications and the terms and conditions of the contract .
The quantities of works are for information only and the contractor is responsible for the assessment of all costs that it will incur throughout the contract period . The lump sum price will seldom be adjusted unless the specified tendered work is altered by formal instructions .
Re-measurement Contract
This type of contract consist detailed bills of quantities ( BQ ) that computed from the tender drawings by the client or its engineer , however the BQ quantity is approximate only and is not final . The tenderers will quote against each BQ item and enter a unit rate or unit price to build up the total contract price on basis of those BQ quantities .
During the construction period , the actual quantity of works executed under each BQ item will be jointly measured and valued at the quoted rate for interim payment purpose .
At completion of contract, the exact quantity of works finally executed under each BQ item will be again jointly re-measured (i.e. the final measurement) and valued at the quoted rate to evaluate the final account.
In case of instructed variation or additional works that are without basis of BQ rate(s) , the contractor can build up new rates for those works for valuation .
In general , this type of contract is much fair to both the client and the contractor because the total workdone is being paid on re-measurement basis and surely can eliminate a lot of disputes resulting from the grey areas of contractor’s responsibilities .
Build , Operate and Transfer ( BOT ) Contract

This type of contract is sometimes known as “ Build , Own , Operate and Transfer ( BOOT ) contract ” . The client will layout a series of required end products with specification , terms and conditions ; and the contractor has to finance , design , construct , maintain , manage and operate the finished work for an agreed period say 10 years , 20 years or so .
During this agreed period , the contractor has the temporary ownership of these finished works and can charge the end users for recovery of its investment together with the expected profit . However when the agreed period expires , the finished work will have to be transferred back to the client in specified conditions .
Maintenance Contract

This type of contract is usually for the maintenance or renovation work of a large sized project and the construction period usually ranges between 2 to 3 years or as otherwise agreed .
Usually a “ schedule of rates ” contains a comprehensive list of work items is already prepared to cover the employer’s proposed works but without specified quantities . The tenderers will be invited to quote their competitive rates against the work items in the schedule ; or sometimes to quote an addition / deduction percentages against the pre-determined rates entered by the employer or its engineer .
The employer will issue Works Orders to the contractor during the stated period for execution of any work items as required in anywhere within the project site . Payment for workdone will be based on the agreed schedule of rates . In case the executed work items are not covered under the agreed schedule of rates , a new rate or “ star rate ” will be built up and jointly agreed for payment purpose .

Term Contract

This type of contract is a short term contract and usually applies to some project which has an urgency to commence construction work . It includes a list of major work items with provisional quantities and invites the contractor to quote .

Following the award of the contract , the contractor will immediately commence preparatory work and detailed scope of works will be instructed from time to time until the whole design is completed . The works payment will be on the basis of the list of major work items , and will negotiate a relevant new rate for the missing work items .

Construction Projects
Invitation of Tender

When the client decides to proceed the project by enter into a contract , normally there are 3 ways to select a contractor that are as follows : -
a) Open tendering

b) Invited tendering

c) Negotiation with a selected contractor
“ Instructions to tenderers ” will be issued to the interested parties to assist them to complete the tender documents , and return the tenders in a format as required by the client or its engineer for easy assessment .
Tender Bond

The employer might require each of the tenderers to provide a bond ( usually from a bank ) as a security to ensure the selected contractor would not attempt to withdraw its tender after submission or refuse to sign the contract after it is awarded . In the latter case , it obviously will cause loss to the employer owing to the additional expense or time delay to the proposed project .
Tender Query

During the preparation of the tender , the prospective contractors may make extensive inquiries for clarification of some omissions , mistakes , uncertainties or ambiguities found in the tender documents . In order to assist the tenderers to ascertain the appropriate cost and time of work and to minimize the contractual risks , the client’s engineer will reply to these queries and copy to all tenderers at the same time for their information .
Assessment of Tender Bids
Tendered price , works experience and financial standing are essential for selection of a prospective contractor . A comparison summary with analysis of all the tenders should be well presented for assessment purpose .
There is always a clause in the tender documents to remind the tenderers that the client does not undertake to accept the lowest or any tender . However in case a tender other than the lowest is recommended , full explanation must be recorded to clarify others’ query .
In fact , the client and its engineer may not have to know precisely how the tenderers build up their tender price . Nevertheless if some BQ items are found that bear an exceptionally higher or lower quoted rate than the estimate , careful examination should be conducted to explore whether there are mistakes or errors had been made by the tenderer ; or otherwise these mistakes or errors in fact exist in the contract documents .
Tender Additional Appendices

During the tendering period , the client and its engineer will take time to go through again the contract documents and carefully examine whether there are omissions or mistakes exist . In case omissions or mistakes are discovered , the client’s engineer will inform all the tenderers at the same time before the tender is closed .
In case there are minor change of design and updating of works details , the client’s engineer will inform all the tenderers by means of letters and these letters will be kept as appendices in the tender documents .

Feasibility Study
A project often requires large expenditure by the client . When the project design is determined , a feasibility study will be conducted at an early stage to assess whether the proposed project is practicable , advantageous and will be accepted by the public and end users in both aspects of engineering and commercial . The report will include , but not limited to , the cost of land , the expected income ( or a return of some kind ) , the running cost , the adverse effects to the third party and adjacent structures , and the impacts on town planning and environmental protection as well .

Site Investigation
When the project development is decided to proceed , site investigation will be carried out by some specialist firm(s) to determine the ground / soil conditions to ascertain the suitability of the proposed site for the proposed building or civil engineering project in view of planning .
Recently , for the sake of saving the initial cost or the urgency of the project , some clients are not willing to spend too much money or time on this topic , and this practice is wrong . Experience tells that an absence of site investigation or a non-comprehensive site investigation report will most likely trigger out the following adverse effects and in turn results unforeseen

expenditure : -
a) Leads to an incomplete engineering designb) Subsequently leads to a wrongly estimated project costc) Subsequently leads to an insufficiently prepared Bills of Quantitiesd) Subsequently leads to an inadequate method statemente) Subsequently leads to a delayed completion datef) Leads to subsequent claims and prolongation costg) Eventually results a higher completion cost than the budget

Engineering Design
When the site investigation is finished , a report with layout drawings , boreholes logs , soil samples , laboratory test results together with the specialist’s interpretation will be produced for the engineer / architect’s reference to proceed with the design and specifications for the foundation . The foundation design will include the earthworks ( the balance of cut and fill , re-use of suitable material , disposal of unsuitable material and the respective replacement ) , piling work , diaphragm walls and underground waterproofing work .
The designs of substructures and superstructures will also be carried out and substantiated by engineering analysis of each structural member and are converted and put into drawings . In this planning stage , the engineer will consider the various alternatives to achieve the requirements of the project in order to save cost and time .

Further designs of drainage work , utilities work , roadwork , external work , E & M works , building services , building finishes and landscaping work will be followed up and accomplished to form the set of engineering drawings after consideration of alternative solutions to meet the constructional and financial requirements .

The Civil Engineering Sri Lanka is Providing Large scale of engineering details.
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