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CONSTRUCTION CONTRACTS DOCUEMENTS

CONSTRUCTION CONTRACTS DOCUEMENTS. APPLIED CIVIL ENGINEERING DEPT. BY LECTURER Maha Muhaisen. CONSTRUCTION DOCUMENTS. CONSTRUCTION DOCUMENTS.

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CONSTRUCTION CONTRACTS DOCUEMENTS

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  1. CONSTRUCTION CONTRACTS DOCUEMENTS APPLIED CIVIL ENGINEERING DEPT BYLECTURERMaha Muhaisen

  2. CONSTRUCTION DOCUMENTS

  3. CONSTRUCTION DOCUMENTS • Contract documents (graphic and written) describe the proposed construction (the ‘Work’) that results from performing services, furnishing labor, and supplying and incorporating materials and equipment into the construction • Contract Forms • Conditions of the Contract • Specifications & BOQ • Drawings • Addenda • Change Orders

  4. A. CONTRACT FORMS • CONTRACT FORMS • Acceptance Letter • Agreement • Performance Bond • Payment Bond • Certificates

  5. B.CONDITIONS OF CONTRACT • CONDITIONS OF CONTRACT • Define basic rights, responsibilities, and relationships of the parties involved in the construction project. • 2 types: General Conditions and Supplementary Conditions • GENERAL CONDITIONS • General clauses that establish how the project is to be administered. • Contain basic expressions of rights, duties, and limitations of the entities involved. • Usually in the form of published standard documents that include principles common to most construction Contracts. • SUPPLEMENTARY CONDITIONS • Modify or supplement general conditions as need to provide for requirements specific to a project. They are not standardized documents and are prepared for specific project needs.

  6. A.1 Agreement The written document signed by the owner and the contractor that is the legal instrument binding the parties to the contract. Defines the relationship and obligations between owner and contractor. The agreement is quite brief and appears to consist mostly of statements of fact, whereas the general conditions section deals primarily with matters that pertain generally to be construction work and the persons involved. In other words, the agreement appears to consist of statements and the general conditions appear to be terms, or conditions.

  7. Acceptance letter Sent to contractor before the signing the contract Mention to the contractor offer, and assure the commitment of the contractor The owner express his acceptance to the contractor offer as it was in the form of bid offer, and ask the contractor to start preparation of the legal and technical steps as it is stipulated in the contract. Signing the authorized signatory and then the contractor is invited to submit performance security and signing the contract. See example of acceptance letter

  8. AGREEMENT The agreement should contain: The names of contracting parties A brief description of the work A list of contract documents, including agreement, general conditions, drawings, and specifications. The contract sum, or amount (lump-sum contract) The procedures for payment The contract time, or dates for start and completion The signatures of contracting parties and witnesses International construction documents are also often based on industry-prepared standard forms.

  9. AGREEMENT FORM • A number of organizations prepare recommended standard general conditions and associated forms. Such as: • ENAA (Engineering Advancement Association of Japan) • FIDIC (International Federation of Consulting Engineers) • ICE (Institute of Civil Engineers, United Kingdom) • JCT (Joint Contracts Tribunal) • SEE ATTACHED WORD FILE FOR EXAMPLES

  10. A.2 .Bonds / Guarantees FORMS 1- PERFORMANCE BOND / security The Contractor, upon receiving the Letter of Acceptance, shall obtain and provide to the Employer before signing the Contract, the Performance Guarantee in the value of ten percent of the Contract Sum, as a guarantee of the proper execution of the Works in accordance with the Contract. This guarantee shall be issued by a licensed bank or financial institution acceptable to the Employer. The guarantee shall be prepared in the form included in part B of these conditions. The obtaining of such guarantee shall in all respects be at the expense of the Contractor.The Performance Security shall be provided to the Employer no later than the date specified in the Letter of Acceptance and shall be issued in an amount specified in the PCC (particular conditions of contract), by a bank or surety acceptable to the Employer, and denominated in the types and proportions of the currencies in which the Contract Price is payable. The Performance Security shall be valid until a date 28 days from the date of issue of the Certificate of Completion in the case of a Bank Guarantee, and until one year from the date of issue of the Completion Certificate in the case of a Performance Bond.

  11. Advanced PAYMENT BOND • Provide a guarantee that subcontractor, material suppliers, and others providing labor, material goods, and services to the project will be paid. • The Employer shall make advance payment to the Contractor of the amounts stated in the PCC by the date stated in the PCC, against provision by the Contractor of an Unconditional Bank Guarantee in a form and by a bank acceptable to the Employer in amounts and currencies equal to the advance payment. The Guarantee shall remain effective until the advance payment has been repaid, but the amount of the Guarantee shall be progressively reduced by the amounts repaid by the Contractor. Interest shall not be charged on the advance payment.

  12. The Contractor is to use the advance payment only to pay for Equipment, Plant, Materials, and mobilization expenses required specifically for execution of the Contract. The Contractor shall demonstrate that advance payment has been used in this way by supplying copies of invoices or other documents to the Project Manager. • The advance payment shall be repaid by deducting proportionate amounts from payments otherwise due to the Contractor, following the schedule of completed percentages of the Works on a payment basis. No account shall be taken of the advance payment or its repayment in assessing valuations of work done, Variations, price adjustments, Compensation Events, Bonuses, or Liquidated Damages.

  13. Defect liability Security After primary taking over, 5% guarantee is submitted to employer for defect liability, valid for 365 days or as stipulated in PCC.

  14. INSURANCE Certificates Insurance for Works and Contractor’s Equipment, Insurance against Injury to Persons and Damage to Property , Insurance for Contractor’s Personnel

  15. Lecture (6), (7), (8) Conditions of the contract

  16. General Conditions of contract The conditions are intended to govern and regulate the obligation of formal contract. Although the headings and topics included within different sets of GCC vary, there is a certain similarity of subject matter

  17. Contents of GCC Definitions Contract documents Rights and responsibilities of owner Duties and authorities of engineer Rights and responsibilities of contractor Sub-contractor, Separate contractors Time Payments and completions Changes in the work Protection of persons and property Insurance and bond Disputes Termination of contract Miscellaneous provisions

  18. FIDIC , AN INTRODUCTION Founded in 1913 Expanded in 1945 to include 40 national associations Published first Conditions of Contract in 1957 In 2004 has 64 member associations Headquarters in Switzerland Web Site : www.fidic.org

  19. FIDIC , AN INTRODUCTION Pre 1957 – no internationally recognised contract conditions First “red book” based on UK ICE conditions FIDIC has international committees to improve contracts

  20. Contract Documents 1999 Conditions of Contract for Construction (Red Book) Conditions of Contract for Plant & Design Build (Yellow Book) Conditions of Contract for EPC Turnkey Projects (Silver Book) Short Form of Contracts (Green Book)

  21. FIDIC Document UsageConditions of Contract for Construction Works designed by Employer or Engineer Contractor Constructs in accordance with designs provided May include some design elements

  22. FIDIC Document UsageConditions of Contract for, Plant & Design Build Electrical & Mechanical Plant May include building and engineering Design & Execution of works Contractor designs and constructs in accordance with Employer’s Requirements Engineer Administers

  23. FIDIC Document UsageShort Form of Contract Small capital value projects Simple content Contractor constructs to Employer’s designs No “Particular Conditions” No “Impartial” Engineer

  24. Typical sequence of Principal Events during Contracts

  25. Typical sequence of Payment Events envisaged in Clause 14(contract price and payment)

  26. Typical sequence of Dispute Events envisaged in Clause 20 DAB: the persons so named in the contract or other persons appointed under sub-clause (appointment of the dispute adjudication board)

  27. FIDIC conditions of contract 1 GENERAL PROVISIONS 2 THE EMPLOYER . 3 THE ENGINEER 4 THE CONTRACTOR 5 NOMINATED SUBCONTRACTORS 6 STAFF AND LABOUR 7 PLANT, MATERIALS AND WORKMANSHIP 8 COMMENCEMENT, DELAYS AND SUSPENSION 9 TESTS ON COMPLETION 10 EMPLOYER’S TAKING OVER . 11 DEFECTS LIABILITY 12 MEASUREMENT AND EVALUATION

  28. FIDIC conditions of contract (cont’d) 13 VARIATIONS AND ADJUSTMENTS 14 CONTRACT PRICE AND PAYMENT 15 TERMINATION BY EMPLOYER 16 SUSPENSION AND TERMINATION BY CONTRACTOR 17 RISK AND RESPONSIBILITY 18 INSURANCE 19 FORCE MAJEURE 20 CLAIMS, DISPUTES AND ARBITRATION

  29. FIDIC conditions of contract 1 GENERAL PROVISIONS 1.1 Definitions 1.2 Interpretation 1.3 Communications 1.4 Law and Language 1.5 Priority of Documents 1.6 Contract Agreement 1.7 Assignment 1.8 Care and Supply of Documents 1.9 Delayed Drawings or Instructions 1.10 Employer’s Use of Contractor’s Documents 1.11 Contractor’s Use of Employer’s Documents 1.12 Confidential Details 1.13 Compliance with Laws 1.14 Joint and Several Liability

  30. FIDIC conditions of contract cont’d 2 THE EMPLOYER . 2.1 Right of Access to the Site 2.2 Permits, Licenses or Approvals 2.3 Employer’s Personnel 2.4 Employer’s Financial Arrangements 2.5 Employer’s Claims 3 THE ENGINEER 3.1 Engineer’s Duties and Authority 3.2 Delegation by the Engineer 3.3 Instructions of the Engineer 3.4 Replacement of the Engineer 3.5 Determinations

  31. FIDIC conditions of contract cont’d 4 THE CONTRACTOR 4.1 Contractor’s General Obligations 4.2 Performance Security 4.3 Contractor’s Representative 4.4 Subcontractors 4.5 Assignment of Benefit of Subcontract 4.6 Co-operation 4.7 Setting Out 4.8 Safety Procedures 4.9 Quality Assurance 4.10 Site Data 4.11 Sufficiency of the Accepted Contract Amount 4.12 Unforeseeable Physical Conditions 4.13 Rights of Way and Facilities

  32. 4.14 Avoidance of Interference 4.15 Access Route 4.16 Transport of Goods 4.17 Contractor’s Equipment 4.18 Protection of the Environment 4.19 Electricity, Water and Gas 4.20 Employer’s Equipment and Free-Issue Material 4.21 Progress Reports 4.22 Security of the Site 4.23 Contractor’s Operations on Site 4.24 Fossils

  33. 5 NOMINATED SUBCONTRACTORS 5.1 Definition of “nominated Subcontractor” 5.2 Objection to Nomination 5.3 Payments to nominated Subcontractors 5.4 Evidence of Payments

  34. 6 STAFF AND LABOUR 6.1 Engagement of Staff and Labour 6.2 Rates of Wages and Conditions of Labour 6.3 Persons in the Service of Employer 6.4 Labour Laws 6.5 Working Hours 6.6 Facilities for Staff and Labour 6.7 Health and Safety 6.8 Contractor’s Superintendence 6.9 Contractor’s Personnel 6.10 Records of Contractor’s Personnel and Equipment 6.11 Disorderly Conduct 6.12 Foreign Personnel 6.13 Supply of Foodstuffs

  35. 6.14 Supply of Water 6.15 Measures against Insect and Pest Nuisance 6.16 Alcoholic Liquor or Drugs 6.17 Arms and Ammunition 6.18 Festival and Religious Customs 6.19 Funeral Arrangements 6.20 Prohibition of Forced or Compulsory Labor 6.21 Prohibition of Harmful Child Labour 6.22 Employment Records of Workers

  36. 7 PLANT, MATERIALS AND WORKMANSHIP 7.1 Manner of Execution 7.2 Samples 7.3 Inspection 7.4 Testing 7.5 Rejection 7.6 Remedial Work 7.7 Ownership of Plant and Materials 7.8 Royalties 8 COMMENCEMENT, DELAYS AND SUSPENSION 8.1 Commencement of Works 8.2 Time for Completion 8.3 Programme 8.4 Extension of Time for Completion 8.5 Delays Caused by Authorities 8.6 Rate of Progress 8.7 Delay Damages

  37. 8.8 Suspension of Work 8.9 Consequences of Suspension 8.10 Payment for Plant and Materials in Event of Suspension 8.11 Prolonged Suspension 8.12 Resumption of Work 9 TESTS ON COMPLETION 9.1 Contractor’s Obligations 9.2 Delayed Tests 9.3 Retesting 9.4 Failure to Pass Tests on Completion 10 EMPLOYER’S TAKING OVER 10.1 Taking Over of the Works and Sections 10.2 Taking Over of Parts of the Works 10.3 Interference with Tests on Completion 10.4 Surfaces Requiring Reinstatement

  38. 11 DEFECTS LIABILITY 11.1 Completion of Outstanding Work and Remedying Defects 11.2 Cost of Remedying Defects 11.3 Extension of Defects Notification Period 11.4 Failure to Remedy Defects 11.5 Removal of Defective Work 11.6 Further Tests 11.7 Right of Access 11.8 Contractor to Search 11.9 Performance Certificate 11.10 Unfulfilled Obligations 11.11 Clearance of Site

  39. 12 MEASUREMENT AND EVALUATION . 12.1 Works to be Measured 12.2 Method of Measurement 12.3 Evaluation 12.4 Omissions 13 VARIATIONS AND ADJUSTMENTS 13.1 Right to Vary 13.2 Value Engineering 13.3 Variation Procedure 13.4 Payment in Applicable Currencies 13.5 Provisional Sums 13.6 Daywork 13.7 Adjustments for Changes in Legislation 13.8 Adjustments for Changes in Cost

  40. 14 CONTRACT PRICE AND PAYMENT 14.1 The Contract Price 14.2 Advance Payment 14.3 Application for Interim Payment Certificates 14.4 Schedule of Payments 14.5 Plant and Materials intended for the Works 14.6 Issue of Interim Payment Certificates 14.7 Payment 14.8 Delayed Payment 14.9 Payment of Retention Money 14.10 Statement at Completion 14.11 Application for Final Payment Certificate 14.12 Discharge 14.13 Issue of Final Payment Certificate 14.14 Cessation of Employer’s Liability 14.15 Currencies of Payment

  41. 15 TERMINATION BY EMPLOYER 15.1 Notice to Correct 15.2 Termination by Employer 15.3 Valuation at Date of Termination 15.4 Payment after Termination 15.5 Employer’s Entitlement to Termination for Convenience 15.6 Corrupt or Fraudulent Practices

  42. 16 SUSPENSION AND TERMINATION BY CONTRACTOR 16.1 Contractor’s Entitlement to Suspend Work 16.2 Termination by Contractor 16.3 Cessation of Work and Removal of Contractor’s Equipment 16.4 Payment on Termination 17 RISK AND RESPONSIBILITY 17.1 Indemnities 17.2 Contractor’s Care of the Works 17.3 Employer’s Risks 17.4 Consequences of Employer’s Risks 17.5 Intellectual and Industrial Property Rights 17.6 Limitation of Liability 17.7 Use of Employer’s Accommodation/Facilities

  43. 18 INSURANCE 18.1 General Requirements for Insurances 18.2 Insurance for Works and Contractor’s Equipment 18.3 Insurance against Injury to Persons and Damage to Property 18.4 Insurance for Contractor’s Personnel 19 FORCE MAJEURE 19.1 Definition of Force Majeure 19.2 Notice of Force Majeure 19.3 Duty to Minimize Delay 19.4 Consequences of Force Majeure 19.5 Force Majeure Affecting Subcontractor 19.6 Optional Termination, Payment and Release 19.7 Release from Performance

  44. 20 CLAIMS, DISPUTES AND ARBITRATION 20.1 Contractor’s Claims 20.2 Appointment of the Dispute Board 20.3 Failure to Agree on the Composition of the Dispute Board 20.4 Obtaining Dispute Board’s Decision 20.5 Amicable Settlement 20.6 Arbitration 20.7 Failure to Comply with Dispute Board’s Decision 20.8 Expiry of Dispute Board’s Appointment

  45. 1.1 Definitions 1.1.1. Contract : include contract agreement, letter of acceptance, letter of tender, specifications, drawings, schedules, tender, appendix to tender, bill of quantities. 1.1.2 parties and persons : party, employer, contractor, engineer, contractor representative, employers' personnel, contractors personnel, sub- contractor, DAB (dispute adjudication board), Fidic. 1.1.3 Dates , tests, periods and completion include base date, commencement date, time of completion, test on completion, taking over certificate, defects notification period, performance certificate, day 1.1.4 money and payement: acceted contract amount, contract price, cost, final , interim payement certificate, currency, provisional sum, retension money,

  46. General conditions • The following are main items that include in the general conditions for the tender ( or the construction contract.

  47. 1 : definitions • The main definitions that are included in and repeated in the articles of general conditions, are: • Employer : "Employer" The party named in the Contract as the "FIRST PARTY" who will enter into contract with the Contractor for the execution of the Works covered by the Contract, or any other party authorized by the Employer to exercise the powers and obligations of the First Party, provided that the Contractor will be informed accordingly in writing . • Contractor : "Contractor" - The person, company or joint venture named as Second Party in the Contract whose Tender has been accepted by the Employer and with whom the Employer has entered into Contract, and includes the Contractors personal agents and his legal successors • Engineer" - The Consulting office, or Engineering office or Engineer or any other technical body appointed from time to time by the Employer to exercise in whole or in part the powers of the Engineer in accordance with the Conditions of the Contract provided that the Contractor shall be accordingly notified in writing.

  48. Article 1 : definitions • "Engineers Representative" - Any resident engineer, or clerk of works appointed by the Engineer from time to time • "Contract" - The documents constituting these Conditions (Parts I and II), the Specification, the Drawings, the Bill of Quantities, the Tender, the Letter of Acceptance, the Contract Agreement, and such further documents as may be expressly incorporated in the Letter of Acceptance or Contract Agreement (if completed). • "Contract Sum" - The sum stated in the Letter of Acceptance as payable to the Contractor for the execution and completion of the Works and the remedying of any defects therein in accordance with the provisions of the Contract, subject to such additions thereto or deductions therefrom as may be made under the provisions of the Contract. • Equipment is the Contractor’s machinery and vehicles brought temporarily to the Site to construct the Works. • "Site" - The land and other places provided by the Employer or designated as such where the Works are to be executed, and any other places specifically designated in the Contract as forming part of the Site. • approval (written approval) • time (calendar / working days)

  49. 2. Engineer's Duties and Authority • a) The Engineer shall carry out the duties specified in the Contract . • b) The Engineer shall exercise the authority specified in or necessarily to be implied from the Contract . • Provided, that the Engineer shall obtain the specific approval of the Employer, in compliance with the terms of his appointment, and after submitting his recommendations to the Employer in writing, in the following matters : • (i) "issuing variation orders"; • (ii) "deciding on the extension of Time for Completion and applying the Liquidated Damages Clause"; • (iii) "approving the appointment of Subcontractors"; • (iv) "notifying the Contractor on suspension of Works";(and any other matters as may be set out in Part II of these conditions). • (c) Except as expressly stated in the Contract, the Engineer shall have no authority to relieve the Contractor of any of his obligations under the Contract

  50. Engineer's Representative • The Engineer's Representative shall be appointed by and be responsible to the Engineer and shall carry out such duties of watching and supervising the execution and workmanship of the Works and to test and examine any materials to be used or workshop employed in connection with the Works. He shall exercise such authority as may be delegated to him by the Engineer

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