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18ARC84 – PROFESSIONAL PRACTICE

Module 3
Ar. GAYATHRI S PILLAI
 MODULE 3
7. Tender: Tender document and its content. Types of tenders, advantages and disadvantages of each type;
suitability to various projects. Tender notices, opening, scrutiny, process of selection and award. Architect’s role
in tender process.
Earnest Money Deposit, Security Deposit, Retention Amount, Mobilization Amount and Bonus & Penalty
Clauses. Issues arising out of tendering process and the role of an architect.
8. Contract: General Principles, types of contract; Contract document. Contract Management: Architect’s role in
Contract Management. Conditions and Scope of Contract; role of an architect in ensuring completion of
contract.
Issues arising in Contract: i) Termination of contract, ii) Certificates of value and quality, iii) Virtual completion

Click to Edit and final completion, iv) Defects liability period, v) Latent and patent defects, vi) Liquidated and un-liquidated
damages, vii) Extension of time, delays and penalty, viii) Non tendered items, extras, extra work, additional
works, variations, rate analysis and architect’s role in certification of variations,
ix) Prime cost, provisional sum.
Supervision and Contract Administration: Site visits, site meeting, co-ordination with various agencies, site
book, site instructions, clerk of works and site office.
Bill checking, quality auditing, handover procedures and final certification.
Disputes in contract and architect’s role in resolving disputes. Case studies from practice highlighting disputes
in contract and methods adopted to solve such disputes.
 ● It is an invitation from the
Click to Edit owner to the contractor to
execute some work at
specified cost in specified
time.
● It is published in the form of
tender notice in news
papers, notice boards, online
etc. according to the cost of
works.
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 Step-by-Step Procedure of Tender Process:
Project Planning:
● Define project scope, objectives, and requirements.
● Develop a detailed project plan, including timelines and budget estimates.
Preparation of Tender Documents:
● Develop comprehensive tender documents outlining project details, specifications, and
expectations.
● Include technical drawings, project timelines, and any specific criteria for evaluation.
Advertisement:
Click to Edit ● Advertise the tender in relevant channels to attract potential bidders.
● Ensure wide visibility to encourage competitive bids.
Site Visit and Pre-Bid Meeting:
● Arrange a site visit for potential bidders to understand the project context.
● Conduct a pre-bid meeting to clarify any queries and provide additional project information.
Bid Submission:
● Bidders prepare and submit their proposals within the specified deadline.
● Ensure all necessary documentation and qualifications are included.
 Step-by-Step Procedure of Tender Process:
Bid Opening:
● Open bids publicly to maintain transparency.
● Record and document all bids received.
Bid Evaluation:
● Evaluate bids based on predefined criteria, considering factors such as expertise, cost, and
timeline.
● May involve a committee or external evaluators.
Selection of Winning Bid:
● Select the bid that best meets project requirements and evaluation criteria.
● Notify the winning bidder and initiate further contractual discussions.
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Contract Negotiation:
● Negotiate contract terms, including scope, timelines, and payment schedules.
● Ensure legal and regulatory compliance.
Award of Contract:
● Once negotiations are successful, formally award the contract to the selected bidder.
● Issue a formal acceptance letter or contract agreement.
Project Commencement:
● Begin the project as per the agreed-upon terms and conditions.
● Monitor progress and ensure adherence to the contract.
 1. Tender Notices:

● Definition: Tender notices are formal announcements or invitations published by a procuring

entity, typically in newspapers, online platforms, or official government gazettes, to invite
qualified bidders to submit their offers for a specific project or service.
● Content: Tender notices include essential information such as the project description, scope of
work, eligibility criteria, submission deadlines, and contact details for obtaining the tender
documents.

Tender Document include:

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 Tender Document include:

The documents includes:

1. Instruction to Contractor: A label which is fixed to the tender which usually states that the
documents shall be opened at specific time and date. At times, These documents are provided to
the contractor on the payment of certain fees.
2. General Conditions & Preliminaries
• Pre construction information
• Site waste management plan
• Description of a project that allows the contractor to assess costs which, whilst they do not form
a part of any of the package of works required by the contract, are required by the method and
circumstances of the works.
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• Bill of quantities (BOQ),
• Specifications describing the products, materials and work required of the works to be carried
out,
• Time Frame for the completion of the work,
• Conditions of the contract and
3. A letter of offer to tender
4. The form of tender - a formal acknowledgement that the tenderer understands and accepts the
terms and conditions of the tender documents and any other requirements that are stipulated.
5. Plans and Drawings if required.
 Methods of calling Tender
Open Tender Closed / Invited / Selective Tender Negotiated Tender:

1. Advantages: 1. Advantages: 1. Advantages:

a. Competitive Bidding: Open a. Quality Control: Allows for a. Flexibility: Allows for direct
tenders encourage a wide range prequalification of contractors, negotiations with a selected
of contractors to bid, fostering ensuring that only qualified contractor, providing
competition and potentially and experienced bidders flexibility in contract terms.
resulting in lower prices. participate. b. Fast Decision-Making:
b. Transparency: The process is b. Efficiency: Shortens the Streamlines the process,
transparent, and all interested evaluation process by making it quicker compared
parties can participate, promoting focusing on a limited number to open tenders.
fairness and openness. of qualified contractors. 2. Disadvantages:
2. Disadvantages: 2. Disadvantages: a. Lack of Transparency: The
a. Time-Consuming: The open a. Reduced Competition: Limits negotiated process may lack
tender process can be the number of bidders, transparency, leading to
time-consuming due to the need potentially reducing concerns about favoritism.
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Methods to evaluate numerous bids. competition. b. Limited Competition:
b. Potential for Unqualified Bidders: b. Subjectivity in Selection: The Involves negotiations with a
calling Tender It may attract bids from prequalification process may single contractor, reducing
contractors lacking the necessary introduce subjectivity in competitive dynamics.
qualifications or experience. selecting qualified bidders. 3. Suitability:
3. Suitability: 3. Suitability: a. Complex or Specialized
a. Large Projects: Open tenders are a. Complex Projects: Suited for Projects: Suitable for
well-suited for large projects projects with specific projects with unique
where a broad pool of contractors requirements and complexity requirements or
is desirable. where expertise is crucial. complexities.
b. Public Projects: Commonly used b. Time-Sensitive Projects: b. Ongoing Relationships:
in public projects to ensure Useful when time constraints When the client has an
fairness and transparency. necessitate a quicker bid ongoing relationship with a
evaluation process. specific contractor.
 2. Opening of Tenders:

● Procedure: The opening of tenders is a public process where the submitted bids are
opened and read aloud. This is usually done on a specified date and time.
● Public Access: The tender opening process is often open to the public, ensuring
transparency and accountability.
● Recording: Details of the bids, including names of bidders and bid amounts, are
recorded during the opening process.

Click to Edit 3. Scrutiny of Tenders:

● Evaluation Criteria: The scrutiny involves a detailed examination of the submitted

tenders against predetermined evaluation criteria.
● Qualification Assessment: Bidders' qualifications, experience, financial capability, and
adherence to submission requirements are assessed.
● Technical and Financial Evaluation: Separate evaluations are often conducted for
technical and financial aspects of the bids.
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 4. Process of Selection:

● Shortlisting: Based on the scrutiny, a shortlist of qualified bidders is created. This may
involve prequalification or a detailed assessment of the submitted bids.
● Selection Criteria: The final selection is based on various factors, including the
competitiveness of the bid, the bidder's experience, and their ability to meet project
requirements.
● Approval: The selected bidder is usually subject to approval by relevant authorities or
decision-makers within the procuring entity.

5. Award Process:
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● Notification: The successful bidder is formally notified of the award decision. Unsuccessful
bidders are also notified.
● Contract Negotiation: After the award, negotiations may take place to finalize contract
terms, including scope, timelines, and payment terms.
● Contract Signing: Once negotiations are complete, the contract is signed between the
procuring entity and the successful bidder.
● Performance Bond: In many cases, the successful bidder is required to provide a
performance bond or security deposit.
 TENDERS BASED ON ECONOMIC CLASSIFICATION

1. Tenders based on measurement (item rate and % rate)

2. Lump sum tenders
3. Cost plus fee tenders
4. Turnkey tenders
5. Tenders based on Build-own-operate and transfer (BOOT) concept.
6. Tenders based on Labour component and miscellaneous material required for the work.
1. Fixed price tenders without provision for escalation: Major risk is borne by the contractor.
2. Fixed price tenders with provision for escalation: Risk is limited
to difference in market rates and factors considered in escalation
formulae.
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(i) Tenders based on measurement (item rate and % rate):
The tender form contains all items of work included in bill of quantities excluding lump sum items and
those items which are to be executed through another agency. In percentage rate tender, the owner
gives both rates and quantities and amount. The contractor quotes % above or at par or % below the
estimated cost.
(ii) Lump sum tenders: The tenderer quotes a fixed price. However if the quote is varied, it involves
contractual problems and methodology to arrive at the rates for addition, deletion and alterations
would be necessary and it is to be built in tender document. This is to facilitate
release of interim and final payments.
 TENDERS BASED ON ECONOMIC CLASSIFICATION
(iii) Cost plus fee tenders: Cost + (%) of total cost with or without a ceiling cost + fixed fee Cost +
incentive fee
(iv) Tenders based on Turnkey concept: In this type of contract, Contractor takes full responsibility for
design, construction, commissioning of the facilities. The scope of the facility is described in detail and a
fixed lump sum price is paid to the contractor. There may or may not be a provision for escalation.
(v) Tenders based on Build-Own-Operate and Transfer (BOOT) concept: It is adopted for
infrastructure projects (highways, bridges, airports, water supply and sewerage projects) Private sector
is involved in these projects. Entrepreneur invests, builds, and maintains these structures. He collects
toll for a specific period based on approved tariff.
(vi) Tenders based on Design-Finance-Build-Own-Operate and Transfer (DFBOOT) concept: This
is a concession contract. The project is based on the granting of a concession by the principal, usually a
Click to Edit Government to a entrepreneur (known . as the concessionaire) who is responsible for design, financing,
construction, operating and maintaining the facility over a period of concession before finally transferring
the facilities at no cost to the principal, as a fully
operational facility.
(vii) Tenders based on Labour component and miscellaneous material required for the work: In
this type of work, the owner supplies all the materials and the contractor provides only the labour
component, i.e. not just labour but also all the required plant and machinery required for construction
work. He is responsible for execution of work. Payments are restricted to labour charges only. This
contract at the tender stage can be based on square meter/cubic meter of
construction for the entire work. It is suitable for all types of buildings, extension work, alterations and
repair of works.
 TENDERS BASED ON ECONOMIC CLASSIFICATION

(viii) Other works: Piece work or days work cannot be strictly classified as tenders. They do
not involve security deposit or penalty as they do not involve Large sums of money.
(ix) Day work: This method of execution is good for small works, which cannot be measured or
valued, (e.g. decorative work, craftwork, artwork, etc.). Payment for the same shall be decided
on the basis of site observation plus reasonable profit.
(xi) Consultancy Selection: Choose consultants based on professional capacity, experience,
and advertise with a two-cover system. Consultant cost is minimal compared to the project
cost; consider past performance, professionalism, personnel strength, and attitude.
(xii) Proof Consultants: Engage for specific periods and circumstances, avoid focusing solely
Click to Edit on the least cost option, and encourage collaboration between main and proof consultants.
Selection Criteria:
Quality-Based Selection (QBS): For highly specialized assignments.
Best Expert Advice: Applicable for major projects like dams.
Fixed Budget (FBS): Simple, precisely defined assignments.
Least Cost Selection (LCS): Routine or standard nature assignments.
Consultant's Qualification (CQS): Small assignments where competitive evaluation is not
justified.
 PREREQUISITES FOR TENDERING

(A) For client

1. Availability of clear site free from physical obstacles (standing crops, old structure, service
line hidden and trees) and legal obstacles (want of clear title, lease land, mortgage issues, etc.)
or site will be made available in parts (time frame should also be mentioned).
2. Funds are available to make payments for mobilization, secured . advance advance payment
fo( work done and not measured and to pay running bills to procure agreemented materials if
any.
3. All Architectural and structural working drawings including foundation structural drawings.
4. Statutory clearances to commence the work (approval from local body, environmental, fire
authority, lift controller, airport clearance if required.
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5. Free accessibility to site for inspection.
(B) For contractor
L Site visit for familiarization
2. Market survey for materials, labour and machinery
3. Seed capital to commence the work
4. Funds to pay upfront Performance guarantee (about 5% of tendered value)
5. Resource mobilization. (Men-Materials-Money-Machinery
6. If Client will not supply any material then it is to be arranged by the contractor. It is necessary
to identify sub-contractors and vendors.
 Architects role of Tender Process

1. It is the Client who calls tenders, not the Architect, consequently it is the Client’s prerogative to
state the terms and conditions of the tender.
2. The Architect’s roles is to:
a) Prepare the tender documents
b) Distribute them to the respondents
c) Manage the process which includes the confidential closing of tenders at the specified date and time and
to provide a recommendation on which tender is most suitable.
d) The tender should be opened in the presence of owner or member with the architect. If the owner doesn’t

Click to Edit not remain present, the tenders should be opened by the architect himself. The practice of receiving and
opening of the tenders by the clients should be discouraged.
e) Once selected, it is generally the architect’s role to scrutinize the tender and advise the preferred
tenderer, in writing, of the Client’s acceptance and to prepare the formal contracts between Client and
builder.
f) The lowest tender should as far as possible be accepted depending upon the Contractor’s financial
stability, Intelligence, capacity to organize, credit in market, previous works executed, works at present in
hand, general behavior and temperament.
 Issues Arising out of Tendering Process:

● Bid rigging or collusion.

● Misinterpretation of tender documents.
● Unforeseen circumstances affecting bid validity.

Role of an Architect in Addressing Issues:

1) Ensuring clarity in tender documents -

● Architects must draft clear, precise, and unambiguous tender documents.
● Clearly define project specifications, requirements, and expectations.
● Include detailed instructions for bidders to minimize the risk of misinterpretation.
Click to Edit 2) Monitoring the tender process for fairness and transparency
● Architects should oversee the entire tendering process to ensure fairness and transparency.
● Regularly review the bidding process to identify and rectify any irregularities.
● Establish and enforce procedures that promote an open and competitive environment.
3) Providing expert advice on technical aspects
● Architects play a crucial role in assessing the technical aspects of bids.
● Provide expert input during bid evaluation, focusing on the feasibility and compliance with
project requirements.
● Offer guidance on the technical capabilities of bidders, helping in the selection of the most
qualified contractor.
 Short notes :
Earnest Money Deposit (EMD):
● Definition: Earnest Money Deposit is a monetary sum deposited by a bidder as a sign of
their commitment and serious intent to participate in a tender or bid process.
● In short EMD is a security to ensure bidders' seriousness.
● Purpose: It helps filter out non-serious bidders and ensures that participants have a genuine
interest in the project.
● Refund/Forfeiture: EMD is either refunded upon unsuccessful bidding or forfeited if the
successful bidder fails to fulfill contractual obligations.

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Security Deposit:
● Definition: A Security Deposit is a sum of money retained by the client or employer from the
contractor as a guarantee against any potential default or non-performance.
● In short security deposit is a percentage of contract value held to cover defaults.
● Purpose: It provides financial security to the client and can be used to cover costs in case of
the contractor's failure to meet contractual obligations.
● Refund: The security deposit is typically refunded to the contractor upon successful
completion of the contract.
 Short notes :
Retention Amount:
● Definition: Retention is a percentage of each payment made to the contractor that is
withheld by the client until the completion of the project.
● In short Retention amount is a Part of payment withheld until project completion.
● Purpose: It ensures that the contractor addresses any defects or issues that may arise
during the defects liability period.
● Release: The retention amount is released to the contractor after the defects liability period,
provided that all contractual obligations are met.

Click to Edit Mobilization Amount:

● Definition: The Mobilization Amount is an upfront payment to the contractor to cover initial
mobilization costs, such as setting up the construction site and acquiring necessary
resources.
● In short mobilization amount is provided to the contractor for project setup.
● Purpose: It helps the contractor commence work without financial strain during the early
stages of the project.
● Adjustment: The mobilization amount is often adjusted against subsequent payments to the
contractor.
 Short notes :

Bonus & Penalty Clauses:

● Bonus Clause: A bonus clause provides an incentive for the contractor to complete the
project ahead of schedule or meet specific performance criteria. The contractor receives a
bonus or additional payment for achieving the stated goals.
● In short bonus and penalty clauses are Incentives for early completion or penalties for
delays.
● Penalty Clause: A penalty clause imposes financial penalties on the contractor for delays,
subpar performance, or failure to meet contractual requirements. Penalties are deducted
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from payments or may result in other specified consequences.
 CONTRACT
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 General Principles of Contract
Here are some general principles that apply to contracts in architecture:

1. Offer and Acceptance:

a. Offer: One party, typically the architect or client, presents a proposal or offer outlining the
terms and conditions of the contract.
b. Acceptance: The other party, often the client or contractor, agrees to the terms presented
in the offer.
2. Intention to Create Legal Relations: Both parties must have the intention to be legally
bound by the contract. In professional practice, the contract outlines the legal obligations of
the architect, client, and any other involved parties.
3. Consideration: Consideration refers to something of value exchanged between the parties.
Click to Edit In architecture, this often involves the payment for services rendered, and the consideration
may also include the promises and obligations outlined in the contract.
4. Legal Capacity: The parties entering the contract must have the legal capacity to do so. For
example, they must be of sound mind and not under duress.
5. Legality of Purpose: The purpose of the contract must be legal. In architecture, this means
that the services agreed upon in the contract must comply with relevant laws, regulations,
and ethical standards.
6. Certainty and Possibility of Performance: The terms of the contract must be clear and
specific, and it should be possible to perform the obligations outlined in the contract. Vague or
ambiguous terms can lead to misunderstandings and disputes.
 General Principles of Contract
7. Mutual Consent: Both parties must freely agree to the terms of the contract without any
coercion or undue influence.

8. Performance of the Contract: The parties are obligated to fulfill their respective
responsibilities as outlined in the contract. In architecture, this involves the architect providing the
agreed-upon services, and the client making the required payments.

9. Termination and Breach: The contract should outline conditions under which it can be
terminated and the consequences of a breach. Termination might occur due to mutual
agreement, completion of services, or a breach of contract terms.

10. Communication and Documentation: Effective communication and documentation are

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essential throughout the contract. Both parties should keep records of discussions, changes, and
any modifications to the original contract terms.

11. Dispute Resolution: The contract may include mechanisms for resolving disputes, such as
mediation, arbitration, or litigation. Defining these processes in the contract helps in case
disagreements arise.

12. Insurance and Liability: Contracts often include provisions related to liability and insurance
coverage. Architects may be required to have professional liability insurance to cover potential
errors or omissions.
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 TECHNICAL TERMS

(i) Arbitration agreement: A written agreement to submit present or future differences to

arbitration.
(ii) 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.
(iii) Bank guarantee: A contract to perform the promise or to discharge the liability of a third
person in case of default.
(iv) Cartel: It is a combination of contractors to keep up prices and to kill the competition in
tendering process.
(v) Clerk of works: A person approved by the architect and appointed and paid by the owner to
act under the orders of the architect to inspect the works in the absence of the architect. He has
Click to Edit no authority to order variations. He has power to issue notice to the contractor for non-approval
of any material or work.
(vi) Consideration: In addition to meeting of minds, it should include an element of obligation.
(vii) Contingencies: Allowance made to cover unforeseen errors and omissions.
(viii) Damages: Monetary compensation for injury (loss) suffereg.
(ix) Day work: Work which under the terms of contract to be paid for time and materials
consumed and not by measurements.
(x) Defendant: The person defending or denying/respondent/accused the person against whom
recovery is sought.
 TECHNICAL TERMS

(xi) Deviation: Increase or decrease with respect to contract, plan, and estimate.
(xii) DPR: Detailed Project Report
(xiii) Escalation: Escalation is Compensation for price rise, or allocation for the risk of price rise.
(xiv) Extra item: Any item of work not included in schedule of quantities forming part of the
agreement.
(xv) Force majuere: An unexpected event. An irresistible and superior force.
(xvi) Frustration of contract: Duty to perform a promise made in the contract is discharged.
(xvii) Latent defects: Latent defects are those which could only have been identified after the
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issue of the final certificate. For latent defects of materials, other than those due to faulty
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, the contractor is not liable to the owner,
but the Architect is liable to his client, if it can be proved that there was negligence or
incompetence on the Architect's part.
(xviii) Lien: Legal right to hold other's property until debt on it is paid.
(xix) Negotiation: A process of amicable settlement of an issue in the spirit of give and take.
 TECHNICAL TERMS

(xx) Patent defects: Patent defects are those which should have identified before the issue of
final certificate. The Architect is liable to his client for patent defects which he should have
noticed in the course of 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.
(xxi) Prime cost: If the specifications for any item or material or fixtures 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. (vide Clause 26 & 27
of IIA contract form)
Click to Edit (xx.ii) Promisee: A person accepting the proposal.
(xx.iii) Promisor: A person making the proposal.
(xx.iv) Quantum meruit: As much as one deserves. It is paid for the work done or services
rendered when the price thereof is not cost fixed by the contract.
(xxv) Surety: One who promises for the debt, default, or miscarriage of another.
(xxvi) Variations: Alterations, or modifications, of designs, quality, quantity, or specification of
work shown in the contract.
(xxvii) Work order: It is written order issued by the owner or his authorized architect or
engineer to the contractor, intimating him that his contract has been accepted for
commencement of the work.
 Types of Contracts
Classification of Building Contracts may be considered for proper modes of execution of
the building works.

Broadly speaking there are two classifications of contract which are popular with
the architects/engineers namely:
i. Lump-sum contract
ii. Item rate contract

Other classes of the contract

i. Cost plus percentage or cost plus fee contract.
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ii. Cost plus fixed fee with or without bonus and penalty.
iii. Labour contract.
iv. Demolition work contract.
v. Turnkey contract

Method of execution of the work

• Day work: Refer clause 30(4)(c) of I.I.A. form of Contract.
• Piece work
• Daily labour.
 Types of Contracts
Lump sum contract

● It is an agreement creating an obligation on the contractor to complete the work as

shown on the drawings and described by the specification and special
conditions/specifications if any, subject to incidental variations, supplying all materials,
labour and other implements necessary for a lump-sum or at unit rate per sq.m of
plinth area.
● The above explanation of lump-sum contract creates two sub-classes of contract
namely :
Click to Edit 1. Lump-sum contract or fixed sum contract.
2. Area based contract.
● Lump sum amount is subject to adjustments and payable by the owner as a reciprocal
obligation either in one payment or by installments as may have agreed.
● Involves a total fixed price for all construction related activities.
● Can include incentives or benefits for early termination, or can also have penalties,
called liquidated damages, for a late termination.
● Preferred when a clear scope and a defined schedule has been reviewed and agreed
upon.
 Types of Contracts
Lump sum contract

Advantages
1. Low risk on the owner, Higher risk to the contractor
2. Cost known at outset
3. Contractor will assign best personnel
4. Contractor selection is easy.
Disadvantages
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1. Changes are difficult and costly.
2. Contractor is free to use the lowest cost of material equipment, methods.
3. The contractor carries much of the risks. The tendered price may include high risk
contingency.
4. Competent contractors may decide not to bid to avoid a high-risk lump sum contract.
 Types of Contracts
Item Rate Contract
● The item rate contract is most commonly used for all types of engineering works of the
government undertakings including railway department.
● It is suitable for works which can be distinctly split into various items and quantities
under each item can be estimated accurately. Item rate contract is also known as unit
price contract or schedule contract
● A contractor undertakes the execution of working an item rate basis. He is required to quote
rate for individual item of work on the basis of schedule of quantities (i.e., bill of quantities)
furnished by the department.
Click to Edit ● The amount to be received by the contractor, depends upon the quantities of work actually
performed.
● The payment to the contractor is made on the basis of the detailed measurements of
different items of work actually executed by him.
● This contract deals in measurement of each item of the work as given in the bill of
quantities and sum to be paid is arrived at based on the rates quoted against each item. In
the bill of quantities all the items are described in detail along with the quantities.
● Here the rates are the part of the contract and the quantities can carry the prefix
“approximate”, do not form part of the contract in as much as variations in the quantities will
not vitiate the contract.
 Types of Contracts
Item Rate Contract
Merits
• This method ensures a very detailed analysis of cost and payment to the contractor and also is
based upon detailed measurements of each item actually done, so this method is more scientific.
• Changes in drawings and quantities of individual item can be made as per requirements within agreed
limits.
• There is no urgency of providing detailed drawings at the time of awarding the contract. It can be
prepared later on.
• A contractor is asked to write down the rate of individual item in figures and words both so it is not
easy to form a cartel during the submission of tender.
• An engineer can compare the rates quoted by the contractor with that of schedule of rates prepared
Click to Edit by the departments to find out whether the tender is unbalanced.
Demerits
• As by wise anticipation or perhaps outside information, a contractor may quote high for items that are
likely to be increased and low rate for items likely to be decreased, making an unbalanced tender.
• Comparative statement of item rate tenders are more elaborate and comprehensive and intelligent
scrutiny is required.
• A contractor may quote some items in words intentionally in order to tamper in rates.
• The total cost of work can only be known after completion. As such the owner may face financial
difficulty if the final cost is substantially high.
• The scope of saving with use of inferior quality may prompt the contractor to do so.
 Types of Contracts
Cost Plus Percentage or Cost-Plus Fee Contract
● This contract requires the contractor to provide materials, labor, and tools for the work, with the owner
reimbursing the cost plus a specified profit percentage.
● Despite potential issues like fictitious bills and arguments about pilferage, the key concern may arise from
ambiguity regarding whether the specified percentage covers only profit or includes overhead charges.
● This ambiguity becomes relevant when considering factors like the nature of work, site conditions, contractor
status, establishment charges, office expenses, and potential disputes over wasteful expenditure.

Fixed Fee Contract

● A Fixed Fee Contract is a variation of the Cost Plus Percentage model.
● Here, the contractor receives a fixed fee regardless of labor, materials, and other costs. It is crucial to clarify in
advance whether the fixed fee encompasses only profit or also includes overhead charges to prevent future
disputes.
Click to Edit ● Unlike a percentage-based arrangement, this contract involves a specified lump-sum amount, often paid in
installments.
● The fixed fee covers both overhead and profit for the contractor and remains constant, unlike the fluctuating
nature of cost plus percentage rate contracts.
● Merits:
1. The fixed fee covering overhead charges and profit incentivizes the contractor to complete the work promptly,
benefiting the owner with early project completion.
● Demerits:
1. Quality of work may be compromised as the contractor prioritizes speedy completion.
2. Intensive supervision, including checking delivery notes and invoices, is required, making it unsuitable for
projects lacking necessary staff.
3. Project costs may rise due to the purchase of materials at higher prices and the engagement of expensive
labor in an effort to expedite project completion.
 Types of Contracts
Labour contract
● In labour contract, the contractor undertakes contract for the labour portion only excluding the materials which
are arranged at the work site by the department/owner.
● The contractor engages the requisite labour and gets the work done as per drawings and specifications.
● It is an item rate basis for labour portion only and the contractor is paid for the quantities of work done on
measurements of different items of work at the stipulated rate in the contract agreement.
Merits
• The materials stored by the departments are thus utilized.
• The work done through labour contract is of superior quality as better-quality materials are arranged by the owner,
• The overall cost of construction may be less, as no profit is paid on the cost of materials.
Click to Edit • This system is very convenient for private building construction.
Demerits
• The department will have to remain vigilant and watchful over the materials used, as the contractor may overlook
the material wastage involved.
• A large storage area is required to store the various kinds of materials to be used in the construction under a
constant guarding arrangement.
• This system is not suitable for government department.
• Because due to lengthy formalities in procurement of materials, it is very difficult to supply each material readily to
the labour contractor.
 Types of Contracts
Turnkey Contract:
● In a turnkey contract, the contractor takes full responsibility for design, construction and
commissioning of the facility of defined scope for a fixed lump sum price. This is an area of high
risk for the contractor.
● The contractor has to bear the normal risk of unforeseen site conditions, poor weather and
foundation problems.
● For turnkey contractor, time is truly equal to money and schedule slippage may adversely affect
his profitability particularly in cases where there is no provision for escalation.
● A bonus or penalty clause may be included as an incentive ·or disincentive to the contractor to
complete the work on time.
● This type of contract is suitable for projects where all the functional parameters are finalized and
Click to Edit changes and extras are not made later. Such type of contracts are seen more in commercial,
defence and interior projects of multi-disciplinary character and when timely completion is
important.
● In this type of contract, Contractor takes full responsibility for design, construction,
commissioning of the facilities. The scope of the facility is described in detail and a fixed lump
sum price is paid to the contractor.
● The number of responsibility centres is reduced to only one.
● It eliminates coordination problem.
● Suitable for scheduling critical commercial and defence projects of multi-disciplinary character.
 Overview of Contract Management:
● Definition: Contract management involves the administration and oversight of contracts to
ensure that all parties fulfill their obligations and that the terms of the contract are adhered
to.
● Importance: Proper contract management is crucial for the successful execution of
construction projects, as it helps mitigate risks, ensures clarity in responsibilities, and
facilitates effective communication among stakeholders.

OBJECTIVE OF CONTRACT MANAGEMENT

● The primary objective of contract

Click to Edit management is completion of work

entrusted to the construction agency
with least complications (ideally
without any complication) within
specified time, within specified
(approved cost) and conforming to
specified quality without loss of
harmony among key participants.
 Architect's Role in Contract Management:
● Preparation of Contract Documents: Architects play a key role in preparing contract
documents, including drawings, specifications, and terms and conditions. These documents
serve as the basis for the contractual relationship between the parties involved.
● Communication and Coordination: Architects act as intermediaries between the client and
the contractor, facilitating effective communication and coordination throughout the project.
● Quality Assurance: Architects are responsible for ensuring that the construction work aligns
with the approved plans and specifications, maintaining the desired quality standards.
● Problem Resolution: In the event of disputes or unforeseen issues, architects play a role in
facilitating resolution discussions and may be involved in dispute resolution mechanisms
outlined in the contract.

Click to Edit Conditions and Scope of Contract:

● Conditions of Contract: These are the specific terms and clauses that define the rights,
responsibilities, and obligations of each party involved in the contract. Conditions address
various aspects, including payment terms, project timeline, and dispute resolution
mechanisms.
● Scope of Work: The scope of work outlines the specific tasks and responsibilities of each
party. For architects, this includes the design, oversight, and quality control aspects of the
construction project.
● Performance Standards: Contracts often specify performance standards that the contractor
must meet. Architects ensure that these standards are maintained throughout the project.
 Architect's Role in Ensuring Completion of Contract:

● Project Oversight: Architects are responsible for regularly monitoring the construction
progress to ensure that it aligns with the project schedule and meets the specified
quality standards.
● Documentation: Architects maintain thorough documentation of the construction
process, including any changes, deviations, or issues that may arise. Proper
documentation is crucial for dispute resolution and accountability.
● Inspections and Approvals: Architects conduct site inspections to verify that the work
meets the approved plans. They provide approvals at key milestones, allowing the
Click to Edit project to proceed in accordance with the contract.
● Project Closeout: Architects contribute to the successful closeout of the project by
ensuring that all contractual obligations are met, conducting final inspections, and
facilitating the handover of the completed project to the client.

In conclusion, the architect's role in contract management is multifaceted, encompassing

responsibilities from contract preparation to project completion. Architects serve as crucial
facilitators in maintaining effective communication, ensuring adherence to contractual
conditions, and upholding the quality and integrity of the construction project in the Indian
professional practice context.
 Issues arising in Contract:
i) Termination of Contract:

● Termination for Convenience: Allows a party to terminate the contract without specifying any
particular reason.
● Termination for Cause: Occurs due to a specific breach or violation of terms by one of the
parties.
● Mutual Termination: Both parties agree to end the contract by mutual consent.
● Termination Clauses: Specific conditions and procedures for termination are usually outlined in
the contract.

ii) Certificates of Value and Quality:

Click to Edit ● Quality Certification: Ensures that the delivered goods or services meet the specified quality
standards.
● Value Certification: Certifies the monetary value of work done or goods supplied as per the
contract.

iii) Virtual Completion and Final Completion:

● Virtual Completion: Refers to the completion of a substantial part of the work, often allowing
partial handover.
● Final Completion: The formal completion of the entire project, meeting all requirements and
standards.
 Issues arising in Contract:
iv) Defects Liability Period:

● Post-Completion Period: The duration during which the contractor is responsible for rectifying
defects at their own cost.
● Defects Identification: Any issues arising during this period are typically rectified by the contractor.

v) Latent and Patent Defects:

● Latent Defects: Defects that are not apparent or visible during normal inspection.
● Patent Defects: Obvious defects that can be identified through ordinary inspection.

vi) Liquidated and Un-liquidated Damages:

Click to Edit
● Liquidated Damages: Predetermined damages specified in the contract for particular breaches to
avoid lengthy legal procedures.
● Un-liquidated Damages: Damages not predetermined; their amount is decided by a court or
arbitrator in case of a breach.

vii) Extension of Time, Delays, and Penalty:

● Extension of Time: Additional time granted due to unforeseen delays, often outlined in the
contract.
● Delays and Penalty: Penalties imposed for delays in completion beyond the agreed-upon
timeline.
 Issues arising in Contract:

viii) Non-Tendered Items, Extras, Extra Work, Additional Works, Variations,

Rate Analysis, and Architect’s Role in Certification of Variations:

● Non-Tendered Items: Items not included in the original tender but required during the
project.
● Extras/Extra Work: Additional work not initially specified in the contract.
● Variations: Changes to the original contract scope, often requiring adjustments in cost and
time.
● Rate Analysis: Evaluation of rates for additional work or variations.
Click to Edit ● Architect’s Role: Certifying variations, ensuring compliance with design, and facilitating
communication between parties.

ix) Prime Cost and Provisional Sum:

● Prime Cost: Includes the cost of materials, labor, and other direct expenses for items not
yet determined at the time of contract.
● Provisional Sum: An estimated amount set aside in the contract for specific items of work
with uncertain costs.
 Supervision and Contract Administration:
1. Site Visits:
● Frequency: Regular visits to monitor construction progress, quality, and adherence to plans.
● Purpose: Identify and address issues, ensure compliance with specifications, and maintain
project alignment with the design.

2. Site Meetings:
● Regular Meetings: Facilitate communication between stakeholders.
● Agenda: Discuss project progress, resolve issues, and coordinate future activities.

3. Coordination with Various Agencies:

● Government Authorities: Ensure compliance with building codes and regulations.
Click to Edit
● Utility Providers: Coordinate for services like water, electricity, etc.

4. Site Book:
● Documentation: Maintains records of site activities, instructions, and changes.
● Communication: An essential tool for tracking the project's history and decisions made.

5. Site Instructions:
● Formal Communication: Written directives issued by the architect to the contractor during
construction.
● Clarifications: Used to provide additional information or modify aspects of the construction.
 Supervision and Contract Administration:

6. Clerk of Works and Site Office:

● Clerk of Works: Represents the architect on-site, monitors quality, and ensures compliance
with specifications.
● Site Office: Essential for administrative tasks, document storage, and coordination.

7. Bill Checking:
● Verification: Ensures that the contractor's payment requests align with the work completed.
● Accuracy: Crucial for maintaining budgetary control and preventing disputes.

8. Quality Auditing:
Click to Edit
● Quality Control: Regular checks to ensure that the construction meets specified standards.
● Documentation: Records instances of non-compliance and corrective actions taken.

9. Handover Procedures and Final Certification:

● Inspection: Thorough examination of completed work.
● Punch List: Identifies outstanding issues to be addressed before formal handover.
● Final Certification: Official confirmation of completion and compliance.
 Supervision and Contract Administration:

Disputes in Contract and Architect’s Role in Resolving Disputes:

1. Identifying Disputes:
● Communication Breakdown: Often arises due to misunderstandings or
misinterpretations.
● Breach of Contract: When one party fails to meet contractual obligations.

2. Architect’s Role:
Click to Edit ● Mediation: Facilitate discussions between parties to reach a mutually agreeable
solution.
● Documentation: Provide evidence and documentation to support or refute claims.
● Expert Opinion: Offer professional judgment on technical matters.
 Supervision and Contract Administration:
Case studies from practice highlighting disputes in contract and methods
adopted to solve disputes

1.Intellectual Property Contract Dispute: An intellectual property contract dispute can arise
when one party violates the terms of the contract related to the use of intellectual property. In one
case, a company sued a former employee for violating a non-compete clause in their contract by
using the company's proprietary information to start a competing business. The case went to
court, where the parties presented their arguments. Ultimately, the court ruled in favor of the
company and issued an injunction to prevent the former employee from using the proprietary
information.
2.Real Estate Contract Dispute: A real estate contract dispute may arise when one party fails to
Click to Edit fulfill their obligations related to the sale or purchase of property. In one case, a buyer sued a
seller for breach of contract, claiming that the seller failed to disclose known defects in the
property. The case went to mediation, where the parties discussed their concerns and reached a
settlement. The seller agreed to make repairs to the property, and the buyer agreed to pay the
agreed purchase price.
3.Distribution Contract Dispute: A distribution contract dispute can arise when one party fails to
fulfill their obligations related to the distribution of goods. In one case, a distributor sued a
manufacturer for breach of contract, claiming that the manufacturer failed to provide the agreed
quantity of goods. The case went to arbitration, where the arbitrator listened to both parties'
arguments and ultimately ruled in favor of the distributor, awarding them damages for lost profits.
 Supervision and Contract Administration:

Case studies from practice highlighting disputes in contract and methods

adopted to solve disputes

4.IT Contract Dispute: An IT contract dispute may arise when one party fails to deliver the
agreed IT services or the other party fails to pay the agreed amount. In one case, an IT service
provider sued a client for breach of contract, claiming that the client failed to pay for the
services provided. The case went to negotiation, where the parties discussed their concerns
and reached a settlement. The client agreed to pay the outstanding amount, and the IT service
provider agreed to provide additional support at no extra cost.
Click to Edit
5. Construction Contract Dispute: In 2017, a construction company was awarded a contract
to build a new office building for a government agency in New Delhi, India. The contract was
for a fixed price of INR 500 million and was to be completed within two years. However, due to
unforeseen site conditions, labor issues, and changes in the scope of work, the project was
delayed and the construction company requested an extension of time and additional payment.
The government agency refused to grant the extension of time and additional payment, citing
the terms of the contract. The construction company filed a claim for INR 150 million in
damages, alleging that the government agency was responsible for the delays and additional
costs.
 Supervision and Contract Administration:
Methods Adopted to Solve the Dispute:

a) Negotiation: Initially, the construction company and the government agency attempted to
resolve the dispute through negotiation. They held several meetings to discuss the issues and
explore possible solutions. However, they were unable to reach an agreement, and the dispute
escalated.
b) Mediation: In 2018, the construction company and the government agency agreed to
participate in mediation. A neutral mediator was appointed to help the parties reach a
settlement. The mediator listened to both parties' arguments and facilitated discussions
between them. Through mediation, the construction company and the government agency
Click to Edit were able to reach a settlement. The government agency agreed to grant a partial extension of
time and additional payment of INR 50 million, and the construction company agreed to
complete the project within the revised timeline.
c) Adjudication: Despite the settlement reached through mediation, the construction company
continued to pursue their claim for INR 100 million in damages. In 2019, the case went to
adjudication, which is a process in which a neutral third party makes a binding decision on the
dispute. An adjudicator was appointed, and after hearing both parties' arguments, the
adjudicator ruled in favor of the construction company, finding that the government agency was
responsible for the delays and additional costs. The adjudicator awarded the construction
company INR 75 million in damages.
 1. https://www.slideshare.net/gayathriselvasegar/architectur

e-professional-practice-81138327

Click to Edit 2. Book - Professional Practice by K. G. Krishnamurthy

3. https://sist.sathyabama.ac.in/sist_coursematerial/uploads

/SAR1504.pdf