CONTRACT

MANAGEMENT
SPEAKER:

A. K. GUPTA
EXECUTIVE ENGINEER (VIGILANCE)
MANDI HOUSE, NEW DELHI
CPWD CONTRACTS
 Clause 2 (compensation for delay)
 Fails to maintain progress

 Fails to complete work as per schedule

 Liable to pay agreed compensations

 Amount

 Compensation for delay:

@ 1.5% per month of delay to be computer on

per day basis
 Not more than 10% of tendered value
compensation for delay

 Amount of compensation may be adjusted or

set off against any some payable
 With holding amount if fails to achieve mile
stone. Withheld amount to be adjusted against
the compensation levied at the final grant of
extension
 If make up the progress subsequently,
withheld amount to be released
INCENTIVE FOR EARLY
COMPLETION
 Clause 2A
 Complete the work ahead of schedule
 Bonus @ 1% of tendered value per month
computed on daily basis payable to contractor
 Not more than 5 of tendered value
 Amount of bonus payable along with final bill
on completion of work.
DETERMINATION OF
CONTRACT (before completion
date)
 Clause -3
 Causes – delay
- inferior workmanship
- claims for damages
- violation of any other promise of contract
 Determination of contract – after giving notice:
i) Omit to comply with the notice given to contractor to rectify,
reinstruct or replace any defective work.
ii) Suspended the progress of work without any reasonable
cause and unable to secure completion of work and
continues even after notice.
iii) Fails to complete the work within stipulated date
Contd.
DETERMINATION OF
CONTRACT (before completion
date) contd.
iv) Persistently neglects to carry out his obligations
under the contract/commits default
v) Contractor offers or give or agree to give any
person any gift or inducement to favour him
vi) Commission has been paid or agreed to be paid
by him unless they are previously disclosed
vii) Secured contract by wrong tendering or by any
other non-bonafide methods
viii) Becomes insolvent /company woundup
ix) Asignes, transfers or sublets or attempts to do
so.
DETERMINATION OF
CONTRACT (before completion
date)
 Consequences
 To determine the contracts
 SD & PG liable to be forfeited
 Measure the work and get the balance work
executed through other contractor
 Liability of contractor
 SD & PG liable to be forfeited
 No claim for compensation
 Only certified work by the E-in-C is payable.
CLOSURE OF CONTRACT NOT
STARTED
 Clause 3A
 Work not started for reasons not with in the

control of contractor within

1/8 of time of completion or 1 month
whichever is more
 Either partly may close the contract PG of the

contractor to be returned
Works up to Rs. 45 lacs – 15 days
45 lacs and upt to Rs. 2.5 crore – 21 days
More than 2.5 crore – 30 days
CLOSURE OF CONTRACT NOT
STARTED
 Consequences:
 PG not returned, simple interest @ 0.25% per
month payable to contractor
 Compensation for damages @ 0.25% of
tendered amount & max upto Rs. 10 lacs
COMPENSATION
 Clause 4
 If powers under clause (3) not exercised
 E-in-C if he so desires after giving notice
 May use as on hire all tools, plants, materials,
stores belonging to the contractor on work & pay
to the contractor at contract rates/market rates
 Remove such tool plants materials etc. at the
contractor's expenses or sell them by auction or
private sale on account of the contractors
 certification of E-in-C as to expresses of proceeds
shall be final
PROGRESS MONITORING
 Clause – 5
 Time/extended time essence of contract

If failure to start govt. may be forfeit PG and EM

 Clause – 5.1

 Contractor to submit time and progress chart

and get approved.

 More than 5 crores use PM Software

 5 crores to 20 crores – MS projects

 More than 20 crores use Primevera software

PROGRESS MONITORING
 Clause 5.1
 Programme chart:
a) Sequence of activities
b) PERT/CPM/BAR Chart
c) Procurement of materials
 If progress is lacking, E-in-C may ask revised PC contractor
to submit within 7 days
 For delays recovery @ 2500/perday for contracts upto Rs. 20
crores
 Recovery @ 5000/perday for contracts above Rs. 20 crores
 Submit proper report monthly failure impose recovery of
2500/5000
EXTENSION OF TIME
 Clause 5.2
 Work delays by
i) Force majure/act of God
ii) Abnormally bad weather
iii) Fire
iv) Commotion
v) Delay attributable to government
vi) Beyond the control of contractor
 Contractor to give notice to Govt.
 Request for rescheduling and extension of time
 Govt. (authority) to give fair and reasonable extension of time
 Authority to take a balance view and delays attributable to both
parties should be mentioned in EOT
FORECLOSURE (Clause -13) (due
to abandonment or reduction in
scope of work)
 On reduction of scope of work E-in-C shall
give notice to contractor
 Contractor to act accordingly
 Contractor not entitled for compensation for
contractor’s profit
 He will be paid for work executed
FORECLOSURE (Clause -13) (due
to abandonment or reduction in
scope of work)
 He will be paid further:
a) On prepatary works 9nuts, roads)
b) Govt. will take over materials and cost shall be paid
c) Govt. materials will be taken back giving allowance for
wastage, paid for transportation
d) For T&P from site to permanent stores
e) Reasonable compensation for repatriation of staff
 Contractor to submit books of accounts and relevant
documents
 (a+b+c+d+e) not more than 2% of the work remain
incomplete
 Compensation for damages will be paid @ .5% of the work
remaining incomplete.
Carrying out part work at risk and
cost of contractor (clause – 14)
 Contractor makes defaulter doesn't execute any part
of work
 Continues to do so after notice
 Violates term and condition of contract
 Fails to complete/the work/part of the time with
stipulated period
 Gives notice to contractor to take the part work/part
incomplete work and of hands of contractor
 E-in-C have power to
 Take possession of site, materials, T&P
 Carryout part work/incomplete work at risk & cost of
contractor
Carrying out part work at risk and
cost of contractor (clause – 14)
 E-in-C will determine
 Recoverable amount from contractor
 Contractor liability on account of loss and damage
suffered by government not more than 10% of
tendered value
 If the expenses by government is less than the
amount payable to contract (@ agreement rates)
difference not payable.
 Excess expenditure to be recovered from contractor
 If contractor fails to pay within 30days, e-in-C shall sell
any or all the contractor’s material and T&P etc.
 Balance as per T/C of contract
 No compensation to contractor
SUSPENSION OF WORK (Clause-
15)
 E-in-C gives in writing to suspend work for reasons
a) Default of contracts
b) Reasons other than default of contractor
c)For safety of work
 Contractor shall protect the work during this period

 For b) and c) above

 Contractor entitled for extension of time for such period +25%

 If exceeds 30 days contractor entitled for wages of

staff/labour sitting idle
 + 2% indirect expenses

 Contractor to submit claim with in 15 days

SUSPENSION OF WORK (Clause-
15)
 If work is suspended for 90 days for reasons b)
and c) the contracts to give notice to government
within 10 days after expiry of 15 days
 Contractor if treats it as abandonment by Govt,
shall have no claim for compensation on account
of loss of profit.
 Contractor is entitled for:
a) Salaries and wages of employees/labours at site
remaining idle
b) +2% indirect charges.
Compensation for delay in supply
of Govt. materials (Clause 15 A)
 No compensation if delay is beyond the
control of Govt.
 Extension of time to be granted
DEFECT LIABILITY PERIOD
(Clause – 17)
 Defect liability period 6 month, less than work
Rs. 10 lacs
 Defect liability period 12 month, more than
work Rs. 10 lacs
 Liable for damages during defect liability
period
 All defects to be made good during the period
 If not firm the SD of the contractor
 For road work 50% of SD to be refunded after
six months
SETTLEMENT OF DISPUTES
(Clause – 25)
 Arbitration clause:
 All questions and disputes during the progress of work, after
cancellation, terminiation, completion/abandonment
 Any dispute, refer it to SE within 15 days, SE to reply within
30 days
 If SE fails or contractor is dissatisfied appeal to CE within 30
days, CE will hear the contractor. Give his decision within 30
days.
 If dissatisfied, appeal before the DRC (Dispute Redressal
committee). DRC will give decision within 90 days.
 Dissatisfied with the decision of DRC, either party may give
notice to CE(C) within 30 days for appointments of arbitrator
failing which decision shall be final/binding.
SETTLEMENT OF DISPUTES
(Clause – 25)
 CE(C) shall refer the matter to sole arbitrator
 Contractor to give list of disputes with amounts
claimed
 If the contractor does not request for
appointment of arbitrator after 120 days of
receiving intimation of final bills, the claims
becomes time barred.
 Arbitration and conciliation Act- 1996
applicable
 Where claim exceeds Rs. 1 lakh, arbitrator to
give reasons.
Thanks
E mail: akgupta07@nic.in