BAHIR DAR UNIVERSITY

BAHIRDAR INSTITUTE OF TECHENOLOGY

FACULITY OF CIVIL AND WATER RESOURCE ENGINEERING

Contract Administration, Specification and Quantity Survey

(Ceng3162)

Chapter 2 Construction Procurement

Nehassie 2014 E.C

 CONTENTS
2
2.1. Construction Procurement
2.1.1. Definitions
2.1.2. Guiding principles in public procurement
2.2. Procurement and Contract Management
2.2.1. Method of procurement
2.2.2.Types of tendering
2.3. Payment Security (Guaranty)
2.4.Tender document
2.5. Contract document and
2.6. Condition of contract
 2.1. 1. Definitions and Concepts
3

 Procurement: is the acquisition of goods, works or services at the

best possible total cost of owner ship (right price) in the right
quantity, right quality, at the right time and in the right place for
the direct benefit or use of the procurer.

 Public procurement: is the process of acquisition, usually by

means of a contractual arrangement after public competition of
goods, services, works, other supplies.

 How these 5R’s can be achieved?

 2.1.2. Guiding Principles In Public Procurement
Proclamation (649/2009) Directive (June 2010)
4
Ensure Value for money in the use of public fund Achieve maximum value for money in
for procurement. procurement. i.e. insure economy, efficiency &
effectiveness
Non discrimination among candidates on ground No candidate shall be discriminated or excluded
of nationality or any other criteria not having to do from participating in public procurement on the
with their qualification, except in cases of ground of nationality or other reasons which are
preference specifically provided for in this not related to the evaluation criteria. Except in
proclamation accordance with the rule of preference provided
Transparency and fairness of the criteria on the Any criteria applied in making procurement
bases of which decisions are given in public decisions and decisions taken on each
procurement as well as of decisions in each procurement must be made transparent to all
procurement. concerned parties.
Accountability for decisions made and measures Ensure accountability for decisions made and
taken with regard to public procurement and measures taken in the execution of public
property administration procurement.
Careful handling and proper use of public property Encourage local producers, companies and small
and micro enterprises which support the national
economy through the application of preferential
treatment.
 Guiding Principles In Public Procurement Cont…

5
Good public procurement are:

1.Value for money (economy, efficiency, and effectiveness);

 Value implies right quality, right quantity, right price, right time,
and right place.

2. Non discrimination (fairness);

3.Transparency; and

4. Accountability and Ethical Standards.

 2.2. Procurement and Contract Management
6  procurement and contract management has the following three
main phases
 2.2. Procurement and Contract Management…

7 2.2.1. Contract Planning

 Contract planning includes decisions on proposed Delivery Systems,
Procurement Methods and Contract Types to be followed and used
together with its provisions for alterations.

1. Procurement and Contract Delivery System

 Procurement and Contract Delivery system is the way Project

Owners together with Project Regulators and Financiers
determine the assignment of responsibilities to Project
Stakeholders along the Construction Process.

 Procurement and Contract Delivery system is often determined

during the Basic Planning phase of Construction Project.
 Procurement and Contract Delivery System….
8
 Generally, there are different types of Procurement and
Contract Delivery systems.These are:

 Force Account,

 Design Bid Build (DBB),

 Design Build (DB) or Turnkey,

 Build Operate Transfer System (BOT),

 Construction/Facility Management Consultancy

 Procurement and Contract Delivery System….
9 Force Account
 When the Project Owners engage themselves to undertake the project,
it is called a force account delivery system.
 Often such a system is promoted if the Project Owners believe that there
is a comparative advantage in Cost,Time and Quality issues.

 When there is a lack of capacity from the private sector to undertake

very large and technologically new projects, public companies do
undertake such projects using Force account delivery systems.

 When projects are unattractive to bidders.

 These days this type of delivery system is often used when projects are
small and places are remote.
 Procurement and Contract Delivery System….
10
Design Bid Build (DBB)

 Is the most practiced type of delivery system in the Ethiopian

Construction Industry – Since 1987.

Contractor
Consultant Built
Bid

Design
Client
 Procurement and Contract Delivery System….
11

Design Bid Build (DBB)

 Procurement and Contract Delivery System….
12  This traditional approach becomes less popular due to the
following factors:

 Severe Adversarial relations between the design and contract

administration consultant and the contractor
 Fragmented contract for the project owner

 Project owner responsibility for risks associated with the design and
contract administration

 Non - Impartiality of the Design and Contract Administration services

 The inability of design and contract administration consultants to

cope up with new construction technologies and constructability
issues of their designs
13 Procurement and Contract Delivery System….
 Procurement and Contract Delivery System….
14 Design Build (DB)

 Design-build contracts are exactly as what the name implies. One

contractor responsible for both the design and construction.

 Reduces fragmentation, adversarial relations and Project Owners’ risk.

However, there is loss of control & Higher cost of tender & risk.

 A design-build contract provides distinct advantages to the owner who

no longer needs to referee disagreements between the designer and the
contractor because they are working together under the same contract.

 This type of contracting is growing in popularity.

 Procurement and Contract Delivery System….

15 Design Build (DB)

 .
OWNER

DESIGN-BUILD FIRM

design
subcontractors construction
subcontractors
design
subconsultants
suppliers
 Procurement and Contract Delivery System….
16 Advantages of DB are as follow:
 Minimizing Project owners’ risk transferable due to Designers’ faults;
 Accountability and entire responsibility for both design and construction
which entitle the employer to receive completed project is onto a single
contractor;
 Employers’ responsibility to co-ordinate interfaces between different
project elements is avoided;
 Single point responsibility minimizes the opportunity to claims by the
contractor due to design related issues;
 Coordination between design and construction processes will also be
enhanced, and
 Procurement and Contract Delivery System….
17 Disadvantages of DB are as follow:

 Since limited supervisory role by the employer representative is

practiced; which is relatively flexible and makes the employer distanced
from the whole process, the employer has little chance to understand
what is developed and entertain variations in requirements implying
loss of control.
 Contractors in order to provide reasonable offer, their tender cost is
higher than in the case for DBB delivery system

 The increase in risk transferred onto the contractor will be counter

balanced by the increase in contract prices which can be taken to include
these costs of risks.
 Procurement and Contract Delivery System….

18 Design Build (DB)

 Procurement and Contract Delivery System….
19 Finance Build Operate Transfer (BOT)

 Design-build-operate contracts are not as common as DB. They may be

used for projects such as athletic arenas, water treatment plants, water
purification facilities, and toll highways.

 The principle is that the contractor will retain some percentage to

ownership in the facility, up to 100%, for a specified period of time, and
operate the facility of a profit during that time to recoup the capital
investment (total cost plus profit).

 The period of ownership by the contractor may vary from few years to
permanent. During the period of ownership, the contractor is
responsible for all costs of ownership, and all profits resulting from
ownership.
 Procurement and Contract Delivery System…. 20

 This delivery system is advantageous because of three major factors:

 It minimizes owners’ scarcity of financial resources;

 It avoids considerable risks from the project owners and lessen

regulatory activities; and

 The facility is well operated and transferred with free of charge or

minimum compensations to project owners.

 The increasing popularity of the BOT project is largely due to a

shortage of public funding and the opinion that the facility will be more
efficiently managed by a private entity.
 Procurement and Contract Delivery System….
21
Construction/ Facility/ Management Consultancy

 Construction Management Consultancy Delivery System is a response

to problems associated with DB and BOT where the Project Owner
was not well represented for its benefit and the problem of
fragmentation between Planning and Implementation.

 Construction management consultancy firm is used to coordinate all

activities from concept inception through acceptance of the facility.

 Facility management consultancy adds operation of facility during

operation to Construction Management Consultancy.
 Procurement and Contract Delivery System….
22
 Construction Management Consultancy service are particularly
attractive to organizations that involve in construction physical
infrastructures such as MoE, MoH, real estate organizations, etc.
 Construction Management Consultants then represent Project Owners
to carry out the following services:
 management and programming of design;
 cost forecasting and financial arrangements;
 preparation of tender documents; tender analysis
 selection of contractors;
 selection of methods of construction;
 planning and scheduling construction works;
 materials procurement and delivery
 Feasibility study of construction projects
 Procurement and Contract Delivery System….

23
Use of PCM approach, should be considered when there is a need for
time saving and flexibility for design changes, and the owner has
insufficient management resources
 It is more expensive, , it offers greater guarantee of performance and
the potential to avoid time overruns and to reduce the cost of claims.
 2.2. Procurement and Contract Management…

24 2. Procurement Method
 Procurement types can be classified based on the things to be
procured and the way how they are procured. There are five bases
for classifying procurement methods.These are:
Bases Things Bidders’ Geographic Procureme Procurement
Procured Coverage al nt Steps
Coverage Awareness
Goods Competitive International General Single
Types Regional Two Staged
Services Negotiated Specific
National Pre-Qualification
Works
Post-Qualification
Local
 Procurement Method cont..
25  Procurement based on things to be procured are as follows
in the following chart

Procurement

Work Service Good

NCB ICB NCB ICB NCB ICB

 Procurement Method cont..
26 Major construction procurements are:

A. Detailed Engineering design consultancy

Three contracts
service contract;

B. Supervision and contract administration

consultancy service contract;

C.Works (construction) contract.

 Procurement Method cont..
27 Works Procurement (National or
International)

Request for
Negotiated Competitive Direct
Quotation (RFQ)
(Both Tech. & Bid purchase
<250,000
Financial)

Restricted (Limited)
Financial only < Open (Unrestricted)
2,000,000 ETB

Single stage Two stage

Pre Post
(Qualification &
qualification qualification
competition
conducted together)
28 3. Contract type

Contract
Types

Priced based Cost based

Lump sum Unit price Cost Plus Target Cost

 2.2. 2. Procurement Management
29
Procurement Management process can be idealized into three major
processes. These include Preparation, Tendering, and Evaluation
(including Award Recommendation) Processes.

Procurement Tendering Tender

preparation evaluation

• Procurement • Invitation • Preliminary

Team • Clarification evaluation
• Tender • Submission and • Detail evaluation
document opening • Award
• Approval of recommendation
tender
document
 Procurement management…
30 1. Pre- Tendering Phase

A. Preparation of procurement plan

 During the planning phase, the tendering method is determined
based on the nature of the project and/or prevailing circumstance.

 The bidding methods can be open or limited bidding and each can be
either single stage or multi stage (two stage).

 Limited bidding can be invited to few suppliers or to large suppliers

(viz. grade 3 or above).
 Procurement management…
31 B. Preparation of Tender Document

 The tender preparation phase is meant for the formation of a

Procurement Team; the preparation of Tender Documents and their
approval for procurement implementations.

i. ProcurementTeam

 Ethiopian Procurement Regulation states that a procurement team

consisting of a minimum of five members shall be established.

 As Tender Evaluation is a joint technical and commercial exercise, the

project owner shall consider that the necessary experts shall be
composed in the procurement team.
 Procurement management…
32 ii. Preparation of tender documents

 Tender Documents are prepared to:

 Instruct bidders on the procedures for the preparation & submissions
of bids

 Inform prospective bidders about the nature of things to be procured,

 Inform bidders about the criteria for evaluation and selection of the
successful bidder, and

 Lay down the contract conditions, delivery system, procurement

methods and contract types of the project.
 Procurement management… 33

 Bid documents will vary between organizations but common elements of

tender documents include:

 Description of the goods, services or works to be procured;

 Evaluation criteria;

 Submission content and format (Submission form & standard forms);

 Process rules and information (ITB & BDS);

 Conditions of Contract (SCC & GCC).

 Procurement management… 34

iii. Approval of tender documents

 Includes the checking, renewal and approval of tender documents.

 Check list is usually used for tender document approval.
 Procurement management…
35
2.Tendering Phase

A. Bid Invitation/Advertisement

 The value, complexity and business category determine how tenders are
invited.

 If selective bidding, then directly invite tenders.

 If open or limited, advertise on media widely circulated or used.

 These commonly could be invitation to bid (ITB), request for proposal

(RFP), request for expression of interest (EOI) or request for Quotation
(RFQ).
 Procurement management…
36
 Announcement or a call of bidders to participate in the bid Contains a
short & brief description of the project and forward information to
bidders.

Contains as a minimum:

 The name and address of the Client;

 A brief description of the project ( type, size and location)

including desired time for completion;

 The means, conditions and place for obtaining the bid documents;

 The place and deadline for the submission and opening of bids.
37
 Procurement management… 38

Bid Floating Period

 Bids will be available for period of time stipulated on the invitation.

 Procuring entity should allow Bidders sufficient time for obtaining and
studying the Bid, preparing complete and responsive proposals and
submitting the proposals.
 Procurement management…
39 B: Clarification and addendum

 Clarifications can either be requested by interested bidder or

carried out using a pre - tender clarification meeting.

 In both cases, issues clarified shall be sent (written) to all

Bidders participating for the intended services or works.
 Procurement management…
40 C: Bid submission and Tender opening

 The bidders shall submit their offer on or before the submission date
and time.

 Late bids are automatically rejected.

 Bids shall be opened in public on the date, at the time and place
mentioned in the invitation to tender and stipulated in the tender
documents.

 Ethiopian practice (public): Two representatives from MoWUD, Project

Owner, Consultant (if available), and Contractors (Who wish to attend)
by themselves or by their representatives shall attend during the tender
opening ceremony.
 Procurement management…
41  The following will be carried out during tender opening:-
1. Tender Attendee members shall take their place and be registered,
2. Tender box opened and checked for faulty things,
3. Check the tender is the right one,
4. Bids will be opened one after the other,
5. All necessary data which deem useful such as Project Name of bidder,
Bid Bond Amount, Tender Price, etc. will be read aloud and recorded at
the opening of bids.

6. Bidders representative shall sign and register to verify their presence

during opening, and
7. Tender committee members shall sign on the Tender.
 Procurement management…
42
 Procurement management…
43 3. Analysis, Evaluation and Selection:

 Each tender will be checked for compliance, and if compliant, then

evaluated against the criteria specified in the tender documentation.

 The tender that offers best value for money will win the business.

 Initial assessment

 Complies with any conditions of participation.

 Tender has been lodged on time.
 Documents are signed as required.
 Tender meets all mandatory requirements.
 Tender security
 If the above are not met, the tender is non-compliant!
 Procurement management…
44
 If the initial check passed, tender will be evaluated according to
evaluation criteria.

The SBD (2011) has defined 4 Qualification criteria to be met by bidders:-

1. Legal Qualification of the Bidder

2. Professional Qualifications and Capability of the Bidder

3. Technical Qualifications, Competence, and Experience of the

Bidder

4. Financial Standing of the Bidder

 Procurement management…
45
Legal capacity deals with:

 Power of attorney;

 Trade and business licenses;

 Tax clearance;

 Competence certificate

 Supplier’s registration; etc.

 Procurement management…
46 Professional qualifications and capability

Number of staffs currently working for the Bidder;

Among the staff currently working for the Bidder, the bidder must
demonstrate that it will have the personnel for the key positions that
meet the Bid requirement;

This should be indicated in the Technical Proposal Form.

Technical qualifications, competence, and experience of bidders 47
 48
Financial standing of bidders
 Procurement management…
49 Tender Analysis and Selection
 Procurement management…
50
 Once the evaluation process is complete, a tenderer will be selected,
and notified of their successful tender.

 Other tenderers will also be notified of their unsuccessful submission.

 Selection of a successful bidder shall be carried out in either of the

following two methods:

a) Setting the minimum technical requirement and selecting the

bidder with the lowest evaluated bid from among the bidders
meeting such minimum technical requirements, or

b) Indicating clearly in the bidding document the criteria to be

applied
 Procurement management…
51  Tender May reject Due to:

 Non - compliance with the tender condition

 Details not completed

 Tender price is too high

 Tender price is too low

 Lot of work in progress

 Insufficient financial capability

 Unsatisfactory work records.
 Procurement management…
52 Consultants selection criteria (PPA)

I. Based on Quality & Cost

 Bidders getting less than (the minimum pass, usually 70%) in the
evaluation shall be rejected and the envelopes containing the financial
proposals of those consultants scoring 70% and above shall be opened.

 Example, the share technical proposal shall be 80% and the

remaining 20% shall be the share of financial proposal.
 Procurement management…
53 II. Quality Based Selection

 It shall be used under the following circumstances

 Complexity of consultancy service & innovation is required,

 Assignments that have a high down stream impact,

 Assignments that can be carried out in substantially different ways.

 Bidder scoring the highest point in the evaluation of the technical

proposals shall be selected as the successful bidder.

 If the price of 1st bidder is beyond the public body to pay, it may enter in
to a contract with the 2nd bidder as long as it is with in its abilities.
 Procurement management…
54 III. Selection Based on Fixed Budget

 This method is appropriate only when the assignment is simple and

can be precisely defined and when the budget is fixed.

 Bidders offering price in excess of the budget available for the scoring
procurement shall be disqualified.

 The bidder offering the price with in the budget limit allocated to the
procurement and the highest point in the total sum of the technical
& financial evaluations shall be selected as the successful bidder.

 If necessary, negotiation may be held with the selected bidder on

certain issues excluding price.
 Procurement management…
55 IV. Selection Based on Least Cost

 This method is appropriate for procurement of a consultancy

service which is standard, simple and doesn’t call for special
qualification of a consultant.

 In evaluating bidders by applying this method, public bodies shall set

the minimum point of technical evaluation.

 Bidders failing to score the minimum point set for technical

qualification shall be disqualified.
 Procurement management…
56 V. Selection Based on the Consultants’ Qualification

 This method may be used for small assignments of which the cost
and time required for preparing and evaluating competitive
proposals is not justified.

 This method may only be used where the value of the consultancy
services does not exceed Birr 50,000.

 The terms of reference to be prepared for such consultancy service

shall require candidate consultants to state their experience and level
of qualification.
 2.3. Payment bond and Securities 57

 Bond is a document given by a third party in support of the

obligations of another party.

 Bonds are normally issued by banks, insurance companies or specialist

surety companies.

 In Construction, Bond is a three-party contract (variously called bid

bond, performance bond, or surety bond) in which one party (the
surety, usually a bank or insurance company) gives a guaranty to a
contractor's customer (obligee) that the contractor (obligor) will fulfill
all the conditions of the contract entered in to with the obligee.
 Payment bond and Securities….
58  If the obligor fails to perform according to the terms of the
contract, the surety pays a sum (agreed upon in the contract
and called liquidated damages) to the customer as
compensation.

Principal (Obligor),(Tenderer)

A Tripartite Agreement
.

Obligee (owner) Surety (Bank or Insurance)

 Payment bond and Securities….
59

 Bid Bond serves as:

 Compensation

 Punishment

 Restriction on unnecessary competition

 Payment bond and Securities….
60  Performance bonds are designed to ensure that the contractor
delivers goods or performs services in accordance with the
terms of the contract. ( 10% )

 Advance payment bonds manage the risk of the contractor’s

failure to earn the whole of any advance payment from the
employer by failing to provide goods and services to an
equivalent value. (30%)

 Retention bonds cover the risk of the contractor’s failure to

perform the contract. (5%)

 Bid bonds are used to compensate an employer if a contract has to

be re-awarded because a prospective contractor refuses to enter
into the contract after his tender is accepted. (2%)
61

TENDER (BID) DOCUMENTS AND

CONTRACT DOCUMENT
 2.4.Tender Document
62
 Standard Bid Document (SBD) issued by PPA is suitable for a standard
contract, where the works have been fully designed by or for the
Procuring Entity (PE) (Employer), prior to bidding, and the contractor
will be responsible for construction only.

 And it is not suitable for the following situations:

 Complex works under US$10 million, such as large water treatment
plants;

 Works designed by the contractor, including turnkey contracts

 For any of these requirements, the PE should find an alternative, more

appropriate document, such as an appropriate FIDIC
 Tender Document cont…

63 Content of RFT Document for works

Part 1 Bidding Procedures

Section 1. Instructions to Bidder (ITB)

Section 2. Bid Data Sheet (BDS)

Section 3. Evaluation Criteria

Section 4. Bidding Forms

Section 5. Eligible Countries

 Tender Document cont…

64 Part 2 Schedules of Requirements

Section 6.1. Scope

Section 6.2. Specification

Section 6.3. Drawing

Section 6.4. BOQ/Schedule of Activities

Part 3 Contracts
Section 7. General Conditions of Contract (GCC)

Section 8. Special Conditions of Contract (SCC)

Section 9. Contract Forms

 Tender Document cont…

65 Content of RFP Document (For Service)

The main difference between the RFP document and RFT document is
Schedule of requirement

Part 2 Schedules of Requirements (for RFT)

Section 6.Terms of Reference(TOR)

 Tender Document cont… 66

The minimum information required in the TOR is

summarized below:

 Scope of services compatible with available budget for the project

 Objectives, goals of the project;

 Background information (listing of existing studies, data, etc.);

 Expected deliverables (reports, designs, tender documents, maps,

etc.

 Agreement clients’ contribution to the assignment (office space,

access to information, nominated counterpart staff etc.)
 2.5. Contract Document
67

 A term used to represent all

executed agreements between
the owner and contractor any
general, supplementary or other
contract conditions; the drawings
and specifications, all addenda
issued prior to execution of the
contract; and any other items
specifically stipulated as being
included in the contract
documents.
 Contract Document Cont…

68
 The construction contract should establish the key components
of the legal relationship:

 Each parties

 Risks

 Rights

 Obligations and Remedies if

the other party breaches its
obligation.
 Contract Document Cont…

69  From the SBD parts indicated above,

1. Section 4 (Bidding Forms),

2. Section 6 (SOR,TOR), and

3. Section 7 through 9 (GCC, SCC and Contract Forms) will form

part of the contract documents.

 The BDS contains information and data relating to the procedure for
bidding and evaluation up to the point of contract award.
 Contract Document Cont.…

70  Contract documents may be classified as:

1. Legal
 Agreements, minute of meetings
 LOA
 Tender and its appendix and addendum
 SCC & GCC
2. Commercial Part
 Performance Security Form,

 Payment Security Form,

 Advance Payment Guarantee Form,
 The Bid Security Form,
 The Insurance Forms,
 The Retention Money Security Form
 Contract Document Cont…

71 3.Technical (Schedule of requirements)

 Specification

 Drawings

 Method of measurements

 Bill of quantities/schedule of activities

 Contract Document Cont…

72
 The above documents do exist before (during tendering) or after
signing of contract.

 Some other documents come to existence during the administration

of contract.

 These includes:

 Contract modifications,

 Notice to proceed.

 Change/Variation orders,
 Priority of contract documents
73
 What will happen if there is any discrepancy in contract documents?
 Case example:

 Suppose in the drawing the ribbed slab block is spaced at 400mm

interval. However, in the bill of quantity it says spacing of 600mm
interval.
 The contractor in his offer made x birr/m2 of ribbed slab during
tender.
 However, during execution phase of the project he found the
discrepancy.
 Will the contractor save or lose money?
 How should be the contract administered?
 Cont…

74
 2.6. Condition of Contract 75
 Conditions of Contract are terms and conditions that set the
rights and obligations of the contracting parties, when a contract
is awarded or enter in to.
 Cont.…

76  The conditions of contract govern matters like

 The responsibility of the contractor,

 Powers and duties of the consultant/engineer and
 Detailed procedures for effective performance of the contract
according to the technical specifications.
 It also provides general rules regarding
 Materials, workmanship,
 General time provisions for commencement of work,
 Delays,
 Modification of contract,
 Time and mode of payment for work done by the contractor etc..
 Cont…

77
Local & International Standard Condition of Contract

Local Forms International Forms

 FIDIC (Fédération Internationale des

 BaTCoDa Ingénieurs-Conseils)
 MoWUD  WB(World bank)
 MDB(multi lateral development banks)
 PPA 2006
 ICE (Institution of civil engineers)
 PPA 2011 (PPAA  NEC (new engineering contacts)
2011)  JCT(Joint contracts tribunal)->England
 Cont…
FIDIC
78
 FIDIC is the international federation of national associations of
independent consulting engineers.

 Its full name is Federation International Des Ingenieurs Conseils

 Founded in 1913 by the national associations of three European

countries (France , Belgium and Switzerland).

 Now with membership from over 74 countries, members are

generally national associations with the Ethiopian Consulting
Engineering and Architects Association being one.

 FIDIC has evolved into a leading body for development of model

standard forms of contract for use in the international construction
industry.
 Cont…

79
 FIDIC has published the following Conditions of Contracts:

 Conditions of Contract for Construction of Building and

Engineering Works Designed by the Employer: The Construction
Contract (New Red Book)

 Conditions of Contract for Plant and Design-Build for Electrical and

Mechanical Plant, and for Building and Engineering Works, Designed
by the Contractor: The Plant and Design/Build Contract (New Yellow
Book)

 Conditions of Contract for EPC/Turnkey Projects: The EPC/Turnkey

Contract (Silver Book)

 Short form of Contract: The Short Form (Green Book)

 Cont…

80 MoWUD

 Officially, known as “Standard Conditions of Contract for

Construction of Civil Work Projects”.

 It has been in practice since December, 1994.

 It contains 75 clauses including Form of Agreement & Form of

Performance Bond.
 Its structure & content resembles that of FIDIC Standard
Conditions of Contract for Civil Engineering Works.

 The Project Delivery System adopted is that of Design-Bid- Build.

 The type of contract is based on BOQ i.e it is an admeasurement

 PPA
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 The PPA, under its legal mandate provided under the Public
Procurement Proclamation, it has prepared & issued certain standard
tender & contract documents for the purpose of public procurement.
 The conditions of contract are applicable to the procurements of the
federal government.

 The Standard Conditions of Contract for the purpose of the procurement

of Works have been prepared for International Competitive Bidding
(ICB) & National Competitive Bidding (NCB), separately.

 User's Guide has been also prepared, separately, both for the ICB & the
NCB. Only used in DBB types of delivery method.
 The Conditions of Contract have been also prepared both in
Amharic & English language.
82

 Why we use a standard form of contract?

  Advantages of Standard Document
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 The standard form is usually negotiated between the different bodies
that make up the industry.As a result the risks are spread equitably.
 Using a standard form avoids the cost and time of individually
negotiated contracts.
 Tender comparisons are made easier since the risk allocation is same
for each tenderer. Parties are assumed to understand that risk
allocation and their prices can be accurately compared.
 Disadvantages of Standard document
 The forms are cumbersome, complex and often difficult to understand.

 The resulting contract is often a compromise, they are resistant to

change. Much-needed changes take a long time to bring into effect.
 Reference
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1. Duncan Cartlidge (2009), Quantity Surveyor’s Pocket Book (1st ed.).

2. (FIDIC, (1991), Conditions of Contract for works of Civil Engineering
Constructions
3. Martin Brook (2004), Estimating and Tendering for Construction work (3rd ed.).
4. R.W.Thomas, (2001), Construction Contract Claims, Palgrave Macmillan
5. Standard bidding documents by PPA, 2006 and FPPA, august 2011,Addis Ababa.
85 Assignment 1

1. What is the difference between tender document and contract

document? List the components of each document?
2. List, describe, conditions used and merits and demerits of
contract/project delivery methods in the construction industry
?