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Contract Agreement

The contract agreement discusses payment terms, proposing milestone payments of 30% upon progress report submission, 30% for draft report, and 40% for the final report. It addresses penalties related to project delays and options for re-design work, emphasizing that penalties should be capped and not linked to delays. Additionally, it clarifies the scope of work, including the definition of engineering drawings, the dynamic nature of the action plan, and the inclusion of a professional risk assessment at project completion.

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Ayalew Tebeje
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19 views2 pages

Contract Agreement

The contract agreement discusses payment terms, proposing milestone payments of 30% upon progress report submission, 30% for draft report, and 40% for the final report. It addresses penalties related to project delays and options for re-design work, emphasizing that penalties should be capped and not linked to delays. Additionally, it clarifies the scope of work, including the definition of engineering drawings, the dynamic nature of the action plan, and the inclusion of a professional risk assessment at project completion.

Uploaded by

Ayalew Tebeje
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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CONTRACT AGREEMENT

ARTICLE 1V: PAYMENT


It is difficult for LQS to only get one payment almost at the end of the project. Is it
possible to pay for project milestones: 30% on the submission of a progress report when
items 1 – 8 (excluding item 7) are completed; 30% on submission of a draft report;
remaining 40% for final report as you stated.

ARTICLE X: PENALTY
This is the main contentious issue in the contract. There are two possible future options
here following completion of this project.
 The first is (and I have said this in a previous discussion) that KAR would
continue to be involved in the implementation (Action Plan stage). In this case any
re-work in design changes would be carried out at no cost to Midroc and such
work would be ongoing with no delays occurring. This is the option I prefer and I
would like to discuss this further with you when we meet.
 The second option is if no agreement is reached with KAR, then any re-design
work would be completed at no cost to Midroc within an equivalent time that the
project was completed initially (which could be up to 100 calendar days).
Obviously this is not the preferred option.

I am assuming that my understanding of this article is that 10.1 is applicable to Article X


only (in other words the second sentence qualifies the first sentence).In this respect the
penalty must be capped at the amount already paid for in fees. Such a penalty clearly
cannot carry on forever at 5% of total project fee paid and deducted every day.

I would like confirmation that any delays referred to in Article VIII are not linked to
penalties referred to in paragraph 10.1. If this assumption is correct, what then is the
liability of the Consultant as stated in Article VIII?
SCOPE OF WORK

 You have added a term “engineering drawings” into several items. I understand
this term to mean CAD drawings. This has never been mentioned before not even
in your original Scope of Work. I assume that you mean plans, sections, graphics
generated from the software programmes being used on the mine planning, with
other possible line diagrams, sketches where applicable. Although CAD drawings
can be done (cost implication) they will not be necessary for this project as there is
no engineering design and construction provided for: it is a mining criteria
document with mechanical/electrical engineering input restricted to reviews as
stated previously and agreed by you.
 With regard to the ACTION PLAN, there is clearly a misunderstanding of
definition here. The use of a specific objective action plan (SOAP) is a trademark
of my management style for many years and a niche component of my
consultancy, and as such it becomes a dynamic ongoing plan. I developed this
management technique specifically for the management of trackless mining
operations for numerous new projects. Such a SOAP for Legadembi would span
the two year period up to steady state production and would be constantly
measured and reviewed with changing circumstances; hence the dynamic plan I
refer to. For this Scope of Work I will prepare in two days (2 man-days in Item
12) the elements of such a SOAP specifically to meet the Legadembi programme.
Notwithstanding, at the time of the site visit, I will discuss with you and site
management more details on how the ACTION PLAN will be developed. In this
respect I am suggesting that you accompany me on the site visit when significant
discussions can take place between us to the benefit of the project.
 I am pleased that you support the proposal of the professional risk assessment at
the end of the project in Ethiopia. Obviously this will be additional to the present
Scope of Work; the one day brainstorming with project discipline engineers (4
man-days in Item 13) will still take place in Johannesburg before completion of the
report. Further details can be discussed when we meet next.

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