1.

An overview of construction management

2. Contract Administration
◦ To Provide Information on actual contract
management & administration problems associated with
different phases of design and construction processes
◦ To brainstorm the actual Steps in design and construction
processes
◦ To Aware Components Controlled in Contract
Administration (quality, cost and time control)
◦ To identify causes and effects of construction delay
Practical Problems associated with Design &

Construction Processes in 10 ULG

Administrations Of Amhara Region

 Design & specification problems
 Quality problems
 Cost overruns/ Variations
 Time overruns (construction delay)
 Poor bid document preparation
 Progress reporting problems
 Unite rate problems
A. Importance of Contract Administration
B. Causes of Contract Administration Problems
C. Major Steps to facilitate Design—Construction
Processes of a Project ?

6
  To see that the Contract is properly administered in parallel with
the execution of the works &
 It is also to ensure that the Contractor receives fair and proper
payment for the work executed.
Who is responsible for contract administration?
 A Consulting Firm shall sponsor the administration of

construction contracts
 All site supervisions shall be continuous and sponsored by a

resident Engineer.
 the Client or Responsible Zonal or Regional may conduct

inspections…
 Sub Standard Design & Specification
 Inadequate
◦ Tender Document Preparation
◦ Tender Evaluation
◦ Contract Agreement
◦ Site Hand over
◦ Close Supervision & inspection
 Poor Documentation & Luck of Legal
Communication
 Construction based on Design & Specification
 Time Control
 Quality Control
 Cost Control
 Documentation/site book ,orders ,letters
 Finalization/provisional & Final Acceptance/
The steps (Periods) may overlap and be iterative:
DESIGN PHASE

PART I : PRE DESIGN PERIOD (Project Initiation & Studies Period)

PART II : FINAL DESIGN PERIOD
PART III: TENDERING & CONTRACTING PERIOD

CONSTRUCTION PHASE

PART IV: CONSTRUCTION PERIOD

PART V: DEFECT LIABILITY PERIOD
 Preliminary Tendering & Execute & Close
& Final Contracting Control
Period
Design
TIME
TIME
CONTROL
CONTROL

• Scope Management
• Workplan Management
• Resource Management
(Time, Cost, People)
Feasibility Tender Doc. QUALITY Defect Liability
Feasibility Tender Doc. QUALITY • Deliverable Mgmt Reporting Defect Liability
Design Contract Doc. CONTROL Reporting Period
Design Contract Doc. CONTROL • Quality Management Period
BOQ
BOQ • Transition Plan
• Int/Ext Vendor
Management

COST
COST
CONTROL
CONTROL

For the successful realization of

a project all these stages
should be managed properly

11
 Two types of feasibility studies are carried out:
1) A preliminary survey, before a decision is
made about the execution of the project and
2) A plan execution survey once the decision is
made. The former is used to define and evaluate
the project’s purposes, while the latter is the
detailed survey needed to develop the project
implementation plans.

12
 Part I : Pre design stage activities
 Feasibility study,
 selection of suitable site,
 preparation of tentative cost estimate and construction schedule
 project appraisal and selection of designer.
 Survey topography of the site and preliminary soil investigations.
 Finalize Environmental Investigations
 Completion of Site Surveys and Right-of-Way Certificates
 Preliminary Design Preparation
 Design Presentation ,comments ,
Part II :Final Design Stage activity
 Final Design
 Final Plans, Elevations, Sections,
 Final Technical Specifications
 Construction Cost Estimate Updated
 Final Construction Schedule
 Design Checking ,Certification & Approval
 Employer’s role during Pre & Final Design stage
In general terms, the role as an employer is to:

◦ Site selection
◦ Environmental Screening
◦ Public Consultation
◦ Employ the services of a consulting firm
◦ Provide and coordinate design review comments
◦ Manage the design consultant’s efforts & schedule
◦ Review and approve design concepts, preliminary
engineering,
◦ Final engineering Design
◦ Budget Request
 Prepare Tender Document
 Prepare notice for Invitation of Bidder
 Publicize Notice
 Public Bid Opening
 Recommendation for Award
 Award of Contract
 1. TENDER DOCUMENT PREPARATION

Part 1 Part 2
Section
Section 1_ITB
1_ITB
Part 3
Section
Section
Section 6_Schedule
6_Schedule of
of Section
Section 7
7–– General
General
Section 2_BDS
2_BDS
Requirements
Requirements Conditions
Conditions of
of Contract
Contract
Section
Section
3_Evaluation Section
Section 8
8–– Special
Special
3_Evaluation &&
Qualification Conditions
Conditions of contract
of contract
Qualification
Section
Section 9
9–– Contract
Contract Forms
Forms
Criteria
Criteria
Section
Section 4_Bidding
4_Bidding
Form
Form
Section Sections to be considered during Bid
Section 5_Eligible
5_Eligible
Document Preparation
Countrie
Countriess
(1,3, 6, 7, 8, & 9)
No Concern Remark
.
1 Completion Time of the work should be specified. Calculated as per
3.3 (Time Control)

2 Category of the contractors invited should be

specified.
Description of Work Category Type

Drainage, Gravel Road, Bridge, Culverts etc. GC/RC

Market Devt., Abattoir, C.Shade, P.Toilet etc. BC/GC

Land fill, LW Treatment Plant GC

3 Level of the category should clearly be stipulated. Refer Next Slide

4 Other issues in the ITB will be considered by the

Procurement Specialist.
 contract documents may also be the source of causes of
delays if they are drafted in such a way that they
◦ do not define in detail all the requirements of the project in
clear and unambiguous way and
◦ Do not identify all the rights and responsibilities of the parties
in the project
◦ Out of the components of contract documents, conditions of
contract, specification, drawing & bill of quantities are the
ones that leads to delay of projects if they were not properly set
out.

18
 Improper itemization of works (works should be
itemized in the Bill of Quantity in sufficient detail to
distinguish between the different classes of works, or
between or works of the same nature carried out in
different locations or in other circumstances which may
give rise to different consideration of cost)
 Incorrect Quantities included in the Bill of Quantity .

Particularly, If the quantities are found mistakenly small,

it will have consequential effect such as:

19
 Cont bill

 Project budget will be affected due to excess quantities

 Construction planning will be affected and causes stocking
 Tenderers can manipulate their offer due to it
 Overzealous contract administration is caused and
 Contractors cash flow will be affected
 On the other hand, if the quantities are mistakenly more, it
will cause
◦ high stocking,
◦ more storing places and risk of spoilage:
◦ unhealthy practices due to over budget provisions; and manipulating in
tendering
CATEGORY GRADE CONSTRUCTION (Birr)

GC/BC/RC 1 Above 350,000,000

GC/BC/RC 2 Up to-

GC/BC/RC 3 Up to -

GC/BC/RC 4 Up to -

GC/BC/RC 5 Up to 100,000,000

GC/BC/RC 6 Up to 45,000,000

GC/BC/RC 7 Up to 18,000,000

GC/BC/RC 8 Up to -

GC/BC/RC 9 Up to 250,000

GC/BC/RC 10 Up to -
SECTION 3. EVALUATION & QUALIFICATION
CRITERIA
 Avg. annual vol.of construction work over the past years ( 3 – 5
yrs)
 at least 1.5 times the bidders own price;
 Experience as prime contractor in the construction of at least one
works of a nature and complexity equivalent to the Works over
the last (3-5)years
 works cited should be at least 70 percent complete.
Proposals for the timely acquisition (own, lease, hire, etc.) of the
essential equipment (the eqpt should be listed as per the category
of the category);
Proposal Personnel with the required qualifications and
experience;
Liquid assets and/or credit facilities (amount to be specified).
SECTION 6. SCHEDULE OF
REQUIREMENTS
 Scope of Works
 The components of the work should be described and its
location as well.

Technical Specification
 For Buildings - BATCODA, 1991, Technical
Specification & Method of Measurement.
 For Roads - ACCRA, 19XX
 For Cobblestone- MUDC, August 2010

 Drawings

 Bill of Quantities
• BOQ should be prepared in compliance with the Technical
Spec. & the design.
 Section 7 – General Conditions of Contract
 General, Time Control, Quality Control, Cost
Control,
Finishing the Contract.
 Section 8 – Special Conditions of Contract
Clause Special Condition
GCC 1.1 Completion Time should be filled

GCC 27.1 The Contractor shall submit a revised Program for the Works
within 30 days of delivery of the Notice of Acceptance
GCC 35.1 The Defects Liability Period is 365 days.

GCC 37.1 This Contract is a Admeasurements Contract.

GCC 47.1 The Contract is not subject to price adjustment in accordance

with Clause 47 of the Conditions of Contract.
GCC 48.1 The proportion of payments retained is 5% percent.
Claus Special Condition
e
GCC 49.1 •The liquidated damages = 0.1% of the final CP per day.
•The maximum amount of LD = 10 % of the final CP.

GCC 51.1 The Advance Payment = 20 % of the CP. It will be paid to

the Contractor no later than 30 days after signing of the
contract. The guarantee should be irrevocable Unconditional
Bank guarantee
GCC 51.3 The Advance Payment will be repaid by deducting
proportionate amounts starting from the first payment
certificate. 100% Repaid when 80% of the payment is
effected.

GCC 52.1 The Performance Security shall be 10% of the CP. (Bond)
Section 9 – Contract Form
 Performance Security Form
 Advance Guarantee Form
 Technical Evaluation
 Financial Evaluation
Parts of Contract document
Contractor’s Bid
Letter of Acceptance
General Conditions of Contract
Special Conditions of Contract
Technical Specification
Drawings
Priced BOQ
etc
 Basic Points to be included in the form
of Contract Agreement(Form No.000)
 Name of the Client/Employer
 Name of the Contractor
 Name of the project
 Contract Amount
 Completion Time
 Signatories
Client Representative
 Contractor Representative
 Consultant Representative
 Witnesses (3)

Make at sufficient copies of the contract —

one for the client and one for the contractor.
Where financial institutions are involved that
body may require a third copy.
.
 Within 15 days of receipt of the Agreement, the successful
bidder shall sign the Contract Agreement and return it to the
Employer, together with the required performance security.
 Upon fulfilment of successful bidder, the Employer will
promptly notify the other bidders that their bids have been
unsuccessful and their bid security will be returned as promptly
as possible.
 Failure of the successful bidder to sign and return a contract
agreement within 15 shall constitute a breach of Contract, cause
for annulment of the award, forfeiture of the bid security, and
any such other remedy the Employer may take under the
Contract, and the Employer may resort to awarding the Contract
to the next ranked bidder.
 Check the Performance Security
 Shall be provided to the Employer no later than 15 days
after receipt of the Letter of Acceptance
 Shall be 10% of the Contract Price.
 Unconditional Bank Guarantee.
 Shall be issued in the form of a Bond for Ethiopian
Contractors only.
 The Contract Security shall be issued in the format specified
in the contract and in an amount specified in the Special
Conditions of Contract
 Shall be valid until to date of issue of the Certificate of
Completion. (+DLP = 365 DAYS)
 Signthe Contract (Fill form ULGDP/007)
 Work Schedule of the Contractor
Work schedule shall be submitted within 30 days
after the notice of the Letter of Acceptance for
Engineer’s approval.
Construction Work Schedule, ULGDP / 002
Man Power Mobilization Schedule, ULGDP / 003
Material Delivery Schedule, ULGDP / 004
Equipment Delivery Schedule, ULGDP / 005
Material Test requisition Schedule, ULGDP / 006
Cash Flow Schedule/ S-curve
 Construction project is realized under the partnership of
three parties; (owner, consultant & contractor)
 CLIENT
(EMPLOYE
R)

CONSULTAN
T CONTRACTO
(ENGINEER R
)
 Employer

 Consultant

 Contractor
35
 Client/Employer

 Consultant

 Contractor
 unachievable specifications,
 the widespread uses of “canned” or “off-the-shelf”

specification and manufacturer’s specifications

 Errors or omission or ambiguity
 Broad and subjective generalities rather than

describing requirements objectively and in detail

 Conflict between drawings and specifications: The

usual cause: one document is changed during design

and the other is overlooked.

37
 The major events that may result in delay arising from
pre-construction stage are:
A. Design preparation
B. Tender document preparation
C. Contract document preparation

38
 Change in drawings,
 Incomplete and faulty specifications
 lack of sufficient details
 Inadequate/inaccurate soil investigation reports
 Errors in raw data for design (eg. survey data for Road

construction – determination of boundaries and

locations used for highway construction, right-of- way
determination, and bridge/structure placement, etc)
◦ Design changes/modifications
◦ Change orders
◦ Time/cost overruns

39
 There are many factors that contribute to causes of delays in construction
projects. These range from factors inherent in the technology and its
management, to those resulting from the physical, social, and financial
environment.
 There are in total of seven groups of causes for delay in construction
project:

GROUP 1: CAUSES OF DELAY BY THE CLIENT

No. Description of Causes of delay
1 Delay in progress payments by owner
2 Delay to furnish and deliver the site
3 Change orders by owner during construction
4 Late in revising and approving design documents
5 Delay in approving shop drawing and sample materials
6 Poor communication and coordination
7 Slowness in decision making process
8 Conflicts between joint-ownership of the project
9 Suspension of work 40
GROUP 4 : CAUSES OF DELAY BY GROUP 5 : CAUSES OF
MATERIALS DELAY BY EQUIPMENT
No. Description of Causes of delay No Description of Causes of
1 Shortage of construction . delay
materials in market 1 Equipment breakdowns
2 Changes in material types and 2 Shortage of equipment
specifications during 3 Low level of equipment-
construction operator's skill
3 Delay in material delivery\
4 Low productivity and
4 Damage of sorted material while
efficiency of equipment
they are needed urgently
5 Delay in manufacturing special 5 Lack of high-technology
building materials mechanical equipment
6 Late procurement of materials

41
GROUP 6 : CAUSES OF DELAY BY LABORS

No. Description of Causes of delay

1. Shortage of labors
2. Working permit of labors
3. Low productivity level of labors
4. Personal conflicts among labors
GROUP 7 : CAUSES OF DELAY BY EXTERNAL FACTORS

No. Description of Causes of delay

1 Effects of subsurface conditions (e.g. soil, high water table, etc.)
2 Delay in obtaining permits from municipality
3 Weather effect on construction activities
4 Traffic control and restriction at job site
5 Accident during construction
6 Changes in government regulations and laws
7 Delay in providing services from utilities (such as water, electricity)
8 Delay in performing final inspection and certification by a third party

42
 Group 2: CAUSES OF DELAY BY
CONTRACTOR GROUP 3: CAUSES OF DELAY BY
No. Description of Causes of delay CONSULTANT
1 Difficulties in financing project by No. Description of Causes of delay
contractor 1 Delay in approving major changes
2 Conflicts in sub-contractors schedule in in the scope of work
execution of project
2 Poor communication and
3 Rework due to errors during
coordination
construction
4 Conflicts between contractor and other 3 Inadequate experience of
parties consultant
(consultant and owner) 4 Mistakes and discrepancies in
5 Poor communication and coordination design documents
6 Ineffective planning and scheduling of 5 Delays in producing design
project
documents
7 Improper construction methods
6 Unclear and inadequate details in
implement
8 Delays in sub-contractors work drawings
9 Inadequate contractor's work 7 Insufficient date collection and
10 Frequent change of sub-contractors survey before design
11 Poor qualification of the contractor's 8 Un-use of advanced engineering
technical staff design
43
Generally, the major problems that arise in associated
with the contract documents and would result in
delay of the project in manipulating them are:
i. Inadequate scheduling clauses
ii. Directing work sequence by owner or consultant
iii.Drawings not indicating interfaces
iv. Permitting responsibilities vague
v. Milestone dates and interface clauses
vi. Leverage for enforcement of schedule specification
vii.Co-ordination inadequately specified

44
 Definition: cash flow - Allocation of construction cost over
time
 Applications:

1) Since construction costs are incurred over the entire

construction phase of a project, it is often necessary to
determine the amounts to be spent in various periods to derive
the cash flow profile ( Baseline plan: the basis of project
controls)
2) Consequently, it is important to examine the percentage of
work expected to be completed at various time periods to
which the costs would be charged (i.e. Combining the cash
flow and earned value technique, a project can track the real
status of progress and detect any early cost deviation)
 A poor cash flow projection could lead to an inability to

fund the project or impose undue stress to the

Contractor/project execution team. 45
 Construction industry is experiencing a
proportionally greater number of distressed firms
than in other industries.
 Primary causes are inadequate cash resources and the

failure to convince creditors and lenders of the

temporary nature of such shortage.
 Apparently, cash flow management is becoming an

essential tool for managing, controlling and

monitoring construction projects so as to ensure
uninterrupted cash flows through the course of
project implementation.

46
 The defining characteristics of a civil engineering project
satisfying an order at site under conditions which vary from
project to project.
 In industries which produce by order, work cannot begin until
an order has been received and the selling price is fixed by the
contract before the work is completed.
 Whereas manufacturers can decide on a selling price after
purchasing the raw materials, manufacturing the product,
measuring the cost of the product, calculating expenses, and
allowing for profit while the construction industry must
procure its raw materials after fixing the selling price.
 Given these characteristics, cost estimation/quotation plays an
important role in the management of construction companies
because the securing of orders and contracts depends on these
skills.
47
 Figure: Cash Flow
Without Advance
Payment

Contractor Contractor's Owner's

Period 's Owner's Cumulative Cumulative
(Months) Expenses Payments Expenses Payments
0 3.78 - 3.78 -
3 7.46 6.47 11.24 6.47
6 10.43 9.33 21.67 15.81
9 14.74 13.35 36.40 29.16
12 11.42 16.83 47.82 45.99
15 5.68 15.54 53.50 61.53
48
 Figure: Cash flow
with Advance
Payment

Period Contractor Owner's Contractor's Owner's

(Months 's Payment Cumulative Cumulative
) Expenses s Expenses Payments
0 3.78 -
3.78 12.31
3 7.46 6.47 11.24 17.48
6 10.43 9.33 21.67 24.95
9 14.74 13.35 36.40 35.63
12 11.42 16.83 47.82 49.09 49
 Contractors perform the work and have to meet the weekly
payroll obligation.
 In addition, materials are procured to support the construction as
the project progresses.
 Depending on the construction contract style, contractors usually
receive payments from the owner based on milestone progress or
other negotiated measurements.
 Contractors have to prepare invoices with supporting documents
prior to payment submittal requests.
 Owners also take time to review invoices and process payments.
It is not unusual for contractors to receive discrete payments 30
to 60 days after the cost was actually incurred.

50
 The difference between the actual expenditure and
payment received is the cash flow that a contractor
needs to finance on a short-term basis. Unless advance
payment is given, Contractors generally recover such
finance charges through overhead, fees or large upfront
mobilization charges.

Figure – Contractor’s Project Cash Flow

51
 From an owner’s perspective, the project cash flow is
the actual payments made to meet expenditure
obligations.
 A preferred method is for an owner to negotiate

payment schedule with a contractor so that discrete

payments received from an owner are essentially
sufficient to cover the projected contractor’s cash
flow requirement

52
Thank you!

s?
i o n
st
e
Qu
Comments?

For
discussion