4.

Contract Management
• 4.1 Methods of Work Execution/Contracting
• 4.2 Types of Contracts
• 4.3 Tendering Procedure
• 4.4 Contract Agreement
4.1 Methods of Work Execution/Contracting
Procurement
• Procurement means acquisition of any goods, consultancy services or
other services or carrying out or causing to be carried out any
construction works by an organization.
• Prior to procuring goods, construction works, or services, organization
shall have to prepare specifications, plan, drawing, design, special
requirement, or other descriptions pertaining thereto.
• ‘Public Entity’ making any procurement shall, to the extent possible
make by inviting open bids, and provide equal opportunity to
qualified bidders to participate in such procurement process without
any discrimination.
• In making procurement by bidding, an invitation to bid can be made
by inviting open bids by determining prequalification or without
determining prequalification.
• The open bid may be divided in a single stage or in two stages.
• A notice for invitation to bids or prequalification proposals shall have
to be published in a daily newspaper of national circulation and in the
case of international bid, it may also be published in any
international communication media.
Execution of Work or procurement can be
done by following methods:
• 1. National Competitive Bidding (NCB)
• 2. International Competitive Bidding (ICB)
• 3. Sealed Quotation
• 4. Direct Procurement
• 5. Works through users committee
• 6. Works may be done by Force Account (Amanat)
Contract
• According to Contract Act 2056, “ Contract is an agreement between
two or more than two persons to do or not to do something, which
can be enforceable by law”.
• The main objective is to seek legal action/remedies if any party
breaches the contract.

• (Show contract in class)

Elements of Contract
• 1. Offer and acceptance
• 2. Consideration (Give sth. and get sth.)
• 3. Capacity to contract (Able though there is exception)
• 4. Lawful purpose
• 5. Possibility of performance
• 6. Free consent
• 7. Certainty/Uncertainty
• 8. Legal relationship
• 9. Written
• 10. Two or more competent parties
All contracts are agreements but all
agreements are not contracts
• Agreement + Legality = Contract
• Without knowing the fact, we enter into hundreds of agreement daily,
which may or may not bound us legally. Those which bind us legally
are known as a contract, while the rest are agreement.
Meaning When a proposal When an
is accepted by the agreement is
person to whom it enforceable by
is made, with law, it becomes a
requisite contract.
consideration, it is
an agreement.
In writing Not necessarily Normally written
and registered
Contract maybe( Not types of contract)
1. Valid Contract: All elements of contract are present
2. Voidable contract: Forceful contract; Fraud
3. Void Contract: Ambiguous; Not possibility of performance

(Show bank Guarantee of Sanjen and Sringeshwor)

Contract Agreement
• Engineering contract document usually contains the following:
• Tender notice
• Instruction to bidders (General rules and direction for the use of the
contractors)
• Letter of submission of tender
• Letter of acceptance of tender
• The addenda: The final contract is obviously subject to the addition, or
alterations agreed to by parties and such it is necessary that the
correspondence exchanged and conditions modified. This is called addenda.
• Form of Contract
• Condition of Contract
• GCC
• SCC
• Schedule A-Showing the details of materials if any, to be supplied by
the owner to the contractor
• Schedule B-BoQ
• Specification
• Drawings
General Conditions of Contract
• Definition and interpretations
• Time for completion and delays
• Payment to contractor
• Execution of work and measurement of completed work
• Breach of contract
• Arbitration-Settlements of Disputes
• Suspension of Work
• General obligation of contractor
• Labor and labor welfare
Special Conditions of Contract
• Some conditions may be changed by mutual agreement between the
parties, which may be based on the law of the country, nature of work etc.

• Bardiya Gulariya Contract

• Clause 41.1
• Show also examples of claim letter
Types of Contract
• 1. Unit Rate Contract
• 2. Lump Sum Contract
• 3. Design and Build Contract
• 4. Turnkey Contract
• 5. EPC contract
• 6. Cost-reimbursement Contract
• 7. Time and material rate contract
• 8. Management contract
• 9. Piece work contract
• 10. Design, supply and erection contract
• 11. Build Own Operate Transfer (BOOT) Contract
Tendering (Bidding) Process
• Tender(Bid):
Tender is an offer in written by the tenderer (the person who offers the tender)
to execute some specified work or to supply some specified goods at a certain
rate/amount within a fixed time frame under certain conduction of agreement.
It is the first step in the formulation of contract.

In making procurement by bidding, an invitation to bid can be made by the

following process:
1. Inviting open bids by determining prequalification
2. Inviting open bids without determining prequalification
Why Tendering??
• To select best contractor
• To get quality work
• To get work at competitive price
• To maintain transparency
• Public Private Partnership (Encouraging Contracting Procedure)
PPP (Wikipedia) (Make separate class for it)
• A public–private partnership (PPP, 3P or P3) is a cooperative
arrangement between two or more public and private sectors,
typically of a long-term nature. Governments have used such a mix of
public and private endeavors throughout history. However, the late
20th century and early 21st century have seen a clear trend towards
governments across the globe making greater use of various PPP
arrangements.
• PPPs are best seen as a special kind of contract involved in
infrastructure provision, such as the building and equipping of
schools, hospitals, transport systems, water and sewerage systems.
Tender Notice
• Is the information inviting bids from competent contractors
• Should be widely published in important daily newspapers
Bid(literal meaning): an offer of a price, especially at an auction.
Tender(Literal meaning): Tender usually refers to the process whereby
governments and financial institutions invite bids for projects that must
be submitted within a finite deadline.
Detail information in Tender Notice
Name and address of the Public Entity inviting bid
Nature of work and its location
Place of delivery, Services to be delivered, Construction work to be
performed
Amount of bid security and validity period of the bid
Date, Time and place where and when the tender document is available
Cost of tender document
Place, manner, deadline for the submission of the bidding documents
Provision of e-bidding and its processes
Place, Date and time for the opening of bids
Expected date of acceptance of successful bids etc
Preparation before Inviting Tenders
• Project preparation
• Estimation of Quantities
• Cost Estimate
• Approval of Estimate
• Resource Planning
• Tender Document preparation
Bidding Document
• Document prepared by the concerned firm making invitation to bid
for submission by bidders by filling up the price or rate.
• This includes instructions to bidders, specifications, drawing, design,
terms of reference, schedule of work, evaluation criteria, BoQ,
conditions of contract and similar other documents.
Matters to be stated in Bidding documents
• Plan, drawing of the proposed work
• BoQ
• Quantity of goods
• Work to be done by the bidder
• Time of supplying goods, completing construction work
• Provision regarding warranty and repair and maintenance
• Type and quantity of necessary training and supervision to be
provided by the bidder
• Provision that the goods or spare parts to be supplied must be be
new and original
• Source of financing required for proposed procurement
Earnest money/Bid Bond/Bid Security
• It is the amount of money deposited while bidding a tender as a
guarantee of the party’s willingness of carrying out the work awarded
to him.
• Bidder shall have to submit the bid along with bid security of 2 to 3%
of the estimated amount of the bid in cash or a bid security, of
equivalent to that amount, issued by a commercial bank.
• This is refunded to unsuccessful bidder.
• If a successful bidder fails to carry out the contract, this amount is
forfeited.
Performance security
• Amount of money deposited by a successful bidder as a security for
satisfactory performance.
• 5% of contract amount for Nepalese firm
• 10% of contract amount for foreign contractor
• Refunded after completion of DLP (Maintenance Period)
Prequalification
• The successful execution of contracts for large and complex buildings,
civil engineering, supply and installation, turnkey, and design and
build projects requires that contracts are awarded only to those firms,
or combinations of firms, that are suitably experienced in the type of
work and construction technology involved, that are financially and
managerially sound, and that can provide all the equipment required
in a timely manner.
• The assessment by an implementing agency of the suitability of firms
to carry out a particular contract prior to being invited to submit a bid
is a process called Pre-Qualification.
Contd….
• It is a kind of short listing of eligible bidder to avoid crowding of
bidder.
• It ensures that the invitation to bids extended only to those
perspective bidders who have adequate capability and resources to
perform the particular contract satisfactory taking into account their:
• Experience and past performance on similar contract
• Capabilities w.r.t. personnel, equipment and construction facilities
• Financial position
• Litigation history
Recruitment of Consultants
• Consulting Services consist of activities of intellectual and advisory
nature that does not lead to measurable physical output and other
than goods or civil works.
• Consulting Services can be procured by following method:
• 1. Quality and cost based Selection (QCBS)
• 2. Quality Based Selection (QBS)
• 3. Least Cost Based Selection
• 4. Fixed Budget Selection (FBS)
• 5. Consultant’s Qualification Selection (CQS)
• 6. Single –Source Selection
Expression of Interest (EOI)
• Process of short listing of the consulting firms.
• Notice inviting the letters of intent shall indicate the following
matters:
• Name and address of the public entity
• General description of the proposed assignment or project
• Source of funding for the proposed assignment
• Qualification of the consultant submitting the letter of intent
• If the consultant submitting the letter of intent is a firm or company:
• A profile of the firm or company
• Status of joint venture
• Details of experience of similar assignments
• Bio-data of key human resources to be involved in the proposed assignment
Request for Proposals (RFP)
• After the preparation of shortlist, Request for detailed proposals will
be invited.
• The following matters should be included:
• Letter of invitation to proposals
• Requirement that the key human resources proposed by the proponent
certify that their respective updated bio-data are accurate and complete.
• Matter that financial proposals shall be opened only after the evaluation of
technical proposals
• Minimum pass score to be obtained by the proponent on the technical
proposal.
Contd..
• Whether the proponent is allowed to propose a separate action plan
of its own and human resources for the concerned assignment
• Whether the proponent is allowed to comment on the terms of
reference and
• Source of Finance required for the proposed assignment