Cp Management

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GUIDELINES ON

CONSTRUCTION PROJECT

MANAGEMENT

JULY, 2011


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FOREWORD

1.0 RITES has been handling Project Management Consultancy assignments for thepast few decades. While some of the Clients, particularly GovernmentDepartments and Public Sector Undertakings, insist upon RITES adopting theTender Document and Contract Management procedures of specific

organizations such as that of Railways, CPWD, State PWD, MES, World Banketc, there are also cases of Clients leaving it to RITES to decide on thedocumentation and procedures.

2.0 The need to have well documented Guidelines/Manual in an organisation toexecute its construction activities in a uniform and well coordinated manner withleast time and cost over-runs cannot be over emphasised. Such Guidelines arerequired to guide officials in their day to day work, so that there is systematic anduniform approach in decision making. The purpose behind issue of theseGuidelines is to bring uniformity in dealing with various aspects ofProject/Contract Management by all the Project Offices. The Guidelines onConstruction Project Management were first issued in 2005 and revised in 2009.

The 'Guidelines 2011' is the revised edition of ‘Guidelines 2009’.

3.0 Since the issue of Guidelines 2009, a number of amendments/new clauses/newparas have been incorporated by way of issue of circulars/correction slips.RITES Standard Tender and Contract Document and GCC have since beenthoroughly revised and issued in June / July 2011. A number of circulars havealso been received from CVC. New CPWD Works Manual 2010 has also beenpublished. All these changes that have taken place since the publication of2009 edition have been considered and suitably incorporated in the Guidelines2011.

4.0 These Guidelines have been made out generally on the basis of CPWD WorksManual 2010 but also incorporate good practices in the Manuals/Instructions of

other major organizations like Indian Railways, World Bank, Military EngineeringService etc. A few examples in this context are given below. These are onlyillustrative in nature and do not cover all such items.

(i) Contract Documents of World Bank, CPWD and Indian Railways providefor Pre-qualification Criteria different to what has been indicated in thisGuidebook.

(ii) World Bank does not provide for any negotiations even with the lowesttenderer.

(iii) In the Indian Railways Contract Documents, the practice is to go in mostlyfor Percentage Rate Tenders in place of Item Rate Tenders.

(iv) In CPWD Contract Documents, there is no provision for a TenderCommittee.

5.0 These Guidelines do not, however, supersede specific provisions, if any, in theContract Documents. Where on any issue, specific instructions exist in theContract Documents, they will take precedence over the provisions in theseGuidelines, but the provisions in Contract which gives full powers to theEngineer-in-charge in dealing with the Contract would not override the internal


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powers of authorities competent to take decisions in various matters vis-à-visEngineer-in-Charge.

6.0 Revised Standard Tender Document 2011 based on CPWD Document but withsome modifications has been issued separately. Where the Client leaves it toRITES to adopt its own set of Tender Documents, these Documents should be

adopted and the Guidelines will be fully applicable in such cases. In other caseswhere the Client insists on adoption of other Standard form of Tender Documentssuch as of Indian Railways, World Bank, MES etc., the Guidelines should befollowed subject to the stipulation that the provisions, if any, in the ContractDocuments on any specific aspect of Contract Management will supersede thecorresponding provisions in these Guidelines.

7.0 The Guidelines are divided into 27 Sections with Annexures kept at the end. Annexures have been numbered separately for each Section and reference hasalso been given therein to the corresponding Para number. Modifications madeon Guidelines 2009 and incorporated in these Guidelines are attached.

8.0 The attention of RITES SBU Heads who will be involved in entering into Agreements with the Clients for Project Management is specifically invited to Annexure 2.1 of the Guidelines giving details of a Model Agreement betweenRITES and the Client in cases where RITES acts for and on behalf of the Clientas a Power of Attorney Holder and enters into the Works Contract with theContractor. The provisions in this Annexure are the ideal ones and may requiremodification depending on the scope of works of the assignment and theprovisions in vogue in similar consultancy agreements which the Clientorganisation may insist on adoption.

9.0 The attention of all RITES Engineers is also specially invited to Para 1.6 of theGuidelines on "Essential features of Good Project Management". The provisionsshould be carefully gone into and efforts made to follow the same. In exceptional

circumstances where they cannot be observed in totality because of exigenciesof work, reasons for the same should be kept on record with proper follow upaction.

10.0 All SBU Heads must ensure that a copy of these Guidelines is given as apersonal copy to each Engineer under them in whatever grade he is and take hisacknowledgement in writing. An acknowledgement should also be taken fromeach such Engineer after a period of three months in confirmation of the fact thathe has read and understood the contents of the Guidelines. The Guidelines maybe retained by the Engineer till his retirement/leaving RITES service when thecopy should be taken back by SBU Head. Similar procedure should also beadopted in future at the time of induction of fresh Engineers into RITES cadre.Same procedures will be required to be followed in future when dealing with

Addenda & Corrigenda that may be issued to the Guidelines.11.0 SBU Heads should also organise training programmes for the Engineers in their

Units so that doubts, if any, can be got clarified.

12.0 It will be appreciated that in Guidelines/Manual of this nature, it may not befeasible to include material to cover each and every contingency that may arisein the course of execution of works, though efforts have not been spared to makeit as comprehensive as possible. In the event of any contingency that might ariserequiring supplementing/deviations from what is contained in these Guidelines so


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as to suit the conditions on a particular project, the same may be done with theapproval of appropriate authority.

13.0 This revised ‘Guidelines 2011’ has been prepared through the efforts put in byShri R. Balasubramanian, ex-General Manager/Metro/Kolkata/Indian Railwaysand presently Advisor/RITES, who was also instrumental in making out the firstEdition of Guidelines in 2005, Shri G.V.Chanana, Advisor, Contract Cell and anumber of senior officers of RITES. No amount of words of appreciation andgratitude to them will be adequate for the purpose.

14.0 It is sincerely hoped that the ‘Guidelines 2011’ would serve the needs for which ithas been published.

B.K. MAKHIJAGurgaon Managing DirectorJuly 2011 RITES Ltd.


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MODIFICATIONS MADE IN THE GUIDELINES “ FEBRUARY 2009” ANDINCORPORATED IN THE GUIDELINES “JULY 2011”

The following are the salient changes made in the “Guideline 2009” and incorporated inthese Guidelines.

i) Section 4

Para 4.5.2 Detailed procedure to be followed in making out the Estimate forspecialized Works like Box Pushing, Construction of PSC Girder Bridge overRailway Track etc., where the cost of enabling work is substantially high andalso dependant on site conditions, has been indicated.

ii) Section 5

Para 5.2.2. GCC will not be available as a Priced Document and will beissued as a part of the Tender Document.

Para 5.3 This deals with Lump sum Contracts with an Annexure explaining

the details.

iii) Section 6

Para 6.6.1 The existing provision that Press Notification is compulsory for allOpen Tenders has been modified to restrict to only Tenders costing over Rs. 50lakhs. Also it has been made clear that Addenda/Corrigenda to TenderDocument will only be uploaded on RITES website with no individualcommunication to the Tenderers.

Para 6.7 The Minutes of the Pre-bid meeting etc. will be displayed only onRITES website. Also queries from Bidders should be sent at least 10 days inadvance of the deadline for submission of Tender.

Para 6.8 Annexure 6.5 relating to this para has been simplified to reflect themethodology to be followed in laying down the qualification criteria.

iv) Section 8

Para 8.9.22

Procedure to be followed on a relook of the Estimate etc. in case of persistenthigh rates received on re-invitation of Open Tenders has been stipulated.

Para 8.14

Stress has been laid on the need for maintenance of copies of agreements inbound volumes with page numbering and date / initials with seal of both RITESand Contractor.


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v) Section 10

Para 10.4 Performance Guarantee can be released even on ProvisionalCertificate of Physical Completion. Additional Performance Guarantee can bereleased even earlier on completion of items of works with unbalanced rates.

vi) Section 12

Para 12.5.5. This lists out the sequence of events on completion of workstarting from Contractor’s Notice on completion of work till preparation of FinalBill.

Para 12.7.2 Clause 10CC on Price variation will be applicable only for workscosting over Rs. 100 lakhs and not linked to the time of completion.

Para 12.7.7 Indices to be used for Price Variation have been modified in lightof the Indices published by the Economic Advisor, Ministry of Commerce &Industry.

Para 12.8.5 The concept of making payment to the Contractor at 97% of BOQrates for some quantity in excess of Deviation Limit has been introduced.

Para 12.9 Clause 14 of GCC has been re-introduced with the Heading“Taking away part work due to default of the Contractor and recovery ofadditional cost.”

vii) Section 17

Para 17.2.4 In case of quantities executed beyond the limit for which rates areavailable in Clause 12.2 of GCC, provisional payment may be made to theContractor at 75% of BOQ rate pending approval of the revised rates by theCompetent Authority.

viii) Section 19

Para 19.14.4 Stress has been made on the need for invoking Arbitration/CourtProceedings within the Limitation period laid down in the Limitation Act.

ix) Section 21

Para 21.1.5 There is no need for maintenance of two separate printed format ofMBs. The Abstract of Measurements may be recorded in manuscript form in thesame MB in which the measurements are recorded.

Para 21.6 The concept of “Computerised Measurement Book” as analternative to conventional printed MB has been introduced. In the event ofresorting to use of Computerised Measurement Book, the billing will also becomputerized.


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GUIDELINES ON

CONSTRUCTION PROJECT MANAGEMENT

JULY 2011

CONTENTS

SECTION PARA SUBJECT PAGE NO.

1 INTRODUCTION

1.1 Preamble

1.2 RITES Documents

1.3 Integrity Pact

1.4 Types of Project Consultancy Assignments

1.5 Financial Liability of RITES

1.6 Essential Features of Good Project Management

2 CONTRACT WITH CLIENT

2.1 Signing of Contract with Client

2.2 Definition of Deposit Works

2.3 Realization of Contribution for Deposit Works

2.4 Execution of Deposit Works

2.5 Endorsement of Copies of Documents to the Client

3 PROJECT ORGANISATION AND RESPONSIBILITYFOR PROJECT IMPLEMENTATION

3.1 Organisational Set up

3.2 Field Organisation2.3 Organisation at SBU Office

3.4 Desirable Level of Organisation

3.5 Field Activities for which Controlling Site Engineer willbe responsible

3.6 SBU Office Activities for which the Project Coordinatorwill be responsible

4 PREPARATION OF ESTIMATES

4.1 Preliminary Estimate / Abstract Estimate

4.2 Detailed Estimate / Technical Sanction

4.3 Detailed Estimate for Technical Sanction – Procedurefor Preparation


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4.4 Detailed Estimate-Non Schedule items-Market Rate Analysis

4.5 Detailed Estimate –Compilation4.6 Technical Check of Detailed Estimates

4.7 Supplementary Estimate

4.8 Revised Estimate

4.9 Market Rate Analysis

5 CONTRACTS AND FORMS

5.1 Definition of Contract

5.2 Contract Documents

5.3 Lumpsum Contract

6 PREPARATION OF TENDER DOCUMENTS AND

PUBLICIT

6.1 Tender System

6.2 Single Tender

6.3 Limited Tender

6.4 Contents of Tender Documents

6.5 Invitation of Tenders for Component Parts

6.6 Publicity of Tenders

6.7 Pre Bid Conference

6.8 Pre Qualification of Tenderers – Joint Ventures

6.9 One Packet and Two Packet Systems

6.10 Time Limit for Publicity of Tenders6.11 Re-invitation of Tenders – Extension of Period

7 SALE OF TENDER DOCUMENTS

7.1 Documents to be ready in time

7.2 Supply of Duplicate set of Tender Documents

7.3 Time Interval between Sale of Tender Documents andOpening of Tenders

7.4 Scale of Charges for Tender Documents

7.5 Supply of Drawings

7.6 Precautions in Sale of Tender Documents

8 RECEIPT, OPENING AND ACCEPTANCE OFTENDERS

8.1 Procedure to be adopted

8.2 Delayed and Late Tenders


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8.3 Instructions for Tender Opening Officers

8.4 Evaluation of Tenders

8.5 Preparation and Scrutiny of Briefing Note for TechnicalBids (Applicable for both Single Packet and Two PacketSystems)

8.6 Evaluation of Technical Bids by Tender Committee(Applicable for both Single Packet and Two PacketSystems)

8.7 Opening of Financial Bids

8.8 Preparation and Scrutiny of Briefing Note andComparative Note for Financial Bids (Applicable for bothSingle Packet and Two Packet Systems)

8.9 Evaluation of Financial Bids by Tender Committee

(Applicable for both Single Packet and Two PacketSystems)

8.10 Tender Committee’s Recommendations and Action bythe Tender Accepting Authority

8.11 Purchase Preference to Public Sector Enterprises

8.12 Acceptance of Single Tender

8.13 Procedure for Conducting Negotiations

8.14 Communication of Acceptance of Tender

8.15 Time Limit for Finalization of Tenders

8.16 Reinvitation of Tenders

9 EARNEST MONEY

9.1 Necessity for Earnest Money

9.2 Rates of Earnest Money

9.3 Mode of Deposit

9.4 Refund of Earnest Money

9.5 Forfeiture of Earnest Money

10 PERFORMANCE GUARANTEE AND SECURITYDEPOSIT

10.1 Performance Guarantee

10.2 Validity of Performance Guarantee

10.3 Claim under Performance Guarantee

10.4 Refund of Performance Guarantee10.5 Recovery of Security Deposit

10.6 Claims under Security Deposit

10.7 Validity Period of Security Deposit and Refund

10.8 Miscellaneous Provisions


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10.9 Refund of Security Deposit – Guarantee on Specialised

Items of Works10.10 SBUs Responsibility for Prompt Refund of Security

Deposit and Performance Guarantee

11 AGREEMENTS/CONTRACTS – ESSENTIALFEATURESG

11.1 General Features

11.2 Power to Sign Agreements

11.3 Recording of Date of Acceptance of Tender in the Agreement

11.4 Supply of Copies of Contract to Contractors

11.5 Certification and Custody of Agreements11.6 Contents of Agreements

11.7 Safe Custody of Contract Agreement and RelatedDocuments

12 GENERAL GUIDANCE FOR OPEATION OFCONTRACT CLAUSES

12.1 Clause 2

12.2 Clause 3

12.3 Clause 5

12.4 Clause 7

12.5 Clause 812.6 Clause 10 (C ) and Clause 10 CA

12.7 Clause 10 (CC)

12.8 Clause 12

12.9 Clause 14

12.10 Clause 16

12.10A Clause 21

12.11 Clause 36

12.12 Clause 42

12.12A Clause 45A

12.13 Clause 47

12.14 Performance for Notices to Contractor under variousClauses of Contract and for Completion Certificate


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SECTION PARA SUBJECT PAGENO.

13 EXTENSION OF TIME AND COMPENSATION FOR

DELAY

13.1 General Principles

13.2 Requirements of Clause 5

13.3 Powers of Officers for Grant of Extension of Time

13.4 Grant of Extension of Time without Application

13.5 Form of Application for Extension of Time

13.6 Procedure for Granting Extension of Time

13.7 Compensation under Clause 2

13.8 Section 74 of the Indian Contract Act, 1872

13.9 Proforma for Intimating Extension under Clause 2

14 PAYMENT FOR SUB – STANDARD WORK

14.1 Procedure for Acceptance of Substandard Works

14.2 Acceptance of Substandard Work

15 ISSUE OF MATERIALS TO CONTRACTOR

15.1 Issue of Materials to be an Exception

15.2 Issue, Supply and Recovery of Cost of Materials

15.3 Issue Rates

15.4 Return of Surplus Materials

15.5 Instructions regarding Storage of Cement in Godowns

15.6 Issue of Materials against Bank Guarantee15.7 Recovery towards materials issued for verification of

defects/Reclosing of work

16 MATERIALS ARRANGED BY CONTRACTOR ANDMANDATORY TESTS

16.1 General Principles

16.2 Mandatory Tests – CPWD Specifications

16.3 Design Mix Concrete – Acceptance Test

16.4 Nominal Mix Concrete – Action in case of Failure ofconcrete in Mandatory Concrete Cube Tests

16.5 Design Mix Concrete – Action in case of Failure ofConcrete in Cube Tests


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17 EXTRA, SUBSTITUTED AND DEVIATED ITEMS OFWORK

17.1 Deviation

17.2 Prior Sanction of Competent Authority Necessary

17.3 Extra / Substituted Items

17.4 Fixation of Rates for Deviated / Extra /Substituted Items

17.5 Rates for Deviation (Extra / Substituted / DeviatedQuantities) Items allowing Profits and Overheads onStipulated Materials supplied to the Contractor

17.6 Measurements for Inadmissible Items

17.7 Deviations in Quantities of BOQ Items

18 FAIR WAGE CLAUSES AND CONTRACTOR’S

LABOUR REGULATIONS

18.1 Provisions of Act

18.2 Acts / Omissions

18.3 Fair Wages

18.4 Responsibilities of Field Officers

18.5 Responsibilities of Contractor

18.6 Deductions to be made from Contractor’s Bills

18.7 Procedure in case of Accidents to Contract Labour

19 ARBITRATION AND LITIGATION

19.1 Application of Arbitration Claus 25 of Standard ContractForm

19.2 Application for Appointment of Arbitrator

19.3 Preparation for Arbitration Cases

19.4 Processing of Contractor’s Application

19.5 Appointment of Arbitrator

19.6 Action Subsequent to Appointment of Arbitrator

19.7 Engagement of Lawyers

19.8 Production of Official Documents beforeCourt/Arbitrators

19.9 Default of a Party19.10 Making of Award

19.11 Acceptance of Award

19.12 Review of Arbitration Award

19.13 Setting Aside of Awards

19.14 Period of Limitation

19.15 Court Cases

19.16 Judgements in Court Cases


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19.17 Legal Charges on Civil Suits / Arbitration Cases

19.18 Documentation for Arbitration Cases

19.19 Disposal of Old Records

20 RECORDS TO BE MAINTAINED AT SITE OF WORK20.1 General Provisions

20.2 Site Order Book

20.3 Periodic Inspection of Works – Inspection Record

20.4 Hindrance Register

20.5 Daily Progress Record

20.6 Cement Register

20.7 Steel Register

20.8 Non Conformance Items Record

20.9 Quality Audit Record

20.10 Site Coordination Meetings Record

20.11 Guarantee Bonds Record20.12 Insurance Policies Record

20.13 Drawings Record

20.14 Record of Mandatory and Non Mandatory Tests Carriedout

20.15 Paint and Chemicals Record

21 MEASUREMENT BOOKS

21.1 Measurement Book – General Instructions

21.2 Test Checking of Measurements

21.3 Recording Levels for Earth Levelling Works

21.4 Loss of Measurement Book

21.5 Proforma for Measurement Book

21.6 Compressed Measurement Books (CMBs) and Bills tobe submitted by the Contractor

22 PAYMENTS TO CONTRACTOR

22.1 Requirement of Clause 7

22.2 Final Payments

22.3 Time Schedule for Payment of Bills

22.4 Inspection of Work Nearing Completion/After completion

22.5 Completion Certificate22.6 Payment through Banks

22.7 Deduction of Income Tax at Source

22.8 Deduction of ‘Sales Tax on Works’/Vat on WorksContract at Source

22.9 Deduction of VAT and Building Workers Cess at Source

22.10 Deduction of ‘Service Tax On Works’ at Source


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23 ADVANCES TO CONTRACTOR

23.1 Types of Advances

23.2 Certificates to Accompany Bills

24 PREPARATION, EXAMINATION, VERIFICATION ANDPASSING BILLS FOR PAYMENTS

24.1 Preparation of Bills

24.2 Forms of Bills for Payment

24.3 Authorities to Pass the Bills

24.4 Payment for Work done

24.5 Deviation Statement

24.6 Bank Guarantees – Check and Custody24.7 Documents to Accompany Bills

24.8 Check of Bills at SBU Office

25 QUALITY ASSURANCE AND CHECK LISTS

25.1 Introduction

25.2 Quality Assurance Plan

25.3 Methods Statement

25.4 Responsibility for Quality Assurance

25.5 Checklists

25.6 Testing Laboratory

26 CHIEF TECHNICAL EXAMINER’S ORGANIZATION AND COMMON IRREGULARITIES OBSERVED

26.1 Functions of CTE Organisation

26.2 Returns

26.3 Inspection by CTE

26.4 Recoveries of Over Payments pointed out by the CTE

26.5 Common Irregularities pointed out by the CTE

27 OPENING , CUSTODY AND FINAL DISPOSAL OFESSENTIAL PROJECT DOCUMENT

27.1 Preamble

27.2 Common Deficiencies Observed in System ofMaintenance and Disposal of Records

27.3 Procedure Order on Opening, Custody and FinalDisposal of Essential Project Documents.

ANNEXURES


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SECTION 1

INTRODUCTION

1.1 PREAMBLERITES has been handling Project Management Consultancy assignments for the

past few decades. While some of the Clients, particularly Government

Departments and Public Sector Undertakings, insist upon RITES adopting the

Tender Document and Contract Management procedures of specific

organizations such as that of Railways, CPWD, State PWD, MES, World Bank

etc, there are also cases of Clients leaving it to RITES to decide on the

documentation and procedures. Some organizations such as Indian Railways,

CPWD, MES, World Bank etc, have also printed their Standard Tender

Documents and Manuals for the guidance of the officers and field Engineers and

these are followed in execution of works in their organizations.

1.2 RITES’ DOCUMENTS

For dealing with Projects in which the Clients permit RITES to adopt any System

considered good by RITES, the following documents have been made out by

RITES for uniform application by all RITES Offices while handling such projects.

(i) Guidelines on Construct ion Project Management 2011

This document is based mainly on CPWD Works Manual 2010 but with

substantial modifications by incorporating the good practices of other

organizations like Indian Railways, World Bank etc. The guidelines are

comprehensive and cover almost all aspects of Contract Management of

particular interest to the Site Engineers and officers in SBUs. The Guidelines

should be read along with the Standard RITES Tender Documents referred

to in item (ii) below. Various instructions/circulars/guidelines issued by

different Deptts like CVC, Railway Board etc in the past have also been

taken into consideration in preparing this revised edition. The provisions

contained in this book can be adopted also in the Management of Contracts

based on the formats of other organizations like Indian Railways and World

Bank in so far as they don’t contradict each other.

(ii) Standard Tender Document 2011

The Standard Tender and Contract Document 2011 with components

indicated below has been made out basically adopting CPWD Format but

with some major modifications. It consists of three parts.

Part 1 (Technical Bid) comprises of following six sections.

1) Notice Inviting Tender and Instructions to Tenderers

2) Tender and Contract Form


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3) Special Conditions

4) Schedules A to F

5) Technical Specifications

6) Drawings

Part 2 : Financial Bid–Schedule (Bill ) of Quantities

Part 3 : General Conditions of Contract

Section (7) Conditions of Contract

Section (8) Clauses of Contract

Section (9) RITES Safety Code

Section (10) RITES Model Rules for Workers

Section (11) RITES Contractor”s Labour Regulations

Depending on the nature and scope of work, Bill of Quantities, Drawings and

site/work specific Special Conditions/Specifications will be required to be

made out by NIT Approving Authority. The Standard Tender Document may

be adopted in all cases other than those where the Client insists upon

adoption of a specific format such as that of Railways, MES, World Bank etc.

iii) Guidelines for Arbitration under Arbitration & Conciliation Act 1996 –

July 2007

iv) Checklist of Specifications for Civil Engineering Works for Quality

Control – August 2008

v) Specifications for Railway Track and Bridge Works – September 2010

1.3 INTEGRITY PACT

RITES in cooperation with CVC has signed MOU with Transparency International

(India) for adoption of Integrity Pact (IP) as a vigilance tool for promoting integrity

/ transparency and competitiveness in matter of major procurements. It has been

decided by RITES that to begin with, Integrity Pact shall be made part of Bid

Documents to be issued to all intending bidders, for works of estimated cost

above Rs.10 Crore. For works of estimated cost of above Rs.10 Crores,

Independent External Monitor (IEM) shall be pre-nominated to review

independently, the compliance of Integrity Pact. The Competent Authority to

appoint IEM shall be MD/ RITES. The Integrity Pact is available as Annexure VIII

to Section I (Part I) of Bid Document viz. NIT & Instructions to Tenderers, in all

Tender Documents for works of estimated cost above Rs.10 Crores.

The essential ingredients of the Pact and its implementation procedure envisage:


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a) IP shall cover all phases of the contract i.e. from the stage of NIT / Pre-Bid

stage till completion of contract. Any violation of the same would entail

disqualification of bidders.

b) Entering into this Pact by the bidder would be a preliminary qualification.

c) IP would be implemented through a panel of IEMs appointed by RITES. For

ensuring liaison between IEM and Contractor / Employer, RITES will nominate a

suitable officer at HQ as Liaison Officer.

1.4 TYPES OF PROJECT CONSULTANCY ASSIGNMENTS

RITES as a Premier Consultancy Organization has been handling Project

Management Consultancy Works of different types as detailed below, mostly for

Central Government / State Government Departments and Organizations and in

a few cases, for private parties.

(i) Project management on Supervision basis:- Client Organisation withadequate technical expertise, handles the Planning and Tendering phases, signs

the Works Contract with the Contractor and entrusts to RITES, the complete

responsibility of Project Management. Here the payments to the Contractor are

effected by the Client on certification by RITES. There are some cases where

the Client Organisation has taken the help of RITES in planning stage as well as

in Tendering Stage. In some cases the Client, while deploying his own staff for

day to day supervision, entrusts to RITES, General Supervision including Quality

Control.

(ii) Project management on Deposit/Turnkey basis:- Client Organization

entrusts through a Power of Attorney or other instrument like a Contract,complete responsibility to RITES for the Works including Planning, Tendering

and Supervision of works. The funds are made available by the Client to RITES

either in a lump sum or in installments. In such cases, the Works Contract with

the Contractors are signed by RITES for and on behalf of the Client and RITES

makes payment to the Works Contractors. In these cases, the Client generally

does not possess the technical expertise to handle major works. But in all cases,

even if Client does not possess the technical expertise, the Client expects RITES

to keep them apprised of any developments with financial implications.

1.5 FINANCIAL LIABILITY OF RITES

The type of Project Management Contracts in 1.4 (i) above generally does not

entail any financial liability on RITES since the Client is the Employer in the

Works Contracts with the Contractor. But in the type of Project Management

Contracts, in 1.4 (ii) above the financial liability of RITES can be of a large

magnitude which may end up in disputes leading to Arbitration or Court case.

With the Agreement executed between RITES and the Contractor, the legal

provision is that there is no privity of Contract between the Client and the

Contractor even though the Agreement may have been executed by RITES for

and on behalf of the Client and the Client has granted a Power of Attorney to


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RITES or appointed RITES as his Agent. There is hence the necessity for

RITES staff to understand clearly the various aspects of Project Management in

the Planning, Tendering and Supervision stages.

Irrespective of whether the Works Contract is signed by RITES or by the Client,

the guidelines in this document should be followed to protect the interest of

RITES in Project Management Consultancy Contracts. While various aspects of

Project Management from tendering to execution have been covered in detail in

subsequent Sections, the basic items to be kept in view for successful

implementation of a Construction Project are detailed below.

Efforts should be made to ensure observance of the essential features discussed

in para 1.6 below. However wherever it is not possible to observe the same in

totality because of exigencies of work, reasons for the same should invariably be

kept on record. Sufficient care should also be taken to ensure that follow up

action on all such issues is taken up in a reasonable and defined time schedule.

1.6 ESSENTIAL FEATURES OF GOOD PROJECT MANAGEMENT

(i) Work should not be awarded to the contractor until ideally all the requiredconstruction drawings are available. However, in case of any exigency,which should be recorded, it should be ensured that construction drawingsof foundation and floor one above or equivalent in other types of works areavailable for construction activities for at least 3 to 4 months. It shall bethe responsibility of the Project Coordinator to ensure that balancedrawings are finalized during this period.

(ii) Contract should not be awarded to the contractor until the site is availableand ready for the construction with clear title deed and free from

encroachments, encumbrance etc. If the Client insists on award ofcontract with only part land available and if RITES is to sign the worksContract as Agent / Power of Attorney Holder, the Client has to be advisedin writing that if balance land is not made available as per the ProjectSchedule in the Tender Document, the Contract may have to beterminated and the resultant liability which may include claims from thecontractor will be to Client’s account. It should also be checked inadvance to ensure that the approval of the Local Authorities is available foruse of the land for the intended purpose. Contract may not be awarded tillapproval of local body to the Layout and building plans is available.

(iii) Work should not be awarded till sufficient funds are deposited by the

Client. Where the full contract amount is not made available in advance by

the Client who desires to make available funds in installments, the Client

should be advised right at the initial stage that in case funds are not made

available promptly as asked for, the Works Contract will have to be

terminated and the resultant liability which may include claims from the

Contractor will be to Client’s account.

(iv) Contract conditions should not be ambiguous and vague. Proper care

should be taken at the time of preparation of BOQ.


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(v) All out efforts should be made to avoid any delay on part of RITES in

issuance of drawings, clarifications on specifications of items, processing

of bills for payment and giving decisions on matters referred to by the

Contractor.

(vi) No extra or substituted item should be executed at site without prior in-

principle approval from the competent authority of RITES and of the client,

if the agreement with RITES requires the same. However in case of

exigency the permission to execute the Substituted or Extra Item should

be taken from the SBU Head or project coordinator respectively. Pending

processing of the rate of Extra/Substituted Item, payment to contractor

should be released @ 75% of the rates as tentatively determined by the

SBU Head of RITES.

(vii) Quantities should not be executed beyond the permissible deviation limits

in BOQ items for which rates have been fixed in the Contract, without the

in principle approval of the Competent Authority of RITES and of theClient, if the Agreement with RITES requires the same. Payment to

contractors for such deviated quantities should be made in accordance

with contract provisions. Where the Contractor presses for payment for

quantity executed in excess of specified limits, for which rate can be

derived from BOQ rate, payment may be effected at 75% of BOQ rate with

the approval of SBU Head. But expeditious action should be taken to

decide on the revised rate.

(viii) It should be ensured that rates of Extra / Substituted Items as well as rates

for the BOQ items for quantities beyond the Limits for which rates are

available in the contract are duly accepted by the Contractor, beforereleasing payment of Final Bill.

(ix) Decisions sought by Project Coordinators with regard to drawings, details,

specifications, additional items, Extra / Substituted Items, operation of

BOQ items beyond permitted Limit etc. shall positively be communicated

to them by the respective SBUs within a reasonable time (say 15 days).

(x) Whenever there is any likelihood of increase in the cost of work beyond

the Clients’ Expenditure Sanction figure, Revised Estimate should be

prepared well in advance and submitted to the Client for revised

Administrative Approval and Expenditure Sanction.

(xi) All the letters and references of the Contractor should be replied to

promptly. No letter or reference of the Contractor should remain

unanswered.

(xii) Proper records should be maintained at site with regard to handing over of

the site and issue of drawings as well as daily progress reports with details

of plant, machinery and equipment deployed at site by the Contractor,

supervisors and labours deployed at site and hindrance details. Site Order


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Book is an important document to be maintained at site. Signature of the

Contractor should invariably be obtained as token of his acceptance in the

relevant records.

(xiii) All possible avenues should be explored to avoid contractual problemssuch as arbitration etc. All disputes should be attempted to be settledamicably within the frame-work of the Contract during the currency of theContract.

(xiv) The contract should be kept live by extending the contract, even suo-moto,

without prejudice to the right of RITES/Employer to levy Liquidated

Damages. The contract must be extended within the contract

period/extended period.


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SECTION 2

CONTRACT WITH CLIENT

2.1 SIGNING OF CONTRACT WITH CLIENT

Any project management starts with the entering into a Contract with the Client.

A good project management therefore has to start with a well drafted Contract

document where the responsibilities and scope of the work of RITES and the

Client are well defined. It is also to be ensured that the Contract does not result

in RITES entering into long term liabilities with the Client or with the contractors

engaged either by RITES or the Client.

Special care needs to be taken where RITES awards and signs the Contract with

Contractor for execution of work, even if these are for and on behalf of the Client.

In order to ensure uniformity, a format for Model Agreement between RITES and

the Client generally in line with the above stipulation is enclosed as Annexure

2.1. The Conditions in the model agreement are generally based on CPWD

Practice which are the ideal ones to protect the interest of RITES. They may be

relaxed to the minimum extent necessary, by the Competent Authority of RITES

during discussions / negotiations with the Client, keeping in view the scope of

work to be carried out.

2.2 DEFINITION OF DEPOSIT WORKS

Works which are got executed by RITES where Works Contracts are signed by

RITES for and on behalf of the Client and the Client makes funds available to

meet the Works Contract expenditure, RITES fees and other related expenses,

come under the category of Deposit Works. Before taking up any Deposit Work,

an Agreement has to be executed between RITES and the Client indicating

clearly the scope of work, the financial arrangements envisaged by the Client for

smooth progress of works and the items on which RITES should take prior

approval of the Client as well as the items on which RITES can take a decision

on its own with or without advice to the Client, during the course of execution of

work.

2.3 REALIZATION OF CONTRIBUTION FOR DEPOSIT WORKS2.3.1 Whenever a Deposit Work is to be carried out, full contribution should normally

be realized before any liability is incurred on account of the work. However, in

cases where RITES is satisfied that money will be forthcoming when required,

RITES may accept the request of the Client to make available the funds in

suitable installments. Efforts should be made to realize about 1% of the

anticipated project cost before preparation of preliminary estimates.

2.3.2 In cases of deposit works of financially sound Clients from whom receipt ofmoney is generally assured, ideally 33-1/3% of the estimated cost of the workmay be got deposited as advance. Thereafter, the expenditure incurred may


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be got reimbursed through monthly bills simultaneously with rendering of monthlyaccounts on the progress of work. The deposit of 33-1/3% or any otherpercentage mutually agreed to between RITES and the Client; obtained as thefirst installment should be retained for adjustment against the last portion of theestimated expenditure. With regard to Deposit Works involving Clients who haveearlier defaulted in payments, or where the works outlay is predominantly for

purchase of capital equipments and machineries, the entire deposit should beobtained in advance.

2.3.3 Where delays are experienced in obtaining funds and where expenditure has tobe incurred out of the 33-1/3% or agreed percentage reserve to keep the worksgoing, the matter should be brought up by the Project Coordinator to the notice ofSBU Head promptly for taking up the matter with the Client. It is reiterated thatno expenditure is to be incurred on Deposit Works out of RITES’ funds.

2.3.4 To enable the Client to provide additional funds in time, Revised Estimatesshould be sent to the Client, at the appropriate stages during the execution of

works wherever required.

2.3.5 It should be ensured that in no case deposits received in respect of one DepositWork are diverted to other Deposit Works even for the same Client. The onlyexception will be in case when the Client specifically authorizes in writing suchdiversions.

2.3.6 The Client on whose behalf the work is to be done is also to be made clear that

RITES does not bind itself to complete the work within the amount of estimate

and that the Client should agree to finance the excess that may occur. An

acknowledgement of this clear understanding is required to be obtained from the

Client before the work is taken in hand.

2.3.7 It should be ensured that the expenditure is not more than the deposits received

for the work. Where the SBU Head is doubtful about the timely receipt of the

deposits, matter should be taken up with the Client by giving notice that if further

deposit is not received, work may be stopped and any contractual liability arising

out of such stoppage of work will have to be borne by the Client. Efforts should

also be made by higher officers, if need be, to follow up with the Client. In

exceptional circumstances, if the work has to be continued, permission of the

Divisional Head should be obtained.

2.3.8 While submitting preliminary estimates for Deposit Works for obtaining Administrative Approval and Expenditure Sanction from the Client, a copy of the

terms and conditions under which the works would be taken up by RITES

generally as given in Annexure 2.1 should also be enclosed with the estimate.

Alternatively these provisions should be incorporated in the Agreement between

RITES and the Client.


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2.4 EXECUTION OF DEPOSIT WORKS

2.4.1 With regard to design, estimation and execution of work, instructions as

contained in subsequent sections should be followed. The scope of work should

not be altered without written permission of the Client.

2.4.2 SBU Heads should keep a close watch on the progress of expenditure onDeposit Works, particularly on the estimated cost of work, RITES fees and

related expenses, the total deposit received and the progressive expenditure. A

copy of the monthly expenditure statement should be forwarded to the Client by

the SBU Head indicating the additional funds, if any, to be made available,

keeping in view the trend of progress of works. Ideally a separate Bank account

should be maintained for each Deposit Work which should be credited with all

deposits of the Client and debited with payments to the Contractor, RITES’ fees

and other expenses as per provisions in the Agreement between RITES and the

Client. This will facilitate easy reconciliation of accounts, monthly and on

completion of works. It is desirable that in case of opening of such Bank

Account, the Agreement between RITES and the Client clearly stipulates whether

interest accruing out of short term deposits from the surplus funds if any available

in the Account from time to time will be retained by RITES or refunded to the

Client. The consultancy fee to be quoted by RITES should take into

consideration this factor. Where the Client does not agree for the interest on such

short term Fixed Deposits being credited to RITES account, keeping in mind the

Income Tax implications on accrued interest and expenditure in management of

such short term fixed deposits, the Client’s funds may be kept in current account

without any conversion into Short Term fixed deposits.

2.5 ENDORSEMENT OF COPIES OF DOCUMENTS TO THE CLIENT

2.5.1 The Agreement between RITES and the Client will indicate what items willrequire prior approval of the Client, what items will require post facto approval ofthe Client and what items can be decided by RITES and the Client just keptadvised.

2.5.2 Irrespective of the provisions in the Agreement between RITES and the Client,copy of the following documents should be endorsed to the Client without anydelay.

(i) Detailed Estimate as sanctioned by RITES

(ii) Detailed drawings as approved by RITES

(iii) Tender Document

(iv) Letter of Acceptance to the selected Contractor

(v) Contract with the Contractor / Supplementary Agreement

(vi) Letters of Extension of Time issued to the Contractor

(vii) Deviations and Rates as approved by RITES for Extra items, Substituted

items and Deviation in Quantity of BOQ items


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(viii) Notice to Contractor on Termination / Rescission / Foreclosure of Contract.

(ix) Running Account Bills and Final Bill with supporting documents

(x) As–built drawings / Maintenance & Operation Manuals (where applicable).

(xi) Completion Certificate

(xii) Maintenance Certificate


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SECTION-3

PROJECT ORGANISATON AND RESPONSIBILITY

FOR PROJECT IMPLEMENTATION

3.1 ORGANISATIONAL SET UP

Every project involving field supervision will have :

i) A field unit headed by a Controlling Site Engineer designated asControlling Engineer/Project Manager/Chief Project Manager, who may beassisted by one or more Engineers and Technical Assistants designatedas Site Engineers.

ii) One of the officers at SBU office designated as Project Coordinator for

liaison with the field office and who will be responsible for all actions to be

taken in the SBU office in connection with that project.

3.2 FIELD ORGANISATION

The strength of field organization will depend on the magnitude of the project in

terms of its financial value and the complexity of works involved. The staff

strength will be deployed on the basis of the funds provided in the approved input

estimate and the average monthly expenditure for different grades of staff. In

cases where a definite commitment has been given to the Client on the number

and grades of staff that will be deployed by RITES for the Project, this

requirement should be kept in mind while deciding on the field organization.

Where required, deployment of Technical staff on contract terms for limited

periods may be resorted to.

The senior most officer in the field organization irrespective of his grade, will be

designated as the “Controlling Engineer/Project Manager /Chief Project

Manager” and the technical staff working under him will be designated as “Site

Engineers”. While the Controlling Site Engineer will be overall responsible for all

the field activities as defined in a subsequent para 3.5, he can allocate specific

duties to his supporting technical staff depending on the number available and

their grades.

3.3 ORGANISATION AT SBU OFFICE

The SBU Head who may be of the grade of GGM, GM or CPM will be dealing

with a number of projects at any one time. He will also be assisted by officers

and staff in both technical and financial matters. SBU Head will allocate projects

among his senior technical officers who will work as Co-ordinating Officers for the

Project or Project Coordinators. Each such technical officer who may be G.M,

Addl.GM, Jt.GM, Sr. Dy.GM, Dy.GM or Manager may be required to deal with

one or more projects and it will be his responsibility to take care of all activities

related to the Project for which the SBU office is responsible as indicated in


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subsequent Para 3.6. The nominated Project Coordinator will also keep the

SBU Head advised fully on the Project and initiate action for referring through

SBU Head to the higher authorities in the Head Quarters, proposals which

require sanction of higher authorities at Head Quarters level.

The nominated Project Coordinator will take the assistance of the officers and

staff in the Technical Section of the SBU office for dealing with all technical

matters related to the project. He will liaise with the Accounts Officer dealing with

all financial matters related to the Project.

3.4 DESIRABLE LEVEL OF ORGANIZATION

The table below gives the desirable level of organization for projects of different

values. The SBU Head can modify them suitably depending upon the nature and

complexity of the project and the availability of engineering personnel under him:

Project Size ProjectCoordinator

ControllingSiteEngineer

SiteEngineer

For Projects costing upto 5 Cr. Rupees Manager Engineer NIL

For Projects costing between 5 & 20 Cr.Rupees

Manager AM Engineer

For Projects costing between 20 & 50 Cr.Rupees

DGM Manager Engineer

For Projects costing above 50Cr.Rupees

Sr.DGM/Jt. GM/

AGM

DGM/ Sr.DGM

Engineer

3.5 FIELD ACTIVITIES FOR WHICH CONTROLLING SITE ENGINEER WILL BERESPONSIBLE

3.5.1 PRE-CONSTRUCTION STAGE

a) Check the “Good for Construction Drawings” with the site conditions and

see if any modification will be required to be made in the drawings such as

change in the layout, type of foundation, increase in depth of foundation,

increase in plinth height etc. If any such modifications are called for, the

same should be brought to the attention of SBU office promptly for takingnecessary action.

b) Do a general check of the BOQ in the Contract Agreement with the “Goodfor Construction Drawings” and see if there are any obvious errors such asmissing items of work, incorrect estimation of quantity of any item, rates infigures and words not tallying for any item etc. If any such error is noticed,

it should be brought to the attention of SBU office promptly for takingnecessary corrective action.


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c) Check if the Contractor has submitted the following documents and if so,

xerox copies of the same should be retained in the Site Office and the

originals sent to SBU Office. The list given below is based on CPWD

General and Special Conditions of Contract and may require modification

depending on the provisions contained in GCC & SCC of other type of

contracts such as that of World Bank, Indian Railways etc as will berequired to be followed for that work.

i) Performance Guarantee Bond.

ii) Insurance Policy on Secured Advance on perishable materials.

iii) Bank Guarantee Bond on Mobilization Advance.iv) Hypothecation deed on Plant, Machinery Advance

v) Insurance Policy on Plant & Machinery Advance

vi) Bank Guarantee Bond on free supply of materials.

vii) License under the Contract Labour (R&A) Act and Rules.

viii) Indemnity Bond against patent rights.

ix) Indemnity Bond on Employer’s Plant & Machinery hired to theContractor.

x) Registration with Sales Tax Department for Sales Tax on Works Contracts.

xi) Insurance Policy on Cost of Works.

xii) Third Party Insurance.

xiii) Workmen’s Insurance.xiv) Indemnity Bond on damages to persons and property.xv) Registration with Service Tax Department

xvi) Registration with Labour Department

d) Check with the provisions in the General and Special Conditions ofContract and see if the following requirements have been complied with

i) Site Laboratory fully equipped and manned by adequate numbers oftechnically qualified staff.

ii) Availability of qualified and experienced technical personnel at site.

e) Check the quality of construction materials arranged by the Contractor by

arranging tests where required and see if the Manufacturers’ Test

Certificates have been furnished, where the Contract provides for the

same.

f) Check if proper storage arrangements for Cement, Steel and other

materials have been provided by the Contractor.

3.5.2 CONSTRUCTION STAGE (WORKS IN PROCESS)


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a) Maintenance of records at site of work as detailed in Sections 20 and 27 of

this book.

b) Conducting mandatory and other tests on materials and workmanship as

indicated in Section 16 of this book, and as per ‘Checklists of Specifications

for Civil Engineering works for Quality Control’ issued separately.

c) Quality control and Technical Audit on works.

d) Keeping a watch on the Contractor’s compliance with Labour Regulations

as detailed in Section 18 of this book.

e) Taking measurements of work including test checking as detailed in

Section 21 of this book.

f) Submission of Running Account Bills with all accompanying documents as

stipulated in Section 24 of this book.

g) Processing Contractor’s submissions with his recommendations to SBU

office on the following:-

i) Rates for deviated quantities of BOQ items, substituted items andnonscheduled items.

ii) Extension of Time with or without compensation.

iii) Acceptance of substandard work and reduced rates for the same.

iv) Contractor’s claims.

h) Issue of notices to the Contractor on progress of work, quality of work,

number and competence of technical personnel deployed, functioning ofSite Laboratory etc.

i) Keeping a watch on deviation of quantities, reasons thereof and

recommend to SBU office, measures to minimise deviations.

3.5.3 CONSTRUCTION STAGE (ON PHYSICAL COMPLETION )

a) Inspect the works on receipt of report from the Contractor that the works

are completed, point out the deficiencies, if any, and issue Provisional

Certificate of Physical Completion/ Completion Certificate.

b) Submission of Final Bill with all accompanying documents as stipulated in

Section 24 of this book.

c) Furnish to SBU office comments on the claims, if any, submitted by the

Contractor along with the Final Bill.

d) Ensure that the Contractor cleans up the area before handing over the

completed works.


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e) Hand over the completed work to the Client under proper Handing over /

Taking over Notes along with Guarantees /Warrantees (if any), Completion

plans and Operations & Maintenance Manual (if any).

3.5.4 POST CONSTRUCTION STAGE

a) Check on the defects if any pointed out by the Client during the

maintenance period and give notice to the Contractor for rectification of the

defects.

b) Issue “Maintenance Certificate” to the Contractor on expiry of Maintenance

Period after checking that all defects have been rectified. Arrange refund of

the balance Security Deposit as per provisions in the Contract.

c) Furnish to SBU office for passing on to the Client, copies of Guarantee

Bonds for specialized works.

d) Furnish to SBU office all relevant records properly indexed to facilitatedealing with further Arbitration/Court cases, if any.

3.6 SBU OFFICE ACTIVITIES FOR WHICH THE PROJECT COORDINATOR WILL

BE RESPONSIBLE

3.6.1 PRE-CONSTRUCTION STAGE

a) Co-ordinate with client regarding:

(i) Entering into contract with client in the format given at Annexure

2.1 modified, if necessary with the approval of competent

authority.

(ii) Obtaining his functional requirements relating to the project.

(iii) Obtaining his approval for preliminary drawings/General

Arrangement Drawings, specifications etc

(iv) Obtaining his approval for preliminary cost estimates

(v) Realization of funds for initial expenses

b) Take necessary action for:

i) Preparation of drawings, design and estimates, if required,

through sub-consultants.

ii) Appointment of sub-consultants.

iii) Preparation of input estimates and obtaining approval of the same

from competent authority after vetting by finance.

iv) Preparation of tender documents, obtaining approval of the same

from Competent Authority, inviting tenders, co-ordinating for


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opening of tenders, for evaluation of tenders by Tender

Committee and for award of work after acceptance of tender by

the accepting authority.

v) Signing of contract by competent authority and sending copies of

the same to finance and Controlling Site Engineer.

c) Where the Controlling Site Engineer recommends modifications of “Good”

for Construction Drawings” as indicated in Para 3.5.1(a), to issue, in

consultation with the Client, necessary corrections to the drawings, workout

the Contract implications and advise the Contractor suitably.

d) Where the Controlling Site Engineer points out errors in the BOQ in the

Contract Agreement when compared with “Good for Constructions

Drawings” as indicated in para 3.5.1 (b), to scrutinize and take corrective

action in consultation with the Client to advise the Contractor suitably .

e) Check the originals of the documents sent by the Controlling Site Engineerin terms of para 3.5.1(c) and see if they are in order. Keep them in safe

custody along with the originals of Contract Agreement and one set of

“Good for Construction Drawings.”

3.6.2 CONSTRUCTION STAGE (WORKS IN PROGRESS)

a) Do periodic inspection of the site of work and see if the records are being

maintained as detailed in Sections 20 and 27 of this book. Record

inspection notes in the Register covering progress and quality of the

materials and workmanship. Carry out mandatory tests, if any, due at the

time of inspection. Test check measurements, particularly on classificationof soil and items of large value, where there is only one Site Engineer at

the project site.

b) Check the Running Bills and accompanying documents as stipulated in

Section 24 of this book and take necessary follow up action.

c) Submit to the Client, periodic Progress Reports and Statements of

Accounts as stipulated in the Agreement between RITES and the Client.

d) Take prompt action in processing approval of the competent authority and

the Client where necessary, and advise the Client, Contractor and the

Controlling Site Engineer on the following:

i) Rates of deviated quantities of BOQ items, Substituted items and Non-schedule items.

ii) Extension of Time with or without levy of compensation.

iii) Acceptance of substandard work and rates for the same.

iv) Contractor’s claims.


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e) In cases where the Controlling Site Engineer foresees large deviation of

quantities, to take prompt action to study his recommendations and advise

the Controlling Site Engineer on the action to be taken.

f) Keep a watch on the validity of Bank Guarantees and take action as

detailed in Section 24 of this Document.

3.6.3 CONSTRUCTION STAGE ( ON PHYSICAL COMPLETION)

a) Check the Final Bill and the accompanying documents as stipulated in

Section 24 of this book and take necessary follow up action.

b) Scrutinize the claims, if any, submitted by the Contractor along with the

Final Bill and get the decision of the Competent Authority in consultation

with the Client on action to be taken for dealing with the claims.

c) Submit to the Client the Final Statement of Accounts as provided for in the

Agreement between RITES and the Client.

d) Submit to the Client the following documents:

i) Completion Certificate

ii) Sets of Completion Plans and Operating & Maintenance Manual asprovided for in the Contract

iii) Charge Paper-Handing over by the Controlling Site Engineer to therepresentative of the Client, the completed works.

3.6.4 POST CONSTRUCTION STAGE

a) Submit to the Client the following documents:

i) Maintenance Certificate

ii) Bank Guarantees/Guarantees for specialized works.

b) Keep safe custody of all records as detailed in Annexure 19.5 of this book.

c) Deal with Arbitration/Court cases as detailed in Section 19 of this book.

d) Deal with Inspection Notes of CTE as detailed in Section 26 of this book.


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SECTION 4

PREPARATION OF ESTIMATES

4.1 PRELIMINARY ESTIMATE/ABSTRACT ESTIMATE

4.1.1 Preliminary Estimate is required to be prepared in order to facilitate the Client toaccord Administrative Approval and Expenditure Sanction. These estimatesshould be prepared on the following basis

Building Works:- On the basis of plinth area rates published by CPWDwith Delhi Base index of 100 as on 1/10/2007 read with upto datecorrection slips and updating it with cost index. CPWD issues such CostIndex figures from time to time to facilitate updating of plinth area rates.Extra provisions for superior specifications not covered in the scope ofPAR to be taken in the Preliminary Estimate.

Railway Works:- Where supply of P. Way material is to be given by Zonal

Railway:-

Track items based on the rates circulated by Railway Board/Zonal

Railways and adding the factors of transportation by road, contractor’s

profit, taxes etc. Earthwork and ballast supply based on the prevailing

rates in the project area.

Railway Works:- Where supply of P. Way material is not to be given by

Zonal Railway:-

A) P. Way Materiali. The rates of rails from SAIL which can be obtained from their Delhi

or Zonal / State Offices.

ii. The rates of sleepers shall be based on rates to be obtained fromPSC sleeper manufacturing company or companies supplyingsleepers to the Railways in the area where work is to be executedor else based on recently accepted rates in the area, if available.Rates should be for supply of sleepers to parties other than IndianRailways.

iii. The rates of Points & Crossings and PSC sleepers for the sameshall be based on rates circulated by Railway duly enhanced by the% by which the rates of rails/sleepers as obtained vide (i) & (ii)above are over and above Railway circulated rates.

B) Execution of work

The rates for execution of PW works should be based on ratescirculated by Railways.


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C) General:

In addition to above, provision shall be made for–

i) Sales Tax/VAT as applicable.

ii) Freight including handling charges.

iii) General charges including charges for Bank Guarantees andInsurance etc. as required.

iv) Works Tax.

v) T & P charges.

vi) Contractor’s profit and overheads

vii) Service Tax, Workers Welfare Cess Act 1996 etc.

Road Works:- Length of road, no. of lanes etc worked out and the rate per

unit area, length or other such method adopted for ready and rough

calculation, so as to give an approximate idea of the cost involved in the

proposal.

Railway Bridges:- On the basis of Bridge opening / span and the number

of Tracks to be crossed, adopting Unit Rate per metre of opening per

Track.

Road Over Bridges:- On the basis of area of road on bridge proper and

on approaches, Unit rate per Sq. Metre of approach will vary depending on

the design.

4.1.2 The Preliminary estimate should invariably provide for the probable escalation in

the prices based on trend of increase in price of materials and labour for theperiod between estimate preparation and start of work as also during the periodof construction. In case these provisions are not accepted/approved by client, itsimplication should be conveyed to them in writing.

4.1.3 The estimate should include RITES’ fee which should include fees of sub-consultants, for project management.

4.1.4 Following steps need to be taken before preparation of the estimates:

Freeze the requirement of project and specifications of work with the Client.

Prepare concept plan based on the requirement and obtain approval of theClient.

Where required, conduct sub-soil investigations and tests to determine subsoilstrata and the safe bearing capacity of soil for design of foundations.

4.1.5 While forwarding the Preliminary Estimate to the Client for according Administrative Approval and Expenditure Sanction, an indication shall be given inthe history sheet that the cost projected in the Preliminary Estimate is liable torevision due to probable escalation in cost of construction apart from reasonssuch as change in scope, design and specifications etc, which may be desiredby the Client at a later date.


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4.2 DETAILED ESTIMATES/TECHNICAL SANCTION

4.2.1 As soon as Administrative Approval and Expenditure Sanction for Work isreceived based on the Preliminary Estimate and an assurance from the Clientthat the site is available duly approved by the Local Body for its use for thepurpose intended, General Arrangement Drawings and Detailed drawings will be

prepared by RITES or got prepared from RITES sub-consultant. Based on thedrawings, Detailed Estimate will be prepared.

4.2.2 Detailed Estimate should, as far as possible, be prepared for the entire project asa whole. It will, however, be advisable to decide on the tender packages inadvance and prepare estimates packagewise. Technical sanction to the DetailedEstimate should be obtained from the competent authority as per schedule ofpowers of RITES.

In case of a Composite Estimate, the concerned disciplines likeCivil/Electrical/Signal/Mechanical etc, shall obtain Technical Sanction for theirrespective portion from the SBU Head and then forward the same to thecompetent Authority for consolidation and sanction.

4.2.3 In case of exigencies of work/requirement of the Client, Detailed Estimate for apart project may be prepared and Technical Sanction obtained for the same.Reasons for the same, however, should invariably be kept on record.

4.2.4 In case the Estimated Cost including the element of RITES fees, Price Escalationduring the course of execution of works and unforeseen items, exceeds theamount for which Administrative Approval and Expenditure Sanction has beenobtained inclusive of the allowable %age excess as per contract agreement withthe Client, the Client should be advised of the revised increased Cost for fresh

Administrative Approval and Expenditure Sanction.

4.2.5 When RITES undertakes a project where Detailed Estimate/ DPR has alreadybeen approved by the Client, no separate Technical Sanction to the estimate isrequired from the competent authority of RITES. However during the scrutiny ofsuch estimates, if deficiencies are noticed which have cost implications, thesame should be brought to the notice of the Client after it is seen by thecompetent authority of RITES. The Project Coordinator will be responsible forsuch scrutiny of estimate and for taking necessary follow up action with theClient.

4.2.6 The Detailed Estimate will include:

References of Name of Work, Estimate Number and a report as detailed in para4.2.7.

Name and Designation of the official preparing the Estimate and the official doingtechnical check.

Detailed Statement of Measurements for each item of Work based on thedrawings.

Rate analysis for items not available in Standard Schedules of Rates along withsupporting documents for rates of materials and labour.

Supporting documents when rates are based on prevailing market rates in theproject area.


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4.2.7 Report on the Estimate should be prepared in a lucid form understandable by theClient. It should be comprehensive enough under each sub-head as mentionedbelow.

i. History: - Particulars relating to the initiation of and reasons leading up tothe proposal and its general purposes including reference to previous

correspondence, documents and specifications, where necessary.ii. Design:- A description of the original proposals and those finally adopted

particularly with regard to location, sitting and design, also with reference

to specifications, calculations and drawings, where necessary, type of

foundation, type of superstructure plinth area and no of storeys.

iii. Scope:- An explicit statement as to what work is and what is not covered

by the estimate; also a reference to what arrangements are being made for

any portions of work which are not included in the estimate.

iv. Rates:- Particulars and basis as to how the rates have been arrived at

giving references to the Standard Schedule of Rates and Non-ScheduledRates and also to the details accompanying the estimate, where

necessary, with any special explanation connected therewith.

v. Cost:- Estimated Cost of the work and a comparison with the amount

originally provided under any previous administrative sanction or detailed

estimate in case of revision.

vi. Method:- The method proposed for carrying out the work - whether by

lump sum contract, item rate or percentage rate contract or any

combination of these.

vii. Establishment:- Details of any provision made in the estimate for work-

charged establishment, when necessary.

viii. Construction Plants:- Any special methods of construction to be adopted

with reference to specifications, etc. and details of the arrangements that

have been provided for necessary Construction Plant, tools etc.

ix. Land:- Whether land for the work is available free of encumbrance.

Arrangements for acquisition of land, where necessary.

x. Time:- Estimated time of completion from the date of award of Works

Contract.

xi. Brief note on the special construction difficulties, if any, that are likely to be

encountered during the project construction stage.

4.3 DETAILED ESTIMATES FOR TECHNICAL SANCTION - PROCEDURE FOR

PREPARATION

The procedure to be adopted for preparation of Detailed Estimate will be as

under:


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i. As far as possible for building works, the items of works should beclassified under various items of DSR (Delhi Schedule of Rates). Thelatest version now in use is DSR 2007. The cost as per DSR should beenhanced by prevailing %age of Cost Index in the project area, circulatedby CPWD. CPWD issues from time to time the prevailing Cost Index indifferent regions of the country.

ii. Where other Schedules are applicable (MES, Railways, State PWD etc.),

the items may be taken from the corresponding Schedule of Rates duly

enhanced by the prevailing Cost Index.

iii. Items that cannot be covered by any Standard Schedule of Rates will

come under the category of Non Schedule items. The estimates for these

items should be prepared as per procedure explained in para 4.4.

iv. The minimum level for preparation of Detailed Estimate shall be Engineer.

The Detailed Estimates are to be technically checked by the Project co-

ordinator or a nominated officer not below the rank of a Manager, before

putting up the same to the competent authority for Technical Sanction. In

case where the Detailed Estimate has been got made out and approved

by the Client, para 4.2.5 may be referred to.

4.4 DETAILED ESTIMATE - NON SCHEDULE ITEMS - MARKET RATE

ANALYSIS

4.4.1 For Non Schedule items, the cost has to be determined for each item based onMarket Rate Analysis which will include the cost of the materials and labour tothe contractor at site of work plus a certain percentage of such cost to cover alloverheads and profit. This percentage representing the element of overheads

and profits has been fixed at different levels by different organizations likeCPWD, MES, NHAI, State PWDs etc. For the purpose of uniformity in RITES,the following procedure may be adopted to work out the Market Rates for anynon-Scheduled item based on a breakup into the elements of Materials, Labour,Hire / Running charges of Plant & Machinery, Sundries and Overheads & Profit.

a) (i) Materials (other than Track Works):- The quantity of materials ofdifferent types including permissible wastage may be determined.CPWD has made out Rate Analysis for various DSR items. They canbe taken for guidance if the Non Scheduled item is an item similar to aDSR item. In case there is no similar DSR item, the quantity ofmaterials will have to be assessed from publications such as Nabhi’sCompilation of Analysis of Rates or similar publications, technical

literature of manufacturers of specialized products, experience inexecution of similar works in the past etc. The cost of materials shouldinclude the element of transport to site.

Market rate for materials should be ascertained by getting quotations inwriting from suppliers preferably for delivery and stacking at site. Incase of difficulty in getting written quotations due to reluctance of thesuppliers, the rates should be collected and recorded with name andaddress of the suppliers by the concerned officer. Where the ratequoted by the supplier is for supply at the Dealers’ godown, theelement of cost of transport to site and stacking should be added and


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this can be based on DSR rates for similar items increased by the CostIndex notified by CPWD.

The least rate out of the quotations, obtained for the lowest

accepted/acceptable make/specification should be adopted and based

on the rates for supply at site and the quantity including permissible

wastage, the cost of the materials to be arranged by the contractor atsite of work can be determined. If the Contract is to provide for supply

of any materials at a fixed cost to the Contractor, the cost of materials

should be based on the issue rate at site of work.

(ii) Materials (Track Works):- In the case of Track Works, for assessing

the quantity of different items of Track materials such as rails, sleepers

and fittings, including wastage, sanctioned estimates for similar works

in the recent past by the Zonal Railways may be taken for guidance.

Market rates for the track materials should be ascertained from the

likely suppliers irrespective of the number of such suppliers. The rateshould be assessed for supply and stacking at site inclusive of all

duties and taxes.

The least rate from the quotations or as ascertained from the likely

suppliers as indicated above should be adopted and based on the

quantity including permissible wastage, the cost of materials to the

Contractor at site of work can be determined.

If the contract provides for supply of Track materials to the Contractor,

at fixed rate, the cost of Track materials should take into account such

issue rate at site of works. If materials are to be supplied elsewhere,the cost of transport and stacking at site of work should be added

suitably.

b) (i) Labour (Other than Track works):- The requirement of labour will

cover different categories - unskilled, semiskilled, skilled and highly

skilled. The requirement per unit of work in terms of mandays has to

be assessed based on previous experience or from literature, if any,

available. If the Non Scheduled item is similar to a DSR item, that can

be taken for guidance. In case there is no similar item, action may be

taken on the same line as indicated for materials in Sub Para a(i)

above. As regards the prevalent daily market rates for differentcategories of labour, the same has to be ascertained from Market by

either of the following methods :

l Rate being paid by the contractors operating in the area.

l Rate at which Labour contractors supply labour. From the ratesquoted, 10% may be deducted towards Labour Contractor’s profit,to arrive at the rate at which the Labour is paid by the LabourContractor.


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While ascertaining the Market Rates, the following may be kept in

mind.

l Rates should be ascertained from at least three different sources.

l Rate should be for casual Labour and should include the elements

of compensation towards weekly rest and other facilities, if any,such as housing, medical attention, Insurance etc.

The daily rate to be considered shall be the least of the rates obtained

from 3 or more different sources. It should be checked if there are any

Statutory Minimum Daily Wages declared by the Central or State

Government for that category of Labour. If there is any such rate, the

Daily rate to be adopted for Market Rate Analysis should not be less

than the highest of the Statutory Minimum Daily Wages laid down by

different Bodies. Based on the Daily rates as determined for different

Categories of Labour and the requirements in terms of Mandays per

Unit of work, the Labour element can be worked out.

(ii) Labour (Track Works ):- The requirement of labour of differentcategories unskilled, semiskilled, skilled and highly skilled for differenttypes of works should be ascertained from the Zonal Railways. Whererecent sanctioned estimate of Railways for similar work is available,the details can also be extracted from such estimate. Assessment ofthe daily market rate and statutory minimum wages shall be done inthe same manner as indicated in Sub para b(i) above. If however,such details of manpower category-wise for different types of worksare not readily available from the Zonal Railways, the Labour elementcost per unit of the particular type of work inclusive of provision forTools and Plants can be ascertained from the Zonal Railways for anyrecently concluded contract.

c) Hire / Running charges of Plant, Machinery and Sundries:- If anyheavy/specialised Plant / Machinery / Equipment is required for thework, its hire/running charges be ascertained.

d) (i) Contractor’s Overheads and Profit :- (Building Works, Colonyroads etc.) For uniformity, this should be taken at 15% of the cost ofmaterials, labour and on hire/running charges for Plant and Machinerybased on CPWD practice.

(ii) Contracto r’s Overheads and Profit (Track Works)The following provisions should be made towards Contractor’s

Overhead & Profita) On Track Materials

If arranged by the contractor at his cost @ 15% of the cost of such

material

If arranged by RITES and supplied free or at fixed rates to the

contractor - @ 5% of cost of such materials.

b) On other than Track Material arranged by the contractor - @ 15%

of the cost of such material.


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c) On Labour

If cost of labour has been assessed based on manpower category –

wise @ 15% of cost of labour.

If cost of labour has been assessed based on recently concluded

contract for similar works – no provision need be made.

d) On Hire/ running charges of Plant & Machinery and sundries - @

15% of the cost of such items.

(iii)Contractor’s Overheads and Profit (Highway Works):- Contractor’s

Overheads and Profit should be taken @ 20% over cost of materials,

labour and hire/running charges for projects costing upto Rs. 50 Crores.

For projects costing over Rs. 50 Crore, the same may be taken @ 18%

based on MORTH practice as per their “Standard Data Book for

Analysis of Rates-2003.”

(iv) Contractor’s Overheads and Profit (Bridge Works):- Contractor’soverheads and profit may be taken as follows on cost of materials,labour and hire / running charges of Plant and Machinery: (Based onMORTH practice as per their “Standard Data Book for Analysis ofRates-2003”)

(i) For major bridges including State-of-Art Bridges – 35%

(ii) Minor bridges included in Highway/Rail packages – 30%

(iii) Rehabilitation of bridges – 40%

4.4.2 The Non Scheduled item rate as worked out above, should be compared with theprevalent Contract rate for same item in the same area, under other ongoing orrecently executed contracts, if such information is available. This will facilitate across check of the reasonableness of rate as worked out. It should however beensured that the Contract rate ascertained is itself a reasonable one determinedon basis of open tender and is not an abnormally high or low rated item. Allrecords in support of the analysis for Non Scheduled item rate should bemaintained and these will include quotations for different materials and differentcategories of labour, Statutory Orders of Central / State Government on MinimumWages for Labour and State Governments’ notification on Sales Tax on WorksContracts.

4.5 DETAILED ESTIMATE - COMPILATION

4.5.1 The Detailed Estimate will first be made out to reflect the following elements :

a) Cost of Schedule of Rate items with escalation as per prevalent Cost Indexdeclared by CPWD / as accepted for similar works in the recent past forNon CPWD contracts.

b) Cost of Non Schedule items based on Market Rate Analysis. Normally

items of Stores conforming to relevant IS Specifications or other approved

and specified standard specifications like BS, DIN should be considered

unless Client specifically wants certain makes to be included in which case


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Detailed Estimate/Justified Cost should be based on lowest acceptable

Make / Brand specified, provided it is available near the project site.

c) In case Sales Tax or VAT on Works Contracts is being levied in the State,

that element has also to be considered. VAT @ 2% is applicable on

Works Contract drawn under the jurisdiction of Government of Delhi. This

may vary from State to State. On VAT on Works Contract, the following

extracts from Para 20.4.3.1 of CPWD Works Manual 2010 may be kept

note of.

The element of VAT will not be applicable in the following cases.

i) Contracts / Work Orders for Hiring Vehicles

ii) Contracts / Work Orders for watch and ward

iii) Contracts/ Work Order for all kinds of Horticulture works

iv) Contracts / Work Orders for miscellaneous services such as running /

maintenance of computer service, running of vehicles etc

v) Any other similar contract / work order having no involvement of

materials.

vi) The element of Building and other Construction Workers’ cess as

applicable to the State / Union Territory will not be applicable for purchase

of materials.

d) Service Tax on Works (if applicable) at 4% or at rate as laid down on cost

of items (a) and (b) above

e) Building and other construction workers Welfare Cess at 1% of cost of

items (a) and (b) above. This rate may vary from State to State and may

be modified accordingly. Some States have still to impose this.

f) Contingencies at 5% on items (a) to (e) if the total is upto Rs.1.00 Crore

and at 3% on items (a) to (e) subject to minimum of Rs.5 lakhs in case

the total of items (a) to (e) is more than Rs.1 Crore.

g) RITES’ fees at the rate agreed to between RITES and the Client on items

(a) to (f).

4.5.2 In case of works of specialized nature such as Box Pushing, Construction of PSC

Girder Bridge over Railway Tracks etc where the cost of enabling Works is

substantially high and also dependant on site conditions, the Detailed Estimate

may be made out based on the last accepted rate for similar works in that area,

duly enhanced by the relevant cost Index.


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4.6 TECHNICAL CHECK OF DETAILED ESTIMATES

The Detailed Estimate is to be technically checked by the Project Coordinator or

a nominated officer not below the rank of a Manager before putting up the same

to competent authority for Technical Sanction. In case of a composite estimate,

the concerned disciplines like Electrical/Signal/ Mechanical shall obtain technical

sanction of their competent authority before sending it to Co-ordinating

SBU/group. The technical check shall cover the following in particular in addition

to the general check on the lines indicated in Paras 4.3 and 4.4 above.

a) The Cost Index adopted on the DSR or other schedules items has beencorrectly taken.

b) Cost of Non-schedule items has been prepared, where feasible, correctlyby comparison with a similar item existing in the Standard Schedule ofRates.

c) In case of Non-schedule items prepared based on the manufacturer’s

specifications or RITES’ experience, the quantities of materials, wastages,etc. have been correctly considered.

d) The elements of taxes/cesses, overheads and profit, contingences and

RITES’ fee have been taken as per standard norms or provisions in the

contract agreement with the Client as applicable.

4.7 SUPPLEMENTARY ESTIMATE

Any modification of a project thought necessary, while a Work is in progress,

which is a material modification to the Scope of Work as already sanctioned must

be covered by a Supplementary Estimate, accompanied by a full report of thecircumstances, which render it necessary. The abstract must show the amount

of the original estimate and the total amount for which sanction is required

including the supplementary amount. This Estimate will also have to be got

sanctioned by the Competent Authority of RITES after acceptance by the Client.

4.8 REVISED ESTIMATE

When an excess over the Sanctioned Estimate is foreseen and there is likely to

be unavoidable delay in the preparation of a Revised Estimate, an immediate

report of the circumstances should be made to the RITES’ authority whose

sanction will ultimately be required and to the Client. When a Revised Estimate

is submitted, it must be accompanied by a statement comparing it with the latest

existing sanction of the competent authority and by a report showing the

progress made upto date. The Revised Estimate will have to be got sanctioned

by the Competent

Cp Management

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