Upload
hasyimah-ismail
View
149
Download
1
Tags:
Embed Size (px)
Citation preview
CONTRACT PROCEDURE
TOPIC 3
CONTRACT PROCEDURE
TRADISIONAL
SYSTEM
•Contract Base on Bill Of Quantity
•Contract Base on drawing & Spesification
STRUCTURE OF CONTRACT
PRINCIPLES
• Offer
•Acceptance
• consideration
•Intention
•Agreement legally bound by law
• Flawless record on both parties
•Bound contract executed
Made in writingGeneral
Construction
CONTRACT
DIFINATION
ALTERNATIF
SYSTEM
Cont.Cont.ALTERNATIF
SYSTEM
•PC + Target Cost
•PC + Fixed Fee
•PC + Percentage Fee
•Kontrak Harga Tambah (Cost Reimbursement)
• Turnkey
Contract
TYPES OF
SUB CKONTRACTOR
DOMESTIC SUB CONTRACTOR
NOMINATED SUB CONTRACTOR
NOMINATED SUPPLIER
MAIN CONTRACTOR RESPONSIBILITY
DIFFERENCE
WORK PROGRESS PAYMENTS
APPOINTMENTS
RIGHT ON THE MAIN CONTRACT PAYMENTS
In terms of:
•The main responsibilities of the contractor
•Progress Payment
•Appointments
•The right main contractor on the payment
DEFINITION OF CONTRACT
• A contract is an agreement is sealed when a party agrees to accept the bid from another one party.
• The contract is sealed when the client appoints the contractor as the project executor.
• The contractor accepts the client’s offer to complete a project by complying to all terms in the sealed contract.
The contractor will perform the work so perfectly, and the owner will be responsible for making payment against the work.
It is made in writing using a valid form
PRINCIPLES OF CCONTRACT
INTENTION
• Client and contractor intend to bind a sincere, responsible and mutual relationship and will not breach all the conditions stated in the contract.
OFFER / TENDER
• According to the contract of 1950 (Revised 1974) - Section 2 (A),
• Client states intention and invites contractor to execute the planned project.
ACCEPTANCE
According to the contract of 1950 (Revised 1974) - Section 2 (b)
Contractor accepts the client’s proposal without other conditions imposed other than as stated in the contract
Conditional acceptance is invalid and not enforceable by contract law.
A proposal when accepted becomes a promise.
CONSIDERATION
Consideration is the action taken by the recipient to accept the tender/offer.
Tender acceptance is usually done either verbal, in writing or by action.
Agreement legally bound by law
• Any agreement between the proposer and the receiver ( client and contractor) is legal according to the Government’s law stated in the contract.
• Agreement that violates state law is invalid and can not be enforced in accordance with the Contract Act 1950 (Revised 1974).
Flawless record on both parties
• No record such as careless work, breach of contract, or bad work performance before binding the contract.
Bound contract executed
• Bound contract does not burden of both parties ( client and contractor), and will not create problems during its execution.
Relationship between contract and offer
• Tender is a statement from the client that provides information to the contractor about the proposed project.
• The tender can be awarded either by competition or by negotiation.
• The main function of a tender is that the client can select the most qualified contractor to carry out the project.
• A contract is an agreement between the client and a contractor bound after the client agreed to appoint the contractor to carry out the project.
• Among contents of the contract is the contractor agree to complete the entire construction according to the estimated cost and client’s approval.
Types, features, requirements, advantages and disadvantages
of procurement ( a ) Lump Sump Contract base on Bill of Quantities.
Plans are prepared and all work items and quantities specified in the tender documents before tenders are invited.
Tenderers who participated in the tender will determine the price for the details of the work contained in the Tender Documents
Quantities contains some fraction of the total tender price for each building elements such as external walls, internal walls, frames, windows, doors, staircases, roofs and other.
i. Both parties can easily understand each field of work when using a contract based on the bills of quantities.
ii. The rates contained in the contract documents will be the basis for evaluate the progress payment that has been
prepared by the contractor and to evaluate the variation order.
iii. Contractors can use the Bill of quantities for calculating the quantity of purchased materials.
iv. Contractors are also able to determine the quotations from sub contractors.
v. The Contractor shall ensure that the work done covering the scope of contract.
ADVANTAGES
i. Quantity Surveyors and architects take a long time to prepare plans and bills of quantities.
ii. This contract may only be used if you have enough time to prepare plans and bills of quantities.
DISADVANTAGES
(b ) Lump Sump Contract based on drawing, specification and schedule of rate .
•The contractor is required to perform work for each element of the total amount of money that has been determined (as has been tendered)
•Tenderers are not supplied with a bill of quantities, but the schedule of rate was attached in the tender documents.
•The scope of works which contained in the drawing and materials also a methods of statement described in the specification but does not stated in bill of quantity .
•Schedule of rates are to be used as a basis for evaluate the progress payment that has been completed and to value a variation order
( c ) Turnkey Contracts
Turnkey contract is carried out when the client assigned complete responsibility to plan, design and manage the project, to the contractor.
The contractor is selected based on the ability in submitting complete proposal that fulfilled the client’s needs. This proposal contains design, construction method, detail cost and term of payment.
There are two factors why the turnkey contract was introduced:
i. urgent requirement of a specific projectii. owners lack the specialist group.
Advantages :
i. Reduce the project implementation. They have time savings because the contractor is fully involved in the construction process from beginning to final.ii. Contractor involvement at an early stage to ensure the success of the project more effective. Contractors can give their views and opinions related to construction projects.iii. To reduce the direct involvement of the owners on matters related to technical problems, cost, time and other.
Disadvantages:
i. The price for a project is high compared with the traditional system.ii. Could affect the participation of local consultants in the turnkey contractor which normally contractor will appoint its own consultants. iii. Local and Bumiputera contractors can not compete to take part because it was used for the high project management prices.
( d )Cost reimbursement contract
Cost reimbursement contracts, also known as Cost Plus Contract.
This contract means that the method of payment to the contractor.
This includes the cost of materials, plant and labor which called prime cost and plus of fee to cover benefits and administrative expenses (overhead).
It Suitable for complex projects and should be completed soon.
This type of Contracts can be divided into three types:
a) Prime Cost + Fixed Fee. b) Prime Cost + percentage fee.
c) Prime Cost + Target cost
Contract Prime Cost + Fixed
Fee
RM RM
1. Cost of Labour
2. Cost of materials
3. Cost of Sub contractor’s work
4. Cost of machine and plant
( Plus Fee that has been set and
approved )
COST PROJECT
39,000
59,000
10,000
2,000
110,000
15,000
125,000
Example : 1
Contract Prime Cost +
Percentage Fee
RM RM
1. Cost of labour
Add 25 %
2. Cost of material
Add 10%
3. Cost sub –contractor’ work
Add 5 %
4. Cost of Machine & plant
Add 10 %
COST PROJECT
40,000
10,000
60,000
6,000
10,000
500
2,000
200
50,000
66,000
10,500
2,200
128,700
Example 2
Contract Prime cost + Target cost
(Target cost RM 110,000) RM RM
1. Cost of labour
2. Cost of material
3. Cost of sub contractor’s work
4. Cost of machine & plant
Negotiate fee
Add 20% from RM2,000
(RM 110,000 − RM 108,000)
38,000
58,000
10,000
2,000
15,000
400
108,000
15,400
COST PROJECT 123,400
Example 3
DOMESTIC SUB CONTRACTOR
Persons / companies which carry out of work on behalf of main contractor.
Selected by main ContractorThe work done was to install floor & wall
tiles, cement works, concrete works and so on.
NOMINATED SUB CONTRACTOR
Persons / companies who are taken to carry out work on behalf of main contractor ( especially for specialis job)
The work done is the piling, electrical installation, air conditioning, lift, etc. .
The payment paid by Owner are directly to Nominated sub contractor.
NOMINATED SUPPLIER
Appointed by the owner / officer and authorities for the supply of Materials to the main contractor.
Binding contract by main contractor Normal appointed for reason:
• Owners may not be able to make decisions for certain work such as finishing work , etc.• Material changes in the market such as electrical equipment, wall paper, etc.• To ensure the suppliers can supply of materials in the market and work to be completed on schedule• Suppliers are usually able to use only quality
products.
Different between domestic sub contractors and nominated
subcontractor
Domestic Sub Contractor
Nominated Sub Contractor
Responsibility of Main Contractor
There is no formal contractual
There is a formal contractual
Progress payment Payment received depends on the Main Contractor
Payment Received based on work completed
Appointed Main Contractor Owner / SO
The right main contractor on claims payments
Through the main contractor
Paid directly by the owner
THANK YOU