Standard EPC Document in Railways

1. Standard EPC Document in Railways SANJAY KHARE Sr. Prof.(works) IRICEN Pune

2. Indian Railway’ Policy of EPC • Guidelines and Model EPC document issued by Railway Board vide Lt. no. 2104/Infra/12/2Dt. 18/10/10/2015. • Standard bidding documents containing RFQ, RFP and EPC agreement. • Zonal Rly may take decision to invite tender through EPC mode. • Precautions to taken. • Railway Minister while presenting the Budget 2016-17 "To ensure participation of large professional players in IR (Indian Railway) projects and minimising cost and time overruns, I had announced moving to EPC based contracting last year," "I am happy to announce that we have finalised the standard document for undertaking works through the EPC mode and will implement at least 20 projects through this mode in 2016-17."

3. Indian Railway’ Policy of EPC • Indian Railways signed its first Engineering, Procurement and Construction (EPC) contract with for large electrification projects in Aug/2017. The contract valuing Rs. 1,050 crore for electrification of 781 route kilometers (RKM) was awarded by CORE. • Instruction on EPC tender further issued by Railway Bd. Vide Lt. no. 2015/W-I/Genl./CORR.GM/Pt III Dt. 30/11/2018 • Tenders for NL, GC, DL, large colonies, workshops and important Bridges shall be EPC tenders only. • Tenders should be EPC of value more than 100Cr. • Incase of deviation approval of GM will be required. • Scope to be approved by CAO/C. • Standard documents issued for EPC by Railway Board to be followed

4. STATUS OF EPC TENDERS FOR ENGINEERING WORKS

5. EPC stands for Engineering, Procurement, Construction • Indian Railways traditionally has the highest experience in works contracts and has standardized its own form of contract mostly on Item Rate Format. • Inherently the Design responsibility is with the Railways. This model worked for small value work or works spread over many budgeting years. • For Large and complex projects – item rate contracting format may not be appropriate, so Other infrastructure sectors, particularly National Highways and Airports have seamlessly moved to EPC Contracting with considerable success. • FIDIC forms of Contract are standardised and used universally. • EPC is a prominent form of contract in the construction industry.

6. EPC stands for Engineering, Procurement, Construction • Contractor will carry out the • detailed engineering design of the project, • procure all the equipment and materials necessary, and • then construct to deliver a functioning facility or asset to their clients. • Companies that deliver EPC Projects are commonly referred to as EPC Contractors.

7. EPC CONTRACT: Why ? • Conventional item-rate contracts are generally prone to time & cost overrun due to: • Involvement of multiple agencies- generally a new line/doubling project involves 15 to 20 different value contracts • Failure of even one contract delays the project • Lack of flexibility in replacing failed agency on real time basis • Delays in design and drawings by the Railway. • Variation in items and quantities.

8. EPC CONTRACT: Why ? • Conventional item-rate contracts are generally prone to time & cost overrun due to: • Considerable time of Project Engineers is consumed in processing of: • Variation in quantity of items which are quite frequent • Introduction of NS items • Variation in contract price • Failure of even one contract delays the project

9. EPC CONTRACT: Why ? • Conventional item-rate contracts are generally prone to time & cost overrun due to: • Measurements recording and preparation of Bills laborious and time consuming (particularly in buildings construction contracts) • IMPROVED & MODERNISED Project Execution Capabilities is required for Faster execution. • Therefore EPC for Railway Projects.

10. OBJECTIVE OF EPC CONTRACT • In EPC mode, Responsibility for INVESTIGATIONS, DESIGN and CONSTRUCTION lies with the CONTRACTOR for a LUMP SUM price determined through competitive bidding. • The Contractor has FULL FREEDOM to plan the construction SCHEDULE for efficient use of its manpower, equipment and other resource while payments are linked to specified stages of construction as compared to payment for individual items/units under the item rate contract.

11. OBJECTIVE OF EPC CONTRACT • Detailed initial planning and designs, before tendering by Railway, may not be required. The owner defines • Scope and the specifications of the plant, quality • Project duration and cost • Well defined system of obligation associated with damages both for Railway & Contractor. • Assigning risk to the party who is in a better position to mitigate it e.g. land, statutory clearances assigned to Railway whereas design, site uncertainty, sub contracting are assigned to contractor.

12. OBJECTIVE OF EPC CONTRACT • Engagement of professionally managed agencies. • Thus from Owner point of view • Single point of contact for owner simplifies communications • Ready availability of post-commissioning services • Cost is known at the start of the project • Reduced stress

14. AUTHORITY’S OBLIGATIONS • Provide Right of Way for construction not less than 90% of project length upon receiving PG (within 15 days of signing agreement). • Environmental and forest clearance for not less than 90% of project length upon receiving PG (within 15 days of signing agreement). • GAD approval of ROBs/RUBs from Road authority within 60 days. • Shifting of utilities within 180 days of notice given by contractor. • Provide Traffic & Power block as specified in agreement.

15. AUTHORITY’S OBLIGATIONS Right of Way: • For balance 10%, provide the Right of Way by the date specified for each part, but in no case later than 180 days of the Appointed Date. • In the event of delay, Contractor shall be entitled to Damages. • If the Right of Way has not been provided within 240 days of the Appointed Date for any part, the affected Works in that part shall be deemed to be withdrawn unless the Parties agree to the contrary. • In the event of withdrawal, CP shall be reduced by an amount equal to 90% of value of works withdrawn.

16. AUTHORITY’S OBLIGATIONS Environmental and Forest Clearances: • The Authority shall procure forest clearance, no later than 60 (sixty) days from the Appointed Date for the remaining portion of site otherwise the Contractor shall be entitled to Time Extension for the period of such delay. • The Contractor shall also be entitled to Damages calculated as if the Right of Way for and in respect of such sections of the Railway Project has not been provided.

17. CONTRACTOR’S OBLIGATIONS • Provide Performance Security equal to 5% of contract price (CP) within 15 days of signing of agreement. • To undertake construction and complete the project on or before schedule completion date. • shall not sub-contract Works comprising more than 70% (seventy per cent) of the Contract Price and shall carry out Works for at least 30% (thirty per cent) of the total Contract Price directly under its own supervision and through its own personnel.

18. Damages associated with obligations of MoR • Amount of damage for not providing ROW will be (Rs./day/m) = 0.10 × C × 1/L × 1/N C=Contract Price (RS.), L=Length of Project (m), N=Completion Period (days) • For 100 km. project with completion period of 1000 days & CP Rs.600 crore, damage works out to Rs.6000/day/km. • In case of ROB/RUB GAD approval, each such ROB will be treated as 1 km. of ROW for the purpose of damages. • For Power/Traffic block, damage rate would be Rs.1000/day for each hour of block not provided. • Aggregate damages payable as above shall not exceed 2.5% of the contract price.

19. Damages associated with obligations of Contractor • Delay in Performance Security – If he fails to provide the Performance Security within 15 days of the date of this Agreement, it may seek extension for a max of 15 days on payment of Damages@ 0.05% of CP/day until the Performance Security is provided. • Delay in project completion – Damages @ 0.05% of CP/day subject to a maximum of 10% of CP.

20. CONTRACT PRICE • L.S. Price for defined scope of work . • Interim payment on completion of a stage, in length, number or area as specified in Schedule e.g. Bridge payment is planned in 03 stages i.e. Foundation, Sub-Structure & Super-Structure. On pro rata basis w.r.t. total linear length. • Interim payment schedule include electrification and S&T works also. • Price adjustment as per specified PV formulae with 15% fixed component. • Retention Money: @6% of interim payment, total not exceeding 5% of CP, to be refunded within 15 days of issue of completion certificate.

21. CONTRACT PRICE • Price adjustment as per specified PV formulae with 15% fixed component. • Insurance to be maintained at its own cost as specified in Schedule-N and as per the requirements of Applicable Laws.

22. CHANGE OF SCOPE • Change of scope – • Omission or addition of any work from the scope of the project and • change in specification. • The cost of change of scope determined based on works of similar nature or else to be derived on the basis of applicable SOR of relevant zonal railway . • Total value of change of scope not to exceed 10% of contract price.

23. CHANGE OF SCOPE • In case of no mutual agreement on change of scope, Authority may award the additional work to other contractor. • However, if the main contractor bid is within 10% of the first lowest, he will have the option of matching the first bid and execute the work after paying the 2% of the bid amount to Authority.

24. Design & other documents by contractor • Contractor to provide, general methods for design & construction, plan, traffic management and safety plan. • Programmeof completion for all stages of construction. • Quality Assurance Plan : • Quality control mechanism, Method Statements including sampling, testing, test frequency, standards, acceptance criteria, check-list for site activities, proforma for testing & calibration. • Internal quality audit system. • Contractor to appoint proof consultant with the consent of Railway.

25. MONITORING & SUPERVISION • Railway to nominate an Engineer to keep day-to-day interaction between Railway and the contractor - Authority’s Engineer • Review of all designs and other documents w.r.t. their conformity to standards & specifications, scope of work by Authority’s Engineer. • Monthly progress reports. • Quality control records and document before issue of completion certificate. • Video recording of construction for every calendar quarter.

26. Railway Approvals • Contractor to submit ESP within 02 months of Appointed Date and Railway to approve in next 04 months. • Contractor to submit SIP & RCC within 02 months of approval of ESP and Railway to approve in next 04 months. • Delay in submission by contractor or approval by Railway for ESP, SIP & RCC will attract damage equal to 0.2% of performance security for each day of delay. • NI program will be drawn by Railway and jointly signed and done under the direct supervision of Railway.

27. Railway Approvals • Generally, Railway to review the drawings within 30 days. • For drawings, involving review by multiple railway agencies, i.e., Open Line, RDSO etc., overall review within 45 days out of which Open Line/RDSO to give their review within 30 days. • Schematic yard plans to be signed jointly by CE/Con and CTPM, which needs to be done before invitation of tender.

28. Completion Certificate & CRS Sanction • At least 30 days prior to likely completion, contractor shall prepare and submit to Railway’s Engineer documents required for seeking approval of CRS. • Railway’s Engineer shall check the project with specifications & standards and upon satisfaction issue a Provisional certificate that Project can be safely and reliably placed in service. • Contractor shall assist Railway during inspection by CRS.

29. Completion Certificate & CRS Sanction • If certain works forming part of the Railway Project are not yet completed, the Provisional Certificate shall have appended, a list of outstanding items signed jointly by the Authority’s Engineer and the Contractor (the “Punch List”). • All items in the Punch List to be completed by the Contractor within 90 days of the date of issuance of the Provisional Certificate. • Completion certificate shall be issued Upon completion of all items in the Punch List and issuance of authorisation by CRS

30. DEFECT LIABILITY • The defect liability period is two years commencing from date of issue of Provisional certificate. • For important bridges, other specified structures, S&T equipments comprising new technology, there shall be extended DLP of two years. • The contractor to rectify the defect within 15 days or such reasonable period as determined by Railway’s Engineer. • In case of failure of contractor to rectify the defect, Railway can do so and recover additional 20% as damages. • Any materials or works with defects replaced/repaired during DLP would be further warranted for 12 months.

31. TERMINATION • Various defaults of contractor stated in the agreement, which if not cured within 60 days of occurrence, the contract can be terminated on contractor’s default . • Upon termination on contractor’s default, Railway shall - • encash Performance Security or Retention Money whichever is more. • encash B.G. for outstanding advance and interest. • pay to the contractor for an unpaid work

32. BONUS FOR EARLY COMPLETION • In the event project completion date occurs prior to the scheduled completion date, the contractor shall be paid bonus equivalent to 0.03% of the contract price for each day by which the project completion date precedes. • The maximum bonus shall be limited to 3% of the contract price.

33. DISPUTE RESOLUTION • “Dispute” shall, in the first instance, be attempted to be resolved in accordance with the conciliation procedure. (As Clause24.2) • If Disputes are not resolved, either Party may refer the Dispute to arbitration in accordance with the provisions of Clause 24.3. • Such arbitration shall be held in accordance with the Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi or such other rules as may be mutually agreed by the Parties, and shall be subject to the provisions of the Arbitration Act.

34. DISPUTE RESOLUTION • The place of such arbitration shall be the capital of the State and the language of arbitration proceedings shall be English. • There shall be a Board of three arbitrators, each Party shall select one, and the third arbitrator shall be appointed by the two arbitrators so selected and in the event of disagreement between the two arbitrators, the appointment shall be made in accordance with the Rules.

35. NEW DEFINITIONS • ‘Authority’: The President of India represented by the Ministry of Railways. • ‘Authority’s Engineer’: A railway engineer appointed by authority to act as the engineer under the Agreement. • “Bid” means the documents submitted by the selected bidder/Consortium in response to the RFP. • Bid Security” means the bid security provided by the Contractor to the Authority in accordance with the RFP, and which is to remain in force until substituted by the Performance Security. • “Defects Liability Period” DLP: The period during which Contractor shall be responsible for all the Defects and deficiencies, except usual wear and tear in the Railway Project or any part thereof.

36. NEW DEFINITIONS • “Appointed Date” means that date which is later of: • (a) the 15th day of the date of this Agreement, • (b) the date on which the Contractor has delivered the Performance Security in accordance with the provisions of Article 7; • (c) the date on which the Authority has provided the Right of Way on at least 90% (ninety per cent) of the total length of the Railway Project in conformity with the provisions of Clause 8.2; and • (d) the date on which all Authority has provided to the Contractor the environmental and forest clearances for sections of the Railway Project comprising 90% of the length thereof in accordance with the provisions of Clause 4.3;

37. NEW DEFINITIONS • “Performance Security” An irrevocable and unconditional guarantee, for an amount equal to 5% (can be increased upto 7.5% for complex projects) of the Contract Price, from a Bank provided to Authority by contractor for performance of his obligations under the agreement valid until 60 days of the expiry of the DLP. • “Project Completion Schedule” means the progressive Project Milestones set forth in Schedules for completion of the Railway Project on or before the Scheduled Completion Dat. • “Project Facilities” means all the amenities and facilities to be constructed on the Site, as described in Schedule-C. • “Project Milestone” means the project milestone set forth in Schedule-I and includes the Scheduled Completion Date;

38. NEW DEFINITIONS • “Proof Consultant” Appointed by Contractor to proof check the detailed calculations, drawings and designs, which have been approved by the Design Director. • “Provisional Certificate” Issued by Authority’s Engineer Upon successful completion of Tests, duly appending appended thereto a list of outstanding items signed jointly by the Authority’s Engineer and the Contractor. The Defects Liability Period for the Railway Project shall commence from the date of issue of the Provisional Certificate. • “Punch List” The list of outstanding item appended to Provisional Certificate.

39. NEW DEFINITIONS • “Quality Assurance Plan” or “QAP”: The quality control mechanism established by contractor to ensure compliance with the provisions of this Agreement in accordance with ISO-9001. • “Request for Proposals” or “RFP”: The prescribed technical and commercial terms and conditions, and invited bids from the bidders shortlisted pursuant to the RFQ for undertaking the Project. • “Request for Qualification” or “RFQ”: The Proposals invited by Authority for short listing of bidders for EPC Project. • “Retention Money”: Deduction from every payment (@ 6%) for Works due to the Contractor as guarantee money for performance of obligations during construction period. Subject to max 5% of contract price. ( can be waived in lieu of increased Performance Security from 5 to 7.5 %).

40. Authority Engineer • Nodal person for contract execution ? Authority Engineer (AE) (Article 16) • Authority Engineer? A Railway officer of SG/JAG rank (Schedule L) • Can there be more than one AE in a contract? No, there will be only one AE. AE is practically not an individual but is the captain of the team. In addition to AE, 02 other officers will be authorised to communicate with contractor.

41. Authority EngineerArticle-16 • Appointment shall be made no later than 15 days from the date of agreement • Authority shall notify the appointment or replacement of AE to contractor. • Contractor may make a written representation to the Authority and seek replacement of the Authority’s Engineer if he has reasons to believe that the Authority’s Engineer is not discharging its duties and functions in accordance with the provisions of the Agreement • Authority shall hold a tripartite meeting with Contractor and AE and make best efforts for an amicable resolution of the Dispute. After due consideration, The Authority will decide about the replacement of AE or otherwise.

42. Role of Authority Engineer during construction • Review of Drawings • Review of Quality Assurance Plan • Programme for construction of works • Review of proposed work Methodology • Inspection of Construction works • Review of Safety at site

43. Role of Authority Engineer in Contract Management • Review of Monthly Progress Report • Processing of Periodical Payments • Processing of Time Extension, Variation order, Power/Traffic block, Disconnections during NI • Provisional/Completion certificates • CRS Inspection

44. Role of Authority Engineer during construction Review of Drawings • Contractor to appoint a Design Director within 20 days to head his design unit(Clause10.1.1) • Contractor to appoint a Proof Consultant from the panel of 03 names of qualified and experienced firmsagreed by railway (Clause10.2.2) • Review to be completed in 30 days/45 days (Clause10.2.7, Annex-II of Schedule-D) • Review means “No Objection for Construction”

45. Role of Authority Engineer during construction Programme for construction of works (Clause10.1.3) • Contractor to submit within 30 days containing- • Arrangements for Design- engagement of design consultants • Work execution Plan- Project phasing and Sub contracting • Traffic Management and Safety Plan- covering safety of users & workers during construction

46. Role of Authority Engineer during construction Quality Assurance Plan (Clause11.2) • Contractor to submit QAP within 30 days containing - • Organisation chart, Duties & Responsibilities, Procedures, Inspections and Documentation • Quality Control Mechanism including Sampling, Test Frequencies and Acceptance criteria, • Reporting & Recording, Proformas for Inspection & Testing • Internal Quality Audit System • AE shall convey its comments to the Contractor within a period of 21 (twenty-one) days of receipt of the QAP, modifications, if any, required, and the Contractor shall incorporate those in the QAP

47. Role of Authority Engineer during construction Inspection of Construction Works • Inspect and submit a monthly Inspection Report • Pre-construction review of manufacturer's test reports and standard samples of manufactured Materials • Ensure that the works conform to Specifications and Standards through various tests got conducted by contractor • Tests to be done on random samples and independent of the tests carried out by the Contractor for its own quality assurance • Minimum 20% test check of the quantity / number of tests for each category / type of test

48. Role of Authority Engineer during construction Safety at Work site – • In case, construction work site is in close proximity of existing operating system of Railways, Contractor to make arrangements for the safety as per provisions of the ‘Compendium of Instructions on Safety at work Sites’ issued by the Authority • Contractor to execute such works which are urgently required for the safety of the Project as directed by AE • AE may recommend for suspension of the whole or part of the Works if it threatens the safety of the public and pedestrians

49. Role of Authority Engineer Contract Management Obtain prior written approval of the Authority before determining: • any Time Extension; • any additional cost to be paid by the Authority to the Contractor; • the Termination Payment; • providing Power Block or Traffic Block to the Contractor; • approval of ESP, Signalling plan and Route Control Chart; • approval of disconnections for modification of signalling and telecom works;

50. Role of Authority Engineer Payments(Article 17) - • Contractor to submit On-Account bills • No recording of MB by Railway • Unit of measurement is mostly in Linear terms (Sch-G) • Payment shall be made no later than 30 days of receipt of Stage Payment Statement from the contractor • Delayed Payment will attract interest equal to Bank Rate plus 3 percent