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Impact of Conditions of Contract for Construction (FIDIC 99) on the Gaza Strip Contractor’s Cost Estimation

Impact of Conditions of Contract for Construction (FIDIC 99) on the Gaza Strip Contractor’s Cost Estimation. Statement of the Problem.

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Impact of Conditions of Contract for Construction (FIDIC 99) on the Gaza Strip Contractor’s Cost Estimation

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  1. Impact of Conditions of Contract for Construction (FIDIC 99) on the Gaza Strip Contractor’s Cost Estimation

  2. Statement of the Problem Condition of Contract for Construction (FIDIC 99) has been recently ratified by the Palestinian cabinet as the Palestinian Unified Conditions of Contract for construction works Statement of the Problem

  3. Statement of the Problem To avoid bidding too low or too high, it is necessary to study FIDIC 99 and develop a practical system to deal with this matter Statement of the Problem

  4. Goal To Analyze FIDIC 99, extract associated responsibility and risk factors and to develop a practical system to help the Palestinian contractors to better estimate the cost impact of FIDIC 99

  5. Objectives 1- To study and analyze FIDIC 99 in terms of responsibilities and risks. 2- To investigate the contractor’s practice in estimating of cost implications of conditions of contract in the Gaza Strip and to prioritize these factors.

  6. Objectives 3- To develop a practical system. 4- To computerize the system. 5- To evaluate the system.

  7. Limitations 1- First and second class contractor according to PCU. 2- FIDIC 99 General Conditions.

  8. Methodology

  9. Analysis of FIDIC 99

  10. Analysis of FIDIC 99

  11. Field Survey Questionnaire was designed after conducting of the Literature Review and Analysis of FIDIC 99 Research population: Local contractors who are classified under the first and second classes in various types of woks

  12. Field Survey Seventy one copies were distributed. Thirty two were answered and received. Response rate = 45%

  13. FieldSurvey

  14. Field Survey Standard Contract used by Contractors

  15. Field Survey Risk Response Strategies It is observed that none of the respondents seeks to keep risks. No doubt that all risks can not be avoided, transferred or mitigated. It was previously observed that there is no systematic techniques for estimating and managing risks. Accordingly, risks are unconsciously retained It is observed that none of the respondents seek to keep risks. No doubt that all risks can not be avoided, transferred or mitigated. It was previously observed that there is no systematic techniques for estimating and managing risks. Accordingly, risks are unconsciously retained.

  16. Field Survey Mitigation Actions

  17. Field Survey Advantages of FIDIC 99

  18. Field Survey Disadvantages of FIDIC 99

  19. Field Survey Responsibility Factors

  20. Field Survey Risks by Probability

  21. Field Survey Risks by Cost Impact

  22. FIDIC 99 Cost estimating System (FCIES) FCIES aims at helping the contractors of the Gaza Strip for more accurate estimation based on FIDIC 99 Responsibilities Estimated directly Risks Monte Carlo simulation

  23. FCIES Description

  24. FCIES Testing Model Verification Model Validation Anti-bugging Expert intuition Deterministic model Continuity testing Degeneracy testing

  25. FCIES Testing FCIES Evaluation Approaching 5 local contractors classified at first class according to PCU The results show that the overall satisfaction of FCIES performance is 88.29%

  26. FCIES Evaluation FCIES advantages Helpful in proper understanding the terms of FIDIC 99 Allays fears of lack of sufficient information and expertise about FIDIC 99

  27. FCIES Evaluation FCIES advantages Helps to find creative ways for dealing with risks Provides sufficient flexibility in order to absorb facts and alternatives

  28. FCIES Evaluation Criticisms Responsibility and risk factors were built in the program, which limits the flexibility of FCIES FCIES calculates the cost impact of FIDIC 99 apart from cost estimating of bill of quantities

  29. Conclusions Conclusions Majority of local contractors do not use formalized techniques for estimation purposes when pricing a bid Local contractors do not have suitable tools to estimate the cost impact of FIDIC 99 Introduction of DAB for settling disputes and FIDIC 99 discouraging disputes are the most appreciated features of FIDIC 99

  30. Conclusions Not well suitable to cope with large number of variations, Presence of some biased clauses against the contractor and Low contractor involvement in decisions related to design are the most disadvantages of FIDIC 99

  31. Conclusions Conclusions The most important responsibilities are Providing different types of insurance Keeping the site and works clear from unnecessary obstructions, rubbish, temporary works and surplus materials. Complying with safety regulations

  32. Conclusions The most important risks are Non-availability of goods, consumables and construction materials Delay in completing works Work interruption due to variations With-holding of interim payment certificate

  33. Conclusions FCIES FCIES was developed in order to help the local contractors to estimate the cost impact of FIDIC 99 FCIES evaluators are generally satisfied with its performance FCIES could play an important role in improving the cost estimation under FIDIC 99.

  34. Conclusions FCIES FCIES Advantages Proper understanding of terms of FIDIC 99 Better assessment of the financial impact of FIDIC 99 Flexible and easy to use Saves time and minimize efforts

  35. Recommendations Recommendations It is recommended that pricing team should be supported with the necessary tools and techniques More time and efforts should be provided at the front end of the project where experienced staff should be involved to manage or mitigate the risks and administrate the contract

  36. Recommendations Recommendations Risk documentation could be helpful in pricing future projects Early involvement of contractor reduces the possibility of excessive variations. It is recommended to encourage other types of contracts settings such as design-build or construction management

  37. Recommendations Recommendations Offering training courses about FIDIC 99 It is recommended to buy and store as much as possible of construction materials at the front end of a project Contractors are invited to use FCIES in order to get more accurate cost estimation

  38. Recommendations for further studies Conduct another survey when the construction industry recovers and make comparative analysis Integrate FCIES with cost estimation software in order to have comprehensive system Study and investigate probability distribution of different risk factors

  39. Thank you Researcher: Zakaria M. Aljarosha Supervisor: Dr. Kamalain K. Shaath October 2008 Islamic University of Gaza

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