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Presented by Sameh Elish January 6, 2004

Determination of Construction Contract Duration for Public Projects in Saudi Arabia By: Ahmed Saleh Al-Sultan, June 1989. Presented by Sameh Elish January 6, 2004. OUTLINE. Introduction Research Objective Literature Review Research Methodology Results and Analysis

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Presented by Sameh Elish January 6, 2004

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  1. Determination of Construction Contract Duration for Public Projects in Saudi ArabiaBy: Ahmed Saleh Al-Sultan, June 1989 Presented by Sameh Elish January 6, 2004

  2. OUTLINE • Introduction • Research Objective • Literature Review • Research Methodology • Results and Analysis • Conclusions and Recommendations

  3. INTRODUCTION • The issue of time in construction projects is important for both the owner and the contractor. • Construction Contract Duration (CCD) is the amount of time given to the contractor to execute the work described by the plans and specifications. • It is a very important issue of any construction contract documents.

  4. RESEARCH OBJECTIVES • To investigate the available methods used to set CCD and the factors affecting the determination process. • To study and evaluate the current practice applied for set CCD for public projects in Saudi Arabia. • To make recommendations related to the practice of setting CCD in the Kingdom.

  5. SCOPE AND LIMITATIONS • The scope of this research will be limited to public construction projects in Saudi Arabia (owner’s point of view). • Projects that the Government Department (project owner) has authority to decide on the setting of CCD. • Projects that have value of SR 100 million or less will be under discussion in this research.

  6. LITERATURE REVIEW • There is a relationship between time and cost. • In general, the time dependent costs increase linearly with the passage of time. • Examples of time dependent costs: cost of supervision and site office utilities. • CCD is normally expressed in either working days, calendar days, or a fixed date for completion.

  7. LITERATURE REVIEW • Methods for setting CCD • Construction season limits: project must be finished prior to a certain season • Quantity or production rate:breaking the project down into the major controlling work items • Work flow technique: large complicated projects where a lot of coordination effort is needed (CPM) • Estimated cost:related to contract time or working days required to complete a particular project

  8. RESEARCH METHODOLOGY • Interviews and telephone calls were performed with some of government officials. • A questionnaire was developed in order to collect the data needed for the research. It consists of 18 questions. • The total population consists of 70 authorities (government departments responsible for executing public construction projects). • A total of 47 completed questionnaires were used for analysis. SAS software were used.

  9. RESULTS AND ANALYSIS • Who set CCD: • 91% of the respondents reported that CCD is set at their department by either top management, engineering department, or by hired consultant. • Attention paid to setting CCD:

  10. RESULTS AND ANALYSIS • Methods of setting CCD: • Budget allocations (30%) • the need for the project (18%) • Past experience (13%) • Critical Path Model (CPM) (8%) • Joint work of the engineering department and a consultant (8%) • Contractors are requested to submit CCD with their bids (6%) • The majority of respondents (87%) expressed the need to apply a method to set CCD.

  11. Negative Consequences for Short CCD Rank Poor performance by contractors resulting from inadequate time allocation to work items 1 Excessive administrative burden resulting from delay claims 2 High bid prices 3 Positive Consequences for Short CCD Raising contractor’s awareness of the importance of time 1 Promoting effective management 2 Low prices due to short CCD 3 RESULTS AND ANALYSIS

  12. Negative Consequences for Long CCD Rank Encouraging contractors to bid more work than can be handle in a timely manner 1 Discourage effective management and innovation 2 Leading to poor performance resulting from discontinuous operations (relaxed schedule) 3 Positive Consequences for Long CCD Good coordination with other agencies 1 Permitting more contractors to bid 2 Low bid prices 3 RESULTS AND ANALYSIS

  13. RESULTS AND ANALYSIS • Factors affecting the setting of CCD: • Project size • Site conditions • Project design • Top management assessment of the city need of the project • Project type • Factors affecting CCD can be grouped into three main categories: project ,contractor ,and environmental characteristics.

  14. CONCLUSION • There seems to be no systematic engineering methods or at least formal procedures followed by Government Authorities to set CCD for public projects. • CCD is currently set by engineering department, hired consultant, or top management of the government agencies. • Several factors affects setting CCD. Among the most important factors are project size, design, budget allocations, type, and site conditions.

  15. RECOMMENDATIONS • The Government procurement Regulations should address the setting of CCD. Articles have to be written to establish guidelines to improve the current practice of setting CCD. • Engineering methods should be developed and used to set CCD. Concerned Government Authorities such as Ministry of Housing and Public Works should take the initiative to develop such methods. • The engineering department of concerned Authorities should participate in the setting of CCD.

  16. RECOMMEND GUIDELINES TO SET CCD • Step 1: Determine a CCD range. Based on: • The project’s tender documents. • Factors affecting CCD. • The experience gained from constructed projects. • Using the above inputs and utilizing scheduling techniques (CPM, PERT, Bar chart), production rates, or any other approach, a reasonable CCD range can be estimated.

  17. RECOMMEND GUIDELINES TO SET CCD • Step 2: Check weather the setting of CCD is under the authority of the project owner. • If there is any preplanned completion date established by higher authorities to meet special operational or public needs. • The project owner can discuss CCD with decision makers based on the range established in step #.1

  18. RECOMMEND GUIDELINES TO SET CCD • Step 3: If the project owner is authorized to set CCD, then he can proceed to check weather budget allocation constraints exist or not. • Step 4: In the case where there is no budget allocation constraint, the project owner is to identify his objectives of CCD. • Objectives include: at least possible bid price, at shortest possible CCD, or an optimal total cost CCD.

  19. RECOMMEND GUIDELINES TO SET CCD • Step 5: The set CCD, produced by either steps #3 and 4, should be reported to top management for approval. • Step 6: The approved CCD is to be incorporated in the tender documents.

  20. THANK YOU

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