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Presentation On:. By Engr. M. Mazhar-ul-Islam. SALIENT ISSUES IN CONTRACT ADMINITRATION. Convener, PEC Act & Bye-laws Committee. Procurement & Contract. Management means organization and co-ordination of activities Procurement is a process of buying and selling the products

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  1. Presentation On: ByEngr. M. Mazhar-ul-Islam SALIENT ISSUES IN CONTRACT ADMINITRATION Convener, PEC Act & Bye-laws Committee

  2. Procurement & Contract • Management means organization and co-ordination of activities • Procurement is a process of buying and selling the products • Administration generally during currency of contract • More particularly during supervision stage • Procurement is realized through a Contract • A contract is an agreement enforceable by law • Essentials of a valid contract: (a) competent to contract (b) free consent (c) lawful considerations (d) lawful objects

  3. Contract stages • Administrative activities for handling of contracts: • Invitation to Bid • Bid Evaluation • Award of Contract • Implementation of Contract • Measurement of completed work • Computation of payments • Modifications in the Contract etc.

  4. What is Engineering Contract • Engineering Contracts – for goods, works and services defined under Section-2(XXV) of PEC Act 1976 for Professional Engineering Works • Agreement = Proposal + Acceptance • Bidding/Tendering is to seek proposal • Principles conforms to Contract Act 1872 • All contracts are agreements but all agreements are not contracts

  5. Typeof Contracting • Conventional Contract • EPC contract • Design and Build Contract • Turn Key Contract • BOT Contract • Fast Track Contract • Cost Plus Fixed Fee Contract

  6. Pakistani Laws on Contract • The Contract Act, 1872 • The Arbitration Act, 1940 • The Limitation Act, 1908 • The Specific Relief Act, 1877 • The Partnership Act, 1932 • The Stamp Act, 1899 • Pakistan Environmental Protection Act, 1997 • The Registration Act, 1908 • Income Tax Laws • Law of Conveyancing • Land Acquisition Act, 1894 • Labor Laws

  7. AWARD OF CONTRACT • Award to lowest evaluated responsive bidder • Conditional acceptance of NOCA • Status of NOCA • No agreement without performance security • Agreement to be signed within 14+14 days • Agreement not to change bidding provisions • Amendment in Contract subject to the limitations

  8. Variation of Works • Variation in quality and quantity • Adjustment due to measurement is not a variation • Variation to be effected with issuance of variation order • V.O to be issued by Engineer with prior concurrence of the Employer • Variation exceeding 15% needs negotiated settlement • No limitations in adjustment of price for V.O

  9. Extension of Time • Original Schedule should be measured and realistic • Unrealistic schedule leads to poor quality and non-performance of Contract • Right-of-Way, Non Payment etc. are generally Employer’s default • Contractor’s right to claim financial compensation, although conditional EOT is granted when Employer is in default • Deduction of liquidity damages for the delay attributable to the Contractor • Price Adjustment to continue, irrespective of delay or LDs

  10. Payment to Contractor • IPCs within 30 days after Joint Verification • Final Payment within 60 days after Joint Verification of Final Payment Certification • Price Adjustment due to increase or decrease of cost can be made concurrently or subsequently • Delayed Payment Compensation Kibor +2% and Libor +1% incase of local and foreign currencies

  11. Dispute Adjudication • In a contract a dispute is likely • Better documentation, less dispute • Engineer’s role in dispute resolution • Mode of Dispute Adjudication • Adjudicator • The Engineer • Dispute Board (DAB) • Amicable Settlement • Arbitration (Arbitration Act 1940) • PEC Rules of Consultation & Arbitration

  12. Miscellaneous issues • Blacklisting of Contractor • Only one amount, Secured advance or Financial assistance, can be granted • Insurance Guarantee in case of Bid Security and Performance Security • Insurance Security for Advance Payment Guarantee is at the option of the Employer

  13. Thankyou

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