QS Crossword Puzzle 2 (Variations)

  Pages From Variation Puzzle -Question

	ACROSS
2	Cost of variations instructed by Engineer due to default of contractor, shall born by this party.
3	If the Contractor is incapable of this,employee can employee another contractor to do an omitted work and it's not a  breach of contract.
4	Variation executed under similar condition, shall value from this rates
7	This is a condition precedent to Claims but not for variations
9	The contractor is bound to give this to the Engineer,if the Engineer's instruction(s) caused to increase the contract price as per SBD 1.
10	This name called for the rates which are derived from any relevant rates or prices in the Contract, with reasonable adjustments
12	If Employer, employee another contractor to do an omitted work, Contractor can claim this.
14	These are variations, unless it is to be carried out by others
16	Contractor can not make any variation without an instruction of this person.
19	Engineer have no authority to vary this.
	DOWN
1	Contractor can submit a claim for adjustment to this and it's a claim  arising out from a variation.
5	The principle of a reasonable value of services called in this name.
6	Clause 13.1 , imposed this on the contractor to execute variation instruction
8	After issue of this certificate, Engineer can not issue valid variation instructions as per SBD 2.
11	Change of this is a variation according to SBD 2 but not according to SBD 1
13	Changes to this may be a variation
15	Contract can go for this rate(a specific name), if the variation is  not executed under similar condition.
16	This party doesn't have authority to issue variation instructions
17	Contractor is bound to execute variation instruction, unless he  can not readily obtain this
18	According to SBD2, all variation instructions shall give in this mode
	All Questions are based on FIDIC 1999 red book, unless specifically stated.

Construction Development Act - Part iii

Section iv(CONSTRUCTION INDUSTRY DEVELOPMENT FUND AND FUND OF THE AUTHORITY)

The section iv of the act makes provisions to establish the “Construction industry development fund and “Fund of the Authority”.

Construction industry development fund

Minister to whom the subject of Construction is assigned impose a levy to be called as “Construction Industry Development Levy”. The rate of the levy to be determined and to be approved by the Parliament and it will charges as a percentage of construction cost of projects.

Income

The new levy will be the main source of income for the Construction industry development fund. In additions to that there are some other income sources such as by way of loans, rent, donations, gifts or grants whether from foreign or local sources.

Expenditure

The fund shall be spending for the expenditure incurred by the Development Fund in the exercise of the powers and discharge of the functions, subject to following guidelines.

ü  More than 50% of the fund shall be reserved for the welfare of the small scale contractors and self-employed registered craftsmen.

ü  Not less than 5% of the fund shall be reserved for research and publications

ü  Not less than 5% of the fund shall be reserved for the purpose of rewarding and encouraging the inventions, applications and propagation of environmentally friendly and cost efficient construction technologies

ü  Arrange long term insurance with pension benefits, for craftsmen registered

The management and administration of the affairs of the Development Fund shall be vested with National Advisory Council on Construction, while the Authority shall have its own Fund for its management.

Section v (QUALIFIED PERSONS)

Currently various professional institutions are maintaining their qualified members register. For an example the Council of IQSSL is maintain a Register of Members according to the section 6 of Act, No. 20 of 2007(IQSSL Act).  The Act also vested the power to maintain a register of qualified persons by the Authority.

The qualified persons shall recommended by the Credential Committee as being qualified persons in Engineering, Architecture, Quantity Surveying and etc. in consultation with the respective institutions. All members of professional institutions like IQSL (SL), IESL, SLIA and etc. established by an Act of Parliament are consider as qualified persons.

The Register shall be available for inspection by any person free of charge and this will convenience for the people who are interest to know or verify qualified persons in various trades in a one place.

There may be members in qualified persons register whereas not in the respective institutions member list due to their qualification obtained through another similar institution and approved by the Credential Committee. For an example member of RICS may include in the qualified persons register where as he is not in the IQSSL members list.

Since the Credential Committee may accept the membership of other foreign institutions membership to include such members in qualified persons register, the act recognize such institutions membership within Sri Lanka. It makes equivalent the foreign institutions membership and the local institutions membership recognition. However since the Credential Committee appoint by the Authority and the majority of the board members of Authority to be appointed by professional institutions, such equivalent recognition may only give to high standard foreign institutions.

The Credential Committee shall appoint by the Authority and it shall identify and categorize professional and vocational disciplines, minimum qualifications and experience required for registration of construction manpower including qualified persons under this Act.

Professional institutions have complaint handling and disciplinary action procedures. For an example section 30-33 of Act No. 17 of 1968 (IESL act) has provision to take disciplinary action against its members. However the Construction Act also has provision to handling of any complaint against a qualified person.

The Act also specified that only the qualified persons shall carrying out of, designing, and preparation of required contract documentation and supervision of any identified construction work of any identified construction work.  Regarding foreign consultants who willing to engage as a qualified person, they are also required to register (provisional) with the Authority.

Currently local authorities require approval of charted engineer/architects for the designs of some construction work however no such current requirement for contract documentation and supervision. Therefore this provision will upheld the quality of construction work.

The identified construction works refereed above means all buildings, structures, or any building or structure or landscape which consists of facilities and amenities for public use exceeding in value rupees ten million but any private residential building constructed for the personal use of any private owner shall be excluded.

Next : Section vi to x

Construction Development Act - Part ii

Part 2

Section I (NATIONAL POLICY ON CONSTRUCTION AND ITS IMPLEMENTATION)

The section I, has described the formulation of National Policy on Construction as follow;

“The National Advisory Council on Construction established under Part II of this Act, shall formulate a National Policy on Construction and such policy shall comprise matters relating to the construction industry and its goals.”

Section ii (NATIONAL ADVISORY COUNCIL ON CONSTRUCTION)

The section ii, described the formation of National Advisory Council and its objectives.

The National Advisory Council on Construction comprising following key persons.

·         Secretary to the Ministry of the Minister in charge of the subject of Construction who shall be the Chairman of the Council

·         Secretary to the Ministry/or an officer not below the rank of a Senior Assistant Secretary of the Minister in charge of the subject of Urban Development, Highways, Water Supply and Drainage, Irrigation, Housing, Vocational and Technical Training

·         Another fifteen members appointed by the  Minister representing professionals including,

ü  President/his representative of the Institute of Quantity Surveyors, Institution of Engineers, Institute of Architects, Institute of Town Planners, Association of Consulting Engineers, Institution of Incorporated Engineers and etc.

The main objective of the National Advisory Council is to formulate and amends the national policy on construction and its implementation mechanism and its other objects area as follow;

·         Make representations to the Minister on any need for the development of the construction industry;

·         Advise the Minister and make recommendations on any regulation to be made under this Act;

·         Advise and make recommendations to the Authority on strategic issues, policies and legislative proposals that may affect or which is incidental or connected with the construction industry; and

·         Propose measures to the Authority which are necessary for the development and sustenance of the construction industry.

Section iii (CONSTRUCTION INDUSTRY DEVELOPMENT AUTHORITY)

The section iii, described the formulation of Construction Industry Development Authority as follow;

“ There shall be established an authority called and known as the “Construction Industry Development Authority”

The management and administration of the affairs of the Authority shall be vested in a Board of Management and it shall comprise members from government ministries and professional institutions as follow;

·         Secretary to the Ministry of the Minister in charge of the subject of Construction and subject of Finance.

·         Twelve members from professional institutions including a member of the Sri Lanka Institute of Quantity Surveyors, Institution of Engineers, Sri Lanka Institute of Architects and etc. who shall nominated by the respective institutions.

The Minister shall appoint one of the appointed members, to be the Chairman of the Board.

While the National Advisory Council responsible for formulate and amends the National Policy on Construction, the Authority responsible for the implementation of the policy.

The Director-General of the Authority shall appoint by the Authority and he shall perfume under the direction and control of the Chairman of the Board. He shall responsible for the administration and control of the employers of the Authority. The Authority may appoint employers as it may consider necessary for the efficient exercise, discharge and performance of its powers, duties and functions under this Act and

Main objects of the Authority are;

·         Provide strategic leadership to the stakeholders of the construction industry to stimulate sustainable growth, reform, and improvement of the construction sector;

·         Register and renew such registration of the stakeholders of the construction industry

·         Promote sustainable growth of the construction industry with special attention to the design and development of energy efficient buildings and structures;

·         Promote appropriate research and dissemination and publication of research work on any matter relating to the construction industry and its development;

·         Formulate, in consultation with other relevant authorities, the standards in construction industry and categorize such standards as compulsory and voluntary standards; and

·         Implement the codes of conduct, practices, procedures and processes and documentations relating to construction industry as being formulated by the Authority.

Following are the key functions of the Authority.

ü  Formulate strategies for the development of the construction industry;

ü  Collate and publish materials and information pertaining to the construction industry;

ü  Promote best practices relating to the construction industry;

ü  Implement the standards in construction work including the standards relating to quality of materials used and workmanship in consultation with the other relevant bodies;

ü  Provide for the registration and grading of construction contractors;

ü  Provide for the registration of property developers and to grade them under financial and marketing capabilities;

ü  Provide for the registration of persons competent to function as adjudicators on contractual disputes;

ü  Maintain a Register of qualified persons

ü  Provide for the registration and issuing of Craft Identity Cards to skilled workers

ü  Maintain a directory of heavy construction plant, machinery and equipment

ü  Promote and facilitate local consultancy services pertaining to construction industry and the

ü  undertaking of consultancy services in other countries by local consulting firms;

ü  Establish standards for technical auditing and monitoring of the construction and management processes and the outcome of construction works which include compliance with stipulated conditions and approved standards;

ü  Promote and facilitate locally registered contractors undertaking construction works in other countries;

Some functions like registration and grading of construction contractors and publish materials and information pertaining to the construction industry, are currently functioning through the ICTAD and hereafter the Authority will function those instead of the ICATD.

Also the act provides provision to absorb the ICATD to the authority. According to the provision for absorption, ICTAD staff be offered employment in the Authority and it’s all property, contract, rights, liabilities and obligations and etc. deemed to be the rights, liabilities and obligations of the Authority;

The Authority shall appoint in consultation with relevant authorities, the following committees to formulate standards, rules and regulations in the Construction Industry:

ü  Committee on Technical Standards, Rules and Regulations;

ü  Committee on Environmental and Public Health Standards;

ü  Committee on Ethical and Social Responsibility Standards.

Next Part 3 : Section iv to v

Back to Part i

Construction development act: A millstone of Sri Lankan Construction industry - Part 1

This article will be provided a brief explanation of the Construction development act and it will comprise of 4 parts as follow. 

Part 1- Summary

Part 2 - Section i to iii of the Act

Part 3 - Section iv to v of the Act

Part 4 - Section vi to x

part 5 - Effect to Quantity Surveyors

Part 6 - Shortcoming of the Act and Summary

Part 1

Summary

Recently Sri Lanka Parliament has seconded the “Construction development act” which is applicable for all activities relating to the Sri Lankan construction industry and it can be considered as a milestone of the Sri Lankan Construction industry.

The Act has provision to formulate a National Policy on Construction through a National Advisory Council on Construction. The policy will implement through the “Construction Industry Development Authority” which also proposed to formulate through the Act. Members of the National Advisory Council and Construction Industry Development Authority will comprise professionals representing professional associations like IQSSL and IESL as well as top ranked government officers like Secretary to the Minister in charge of the subject of Construction.

Also the Act has proposed to impose a tax called as “Construction Industry Development Levy” and it will be collect as a percentage of construction cost of projects and it will be the main source of income to the “Construction industry development fund”. The fund will reserved for the benefit and development of construction industry and its stakeholders, for an example it will form insurance with pension benefits, for craftsmen.

The Authority will maintain a Register of qualified persons in different disciplines such as Quantity Surveying and Engineering in addition to the register of Contractors, Developers, Skilled Construction Workers, Construction Site Supervisor and etc.

Moreover the Act has imposed to use standard documents specified for the purpose by the Authority by qualified persons, contractors and etc.

Also it has proposed to use Mediation or conciliation/adjudication as dispute resolution mechanism for identified construction works respectively.

In addition to those the Act has established an appeal board to hear any appeal from any person who is aggrieved by decisions of the Authority.

The Act has vested power to the Authority to collect information from various organizations for the purpose of preparation and maintenance of a National Data Base of construction.

All physical and human resources of ICTAD will be offered to the Authority in order to smooth function of the aforementioned activities.

Next:  Part 2 - Section i to iii of the Act.

CAN A TENDERER WITHDRAW HIS OFFER?

The purpose of tendering is to select a contractor to do the project for a reasonable competitive price. According to the institution of civil engineers(1976,p.100), main purpose of tendering procedure is to secure economies in project costs by establishing competition between firms willing to enter in to a contract for the performance of specific work. After selected the tenderer, employer and the selected tenderer will enter in to a contract.

Contract is an “agreement between two or more parties which is intended            to have legal consequences”-(Brook 2004, p.35)

Basically there should be three requirements for make a contract. Those are;

·         Offer

·          Acceptance

·          Consideration

The common understanding is that a Contract will come into existence if and when the contractor’s offer accepted by the client. Until the offer is accepted there is no contract. Generally contractor’s offer valid for a limited time period, and the time period may stated in the tender document and/or invitation to tender and sometimes its states in the governing law.

For an example Qatar Central Tender committee law article 16 has states ”Period of validity of tender after opening provided that this period shall not exceed ninety days. The tender shall remain effective and irrevocable during this period.”

However, offer should accept before it terminate. There are few circumstances which may terminate the offer. Those are;

1)      On death of either party

2)      Withdraw the offer

3)      After a specified time/reasonable time (According to the Qatar Central Tender committee law 90 days)

4)      When the client makes a counter offer.

Hence the tenderer can withdraw the offer before it is accepted.  However the tenderer can submit a new offer before tender closing time.

In the case of National Highway Authority of India v M/s Ganga Enterprises, The High court held “To have an enforceable contract there must be an offer and unconditional acceptance. A person who makes an offer has the right of withdrawing it before acceptance”

However this situation may differ if the tenderer agrees to keep his offer open for a specific period for a consideration. For an example employer pays payment to the contractor to keep the tender open such as an employer pays QR 40,000 to tenderer for keep the tender open for 120 days. In such case there is a subsidiary contract between the tenderer and client to keep open offer for a 120 days. If the tenderer withdraw the offer before 120 days, he may sue by the client for breach of contract. In such case, probably he may have to pay, additional cost incurred by the employer to select another contractor for the project.

Further the tenderer can submit a revised offer to supersede the original offer before stipulated tender closing date & time.

Further it’s important to study position of tender bond with regarding withdraw of an offer.

 If a tenderer withdraws an offer, can he ask to return tender bond?

The tender bond could be considered as the consideration for a subsidiary contract between tenderer and employer, had been formed when submitting the offer by tenderer. This situation is similar to the aforesaid example, where the employer pays money to keep tender open for 120 days.

First look the purpose of tender bond. Main purposes of tender bond are to ensure that a successful tenderer will enter in to a contract and compensate for the cost associate with the tendering in case of withdrawal. Further it makes sure that only genuine bids are received.

If tenderer able to get back the tender bond without forfeiture, the purposes of the tender bond would be lost. Moreover there is a breach of contract. Hence even the tenderers able to withdraw their offer, they haven't right to withdraw the tender bond.

In the case of National Highway Authority of India v M/s Ganga Enterprises, the supreme court held "A person may have a right to withdraw his offer but if he has made his offer on a condition that some security money will be forfeited for not entering into contract or some act is not performed, then even though he may have a right to withdraw his offer, he has no right to claim that security be returned to him"

Tender bond may forfeiture in case of withdraw the offer within tender bond validity period, further it may forfeiture if the successful tenderer fails to sign the contract or provide performance bond within given time period.

In Qatar Central Tender Committee (QCTC) law article nr 42 has states "If the successful tender does not deposit the performance bond .......Central tender committee may recommend cancelling his tender and confiscating the tender bond...”. Moreover, the article 44 has states “If the tenderer fails to sign the contract on the fixed date or if he withdraws ......he shall be liable for .....Confiscation of the final security (tender bond)”

Since the tenderer haven't right to withdraw the tender bond, when it would expire?

 Generally in tender document and/or invitation to tender has provided validity period for the tender bond. Further there may be legislations which states the tender validity period. For an instant Instruction to tender on QCTC, clause 7 has states "Tender bond... It must be unconditional and valid for 120 days as from the date of opening of the tender".

Generally tender bond validity period is greater than tender validity period. It is as a safeguard for the extended tender validity period. Article 25^th of QCTC law has states “the period of its validity shall not be less than thirty days after the termination of the period fixed for the validity of the tender

However general practice is to return the all tender bonds after the successful tenderer deposited the performance bond. According to the QCTC law article 26, “The tender bond shall be returned to their owners after the tenderer whose has been accepted, has deposited the performance bond”.

By considering above facts I believe, it's good practise to add a clause to instruction to tenderers, which clearly states the position of tender bond with regarding withdraw the offer.

Sample clause;

1) The Tender bond may be forfeiture;

a)      If the tenderer withdraws his offer before tender bond expires.

b)      If the successful tenderer fails to enter in to the Contract within the specified time.

c)       If the successful tenderer fails to provides the Performance bond within the specified time.

 I conclude, tenderer can withdraw his offer before accept without reasoning, However the tenderer’s tender bond may forfeiture.

References;

·         Brook, M., (2004). Estimating and Tendering for Construction Work. 3^rd ed. Oxford: Elsevier Butterworth-Heinemann.

·         Chappell, D., (2006). Construction Contracts-Questions and Answers. Abingdon: Taylor & Francis.

·         Jone, M. and Will. H., (2000). Construction Contracts Law and Management.3rd ed. London: Spon Press.

·         Law No.8 of 1976, Qatar. Qatar Central tender Committee.

·         Pathak, A., (2007). Legal Aspects of Business.2^nd ed. Abingdon: Tata McGraw-Hill.

·         The Institution of Civil Engineers. (1976).An Introduction to engineering economics.2^nd ed. London: William Clowes & Sons Ltd.