CONTRACT, SPECIFICATION AND

QUANTITY SURVEYING (CEng.

484)

Tadesse Ayalew
Bahir Dar University, College of
Engineering
Civil Engineering Department
March-May 2010
1. Procurement and
contract
 General Introduction
 Project life cycle
 Introduction to Procurement
 Procurement and Contract
Management
 Procurement and Project
Delivery Systems
1. Procurement and
Contract
Construction covers a wide range of products,
services and activities.
Construction industry is an important part of the
nation’s economy which contributes considerable
role.
 In many countries the industry contributes
more than 10 % of the GDP,
 In Ethiopia the contribution of the industry to
the national economy for some years is as
follows;
 Contribution of Ethiopian
construction industry to GDP
1995 1996 1997 1998 1999 2000
Industry/Year 2002/ 2003/ 2004/ 2005/ 2006/ 2007/
03 04 05 06 07 08
Agriculture, Hunting and 44.9 47.0 47.4 47.1 46.3 44.6
Forestry
Animal Farming and 14.8 14.3 13.5 12.7 12.3 11.8
Hunting
Manufacturing 5.5 5.2 5.2 5.2 5.0 4.8
Electricity and Water 2.4 2.3 2.2 2.1 2.2 2.2
Construction 5.7 6.1 5.8 5.7 5.7 5.7
Whole Sale and Retail 12.5 11.8 11.8 12.5 13.1 13.4
Trade
Hotels and Restaurants 2.4 2.3 2.3 2.4 2.7 3.0
Transport and 5.9 5.7 6.1 5.8 5.6 5.8
Communications
Public Administration and 4.8 4.3 4.2 4.0 3.7 4.2
Defense
Education 2.8 2.8 2.8 2.8 3.0 3.1
 Too Many Participants
Job
Supervisors Subs
Corporate
Management
Owners

Field Labor
RE Agents

Suppliers

Design
Center

Sales &
Marketing
Manufacturers

Accounting
Banks &
Mortgage
Lendors

Scheduling

Local
Municipalities

Purchasing Estimating
Main players of the construction
industry

Among the many parties involved in the

construction industry , some of the main
players actively involved in the industry
are:
 The Client:
 Who is the initiator and owner of the project
 The Consultant:
 The consultant transfers the wish of the owner into
realizable form and makes the study, design and
possibly the supervision.
 The Contractor:
 The contractor is the one who performs the work.
 Main players of the construction
industry (cont…)

Insurance Companies: Provides

bonds
Bid bond
Performance bond
Payment bonds
Banks:
 Banks provide the working capital for
contractors need to build the project.
They also provide bonds for bid and
performance.
 Resources for the
Construction Industry

The following are the major

resources for construction projects;
1. Human Resources / Labor or
Workmen
2. Financial Resources / Fund
3. Physical Resources such as Materials,
Equipment and other Assets
4. Services and Management.
5. Information Resources
 1.4 The Life Cycle of a Civil
Engineering Project
Civil Engineering project starts with idea,
requirement to fulfill demands, will to
provide basic facilities to the citizen by
the state.
Project ends with the infrastructure of
facilities, recreational center, industrial
plants in operation as reality.
 1.2 The Life Cycle of a Civil
Engineering Project (cont…)
In order to bring the idea generated into
reality civil
engineering project passes through the
following phases:
1. Conceptual and Feasibility Studies.
2. Engineering Design.
3. Contracting and Procurement
4. Construction.
5.Commissioning of a project Start-up and
Implementation
6. Utilization and Maintenance
 1. Conceptual and Feasibility
Studies
In this stage, ideas generated by individuals / a
group of people are studied.
Following important points are carried out to
establish the viability of the project
 Conceptual development of the model and its studies
 Technical and economic feasibility studies
 Environmental and social impact assessment
 Land and geological survey-location of the project
 Enumeration of major problems in translating the
project to reality
Outcome of this phase: A report dealing with
investigation and studies concerning the problems to be
encountered and its solution.
 2. Engineering Design
In this stage, project takes the definite
shape. All the technical issues related to the
project are carried out. Engineers come out
with the best alternatives available.
Design phase of project is carried out in two
phases
Preliminary design
Detailed design
Preliminary design
This stage involves primarily the studies of
various design alternative, their economic
comparative studies and architectural aspect.
Also, in this stage, detailed field investigation
such as;
 soil testing,
 geological,
 hydrological data collection,
 market survey, etc are carried out.
It is difficult to say the end of feasibility study
and the start of preliminary design. These
steps are also a part of feasibility study.
Detailed Design

In this stage, the project is broken down into

its components and each of the elements
are analyzed and designated, such that the
engineer renders the explicit drawings and
specifications which is used for construction
The following are the outcome of this phase
 Drawing of the structures/facilities to be
constructed
 Specifications of component to be
employed which contain detailed
description of the facilities to be
constructed
18
Construction Bid
Documents
Structural Mechanical
Architect And
Engineer
Electrical Eng.

CAD Drafting
Software

Mechanical
Architectural Structural
Specifications & Electrical
Drawings Drawings
Drawings

Construction Bid Documents

19
3. Contracting and
Procurement
In this stage, the bill of quantities are
prepared, final cost estimate is worked out.
Most of the agreements are signed and
relationships between different parties
involved is defined
Following points are generally addressed
during this time.
Tender notices are advertised
Qualification of contractor / suppliers is studied.
Contract is awarded to execute the work
For many of the projects, such as industrial projects,
Outcome of this stage: Contract document, which is a legal
industrial
document material and equipment to be installed
describing is
the terms
and purchased
conditions to execute the project.
4. Construction
This is the most important phase of a civil
engineering project, where the major portion
of the money is invested.
A lot of issues of project management are
involved during this phase.
The project is realized in the real world.
The main work involved during construction
is to answer the following questions
How to do the particular construction (Construction
Methods)
How to organize labor, materials and equipments to
accomplish the construction (Resources Management)
How to breakdown the overall work into small identifiable
work called activity and put them in sequence
(Construction Planning)
How to calculate the time and resources required to
complete the activity and obtain the criticality of the
activity (Construction Scheduling)
How to distribute the labor and equipments, in order to
accomplish the work in the given time (resource allocation)
How to prepare the bill for the money invested in the
construction to get the payment from the client
(Construction Finance)
How to conform the construction is according to drawing
the specifications (Quality of conformance)
 How to implement the safety measure taken during
construction (Construction safety)
 How to organize the different personals or the
company involved in the construction and define
relations among them (Constructional Organization
management, construction sub contracting,
construction Supervision and method of reporting)
 How to check whether the project is according to
construction schedule and quality (Construction
supervision)
 What to do if things are not moving according to plan
(Disputes arbitration, Labor laws, Penalty)

Outcome of this stage : Facility or

structures
5. Commissioning of a
project
Aim of this phase is to check that the
project has been carried out according to
the contract document.
All the facilities developed should function
properly as envisaged in the design.
Also during this stage changes in the
design during the construction is properly
documented for the purpose of technical
performance and financial implications.
Following activities are carried out
during this stage;
Check if each component is functioning
according to design and specification
Check if the entire system is functioning
accordingly as desired to remove the
defect if any during construction work
Dream has come to reality
Operational and maintenance instruction
manuals are also prepared during this
phase
6. Utilization and
maintenance
Basic infrastructure facilities created
should be utilized to its fullest capacity
Regular repair of the part getting
damaged has to be accomplished
This stage has become a very important
stage in dealing with project when we talk
about the life cycle cost of the project.
Development, Design, Construction, and
Management Process

Sales,
Identify Plan & Architectural Operation
Secure Marketing
& Acquire Develop Engineering Construction &
Financing &
Real Estate Project Design Management
Promotion

Architect Architect

Contractors

Developers

Owners
27
28
 1.3 Introduction to Procurement

Construction Industry involves procurement

and contract management systems in order
to ensure fair competition and distributions
of obligations and rights among
stakeholders.
Procurement is a process used to select the
lowest competitive and qualified bidder for
procuring services or works or goods from
potential competitors based on reasonable
relevant criteria.
1.3 Introduction to Procurement
(cont…)
Physical infrastructures are cost
extensive and appropriate savings
obtained through competition are the
main factor behind the procurement
process. Because an effective and
efficient procurement method ensures
some of the following advantages ;
The Right Quality,

C
m

o
The Right Cost / Price /, Resources

Ti

st
The Right Time
Quality
1.3.1 Types of procurements
Procurement types can be classified based
on the things to be procured and the way
how they are procured. There are six bases
for classifying procurement methods.
These are;
Things procured (Goods, services and work)
Bidders’ Coverage (Competitive Vs
Negotiated)
Geographical Coverage (LCB /NCB/RCB Vs
ICB)
Procurement Steps (Single Vs Two staged /
pre or post qualification)
1.4 Procurement and Contract
Management

Procurement and Contract Management

involves three
major processes: Contract Planning,
Procurement
Management and Contract Management
which in turn
consists of the following
Recommended Procurement flow chart for pre-qualification assessment

Procedure Employer / Consultant Contractors

Procurement and Contract

Strategy Delivery System
Delivery System
Procurement Method Awareness on Future
(Contract Planning Phase) Awareness
andon Future
Procurement
Contract Type Method
Contract Business Follow Up
Action PlanType Business and Follow Up
Action Plan
Pre-qualification Documents
Tender Document Preparation Letter of Invitation
Letter of Invitation
Information about prequalification procedure Collect information about
Information
Project about prequalification procedure
Information Collect
the information
project about
and its location
Project Information
Prequalification Application the project and its location
Prequalification Application
Invitation To
Advertisement
Pre-qualify Advertisement
Project Scope, Location, Source of finance Check Eligibility
Tendering Project Scope, Location, Source of dates
financeof Check
Check Eligibility Advantage
Competitive
Issue, Submission and Opening
Issue, Submission and Opening dates of Check Competitive Advantage
Collect Information
Phase Tenders
Tenders Decide toInformation
Collect participate
Instructions to pre-qualify and evaluation
Instructions to pre-qualify and evaluation Decide to participate
Issuance & Submission of criteria
criteria
Pre-qualification docs. Organization, Structure & Experience Request and Obtain Pre –
Organization, Structure & Experience Request and Obtain Pre –
Tendering Resources
Resources
(Financial, Managerial,
(Financial, Managerial,
Technical,
Technical,
Qualification
Qualification
docs.
docs.
Labor, Plant, Stock, etc) Request & Obtain Clarifications
Phase Labor, Plant, Stock,
Current Commitments etc) Request & Obtain
Complete and Submit Clarifications
Docs and
Current Commitments
Acknowledge Receipt Complete and
Relevant Info. Submit Docs and
Acknowledge Receipt Relevant Info.
Opening & Analysis of Open Tender in the presence of relevant
Pre – Qualification Open Tender in the presence of relevant
attendee Attend Tender Opening
attendee
Evaluate for Eligibility, Technical,
Attend Tender Opening
Ceremony
Tender Evaluation Phase Evaluate for Eligibility, Ceremony
Organizational , FinancialTechnical,
Capability
Organizational , Financial Capability

Selection and Notification Pre-qualified tenderers are selected Acknowledge & Confirm Intention
Pre-qualified tenderers are selected toAcknowledge
participate in & Confirm Intention
succeeding
of Tenders Winners are Notified to participate in succeeding
Winners are Notified tender
Tender Evaluation Phase tender
Procurement and Contract Delivery
Systems
Procurement and Contract Delivery system is the
way Project Owners together with Project
Regulators and Financiers determine the
assignment of responsibilities to Project
Stakeholders along the Construction Process.
Procurement and Contract Delivery system is
often determined during the Basic Planning phase
of Construction Project.
Methods of project delivery system
Force Account,
Design Bid Build (DBB),
Design Build (DB) or Turnkey,
Finance / Build Operate System (BOT),
Construction/Facility Management Consultancy
 Design-Bid-Build
(Two Separate Contracts for Design & Construction)

Owner

General
A/E Contractor

Responsible for Design Responsible for

Costs & Schedule
Design bid build
 Typical Design-Bid-Build Process
(The Four Phases)
NEED

Planning Design Bid Construction Occupancy

Typical
Design-Bid-Build
Process

Design Team Contractor

Design-Build (Turnkey)
Owner

Design-Build
Firm

Designers and Consultants Subcontractors and Suppliers

Design-Build

OWNER

DESIGN-BUILD
FIRM

design
subcontractors construction
design subcontractors
subconsultants
suppliers
 Typical Design/Build Process
(The Four Phases)

NEED

Typical Planning
Design/ Design
Build Construction
Process Design/Build
Team Occupancy
BOT Contractual Structure
Professional Construction Management
PCM Agency with GC

Owner

Agency
CM

A/E
GC

Designers and Consultants

Subcontractors and Suppliers

 OWNER

ARCHITECT
LIMITED
CONSTRUCTION
ADMINISTRATION

DESIGN
DATA DETAILED
CONSTRUCTION
COORDINATION

FEASIBILITY
+COST DATA

Architect’s
design GENERAL
consultants CMa CONTRACTOR

subcontractors

Construction Management: materials supplie

“Agency” Form
Professional Construction Management
(PCM)

This may include:

 management and programming of design;
 cost forecasting and financial
arrangements;
 preparation of tender documents; tender
analysis
 and selection of contractors;
 selection of methods of construction;
 planning and scheduling construction
works;
 materials procurement and delivery
1.5 Procurement
Management
Procurement Management process can be
idealized into three major processes.
These include Preparation, Tendering, and
Evaluation (including Award
Recommendation) Processes
 Recommended Procurement flow chart for tendering
Procedure Employer / Consultant Contractors
Procurement Document Letter of Invitation
Letter of to
Invitation
Check Eligibility
Check Eligibility Adv.
Instruction Bidders Check Competitive
Tender Document Instruction
Conditions of to Bidders
Contract Check
Collect Competitive Adv.
Information
ConditionsBillof
ofContract Collect
to Information
Preparation Drawings, Quantities, Forms, Formats and Schedules, etc
Drawings, Bill of Quantities, Forms, Formats and Schedules, etc
Decide participate
Decide to participate

Issuance of Tender Advertisement or Invitation Request and Obtain Tender docs.

Documents Advertisement
Project or Invitation
Scope, Location, Source of finance Request and Obtain Tender docs.
Tendering Phase Issue, SubmissionLocation,
Project Scope, Source
and Opening of finance
dates of Tenders
Issue, Submission and Opening dates of Tenders

Clarification and Site Visit Arrange date and Time for Pre Bid Submission Meeting Request & Obtain Clarifications
Tendering Arrange
Send date and Time
all clarifications to allfor Pre Bid Submission Meeting
bidders Request
Request & Obtain
and Clarifications
Visit Site
Arrange date and time for sitebidders
Send all clarifications to all visit Request andreceipt
Acknowledge Visit Site
of all clarifications
Phase Arrange
Prepare anddate andAddenda
Issue time for site visit
for all Clarifications Acknowledge receipt of all clarifications
Prepare and Issue Addenda for all Clarifications

Submission of Offer Receive Offers Complete and Submit Offers

Tendering Receive
Record Offers
date and Time of Receipt Complete
together withand SubmitInfo.
Relevant Offers
Record date and Time of Receipt together with Relevant Info.
Phase Reject Late Offers
Reject Late Offers

Opening of Open Tender in the presence of relevant attendee

Open Tender in the presence of and
relevant attendee Attend Tender Opening
Tender Announce
Announce
and Record
and Record
Tenderers
Tenderers
all offer
and all offer Attend Tender Opening
Tender Evaluation Phase information Ceremony
information Ceremony
Evaluation of Tenders Review conformity and completeness of Tender
ReviewAlternative
conformity tenders
and completeness of Tender Provide Clarification if
Tender Evaluation Evaluate
Evaluate Alternative
and deviations
tenders and deviations Provide Clarification if
Reject Substantially non Responsive and non Requested
Phase Reject Substantially
conforming Tender non Responsive and non Requested
conforming Tender
Approval by Regulator & Financier
Approval by Regulator & Financier

Selection and Award Select Least Qualified and Evaluated Bidder

Recommendation Select Least
Propose AwardQualified and Evaluated Bidder
Recommendations
Tender Evaluation Phase Propose Award Recommendations
Decide if further Negotiation is required or
Decide if further Negotiation is required or
not
Thank you