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CHAPTER 1

INTRODUCTIONGENERAL

Delay in construction projects could be defined as time over run either beyond the contract date or beyond the date the parties have agreed upon for the delivery of the project. It is commonly observed that delays are one of the most unwanted evil in any project. The number of reasons could be attributable to these delays. Responsibility for the delay could lie with act of God, contractor or employer individually or sometimes collectively. In any case a delay is usually a costly situation although, some of the delays can get compensated monetarily by invoking extra claim using the time extension clauses, but ultimately the contractor suffers lag in the schedule in the project and which in turns affects the project profitability.Construction is a complex and challenging process. Among other things, it requires interpretation of and compliance with many laws, codes, and regulations; gathering of considerable resources, including labor, equipment, and material; and communications with and coordination among multiple parties, such as the owner, the design professional, other contractors and subcontractors, and suppliers, all of whom may have differing purposes and goals. Therefore, a main contractor (including subcontractors) should be able to understand, evaluate, and manage the clauses whenever possible.In the construction industry, it is not unusual for the parties to have commenced on the physical work while still trying to finalize their contract documents. In most cases, the contract was not even agreed upon nor signed after the works is completed. This often gives rise to a number of difficulties in ascertaining whether there was in fact a concluded contract and if so, when was the contract actually made, and what were the terms of the contract. In instances where the parties did enter into a formal contract, the contract is sometimes so poorly drafted that it did not capture all the agreed terms, or it is ambiguous as to what was agreed between the parties. There are many causes of delays like change of scope, poor site management, lack of skilled labour, inclement weather, unforeseen ground conditions, lack of communication, etc. (Tommy, Ivan and Karen 2006) which have been identified in the past through various studies.

1.2 NEED FOR STUDY

In the current world, construction projects are becoming bigger with a lot of complications. Though we have a lot of method to make sure that we finish our project on schedule so that we improve our profit margins, still delay is inevitable, which ultimately results the reduction in profit margins. A study conducted by Infrastructure & Project Monitoring Division of Ministry of Statistics and Programed Implementation (http://www.mospi.nic.in) reports that out of 860 central sector projects (which are of the order of more than Rs 204.2 million) costing around Rs 3432 trillion and average project duration of 6 to 7 years, about 35% are behind schedule and the delay ranges from 1 to 195 months.So far lots of studies have been carried out by various researches to identifying the factors that affect the schedule and profitability of the project. Still there are a lot of projects which run behind schedule and suffer a heavy loss. Lot of study has been carried out by various researches to find out the factors that affect the schedule of the project, but the root cause of all these factors are the contract clauses which are the binding between the Employer and Contractor. This factor made us to identify the clauses that affect the schedule performance and project profitability of the construction project.

1.3 AIM

This project aims to identify and evaluate those clauses which when taken care in the initial stages would help in speedy completion of the project and also would help in maintaining / improving project profitability.

1.4 OBJECTIVE

To identify the contract clauses that affects the schedule performance and project profitability of the contractor executing the construction project. To determine the factors that affect the schedule of the project To find out the claims arises in the construction contracting and ranked it as per the importance. Identify the clauses in Indian contract law which should give more importance to the contractor for better performance. Find the root cause of all these factors are the contract clauses which are the binding between the Employer and Contractor To generate solutions for solving problems and delay due to contractual obligations.

1.5 DEFINITIONS:

1.5.1 CONTRACT: The word contract can be defined in short as an agreement between the parties enforceable under the law. A contract is a legally binding agreement between the parties identified in the agreement to fulfill all the terms and conditions outlined in the agreement.

1.5.2 CONTRACT CLAUSES

Clauses can be located in various places in the contract, but most of the time they appear towards the end of the document. Contract clauses can take many forms and can cover nearly aspect of business and commercial interests.A common example is a non-disclosure clause in an employment contract, where the employer agrees not to disclose any confidential information belonging to the company. A contract clause is a specific provision or section within a written contract. Each clause in a contract addresses a specific aspect related to the overall subject matter of the agreement. Contract clauses are aimed at clearly defining the duties, rights and privileges that each party has under the contract terms. Contract clauses are enforceable along with the rest of the contract under state and federal laws. In India have many clauses for driving the contractual relationship and better performance of project. The use of various clauses all depends on the needs of the parties. Some clauses appear more frequently in contracts than other ones. Each contract clause contained within an agreement is aimed at defining the rights, privileges, and commitments that each party has determined represent the terms govern their working relationship. In this study CPWD have many clauses, analysis and identify the clauses and analysis the clauses which affect the project schedule and help the contractor to aware about the condition and clauses and help to reduce the delay and cost also overall performance can be improved. 1.6 CPWD CONTRACT CLAUSES A contract by definition is an agreement between two parties valid in law. As such all contract conditions and clauses must be strictly in conformity with law. Any condition or clause not as per law will be automatically to be treated as null and void. In the central government have 45 clauses as a general condition of clauses, for the smooth running of the project. The use of various clauses all depends on the needs of the parties. Some clauses appear more frequently in contracts than other ones. This clauses help to achieve the tendering procedure and execution of tender very effectively. This clause help to the contractors and professional in the construction stage .In this clauses have general clauses which about the general condition should maintained by the parties. Another one is special contract clauses which used for special circumstances for construct This is very important so that it also taken for study .it include almost all procedure in the construction contact management stages.

1.7 GENERAL CONTRACT CLAUSES

Clause 1: Performance Guarantee and recovery of security deposit These clauses represent the payment issues and security deposit recovery the contractor shall submit an irrevocable Performance Guarantee of 5% of the tendered amount in addition to other deposits mentioned elsewhere in the contract for his proper performance of the contract agreement. This guarantee shall be in the form of Departments cash receipt or Demand Draft or Pay Order or Bankers cheque .The Performance Guarantee shall be initially valid up to the stipulated date of completion plus 60 days.

Clause 2: Compensation for delay and incentive for early completion This clauses represent If the contractor fails to maintain the required progress in terms of clause-5 or to complete the work and clear the site on or before the contract or extended date of completion, he shall, without prejudice to any other right or remedy available under the Law to the Govt. on account of such breach, pay as agreed compensation the amount calculated at the rate. Compensation for delay of work: @ 1.5% per month of delay to be computed on per day basis.

Clause 3: Clauses indicating when contract can be determined Subject to other provisions contained in this clause, the Engineer-in-Charge may, without prejudice to his any other right or remedy against the contractor in respect of any delay, inferior workmanship, any claim for damages and or any other provisions of this contract or otherwise, and whether the date for completion

Clause 4: Contractor liable to pay compensation even if action not taken under Previous Clause In any case in which any of the powers conferred upon the Engineer-in-Charge by clause 3 thereof, shall have become exercisable and the same are not exercised, the non-exercise thereof shall not constitute a waiver of any of the conditions hereof and such powers shall notwithstanding be exercisable in the event of any future case of default by the contractor and the liability of the contractor for compensation shall remain unaffected.

Clause 5: Time and Extension for delay The time allowed for execution of the works as stipulated in the Schedule or the extended time in accordance with these conditions shall be the essence of the Contract. The execution of the works shall commence from such time period as mentioned in Schedule or from the date of handing over of the site whichever is later.

Clause 6: Measurements of work done Subject to provisions contained in this clause, Engineer-in- Charge shall, except as otherwise provided, ascertain and determine by measurement, the value in accordance with the contract of work done. All measurement of all items having financial value shall be entered in Measurement Book and/or level field book so that a complete record is obtained of all works performed under the contract.

Clause 7: Payment on Intermediate Certificate to be regarded as Advances No payment shall be made for work estimated to cost Rs.20, 000/- or less till after the whole of the work shall have been completed and certificate of completion given. For works estimated to cost over Rs.20,000/-, the interim or running account bill shall be submitted by the contractor for the work executed on the basis of such recorded measurements on the format of the Department

Clause 8: Completion certificate and Completion plansWithin ten days of the completion of the work, the contractor shall give notice of such completion to the Engineer-in- Charge and within thirty days of the receipt of such notice, the Engineer-in-Charge shall inspect the work, and if there is no defect in the work, shall furnish the contractor with a certificate of completion, otherwise a provisional certificate of physical completion indicating defects to be rectified by the contractor.

Clause 8 A: Contractor to keep the site clean When the annual repair and maintenance of works are carried out, the splashes and droppings from white washing, colour washing, painting etc. on wall, floors, doors, windows etc. shall be removed and the surface cleaned Clause 8 B: Completion Plans to be submitted by the contractor The contractor shall submit completion plan required as per Specifications for Electrical works as applicable within 30 days of the completion of the work.

Clause 9: Payment of Final Bill & Payment of Contractors Bills to Banks The final bill shall be submitted by the contractor in the same manner as specified in interim bills within three months of physical completion of the work or within one month of the date of the final certificate of completion.

Clause 10: Materials supplied by Government Materials which Government will supply are shown in schedule which also stipulates quantum, place of issue and rate(s) to be charged in respect thereof. The contractor shall be bound to procure them from the Engineer-in-Charge. As soon as the work is awarded, the contractor shall finalise the programme for the completion of work as per clause 5 of this contract and shall give his estimates of materials required on the basis of drawings/or schedule of quantities of the work Clause 10 A: Materials to be provided by the Contractor The contractor shall, at his own expense, provide all materials, required for the works other than those which are stipulated to be supplied by the Government. The contractor shall, at his own expense and without delay; supply to the Engineer-in-Charge samples of materials to be used on the work and shall get these approved in advance.

Clause 10 B: Advances: This clause includes, the advancement of money and material and mobilization. Secured advance on non-perishable materials Mobilisation advance: Plant, machinery & shuttering material advance Interest & recovery:

Clause 10 C: Escalation Clauses: This clause include payment on account of Increase in prices/Wages due to Statutory order(s) Increase / decrease in prices of cement and steel reinforcement bars after receipt of tender Increase / decrease in prices / wages after receipt of Tender for works

Clause 10 D: Dismantled Material treated as Government property The contractor shall treat all materials obtained during dismantling of a structure, excavation of the site for a work etc. as Governments property.

Clause 11: Work to be executed in accordance with specifications, drawings, orders The contractor shall execute the whole and every part of the work in the most substantial and workman like manner both as regards materials and otherwise in every respect in strict accordance with the specifications.

Clause 12: Deviations / Variations Extent and Pricing The Engineer-in-Charge shall have power (i) to make alteration in, omissions from, additions to, or substitutions for the original specifications, drawings, designs and instructions that may appear to him to be necessary in the progress of the work, it also includes Deviation Extra Items and pricing Deviation, substituted items, Pricing Deviation, Deviated quantities, Pricing

Clause 13: Foreclosure of Contract due to abandonment or reduction in scope of work This clause stated that at any time after acceptance of the tender, Government shall decide to abandon or reduce the scope of the works for any reason whatsoever and hence not require the whole or any part of the works to be carried out, the Engineer-in charge shall give notice in writing to that effect to the contractor and the contractor shall act accordingly in the matter.

Clause 14: Cancellation of contract in full or part In case the work cannot be started due to reasons not within the control of the contractor within 1/8th of the stipulated time for completion of work, either party may close the contract

Clause 15: on Suspension of work The contractor shall, on receipt of the order in writing of the Engineer-in-Charge suspend the progress of the works or any part thereof for such time and in such manner as the Engineer-in- Charge may consider necessary.

Clause 16: Mentioning action in case work not done as per specifications This clause mentioning that all works under or in course of execution or executed in pursuance of the contract, shall at all times be open and accessible to the inspection and supervision of the Engineer-in- charge, his authorised subordinates in charge of the work and all the superior officers of the Department or any organization engaged by the Department for Quality Assurance and of the Chief Technical Examiner's Office.

Clause 17: Contractor is liable for damages, defects during maintenance period This clause indicating that if the contractor or his working people shall break, deface, injure or destroy any part of building in which they may be working, or any building, road, any things the contractor should fine.

Clause18: Contractor to supply Tools & Plants This clause mention that The condition of contractor shall provide at his own cost all materials except such special materials, if any, as may in accordance with the contract be supplied from the Engineer-in- Charges stores

Clauses 18 A: Recovery of Compensation paid to workmen Clause insisting the Government is obliged to pay compensation to a workman employed by the contractor, in execution of the works; Government will recover from the contractor the amount of the compensation

Clauses 19, 20: Labor laws are to be complied by the contractor. And Payment of wages to labours. Clauses indicating that contractor shall obtain a valid license under the Contract Labour (R & A) Act, and the Contract Labour, Central Rules, before the commencement of the work, and continue to have a valid license until the completion of the work. The contractor shall comply with all the provisions of the Minimum Wages Act and rules framed there under and other labour laws affecting contract labour that may be brought into force from time to time.

Clause 21: Work not to be sublet / Action in case of insolvency This clauses saying that if contract shall not be assigned or sub-let without the written approval of the Engineer-in-Charger become insolvent or commence any insolvency proceedings.

Clause 22: Sums payable by way of compensation This clause saying that the all sums payable by way of compensation under any of these conditions shall be considered as reasonable compensation to be applied to the use of Government without reference to the actual loss or damage sustained, and whether or not any damage shall have been sustain.

Clause 23: Intimation of the Change in firms Constitution. This clause insisting where the contractor is a partnership firm, the previous approval in writing of the Engineer-in-Charge shall be obtained before any change is made in the constitution of the firm.

Clause 24: Works to be under direction of engineer-in-charge This clause saying all works to be executed under the contract shall be executed under the direction and subject to the approval in all respects of the engineer-in-charge

Clause 25: Settlement of disputes & Arbitration This clause insisting, in the contract already mentioned the condition and situation of arbitration all situation and conditions insisted in the conditions.

Clause 26: Contractor to indemnify Government against Patent Rights This clause insisting, Contractor to indemnify Government against patent rights which means the contractor shall fully indemnify and keep indemnified the President of India against any action, which may be payable in respect of any article or part thereof included in the contract.

Clause 27: Lump sum provisions in Tender This clause insisting, when the estimate on which a tender is made include lump sums in respect of parts of the work, the contractor shall be entitled to payment in respect of the items of work.

Clause 28: Action where no tender specifications are specified: In the case of any class of work for which there is no such specification as referred to in clause, such work shall be carried out in accordance with the CPWD Specifications and Bureau of Indian Standard (BIS) Specifications or Engineer-in-Charges decision shall be final.

Clause 29: Owners Lien on withheld amount. This clause saying, whenever any claim or claims for payment of a sum of money arises out under the contract or against the contractor, the Government shall be entitled to withhold and also have a lien to retain such sum from whole or in part from the security deposit.

Clause 30, 31: Employment of coal mining or controlled area labour not permissible The contractor shall not employ coal mining or controlled area labour falling under any category whatsoever on or in connection with the work or recruit labour from area within a radius of 32 Km. Use unfiltered water supply and departmental water supply, if available.

Clause 32: Alternate water arrangements The contractor shall make his/their own arrangements for water required for the work and nothing extra will be paid for the same. This will be subject to the following conditions

Clause 33: Hire of Plant and Machinery Notwithstanding anything contained to the contrary in this contract, where any materials for the execution of the contract are procured with the assistance of Government either by issue from Government stocks or purchase made under orders or permits or licenses issued by Government.

Clause 34: Hire of Plant and Machinery (deleted)

Clause 35: Condition relating to use of asphaltic materials (deleted)

Clause 36: Employment of Technical Staff and Employee This clause includes Contractors Superintendence, Supervision, and Technical Staff & Employees. The contractor shall provide all necessary superintendence during execution of the work and all along thereafter as may be necessary for proper fulfilling of the obligations under the contract.

Clause 37: Levy / Tax Payable by contractor This clause include Sales Tax / VAT or any other tax on materials in respect of this contract shall be payable by the contractor and Government shall not entertain any claim whatsoever in this respect. The contractor shall deposit royalty and obtain necessary permit as required for supply of the sand, aggregate, stone etc. from local authorities. If pursuant to or under any law, notification or order any royalty, cess or the like becomes payable by the Government of India and does not any time become payable by the contractor to the State Government.

Clause 38: Conditions for reimbursement of levy / taxes if levied after receipt of tenders This clause include all tendered rates shall be inclusive of all taxes and levies payable under respective statutes. However, pursuant to the Constitution, if any further tax or levy is imposed by Statute, after the last date of the receipt of tender and the contractor thereupon necessarily and properly pays such taxes / levies, the contractor shall be reimbursed the amount so paid, provided such payments, if any, is not, in the opinion of the Engineer-in-Charge (whose decision shall be final and binding on the contractor) attributable to delay in execution of work within the control of the contractor.

.Clause 39: Termination of contract on death of contractor This clause include, without prejudice to any of the rights or remedies under this contract, if the contractor dies, the Engineer-in- Charge on behalf of the President shall have the option of terminating the contract without compensation to the contractor.

Clause 40: If relative working in CPWD then the contractor not allowed tendering This clause mentioned the contractor shall not be permitted to tender for works in the DAE (responsible for award and execution of contracts) in which his near relative is posted as AAO / AO. He shall also intimate the names of persons who are working with him in any capacity or are subsequently employed by him and who are near relatives to any Gazetted Officer in the DAE. Any breach of this condition by the contractor would render him liable to be barred to tender in the DAE.

Clause 41: No Gazette Engineer to work as Contractor within two years of retirement This clause saying officer employed in engineering or administrative duties in an engineering department of the Government of India shall work as a contractor or employee of a contractor for a period of one year after his retirement from government service without the previous permission of Government of India in writing. This contract is liable to be cancelled if either the contractor or any of his employees is found at any time to be such a person who had not obtained the permission of Government of India as aforesaid, before submission of the tender or engagement in the contractor's service, as the case may be.

Clause 42: Return of material & recovery for excess material issued This clause include that ,after completion of the work and also at any intermediate stage in the event of non-reconciliation of materials issued, consumed and in balance - (see Clause 10), theoretical quantity of materials issued by the Government for use in the work shall be calculated on the basis and method given hereunder Clause 43: Compensation during war like situations.This clause saying the work whether fully constructed or not)and all materials, machines, tools and plants, scaffolding, temporary buildings and other things connected therewith shall be at the risk of the contractor until the work has been delivered to the Engineer-in-Charge and a certificate from him to that effect obtained. In the event of the work or any materials properly brought to the site for incorporation in the work being damaged or destroyed in consequence of hostilities or war like operations, the contractor shall, when ordered in writing by the Engineer-in-Charge, remove any debris from the site, collect and properly stack or remove in store all serviceable materials salvaged from the damaged work and shall be paid at the contract rates in accordance with the provision of this agreement for the work of clearing the site of debris, stacking or removal of serviceable materials and for reconstruction of all works ordered by the Engineer-in- Charge, such payments being in addition to compensation up to the value of the work, originally executed before being damaged or destroyed and not paid for

Clause 44: Apprentices Act provisions to be compiled with The contractor shall comply with the provisions of the Apprentices Act, 1961 and the rules and orders issued thereunder from time to time. If he fails to do so, his failure will be a breach of the contract and the Chief Engineer may, in his discretion, cancel the contract. The contractor shall also be liable for any pecuniary liability arising on account of any violation by him of the provisions of the said Act.

Clause 45: Release of security deposit after labour clearance After completion the project with ensure all clauses, and then provide security money to the contractor.

1.8 CONCEPT of CLAUSES AFFECTING SCHEDULE

So far the factors that have affected the schedule performance have been studied but there are clauses that affect the schedule performance of the project. This section deals with the study about the methodology employment for their identification.Wang et al. (1999) examined the adequacy of key contract clauses used in one of the power plant project in their country. After a comprehensive literature review they identified the list of unique or critical risks associated with that power projectand their mitigating measures. They carried out their work further by conducting international survey and they analyzed the data obtained under various categories and concluded measures of fine tuning the contract clauses. But this work was mainly related to BOT projects in China.Thomas and John (2003) studied the interpretation of the contract clauses by the courts and highlighted the circumstances where still the contractor may recover monetary damages despite the clause. They analyzed the No damage for delay clause in various contracts and its interpretation in various courts and formulated a flow chart for this clause. This flow chart indicates the path in which the contractor recovers monetary damages. They finally concluded that1. There are more broadly worded clauses2. Extra ordinary and unusual delay will aid the contractor in getting monetary claims.Tiong et al. (2006) aimed ati. Comparing the views of contractors, clients and consultants on factors facilitating and deterring relational contracting and ii. Investigating the use of contractual incentives to increase the effectiveness of relational contracting.After a detailed literature survey they reviewed the four main components of Relational Contracting. Then a questionnaire was formulated and a survey was conducted to get the required data. The acquired data was then analyzed. The responses of contractors against clients and consultants were compared and the Components of Relational Contracting was discussed in detail along with the results of the analysis. They concluded that Relational Contracting is one of the approaches that enhances team performance and ensures project delivery and also reduces adversarial behaviour. But the main limitation of this study is that relatively high % of respondents was without Relational Contracting experience and also this study was confined to Singapore only.

1.9. CONTRACTUAL PROBLEMS1.9.1. Procurement1.9.1.1 What are entire contracts and how relevant are they in the construction industry? 1.9.1.2 Do projects where the parties enter into partnership arrangements require a formal contract to be agreed?1.9.1.3. What is the effect of an agreement to undertake work which is expressed as being Subject to Contract?1.9.2 Tenders and Bidding1.9.2.1. What is meant by the Battle of the Forms?1.9.2.2. If a tender which contains an error is accepted in full knowledge of the error, has the tenderer any redress?1.9.2.3. Where an employer includes with the tender enquiry documents a site survey which proves misleading, can this be the basis of a claim?

1.9.3 Design

1.9.3.1. What is the difference between a fitness for purpose responsibility and an obligation to exercise reasonable skill and care?1.9.3.2 Can a main contractor be responsible if a nominated/named subcontractors design is defective? 1.9.3.3. Must a contractor notify an architect/engineer of defects in his design?

1.9.4. Letters of Intent

1.9.4.1. When work is undertaken in accordance with a letter of intent without a contract being entered into, on what basis is the contractor or subcontractor entitled to be paid for the work carried out?1.9.4.2. Under what circumstances, if any, could a letter of intent be regarded as a concluded contract? 1.9.4.3. What are the advantages and disadvantages to an employer and contractor in work being commenced on the basis of a letter of intent?

1.9.5 Programme

1.9.5.1. Where a contractor submits a programme which is approved or accepted by the architect/engineer, is he obliged to follow it or can he amend it at his own discretion?1.9.5.2. Is a subcontractor obliged to follow a main contractors programme?1.9.5.3. Who owns float time in the contractors programme, the architect/engineer or the contractor? 1.9.5.4. What is the effect of making the programme a contract document?

1.9.6. Delays and Delay Analysis

1.9.6.1. What is meant by a contractor or subcontractor having to use constantly his best endeavours to prevent delay; does it differ from reasonable endeavours? 1.9.6.2. What is meant by Time is of the Essence?

1.9.7 Extensions of Time

1.9.7.1. Does a contractor or subcontractor lose entitlements to extensions of time if he fails to submit the appropriate notices and details required by the contract?1.9.7.2. Can an architect/engineer grant an extension of time after the date for completion has passed?

1.9.8. Liquidated/Delay Damages

1.9.8.1. What is the difference between liquidated damages and a penalty?1.9.8.2. If the employer suffers no loss as a result of a contractors delay to completion, is he still entitled to deduct liquidated damages?1.9.8.3. If a delay is caused by the employer for which there is no specific entitlement to an extension of time expressed in the extension of time clause, will this result in the employer losing his right to levy liquidated damages?

1.9.9. Variations1.9.9.1. Where a contractor/subcontractor submits a quotation for extra work which is accepted, is the accepted quotation deemed to include for any resultant delay costs? 1.9.9.2. Can a contractor/subcontractor be forced to carry out a variation after practical completion?1.9.9.3. Where work is omitted from the contract by way of a variation, can a contractor or subcontractor claim for loss of profit?

1.9.10. Loss and Expense/Additional Cost

1.9.10.1. Where a contractor/subcontractor is granted an extension of time, is there an automatic right to the recovery of loss and expense?1.9.10.2. Where a contractor/subcontractor successfully levies a claim against an employer for late issue of drawings, can the sum paid out be recovered by the employer from a defaulting architect/ engineer?1.9.10.3. Will a contractor or subcontractor substantially prejudice its case for additional payment if it fails to keep adequate accurate records?

1.9.11. Payment

1.9.11.1. Where a contract requires the contractor to give a guaranteed maximum price, does he have any grounds for increasing the price above the guaranteed maximum?1.9.11.2. Where a subcontract provides for 2.5% cash discount, does this mean that the discount can only be deducted if payment is made on time, or may the discount be taken even if payment is made late?

1.9.12. Practical Completion and Defects

1.9.12.1. Is a contractor/subcontractor absolved from any liability if the employer refuses him access to make good defects because he chooses to make them good himself?1.9.12.2. Can an employer recover from the contractor the costs involved where it became necessary to employ an external expert to demonstrate that work was defective?1.9.12.3. What is the difference between patent defects and latent defects?

1.9.13. Rights and Remedies

1.9.13.1. Where a contract requires the parties to act in good faith, is it enforceable?1.9.13.2. How is the term regularly and diligently, as used in the standard forms of contract, to be defined?1.9.13.3. Can parties to a dispute be forced to submit the matter to mediation?

1.9.14. Adjudication

1.9.14.1. Will an adjudicators decision be enforced by the courts? 1.9.14.2. Will a court enforce part only of an adjudicators award?1.9.14.3. When can it be said that a dispute has arisen which gives rise to an entitlement for the matter to be referred to adjudication?1.9.14.4. Can a dispute concerning oral amendments to a construction contract be referred to adjudication?

CHAPTER 2

LITERATURE REVIEW

2.1. Abdalla M Odeh, Hussien T Battaineh Causes of Construction Delay: Traditional Contracts, International Journal of Project ManagementVolume 20, Issue 1, January 2002, Pages 6773Many projects experience extensive delays and thereby exceed initial time and cost estimates. In addition to imparting the economic feasibility of capital projects, extensive delays provide a fertile ground for costly disputes and claims. This paper presents the findings of a survey aimed at identifying the most important causes of delays in construction projects with traditional type contracts from the viewpoint of construction contractors and consultants. Results of the survey indicate that contractors and consultants agreed that owner interference, inadequate contractor experience, financing and payments, labor productivity, slow decision making, improper planning, and subcontractors are among the top ten most important factors. It is hoped that these findings will guide efforts to improve the performance of the construction industry, and will be useful to international engineering and construction firms seeking a share in the Jordanian and the regional markets.

2.2. Abdalla M Odeh, Hussien T Battaineh Considerations on the Approach of the Contractual Agreement for Construction Works Social and Behavioral Sciences Vol.124 (2014) pp 514 520

The aim of this paper is to present a general outline of the Construction Works Contract Agreement under Romanian law and to provide some recommendations for its improvement, based mainly on German construction law. The authors noticed theexistence of differences in this area between the EU Member States. Eastern countries that joined the EU after 2004 have less detailed regulations and technical standards for the construction works than Germany which has the most advanced system of regulations and standards in the EU in this area. The emphasis will be on the importance of the inclusion of the standardized specific terms and conditions into the Construction Works Contract Agreement, especially for public works.

2.3.K.C.Iyer ,N.B. Chaphalkar,, G.A. Joshi. Understanding Time Delay Disputes in Construction Contracts, International Journal of Project ManagementVolume 26, Issue 2, February 2008, Pages 174184 Most of the construction projects are executed through contracts which are generally not easy to comprehend even by professionals. With advancement in technology and mammoth requirement of infrastructure in developing countries like India, there has been increase in size and complexities in the nature of projects. This gives rise to further ambiguities in the prevailing contract forms eventually making contract forms more complex and difficult and causing adversarial impacts such as increase in number and frequency of claims and disputes besides time and cost overruns. To overcome the worsening scenario, it is essential to develop a system that can assist the contract administrators to understand and evaluate worth of their claims prior to taking it to litigation. An attempt has been made to devise a rule-based expert system to achieve this objective with a limited scope of disputes arising out of Time Delay and Extension in Indian Construction Contracts.

2.4. K.C Iyer,.Chaphalkar, N.B. Assessment of time extension clauses on claim settlementIndian Institute of Technology Delhi, New Delhi, India, Social and Behavioral Sciences, Volume 105, 3 December 2013, Pages 5463Modern construction projects being multi disciplinary in nature, time and cost of the project is difficult to precisely estimate at the design and tendering stage. As a result there are a number of change orders placed on the contractors during the progress of the work leading to cost and time overruns eventually ending up in disputes. Administrative measures to deal with delay disputes are suggested in the contract agreements which include provision of granting extension of time and levying liquidated damages. But, wording of the clauses and the actual ground situations are so complex that they often lead to varied interpretations and assertion of rights in the form of claims. This paper reviews the differing language of time extension clauses used by pioneering construction departments of India and its impact on claim settlement through a study of number of arbitration awards. 2008 Taylor & Francis Group.

2.5.Abdulaziz A Bubshait, Soliman A Almohawis Evaluating the general conditions of a construction contract , International Journal of Project ManagementVolume 12, Issue 3, August 1994, Pages 133136

International construction contractors are often faced with the situation of working in an unfamiliar construction environment. One potential source of risk is the contractual requirements embodied in the general conditions of contracts. The paper presents a simple quantitative method for evaluating the general conditions of a construction contract. 11 attributes were used in this evaluation: clarity, conciseness, completeness, internal and external consistency, practicality, fairness, effect on quality, cost, schedule, and safety. The procedure can also be used to assess the risk level associated with the general conditions.

2.6. Essam K. Zaneldin Construction claims in United Arab Emirates: Types, causes, and frequency, International Journal of Project ManagementVolume 24, Issue 5, July 2006, Pages 453459

The construction industry in the United Arab Emirates is considered the largest single industry, yet, it is also very complex and the most fragmented industry as it involves multidisciplinary participants. In this multidisciplinary environment, claims appear to hinder the completion of construction and cause delays in delivering projects. This research presents the results of a study of the types, causes, and frequency of construction claims in the emirates of Dubai and Abu Dhabi in UAE using a data from 124 claims for a variety of projects in the two emirates. The data were analyzed and the results of this analysis along with recommendations on how to reduce/prevent claims in construction are then presented.

2.7. M. Osama Jannadia , Sadi Assaf, A. A. Bubshait, Allam Naji Contractual methods for dispute avoidance and resolution (DAR) International Journal of Project Management 18 (2000) pp. 4149

This paper discusses the appropriateness of contractual methods towards dispute avoidance and resolution (DAR) for industrial projects in Saudi Arabia. It focuses on the private industrial sector in the Eastern Province. A survey was conducted using the principles of quota sampling where 93 questionnaires were distributed to 11 owners, 59 contractors and 23 consultants. The survey consisted of 20 statements that measured the parties' attitude and opinion towards contractual methods recommended for dispute avoidance and resolution (DAR) during the construction phase. Respondents indicated their level of agreement on a 5-level scale. The results reflect the appropriateness of these techniques for industrial projects. The ve contract administration methods for dispute avoidance and resolution (DAR) covered in this study are: Allocating Fair Contract Risk, Drafting Dispute Clauses, Team Building, Provision of a Neutral Arbitrator, and Binding Arbitration. # 1999 Elsevier Science Ltd and IPMA. All rights reserved.

2.8. Zhang Yang, Renmin University of China The Study on Law Disputes in Construction Project Contract Relationship, Physics ProcediaVolume 33, 2012, Pages 19992004

Because the disputes and case facts of construction project contracts are intricate, there are many new conditions and problems involved in application of law, its very difficult to dispose in the judicial practice with the difference in judicial theories and understanding spirit of the laws, and the juridical criterions of judgment are not unified in the courts of various regions. As judicial organs, people's courts should keep pace with the times, take precautions, and do well investigations and researches on such application of law in such cases in order to give full play to the judicial function, to safeguard the lawful rights and interests of disadvantaged groups and to promote the sustained, rapid and sound development of real estate market.

2.9. Roger Levya, Evelina Fedorenko, Edward Gibson, The syntactic complexity of Russian relative clausesJournal of Memory and Language 69 (2013) pp. 461495

Although syntactic complexity has been investigated across dozens of studies, the available data still greatly underdetermine relevant theories of processing difficulty. Memory-based and expectation-based theories make opposite predictions regarding fine-grained time course of processing difficulty in syntactically constrained contexts, and each class of theory receives support from results on some constructions in some languages. Here we report four self-paced reading experiments on the online comprehension of Russian relative clauses together with related corpus studies, taking advantage of Russians flexible word order to disentangle predictions of competing theories. We find support for key predictions of memory-based theories in reading times at RC verbs, and for key predictions of expectation- based theories in processing difficulty at RC-initial accusative noun phrase (NP) objects, which corpus data suggest should be highly unexpected. These results suggest that a complete theory of syntactic complexity must integrate insights from both expectation based and memory-based theories.

2.10. Oana Adascalitei, Maritime University Of Constanta, Mircea cel Batrin Street, 104, 900663, Constanta, Romania, Ensuring the Rights of Ship-Owners - Maritime Lien and Cesser Clause Social and Behavioral Sciences 149 (2014) pp.14 19

Both by the common law or express contractual provision, the ship owner enjoys the right to retain the goods in the port of discharge as a security for the payment of freight or other charges. The article aims at analyzing the characteristics of common law and contractual liens: their legal nature, enforceability, effectiveness and conditions for the exercise of a contractual lien when cargo is owned by a third party. Closely related to the existence of lien is the cesser clause. Its purpose is to terminate the charterers personal liability for specified payments on shipment of the cargo and at the same time to allow the ship owner to exercise a privilege as he might have at common law plus additional liens (typically for dead freight, demurrage and damages for detention). The conditions that enable the existence of a cesser clause are also analyzed thereby.

2.11. Simon Grant, J. Jude Kline, John Quiggin, School of Economics, University of Queensland, Brisbane 4072, Australia, A matter of interpretation: Ambiguous contracts and liquidated damagesGames and Economic Behavior 85 (2014) pp.180187

We consider the optimality of liquidated damages contracts in a setting of contractual ambiguity and potential for disputes. We show that when parties are ambiguity averse enough, they will optimally choose liquidated damages contracts and sacrifice risk sharing opportunities.

2.12. Emilian Ciongaru, Ph.D, Associate researcher, Romanian Academy, Institute of Legal Research ,Acad. Andrei Radulescu,Bucharest, Romania. Theory of Imprevision, a Legal Mechanism for Restoring of theContractual JusticeResearcher, Hyperion University, Bucharest, Romania Social and Behavioral Sciences vol. 149 (2014) pp. 174 179

It is very difficult to conceive a legal system that may not contain the principle according to which legal conventions concluded have the power of law between the contracting parties. Keeping ones word is one of the pillars of all current legal systems and of the Roman one or even others considered as more primitive. As any legal principle, it has certain limits that are equally important as the principle itself. Among these limits, the principle of binding force of the contract, pacta sunt servanda, there is one recently introduced in the Romanian legal system, namely the theory of imprevision, a legal mechanism by which they follow, above all, the restoration of contractual justice. Imprevision, which is the less visible and contradictory part of the pacta sunt servanda principle, is generated by a social-economic reality appeared following some drastic and unpredictable changes of the conditions in which a contract is to be executed with respect to the aspects envisaged by the parties upon the conclusion thereof. The theory of imprevision aims at answering the debtors situation if any unpredictable events that bring prejudice to the balance of services should occur, balance that was considered by the contracting parties upon the conclusion of contract when the agreement was formed. As a principle, before the coming into effect of the New Civil code, the Romanian courts refused to enforce the theory of imprevision, except for some cases related to the reevaluation of rents. This principle adopted both by the law courts relied on the strict interpretation of contractual provisions and the inexistence of some express legal provisions that might allow the judge to intervene in a contract, and arguments from the practice of international commercial transactions are brought to support the enforcement of the theory of imprevision.

2.13. Oana Adascalitei, Maritime University Of Constanta, Mircea cel Batrin Street, 104, 900663, Constanta, Romania, Lumen International Conference Logos Universality Mentality Education Novelty (LUMEN 2013), An Overview on the Implied Obligations in a Contract of AffreightmentSocial and Behavioral Sciences vol.92 (2013) pp.7 15

If there were no express provisions in the charter party as to seaworthiness or a ship owners obligation to exercise reasonable dispatch, there is an implied obligation in common law. At other times, in the absence of an express term, the right to nominate a port does not give rise to a correlative warranty on the nomination to a safe port. Likewise, a change of circumstances occurring after the conclusion of the contract may be sufficient to discharge the parties from further performance of their contract. In common law, the shipper has an implied obligation to inform the ship owner on the dangerous nature of the shipped goods. Last but not least, whether the owner of the vessel operates a liner service or a under a charter undertakes that his vessel, while performing its obligations under the contract of carriage, will not deviate from the contract of carriage. Based on theoretical and jurisprudential aspects, this article aims to analyze the consequences of the ship owners breach of the contract, the implications of express liberty clauses, and where appropriate, the Hague-Visby Rules incorporation effect. In conclusion, the obligations have different meanings depending on the type of the contract of affreightment and the circumstances in which the obligation must be fulfilled or the moment while operating.

2.14. Edoardo Favari, Phd executive candidate, Politecnico di Milano, Piazza L. Da Vinci Reducing complexity in urban infrastructure projects Social and Behavioral Sciences vol. 53 (2012 ), pp. 9 15

This paper presents results of an analysis of the most relevant urban guided transportation projects of the last decades, to understand root causes of failures and relevant variances from previously estimated parameters. We collected information from all side of the project history of the transportation network, social environment, technical choices reading documentation and interviewing stakeholders. Major problems emerging during the executing phases turn out to be managerial and referable to project management areas. So we addressed to the modern theory of project management based on complexity, which seemed to be fit for urban transportation projects.

CHAPTER 3

METHODOLOGY

3.1 INTRODUCTION The survey research method would be adopted in this study. Survey research is defined as collection of different data by asking people questions. The data collection process used in this research had the option of two basic methods: questionnaires and personal interviews focused on the issues about contract clause in the construction industry. A questionnaire was preferred as the best effective and suitable data-collection technique for the study. It was concluded that the questionnaire was described as a self-administered tool with questions, and get appropriate response. Data was collected from literature reviews from books, journals, articles, seminar conferences, and websites. A survey was given to employees from different trades involved with the construction project. The survey is conducted using four point scales. The questions in this survey consist of structured closed, forced and open ended questions with easy responsible one for the personal who interviewed. Data collected from the sites and draw the solutions

Preliminary study and referring of literature review

Preparation of questionnaire and site investigation

Collecting data by Questionnaire survey and interview

Data analysis and ranking

Generate ideas for solving the problems

Conclude with suggestion

Fig 3.1.a: Methodology

3.1 Preliminary study and referring of literature review:

A detailed literature review on factors affecting the schedule performance of the construction project was carried out and the General Conditions of Contract of CPWD (2007) were studied in detail.

3.2 Preparation of questionnaire and site investigation

A preliminary questionnaire was prepared based on the forms of contracts.Visit the site which the works under central government and private also. Mainly this survey aims the contractor and subcontractor and project manager and PWD engineers ,take about 3 companies for the survey also it is aimed the CPWD department in Kerala, Poonkulam at Velli. The extensive review of literature and problem identification, the preliminary survey of clauses and disputes is started in the on-going construction project in Thiruvananthapuram under taken by contractors and professionals in contractual basis.

Collecting data by Questionnaire survey and interview

These First prepare questionnaire for data collection. The questionnaire design practice advanced on a communicating basis. It was categorized into profile of the respondent in building construction. Questions in the respondent profile were created to collect information such as job position, experience of the work, locations of the current and previous works and contact information. Mainly this survey aims the contractor and subcontractor and project manager and PWD engineers ,take about 3 companies for the survey also it is aimed the CPWD department in Kerala, Poonkulam at Velli. Using this questionnaire survey conduct interview the contractor, subcontractor and professionals engineers. These questionnaires include general details of personnels and preliminary questionnaire about 45 clauses and set of causes of contractual disputes. By this preliminary survey identify the significant clause affecting schedule of the project. So the main questionnaire of clauses will prepared based on the response preliminary questionnaire of contract clauses. Collect the data by the form of questionnaire survey and take the interview for contractors and engineers.

Data analysis and ranking

Here the data may be analyzed by the means of questionnaire. After the data analyzed may be done, then ranking may calculated by the formula,RII = Wi / (A N)Where, Wi = Total score assigned to the factor by the respondentsA = Highest weight N = Number of respondents

Generate ideas for solving the problems

For solving the problem, generate ideas from the questionnaire survey.

Conclude with suggestion

By taking the suggestion to solve the problem and conclude the proje

CHAPTER 4

DATA COLLECTION

4.1INTRODUCTION

The first two chapters covered the various aspects of schedule and causes of schedule. From the finding of researches the factors affecting the schedule of the project is motivated us to carry a study on the contract clauses in Indian condition. A preliminary questionnaire survey was carried out to identify the clauses that affect the schedule of the project and then the clauses obtained from the preliminary questionnaire were proposed to be used in a main questionnaire for further analysis. The study was carried out on contract documents of CPWD.4.2QUESTIONNAIRE SURVEY

4.2.1 CPWD FORM of CONTRACTS

For the study of the clauses affecting the schedule performance and profitability of the Projects, first the source of clauses needs to be identified. For the first part of the thesis work CPWD (2007) General Conditions of Contracts were studied.

4.2.1.1 PRELIMINARY QUESTIONNAIRE

The questionnaire comprising of a general introduction to the project topic followed by questions regarding basic information about the respondents. Though from literature survey clauses affecting schedule and profit can be identified the view of an experienced professional would give us almost all the clauses. The preliminary questionnaire was formed with 50 questions covering 45 clauses of contract law and was sent to experienced Professionals to answer the question.

The professionals were asked to rate on a scale of 0 to 3

0No effect

1Low effect

2Medium effect

3High effect

The data collected through questionnaire was in the form of opinions of the various professionals based on their experiences of contract clauses. The use of statistical tools was necessary to extract those clauses that have significant impact on the schedule performance of the project and also to find out the further extension of study like the impact of those delay affecting clauses on profitability.The preliminary questionnaire was sent to various sects of people working in construction industry. A total of 30 responses were received which included 18(60%) Contractors and 12 (40%) Employers and the average experience of the professionals

Fig: 4.2.1.1(a) Pie chart for the contractors and employers respondents

Fig: 4.2.1.1(b) Respondent profile- Experience wise CPWD Preliminary

4.2.1.2 MAIN QUESTIONNAIRE

The information obtained from the professionals through preliminary questionnaire, was subjected to sample t test and main questionnaire was formed by accounting 16 clauses which were found to be significant. Basically two questions C and D (From Appendix B) were put-forth to the in the questionnaire as the respondents and requested to answer the questionnaire on a 5 point scale.In view of getting the detailed information about the clauses, questions were framed in the sense that they get as much information as possible from the respondent. After thorough literature review it was found that clauses do affect the project profitability and it was also included in the questionnaire. To find out about the percentage of cases in which the respondent has found those clauses affect the project schedule also, a question was included.The respondents were asked to rate the clauses on a scale of 1-5

For Question C 1Very low

2Low

3Medium

4High

5Very high

For Question D1Very low 80%

The data collected through questionnaires was in the form of opinions of the various professionals based on their experiences in contract clauses.

Many modes of collecting responses such as E-mail, postal and telephonic contact towards questionnaires were followed. It was ensured that all the respondents had very high experience in execution especially in contracts. Collection of data by meeting in-person was fruitful as it also proved a means of acquiring knowledge through discussions with the professionals. For question C, (Appendix B) total of 50 responses were collected among those included 24(48%) person were Contractors and 26(52%) person were Employers and the average experience of the professionals who filled the questionnaires was 16 years and the approximate response rate was very high at 52%. For question D, (Appendix B) total of 51 responses were collected in that 25(49.02%) person were Contractors and 26(50.98%) person were Employers and the average experience of the professionals who filled the questionnaires was 13years.

Fig: 4.2.1.2 (i) Respondent profile- Experience wise profitability-CPWD

Fig: 4.2.1.2 (ii) Respondent profile- Experience wise Frequency of clauses affecting schedule-CPWD

4.3 CPWD FORM OF CONTRACT

4.3.1 INTRODUCTION

The method of extraction of clauses for main questionnaire from preliminary questionnaire and the ranking and classification of crucial clauses

4.3.2 PRELIMINARY QUESTIONNAIRE

One sample t-test with a test value of 1.5 and 99% probability was performed for the responses obtained from 30 respondents to find out the significant clauses. The single tailed critical t value for 50 variables and 29 degrees of freedom is 2.756(from t tables). Those clauses whose t value was above 2.756 are the ones which are significant and have an impact on the schedule performance of the project.

Table 4.3.2: Mean, standard deviation, t-value and Ranking of the CPWD contract clauses ClauseNo:Brief Description of clausesMeanStd.DeviationTt>2.756ScoreRIIRank

Clause 1Performance Guarantee and recovery of security deposit clauses.1.760.9431.72NO

Clause 2Compensation for delay and incentive for early completion clauses2.370.8196.53YES900.7894

Clause 3Clauses indicating when contract can be determined1.900.7922.807YES700.61415

Clause 4Contractor liable to pay compensation even ifaction not taken under Previous Clause i.e.Clause 31.740.7951.84NO

Clause5Time and Extension for delay clauses.2.210.7775.64YES840.7379

Clause6Measurements of work done2.470.55710.78YES940.8253

Clause7Payment on Intermediate Certificate to beRegarded as Advances clause.1.860.7262.761YES690.60516

Clause8Completion certificate and Completion plans clause1.420.642-0.76NO

Clause 8AContractor to keep the site clean0.680.702-7.17NO

Clause8BCompletion Plans to be submitted by the contractor1.130.811-2.80NO

Clause9Payment of Final Bill & Payment of Contractors Bills to Banks1.840.9732.17NO

Clause10Materials supplied by Government2.370.6757.93YES900.7894

Clause10AMaterials to be provided by the Contractor2.110.6066.16YES800.70210

Clause10BClauses on Secured advance1. On Non-perishable materials2. Mobilisation Advance3. Plant Machinery & ShutteringMaterial Advance4. Interest & Recovery1.870.7772.92YES710.62314

Clause10CEscalation clauses: Payment on account of1. Increase in prices/Wages due toStatutory order(s)2. Increase / decrease in prices of cementand steel reinforcement bars afterreceipt of tender3. Increase / decrease in prices / wagesafter receipt of Tender for works.2.710.61112.21YES1030.9041

Clause10DDismantled Material treated as Government property0.470.725-8.72NO

Clause11Work to be executed in accordance withSpecifications, Drawings orders etc,1.920.8183.17YES730.64013

Clause12Deviations / Variations Extent and Pricingclause.3. Deviation Extra Items and pricing4. Deviation, substituted items, Pricing3. Deviation, Deviated quantities, Pricing2.610.49513.75YES990.8682

Clause13Foreclosure of Contract due to abandonment or reduction in scope of work2.370.7517.13YES900.7894

Clause14Cancellation of contract in full or part2.370.8196.53YES900.7894

Clause15Clauses on Suspension of work2.370.6338.45YES900.7894

Clause16Clauses mentioning action in case work not done as per specifications1.970.4346.73YES750.65811

Clause17Clauses indicating that Contractor is liable for damages, defects during maintenance period1.450.686-0.47NO

Clause18Contractor to supply Tools & Plants etc1.180.801-2.43NO

Clause18AClauses insisting the Recovery ofCompensation paid to workmen and Ensuring payment and amenities to workers if contractor fails0.970.788-4.12NO

Clause19,20Clauses indicating that Labour laws are to be complied by the contractor. And also about Payment of wages to labours.1.000.615-5.01NO

Clause21Clauses saying that work not to be sublet. Action in case of insolvency1.390.718-0.90NO

Clause23Clause insisting intimation of the Change in firms Constitution.1.240.971-1.67NO

Clause24All works to be executed under the contractshall be executed under the direction andsubject to the approval in all respects of the engineer-in-charge.1.260.795-1.84NO

Clause25Clauses about settlement of disputes & Arbitration1.660.9091.07NO

Clause26Contractor to indemnify Government against Patent Rights0.870.6651.07NO

Clause27Lump sum provisions in Tender1.50.9520.00NO

Clause28Action where no tender specifications arespecified: Local / District Specification to be followed / Engineer-in-Charges decision shall be final.1.550.8280.39NO

Clause29Owners Lien on with held amount.1.630.6331.28NO

Clause30Employment of coal mining or controlled area labour not permissible1.161.00-2.11NO

Clause30,31Unfiltered water supply and Departmental water supply, if available 0.820.692-6.1NO

Clause32Alternate water arrangements0.840.718-5.65NO

Clause33Return of surplus materials1.420.858-0.57NO

Clause34Hire of Plant and Machinery1.450.686-0.47NO

Clause35Condition relating to use of asphaltic materials1.050.804-3.43NO

Clause36Employment of Technical Staff and Employee1.630.7861.03NO

Clause37Levy / Tax Payable by contractor1.420.826-0.59NO

Clause38Conditions for reimbursement of levy / taxes if levied after receipt of tenders1.950.6134.5YES740.64912

Clause39Termination of contract on death of contractor1.451.058-0.31NO

Clause40If relative working in CPWD then the contractor not allowed to tender.1.030.885-3.3NO

Clause41No Gazetted Engineer to work as Contractor within two years of retirement0.790.811-5.4NO

Clause42Return of material & recovery for excess material issued1.050.868-3.18NO

Clause43Compensation during war like situations.1.50.9520NO

Clause44Apprentices Act provisions to be compiled with 1.210.935-1.95NO

Clause45Release of security deposit after labour clearance1.210.935-1.91NO

The clauses that are found to be having t value greater than 2.756 are significant i.e. they have impact on the schedule of the construction project. The significant clauses were ranked on the basis of their mean scores using the relative importance index (RII) which was first computed for each factors using the expressionRII = Wi / (A N)Where, Wi = Total score assigned to the factor by the respondentsA = Highest weight (3 in this preliminary questionnaire)N = Number of respondents (38 in this study)

Note: Ranking has been given to those clauses that are significant only.

Taking a look at the clauses that affect the schedule of the project, we can find out that those with higher ranks are escalation clause, deviation / variation pricing clause. This substantiates to our already proposed question about schedule clauses affecting profitability of the project. Main questionnaire was prepared to further analyze these clauses that affect the schedule of the project.

4.3.3 MAIN QUESTIONNAIRE

As discussed in contract articles the main questionnaire was prepared and sent to various professionals to get responses. Total of 50 and 51 respondents replied to the question on profitability and frequency of these clauses affecting the profitability of project and the clauses were ranked on the basis of the RII (as mentioned above).

Table 4.3.3.1: Mean score and ranking of the impact of various schedule affecting clauses on the Profitability of the project CPWDClauseNo:ContractorEmployerOverall

Mean ScoreRIIRankMean scoreRIIRankMean ScoreRIIRank

Clause 10C4.4170.82513.9230.95214.1600.8311

Clause 124.0830.76723.6150.87533.8400.7672

Clause 133.9160.73343.2690.788123.6000.7183

Clause 53.7920.70863.3840.81783.5600.7134

Clause 63.4580.65093.6530.88523.5600.7134

Clause 143.9580.74233.1710.769133.5400.7106

Clause 153.8330.71653.2930.798113.5200.7087

Clause 383.6670.68373.3070.807103.4800.6978

Clause 10B3.5420.65883.4230.82673.4600.6959

Clause 23.2910.617113.6150.87533.4400.9010

Clause 10A3.3750.633103.4620.84663.4200.98511

Clause 113.0410.567133.5380.85553.3000.65912

Clause 163.1670.592123.3460.81393.2800.65413

Clause 32.9160.542143.1150.759143.0200.60514

Clause 102.8750.533152.8850.702162.8800.57715

Clause 72.5000.467163.0380.740152.7800.55616

When we carefully examine the mean of many of the clauses as shown in Table 4.2 it is evident that there is a very contrasting opinion between employer and contractor on the impact of the schedule affecting clauses on the profit.

The difference in opinion is significant between owner and contractor with respect to six clauses. (Mean is mentioned in closed bracket) The difference in mean between Contractor (4.417) and Employer (3.923) for the escalation Clauses is highly significant even though they carry the same rank. Work to be executed in accordance with Specifications, Drawings orders etc the ranking difference for this clause is very high though there is not much difference in mean between Contractor (3.041) and Employer (3.538). There difference in opinion between Contractor (4.083) and Employer (3.615) with respect to Variation pricing clauses was also significant though there is not much of change in the ranking. Foreclosure of Contract due to abandonment or reduction in scope of work also frequently affects the profitability of the project with a significant difference in opinion between Contractor (3.916) and Employer (3.269) being, also supported by high ranking difference. The difference in opinion between Contractor (3.958) and Employer (3.171) is highly significant, with a very high rank and mean difference, when it comes to the clauses dealing with Cancellation of contract in full or part. Clauses on Suspension of work affect the profitability of the project, but the difference in opinion between Contractor (3.833) and Employer (3.293) is high and also significant. The high ranking difference also adds to the drawn conclusion..

Table 4.3.3.2: Mean score and ranking of the impact of schedule affecting clauses on the frequency of them affecting the Schedule CPWDClauseNo:ContractorEmployerOverall

Mean ScoreRIIRankMean scoreRIIRankMean scoreRIIRank

Clause 123.4000.94023.6530.95213.5490.4851

Clause 10C3.3600.92033.6150.94223.5090.4802

Clause 53.6000.99013.2690.85663.4310.4713

Clause 103.2400.89043.1920.83783.2160.4414

Clause 153.0400.84053.3850.88533.2160.4414

Clause 112.9600.81063.3850.88533.1960.4366

Clause 10B2.8400.78083.2690.85663.0780.4227

Clause 22.7600.760103.3080.86553.0590.4178

Clause 10A2.8000.77093.1530.81793.0000.4129

Clause 62.9600.81062.9610.769112.9800.40710

Clause 162.6400.730133.1150.808102.9010.39711

Clause 142.6800.740112.6920.702132.6860.36812

Clause 32.4400.670162.7690.721122.6270.35813

Clause 72.5600.700152.6530.692142.5880.35314

Clause 132.6000.720142.5380.663152.5490.34815

Clause 382.6800.740112.3850.625162.5290.34316

When we carefully examine the mean of many of the clauses in the above table it is evident that there are not much contradicting opinions between employer and contractor on the frequency of these clauses affecting the schedule of the project

There the difference in opinion is significant between owner and contractor with respect to two clauses. The difference in mean between Contractor (2.440) and Employer (2.769) for the Clauses indicating when contract can be determined though there is not much deviation, still is affects schedule and also is the difference in opinion is significant. Clauses mentioning action in case work not done as per specifications also frequently affects the schedule of project but the difference in opinion between Contractor (2.640) and Employer (3.115) is significant.In this form of contract there is a very good chance that these clauses that affect the schedule and profitability of the project can be altered to aid them in improving profit and not affecting it. Though there is a low degree of acceptance in the opinion between Employer and Contractor in profitability case, but they have agreed in the percentage of cases these clauses affect the schedule of the project. So taking considering this point that any employer would like to get his project completed well ahead of the schedule, negotiations could be carried out based on these results to come up with changes in the clause wordings that causes the schedule overrun and hence cost overrun

CHAPTER 5SUMMARY AND CONCLUSION

5.1 SUMMARY

The concepts of delay and the various factors that affect the schedule of the project were studied. Studies have been performed on various factors affecting the schedule of the project, but contract clauses also do affect the schedule of the project and since no significant work was performed in this area, it was proposed to take up the study on identifying the contract clauses that affect the schedule of the construction project.

Initially the CPWD (2007) Contract documents were studied and a preliminary Questionnaire was prepared to identify the clauses that affect the schedule of the project. Then these selected 16 clauses were incorporated in a main questionnaire to do further analysis in these schedule affecting clauses and the collected responses from respondents The clauses were ranked on the basis of them affecting the profitability of the project and also on the basis of them affecting the schedule frequently.

When it came to Profitability issue in CPWD contract documents there was a high degree of disagreement between Employer and Contractor. But still escalation clauses, deviation / variation pricing clauses were ranked as the top most affecting the profitability of the project by both contractors and employers. The same clauses also affected the schedule frequently and thus also affected profit of project. This clearly confirms the inter relation between schedule and profitability of any project.

5.2 CONCLUSIONThe following conclusions can be drawn from the current study: Out of 45 Clauses, 16 were found to be significant, having impact on the schedule of the construction project. There has been a high degree of disagreement between Employers and Contractors when it comes to clauses affecting profitability The difference in opinion between Employer and Contractor is highly significant in 6 clauses with respect to profitability. The difference in opinion between Employer and Contractor in highly significant in 2 clauses with respect to clauses affecting schedule frequently.

5.3. Relative Importance Index

RII = Wi / (A N)Where, Wi = Total score assigned to the factor by the respondentsA = Highest weight N = Number of respondents

REFERENCES

1. Aibinu, A. A., and Odeyinka, H. A. (2006). Construction Delays and their causative factors in Nigeria, Journal of Construction Engineering and Management. 132(7), pp.667-677.2. Bubshait, A. A., Member, ASCE and Michael J.Cunningham, J. M. (1998). Comparison of Delay Analysis Methodologies, Journal of Construction Engineering and Management., 124(4), pp.315-322.3. Iyer, K. C., and Jha, K. N., (2006). Critical factors affecting Schedule Performance Evidence from Indian Construction Projects, Journal of Construction Engineering and Management., 132(8), pp.871-881.4. Joshua, M. (2001). Time overrun factors in Nigerian Construction Industry, Journal of Construction Engineering and Management., 127(5), pp.419-425.5. Kim, Y., A.M. Kim, K., A.M. and Shin, D., (2005), Delay Analysis Method Using Delay Section, Journal of Construction Engineering and Management, 131(11), pp.1155-1164.6. Lee, H. S., M. Ryu, H. G., Yu, J. H., and Kim, J. J., M. November (2005), Method of Calculating Schedule Delay Considering Lost Productivity, Journal of Construction Engineering and Management., 131(11), pp.1147-1154.7. Ling, Y. F. L., Rahman, M. M., and Ng, T. L. (2006), Incorporating Contractual Incentives to Facilitate Relational Contracting, Journal of Professional Issues in engineering Education and Practice., 132(1), pp.57-66.8. Lo, Y. T., Fung, W. H. I., and Tung, C. F. K., (2006). Construction delays in Hong Kong Civil Engineering projects, Journal of Construction Engineering and Management., 132(6), pp.636-649.9. Love, E. D. P., Tse, Y. C. R., and Edwards, J. D. (2005). Time Cost relationships in Australian Building construction Projects, Journal of Construction Engineering and Management., 131(2), pp.187-194.10. Mbabazi, A., Hegazy, T., M.ASCE and Saccomanno, F. (2005), Modified But-For Method of Delay Analysis, Journal of Construction Engineering andManagement.,131(10), pp.1142-1144.11. Nassar, M. K., Gunnarsson, G. H., and Mohamed Y.Hegab,P.E. M. Y. (2005),Using Weibull Analysis for Evaluation of Cost and Schedule Performance, Journal of Construction Engineering and Management., 131(12), pp.1257-1262.12. Rahman, H. A., Berawi, M. A., Berawi, A. R., Mohamed, O., Othman, M., and Yahya I. A. (2006). Delay mitigation in Malaysian Construction Industry, Journal of Construction Engineering and Management., 132(2), pp.125-133.13. Scott, S. (1997), Delay Claims in UK Contracts, Journal of Construction Engineering and Management. 123(3), pp.238-244.14. Semple, C., Hartman, F. T., and Jergeas, G. (1994). Construction Claims and Disputes: Causes and Cost/Time overruns, Journal of Construction Engineering and Management., 120(4), paper no: 6615.15. Shumway, R., Richard, A., and Ritti, J. (2004), New Trends and Bad Results in Construction Contracts, Part II, Leadership and Management in Engineering, pp.99-104.16. Shumway, R., Richard, A., and Ritti,J. (2004), New Trends and Bad Results in Construction Contracts, Part I, Leadership and Management in Engineering,pp.93-98.17. Thomas H. R., and Messner, J. I., October (2003). No-damages for Delay clause:Evaluating Contract Delay Risk, Journal of Construction Engineering and Management., 129(4), pp.257-262.18. Vidogah, W. and Ndekugri, I. (1997), Improving Management of Claims: Contractors Perspective, Journal of Management in Engineering., 13(5), pp.37-44.19. Wang, S. Q., Robert, L.K., Tiong, member, ASCE Ting, S. K., and Ashley, D.,member, ASCE (1999). Political Risks: Analysis and mitigation of the contract clauses in chinas BOT project, Journal of Construction Engineering and Management., 125(3), pp.190-197.20. Yates J.K, member, ASCE and Epstein, A., member, ASCE (2006). Avoiding and Minimizing Construction Delays Claim disputes in Relational Contracting, Journal of Professional Issues in Engineering Education and Practice., 132(2), pp.168-179.

APPENDICES

APPENDIX A CPWD Preliminary QuestionnaireA Preliminary Questionnaire OnCONSTRUCTION CONTRACTS IN CONSTRUCTION INDUSTRYConstruction Engineering and Management,Department of Civil Engineering,Arunachala College of Engineering for Women, Manavilai.

IntroductionConstruction contracts which are being used by various contracting agencies even after many amendments and changes still account for disputes during the execution of the work. The primary objective of this questionnaire is to identify the clauses affecting the schedule performance of the project. We recognize that you are a professional with good experience in construction industry. We request you to help us to carry out our studies by filling up this questionnaire. The clauses have been adopted from the CPWD Contract as these are still widely used in Indian context.

Confidentiality of the responsesWe guarantee confidentiality of all the responses. We will use it for research purposes only. Individuals (respondents), organizations, or the projects will not be revealed or identified in any report.

About the respondentName: __________________________________________________________Title: ___________________________________________________________Organization: _____________________________________________________Experience in industry (years):________________________________________

Please indicate your rating of the clause according to the question mentioned below in the check boxes from your past experience.

How do you rate the impact of the following clause on the schedule performance of the construction project?Please follow the legend given here to fill the questionnaire

0No effect

1Low effect

2Medium effect

3High effect

Sl.NoClauseNo:Brief Description of clausesImpact on Schedule

No effectLow effectMedium effectHigh effect

01

23

1Clause 1Performance Guarantee and recovery of security deposit clauses

2Clause 2Compensation for delay and incentive for early completion clauses

3Clause 3Clauses indicating when contract can be determined

4Clause 4Contractor liable to pay compensation even ifaction not taken under Previous Clause i.e.Clause 3

5Clause 5Time and Extension for delay clauses

6Clause 6Measurements of work done

7Clause 7Payment on Intermediate Certificate to beRegarded as Advances clause

8Clause 8Completion certificate and Completion plans clause

9Clause 8AContractor to keep the site clean

10Clause 8BCompletion Plans to be submitted by the contractor

11Clause 9Payment of Final Bill & Payment of Contractors Bills to Banks

12Clause 10Materials supplied by Government

13Clause 10AMaterials to be provided by the Contractor

14Clause 10BClauses on Secured advance1. On Non-perishable materials2. Mobilisation Advance3. Plant Machinery & ShutteringMaterial Advance4. Interest & Recovery

15Clause 10CEscalation clauses: Payment on account of1. Increase in prices/Wages due toStatutory order(s)2. Increase / decrease in prices of cementand steel reinforcement bars afterreceipt of tender3. Increase / decrease in prices / wagesafter receipt of Tender for works.

16Clause 10DDismantled Material treated as Government property

17Clause 11Work to be executed in accordance withSpecifications,

Drawings orders etc,

18Clause 12Deviations / Variations Extent and Pricingclause.3. Deviation Extra Items and pricing4. Deviation, substituted items, Pricing3. Deviation, Deviated quantities, Pricing

19Clause 13Foreclosure of Contract due to abandonment or reduction in scope of work

20Clause 14Cancellation of contract in full or part

21Clause 15Clauses on Suspension of work

22Clause 16Clauses mentioning action in case work not done as per specifications

23Clause 17Clauses indicating that Contractor is liable for damages, defects during maintenance period

24Clause 18Contractor to supply Tools & Plants etc

25Clause 18AClauses insisting the Recovery ofCompensation paid to workmen and Ensuring payment and amenities to workers if contractor fails

26Clause 19,20Clauses indicating that Labour laws are to be complied by the contractor. And also about Payment of wages to labours.

27Clause 21Clauses saying that work not to be sublet. Action in case of insolvency

28Clause 23Clause insisting intimation of the Change in firms Constitution.

29Clause 24All works to be executed under the contract shall be executed under the direction and subject to the approval in all respects of the engineer-in-charge.

30Clause 25Clauses about settlement of disputes & Arbitration

31Clause 26Contractor to indemnify Government against Patent Rights

32Clause 27Lump sum provisions in Tender

33Clause 28Action where no tender specifications are specified: Local / District Specification to be followed / Engineer-in-Charges decision shall be final.

34Clause 29Owners Lien on with held amount.

35Clause 30Employment of coal mining or controlled area labour not permissible

36Clause 30,31Unfiltered water supply and Departmental water supply, if available

37Clause 32Alternate water arrangements

38Clause 33Return of surplus materials

39Clause 34Hire of Plant and Machinery

40Clause 35Condition relating to use of asphaltic materials

41Clause 36Employment of Technical Staff and Employee

42Clause 37Levy / Tax Payable by contractor

43Clause 38Conditions for reimbursement of levy / taxes if levied after receipt of tenders

44Clause 39Termination of contract on death of contractor

45Clause 40If relative working in CPWD then the contractor not allowed to tender.

46Clause 41No Gazetted Engineer to work as Contractor within two years of retirement

47Clause 42Return of material & recovery for excess material issued

48Clause 43Compensation during war like situations.

49Clause 44Apprentices Act provisions to be compiled with

50Clause 45Release of security deposit after labour clearance

Appendix B CPWD Main QuestionnaireA Questionnaire OnCONSTRUCTION CONTRACTS IN CONSTRUCTION INDUSTRYConstruction Engineering and Management,Department of Civil Engineering,Arunachala College of Engineering for Women, Manavilai.

Introduction

Construction contracts which are being used by various contracting agencies even after many amendments and changes still account for disputes during the execution of the work. The primary objective of this questionnaire is to identify the clauses affecting the schedule performance and profitability of the project. We recognize that you are a professional with good experience in construction industry. We request you to help us to carry out our studies by filling up this questionnaire.

Confidentiality of the responses

We guarantee confidentiality of all the responses. We will use it for research purposes only. Individuals (respondents), organizations, or the projects will not be revealed or identified in any report.

About the respondent

Name (optional):_____________________________________________________Designation: _______________________________________________________Email ID: __________________________________________________________Organization: ________________________________________________________Experience in industry (years):_________________________________________Status: Employer Contractor Consultant

The various Contract Clauses that have an effect on the Schedule Performance of the Construction Project have been identified after analysis through preliminary questionnaire filled up by experienced Professionals who are in the field and are listed below (A). The clauses have been adopted from the CPWD Contract as these are still widely used in Indian context. The clauses may affect the Schedule Performance of project via time delay in decision making, by causing disputes etc.

Please indicate the effect of these clauses on the various factors mentioned in C and D as per the questions given below.C. How far do u think that the following Contract Clause affect the Project Profitability?D. How many % of cases has this clause affected the schedule performance of the project?

For Question C

1Very low

2Low

3Medium

4High

5Very high

For Question D

1Very low 80%

Sl.NoClauseNo:Brief Description of clausesImpact on profitability of the project% of cases where this clause has affected the schedule of project

ABCD

1234512345

1Clause 2Compensation for delay and incentive for early completion clauses

2Clause 3Clauses indicating when contract can be determined

3Clause 5Time and Extension for delay clauses

4Clause 6Measurements of work done

5Clause 7Payment on Intermediate Certificate to beRegarded as Advances clause

6Clause 10Materials supplied by Government

7Clause 10AMaterials to be provided by the Contractor

8Clause 10BClauses on Secured advance1. On Non-perishable materials2. Mobilisation Advance3. Plant Machinery & ShutteringMaterial Advance4. Interest & Recovery

9Clause 10CEscalation clauses: Payment on account of1. Increase in prices/Wages due toStatutory order(s)2. Increase / decrease in prices of cementand steel reinforcement bars afterreceipt of tender3. Increase / decrease in prices / wagesafter receipt of Tender for works.

10Clause 11Work to be executed in accordance withSpecifications, Drawings orders etc,

11Clause 12Deviations / Variations Extent and Pricingclause.3. Deviation Extra Items and pricing4. Deviation, substituted items, Pricing3. Deviation, Deviated quantities, Pricing

12Clause 13Foreclosure of Contract due to abandonment or reduction in scope of work

13Clause 14Cancellation of contract in full or part

14Clause 15Clauses on Suspension of work

15Clause 16Clauses mentioning action in case work not done as per specifications

16Clause 38Conditions for reimbursement of levy / taxes if levied after receipt of tenders