Contractor’s Orientation

Contractor’s Orientation Behailu Demeke, West Region Directorate P/Director Ethiopian Roads Authority August 2011

Outline of the presentation • Introduction • What you should do to succeed • Risks in construction • The contractor’s obligation • Concluding remarks

1. Introduction • Currently 27 contractor’s work with ERA • It is planned to increase this number to 100 by 2007 EFY • Why? • To develop the LCI • To create healthy competition • How? • With your participation • With ERA’s support

Introduction, … Our Common Goals Safely • Finish the Project • As specified • On schedule • Within budget We understand contractor works to make reasonable profit in the process

2. What you should do to succeed • Plan • Organize • Control The Golden Rule of Construction Management

2.1 What you should do,Plan! • Physical Plan • Construction execution plan • Detailed schedule, clause 14.1 & 14.2 • Financial Plan • Cash flow clause 14.3

2.1.1 Clause 14 program • Critical path method with Logical link • Description of work method & arrangements • Period of construction for each activity, daily/monthly productivity rates • Equipment, labor and material arrangements & sources • Climatic conditions, subsurface conditions, custom process, LC & etc

2.1.1 Clause 14 program… Cont’ • The program should detail • Deadline for the provisions of engineer’s facility • Timeline for completion of contractor’s site facility • Time frame for the delivery of plant, equipment and material • Right of way and other land requirements • Temporary works arrangement • HIV alleviation programs, safety & environmental issues

2.2 What you should do,Organize! • Organizational Activities • Developing system • Organizational chart • Key positions & descriptions • Site operation procedures • Site facility • Issue control procedure • Mobilize & motivate field staff

2.2.1 Organizational activities • Appoint competent project management team • Timely mobilization of equipment, manpower and material (proper utilization of the mobilization advance) • Timely establishment at the site • Office, accommodation, laboratory, workshops etc • Put in place effective communication system • Recording system

2.2.1 … activities cont’ • Establish work procedures (mandatory to avoid rework) • Environmental management should be part of the work system/flow • Safety of workers & third party has to be an inbuilt element of the work method/procedure • Traffic management plan is mandatory

2.3 What you should do,Control! • Control activities • Quality – materials, products, • Time – measured against the schedule • Money – construction budget and cash-flow • Physical Progress and Productivity • Reporting – informs the output of the Controlling activity

2.3.1 Controlling the site activities • Make sure the work being done is of the required quality (regardless of the engineer’s checking and approval) • Make sure that the actual productivity for each activity is as planned or even better • Monitor the return on financial spending • Report is the most important tool to follow up your performance • Visit your sites regularly

3. Risks as to construction • Construction work is inherently a risky venture • Risk is the probability that an adverse event occurs during the construction period • Establish the probability of occurrence of the adverse events, Measure/estimate the potential impact and account it in your tender Risk can be managed, minimized, shared, transferred or accepted, but it cannot be ignored!

3. Risks … cont’ • Estimation and pricing of risk is very difficult (lack of database and documentation) • The condition of contract serves to allocate the risks and liabilities • The risks are usually allocated based on the fact that who is best suited to handle them • Contractor’s have to assess which risks they assume as per the contract and/or the law

4. The Contractor’s Obligation • Construction & completion within the time allowed • The use of material & workmanship as specified & instructed by the Engineer • Provision of securities, indemnities & insurances

4. The … Obligation cont’ • Supply of information and notices • Perform certain administrative & other functions These obligations are spread through time

4.1 Obligations during tendering • Inspecting the site & its surroundings • Inspect information available in connection with the site • Receive & interpret data on hydrological & subsurface conditions So far as is practicable, having regard to considerations of cost and time Sub-clause 11.1

Obligations during tendering • Satisfied himself • The form & nature of the site, including the subsurface condition • The hydrologic & climatic conditions • The extent & nature of work & material necessary Sub-clause 11.1

Obligations during tendering • Obtain necessary information as to risks, contingencies & all other circumstances which may influence or affect his tender • Based his tender on the data made available by the Employer & on his own inspection & examination • Satisfied himself as to the correctness & sufficiency of his tender (cl 12.1)

Obligations during tendering • To agree on the general terms of the insurance (cl 25.1) • Arrangements for price adjustment should be reflected in the tender rate • Indices should relate to proposed source of supply

4.2 Obligations during Construction • Prior to commencement of the works • Provision of performance security (cl 10.1) • Program submission (cl 14.1) • Insurance evidence (cl 25.1) • Breakdown for lump sum items (cl 57.2)

Obligations during Construction • Construction & completion of the works with duecare and diligence & within the time for completion (cl 8.1, 41.1) • Substantial completion (cl 48.1) • A stage that warrants issuance of DLC (62.1) • The contractor has to complete the works irrespective of any difficulties he may experience

Obligations during Construction • Do anything necessary to complete the works • Incidental works when risks eventuate, (repair of damage, additional works etc) • Rate of progress should enable to meet the time for completion (cl 46.1)

Obligations during Construction • Use of materials, plant and workmanship as specified and instructed • The GCC & COPA set the principles (the Specs give details)

Obligations during Construction • Provision of securities, indemnities & insurances • Performance security • Care for the works and materials and plant for incorporation therein • The indemnity & insurance cover are listed in cl 20 to 25 (CAR, Workmen, third party, etc) • Compliance with statutes & regulations

Obligations during Construction • Provision of securities, indemnities & insurances • Patent rights, design trademarks or names & other protected rights • Interference with traffic & adjoining property • Indemnity for use of in-route facilities

Obligations during Construction • Supply of information, notices or alerts • Design related information • Program • Cash flow estimates • Geological & archeological finds • Details of labor and equipment returns • Particulars of EOT

Obligations during Construction • Supply of information, notices or alerts • Emergency works • Varied works, to be executed under day-works • Contemporary records • Measurement • Use of provisional sums • Payment to nominated subcontractors • Monthly statements

Obligations during Construction • Performance of certain administrative functions • Not to assign the contract, any obligation or benefit to others • Is responsible for the acts of sub-contractors • To afford reasonable opportunity to other contractors on site • Engagement of staff and labor (observing the law)

Obligations during Construction • Performance of certain administrative functions • Making payments in some cases (temporary rows, reinforcing bridges along the route improving the roads, etc) • Making and keeping further copy of drawings (cl 6.1) • Assigning benefit to the employer in case of termination (cl 6.1)

4.3 Obligations after substantial completion • Site clearance cl 33.1 • Searching defects and remedying (cl 50.1) • Preparation and submission of statement at completion (cl 60.5) • Draft final statement and further information (cl 60.6) • Issuing discharge to the employer (cl 60.7)

5. Concluding remarks • You have to carefully plan, organize and control your work • You have to mobilize and commence work at the site ASAP • You have to monitor the progress and quality of the work

Concluding remarks … cont’ • You should have a robust financial utilization and controlling system • You have to have a good supply chain management system • You have to take corrective measures through close follow up

Concluding remarks … cont’ • This is a one time opportunity • If you succeed a lot more is coming for you • If you fail in this opportunity you may jeopardize the opportunity of others • This projects will be counted as an experience for you when you complete 70% of the work • You will be eligible for another opportunity after you progress 50%

Thank you and Good Luck

Contractor’s Orientation