EPC CONTRACTS-CPWD.pdf

EPC CONTRACTS-CPWD

1. EPC CONTRACTS: A REVIEW
DR K M SONI
ADG(RETD.), CPWD, NEW DELHI

2. EPC
•E-ENGINEERINGMEANSPLANNING
ACTIVITIES
•P-PROCUREMENTMEANSOBTAINING
SOMETHING
•C-CONSTRUCTIONMEANSEXECUTION
•THUS EPC MEANS ENGINEERING,
PROCUREMENTANDCONSTRUCTION

3. EPC CONTRACT OF A WORK
•AWORKMAYINVOLVEMANYACTIVITIESOR
SUBHEADS
•EPCMEANSALLACTIVITIESOFENGINEERING,
PROCUREMENTANDCONSTRUCTIONOR
MAYBEPARTALSO?
•LETUSDISCUSS

4. SCOPE OF A WORK
•WORK MEANS THE SCOPE OF WORK DEFINED IN A
SANCTION
•THIS MAY INCLUDE
–CIVIL WORKS
–E&M WORKS
–FIRE PROTECTION & FIRE FIGHTING WORKS
–SECURITY RELATED WORKS
–HORTICULTURE WORKS
–FURNITURE
–INTERIOR & FURNISHING
–EQUIPMENT
–OPERATION AND MAINTENANCE

5. TYPE OF CONTRACTS
•ITEM RATE CONTRACT
•PERCENTAGE RATE CONTRACT
•EPC CONTRACT
•TURN KEY CONTRACT

6. ITEM RATE CONTRACT
•CONTRACT IN WHICH RATES ARE QUAOTED
BY THE TENDERER FOR EACH ITEM AND
ACCEPTED BY OTHERPARTY ACCORDINGLY
•THUS ITEMS ARE TO BE SPECIFIED BY THE BID
INVITING AUTHORITY
•THE BID INVITING AUTHORITY SHALL NOT
MENTION HIS RATES OF THE ITEMS

7. PERCENTAGE RATE CONTRACT
•CONTRACTINWHICHRATESAREQUOATED
BYTHETENDERERONPERCENTAGEBASIS,
ABOVEORBELOWORATPARONESTIMATED
RATESOFTHEITEMSMENTIONEDBYOTHER
PARTY
•THUSITEMSARETOBESPECIFIEDBYTHEBID
INVITINGAUTHORITYINTHISTYPEOF
CONTRACTANDADDITIONALLYESTIMATED
RATESOFITEMSALSO

8. TURNKEY CONTRACT
•MEANSCLIENTOREMPLOYERWANTS
EVERYTHINGTOBEINCLUDEDINACONTRACT
ANDHETAKESOVERTHEKEYANDENTERSINTO
THEBUILDINGORPREMISES
•THUSCLIENTHASTOSPECIFYBROAD
REQUIREMENTSONLYANDENGINEERING,
PROCUREMENTANDCONSTRUCTIONOFONE
ORMOREPACKAGESTOBEDECIDEDBYTHE
CONTRACTOR
•ITMEANSTHEREISONLYONECONTRACT
BETWEENCLIENTANDCONTRACTOR

9. TURNKEY AND EPC CONTRACT
•ISTHEREANYDIFFERENCEBETWEEN
TURNKEYANDEPCCONTRACTS?
•YESPROBABLY

10. WHAT SUBHEADS SHOULD BE INCLUDED IN
EPC CONTRACT?
–CIVIL WORKS
–E&M WORKS
–FIRE PROTECTION & FIRE FIGHTING WORKS
–LANDSCAPING AND HORTICULTURE WORKS
–SECURITY RELATED WORKS
–FURNITURE
–INTERIOR & FURNISHING
–EQUIPMENT
–OPERATION AND MAINTENANCE

11. CASE -I
•CIVIL OR E&M WORKS ALONE WHICH INCLUDES
•ARCHITECTURAL SERVICES
•ENGINEERING SERVICES
•EXECUTION
•QUALITY ASSURANCE
•PROJECT MANAGEMENT
•OPERATION & MAINTENANCE
ANDCALLTENDERFORALLABOVEHAVING
ARCHITECTURAL,ENGINEERING,PROCUREMENTAND
CONSTRUCTIONACTIVITIESOFABOVEHEADS.WILLITBE
EPCCONTRACT?

12. CASE -II
•CIVIL AND E&M WORKS WHICH INCLUDE
•ARCHITECTURAL SERVICES
•ENGINEERING SERVICES
•EXECUTION
•QUALITY ASSURANCE
•PROJECT MANAGEMENT
•OPERATION & MAINTENANCE
ANDCALLTENDERFORALLABOVEHAVING
ARCHITECTURAL,ENGINEERING,PROCUREMENT
ANDCONSTRUCTIONACTIVITIESOFABOVEHEADS.
WILLITBEEPCCONTRACT?

13. CASE -III
•CIVIL, E&M WORKS AND
LANDSCAPING/HORTICUTURE WHICH INCLUDE
•ARCHITECTURAL SERVICES
•ENGINEERING SERVICES
•EXECUTION
•QUALITY ASSURANCE
•PROJECT MANAGEMENT
•OPERATION & MAINTENANCE
ANDCALLTENDERFORALLABOVEHAVING
ARCHITECTURAL,ENGINEERING,PROCUREMENTAND
CONSTRUCTIONACTIVITIESOFABOVEHEADS.WILLITBE
EPCCONTRACT?

14. CASE -IV
•CIVIL,E&MWORKS,LANDSCAPING/HORTICUTURE
ANDFURNITURE/FURNISHINGWHICHINCLUDE
•ARCHITECTURALSERVICES
•ENGINEERING SERVICES
•EXECUTION
•QUALITY ASSURANCE
•PROJECT MANAGEMENT
•OPERATION & MAINTENANCE
ANDCALLTENDERFORALLABOVEHAVING
ARCHITECTURAL,ENGINEERING,PROCUREMENTAND
CONSTRUCTIONACTIVITIESOFABOVEHEADS.WILLITBE
EPCCONTRACT?

15. CASE -V
•CIVIL, E&M WORKS, LANDSCAPING/HORTICUTURE,
FURNITURE/FURNISHING AND SECURITY MEASURES
WHICH INCLUDE
•ARCHITECTURAL SERVICES
•ENGINEERING SERVICES
•EXECUTION
•QUALITY ASSURANCE
•PROJECT MANAGEMENT
•OPERATION & MAINTENANCE
ANDCALLTENDERFORALLABOVEHAVING
ARCHITECTURAL,ENGINEERING,PROCUREMENTAND
CONSTRUCTIONACTIVITIESOFABOVEHEADS.WILLITBE
EPCCONTRACT?

16. CASE -VI
•CIVIL,E&MWORKS,LANDSCAPING/HORTICUTURE,
FURNITURE/FURNISHING,SECURITYMEASURES,
EQUIPMENTANDANYOTHERITEMASPERCLIENT’S
REQUIREMENTWHICHINCLUDE
•ARCHITECTURALSERVICES
•ENGINEERINGSERVICES
•EXECUTION
•QUALITYASSURANCE
•PROJECTMANAGEMENT
•OPERATION&MAINTENANCE
ANDCALLTENDERFORALLABOVEHAVING
ARCHITECTURAL,ENGINEERING,PROCUREMENTAND
CONSTRUCTIONACTIVITIES.WILLITBEEPCCONTRACT?

17. CASE -VII
•CIVIL, E&M WORKS, LANDSCAPING/HORTICUTURE,
FURNITURE/FURNISHING, SECURITY MEASURES,
EQUIPMENT AND ANY OTHER ITEM AS PER CLIENT’S
REQUIREMENT WHICH INCLUDE
•ARCHITECTURAL SERVICES BUT WITHOUT CONCEPTUAL
PLANS
•ENGINEERING SERVICES
•EXECUTION
•QUALITY ASSURANCE
•PROJECT MANAGEMENT
•OPERATION & MAINTENANCE
WILL IT BE CALLED EPC CONTRACT?

18. CASE -VIII
•CIVIL, E&M WORKS, LANDSCAPING/HORTICUTURE,
FURNITURE/FURNISHING, SECURITY MEASURES,
EQUIPMENT AND ANY OTHER ITEM AS PER CLIENT’S
REQUIREMENT WHICH INCLUDE
•ENGINEERING SERVICES
•EXECUTION
•QUALITY ASSURANCE
•PROJECT MANAGEMENT
•OPERATION & MAINTENANCE
BUT EXCLUDING ARCHITECTURAL DRAWINGS. WILL IT BE
CALLED EPC CONTRACT?

19. CASE -IX
•CIVIL, E&M WORKS, LANDSCAPING/HORTICUTURE,
FURNITURE/FURNISHING, SECURITY MEASURES,
EQUIPMENT AND ANY OTHER ITEM AS PER CLIENT’S
REQUIREMENT WHICH INCLUDE
•ENGINEERING SERVICES EXCLUDING STRUCTURAL DESIGN
•EXECUTION
•QUALITY ASSURANCE
•PROJECT MANAGEMENT
•OPERATION & MAINTENANCE
BUT EXCLUDING ARCHITECTURAL DRAWINGS , E&M AND
STRUCTURAL DRAWINGS.WILL IT BE CALLED EPC
CONTRACT?

20. EPC
•THUSEPCCONTRACTSISACONTRACTFORPART
OFAWORKORCOMPLETEWORKINWHICH
ENGINEERING, PROCUREMENT AND
CONSTRUCTIONAREINCLUDED
•IFEPCISFORCOMPLETEWORKANDINCLUDES
ALLITEMSOFE,PANDC,ITBECOMESTURNKEY
CONTRACT
•HOWEVEREPCMAYBEFORPARTOFWORK
•ANDEPCMAYBEFORE,PANDCWITHOUT
ARCHITECTURALANDPARTOFENGINEERING
SERVICESALSO.

21. AND CONTRACT
•ACONTRACTISBASICALLYANAGREEMENTBETWEEN
TWOPARTIESCREATINGALEGALOBLIGATIONFOR
BOTHOFTHEMTOPERFORMSPECIFICACTS.EACH
PARTYISLEGALLYBOUNDTOPERFORMTHE
SPECIFIEDDUTIESSUCHASRENDERINGAPAYMENT
ORDELIVERINGGOODS.
•INORDERFORTHECONTRACTTOBEENFORCEABLE,
EACHPARTYMUSTEXCHANGESOMETHINGOFVALUE
(CALLED“CONSIDERATION”).
•THEYMAYBEEITHERORALORWRITTEN,THOUGH
COURTSPREFERTHATAGREEMENTSBEPUTIN
WRITING.

22. REQUIREMENTS OF A VALID CONTRACT
•MUTUALASSENT:EACHPARTYMUSTHAVEASHARED
UNDERSTANDINGREGARDINGWHATTHESUBJECT
MATTEROFTHECONTRACTIS.FOREXAMPLE,WORK
MEANSPROJECTANDNOTASERVICEOFBRINGING
SOMETHINGFROMSOMEWHERE.
•OFFERANDACCEPTANCE:ONEPARTYMUSTMAKEAN
OFFERBYCLEARLYCOMMUNICATINGTHEIRINTENTTOBE
BOUNDINACONTRACT.LIKEWISE,THEOTHERPARTY
MUSTRENDERTHEIRACCEPTANCEINUNAMBIGUOUS
TERMS.
•CONSIDERATION:THISWHEREBOTHPARTIESMUTUALLY
EXCHANGESOMETHINGOFVALUEINORDERTOMAKE
THEAGREEMENTBINDING.
•ANEPCCONTRACTSHOULDALSOCONFORMTO
REQUIREMENTSOFACONTRACTASPERTHECONTRACT
ACT

23. UNDERSTANDING
•UNDERSTANDINGMEANSTHETERMSAND
CONDITIONSARETOBECEARLYSPELLEDOUT
•THESEAREINCLUDEDINGENERALCONDITIONS
OFCONTRACT,SPECIALCONDITIONSORANY
OTHERCONDITIONSMADEPARTOFTENDER
DOCUMENTHENCETHEREMUSTBECLEAR
UNDERSTANDINGOFSCOPEOFWORKINEPC
CONTRACTALSO
•LETUSDISCUSSSOMEOFTHECONTRACT
CONDITIONS

24. SECURITIES
•PERFORMANCESECURITY/GUARANTEEFOR
PERFORMANCEOFCONTRACT
•SECURITYDEPOSITFORADJUSTMENTON
ACCOUNTOFSUMSPAYABLEBYTHE
CONTRACTOR
•THISISSIMILARTOOTHERCONTRACTS

25. TIME AND DELAY
•COMPENSATIONFORDELAY
–WITHMAXIMUMRATE@1%(ONEPERCENT)PERMONTHOF
DELAYTOBECOMPUTEDONPERDAYBASISBASEDON
QUANTUMOFDAMAGESUFFEREDDUETOSTATEDDELAYON
THEPARTOFCONTRACTOR
•INCENTIVESFOREARLYCOMPLETION
–INCASE,THECONTRACTORCOMPLETESTHEWORKAHEADOF
STIPULATEDDATEOFCOMPLETIONORJUSTIFIEDEXTENDED
DATEOFCOMPLETION,[email protected]%(ZEROPOINTFIVE
PERCENT)OFTHETENDEREDVALUEPERMONTHCOMPUTED
ONPERDAYBASIS,SHALLBEPAYABLETOTHECONTRACTOR,
SUBJECTTOAMAXIMUMLIMITOF2%(TWOPERCENT)OF
THETENDEREDVALUE.
THISISSIMILARTOOTHERCONTRACTS.ABOVECRITERIONMAY
CHANGEFROMORGANISATIONTOORGANISATION.ABOVE
CRITERIONISOFCPWD

26. DETERMINATION OF CONTRACT
•DEFECTIVE WORK
•SUSPENSION OF WORK
•DELAY
•NEGLIGENCE OF OBLIGATIONS
•INVOLVED IN CORRUPTION
•PAYING COMMISSION
•OBTAINED CONTRACT WITH MALPRACTICES
•BECOMES INSOLVENT
•SUBLETS THE WORK
ABOVE CRITERION IS FROM CPWD, APPLICABLE TO ALL
TYPES OF CONTRACTS

27. CLAUSE 3 A
•INCASE,THEWORKCANNOTBESTARTEDDUE
TOREASONSNOTWITHINTHECONTROLOFTHE
CONTRACTOR WITHIN1/8THOFTHE
STIPULATEDTIMEFORCOMPLETIONOFWORK
ORONEMONTHWHICHEVERISHIGHER,EITHER
PARTYMAYCLOSETHECONTRACTBYGIVING
NOTICETOTHEOTHERPARTYSTATINGTHE
REASONS.
•ABOVECRITERIONISFROMCPWD,APPLICABLE
TOALLTYPESOFCONTRACTS

28. OTHER MAIN CLAUSES
•SECURED ADVANCE
•MOBILIZATION ADVANCE
•T & P ADVANCE
•WAGE INCREASES DUE TO STATUTORY
ORDERS
•PRICE INCREASE ON MATERIALS SPECIFIED
•ESCALATION CLAUSE
•DEVIATIONS

29. SECURED ADVANCE
•SECUREDADVANCEMAYBEINCLUDEDINEPC
CONTRCATSORMAYNOTBE
•INCPWDEPCCONTRACTS,ITISINCLUDED
•ITHELPSINMOBILISINGRESOURCESANDDOES
NOTBLOCKMONEYFORLONGTIMEHENCEISIN
FAVOUROFWORK
•SINCERATESOFITEMSARENOTAVAILABLEIN
CONTRACT,ENGINEERINCHARGEHASTO
ASSESSTHEMARKETRATESANDREQUIEMENTS
OFMATERIALSONWHICHSECUREDADVANCEIS
GIVENCAREFULLY

30. MOBILISATION AND T&PADVANCE
•MOBILIZATION AND T&P ADVANCE ALSO
HELP THEAGENCY TO ACCELERATE THE
PROGRESS HENCE IN FAVOUR OF WORK

31. WAGE INCREASE DUE TO STATUTORY
ORDERS
•THISISREQUIREDTOBEPAIDASPER
APPLICABLAWSHENCENEEDSTOBE
INCORPORATEDINEPCCONTRACTSELSE
PROVISIONHASTOBEMADEANDCONTRACTOR
HASTOPABSORBTHERISKANDPAYIFTHEREIS
ANINCREASE
•THISCLAUSECANALSOBEASREIMBURSEMENT
ONACTUALBASIS
•CPWDCONTRACTCLAUSEISKNOWNASCLAUSE
10C

32. ESCALATION CLAUSES
•CPWDCONTRACTDOCUMENTHASTHREESUBCLAUSES
INESCALATIONCLAUSE(CLAUSE10)
•CLUSE10C:WAGEINCREASEDUETOSTATUTORY
INCREASE
•CLAUSE10CA:FORCERTAINCOSTLYITEMSLIKECEMENT,
STEEL
•CLAUSE10CC:ESCALATIONONLABOURANDOTHER
MATERIALSEXCEPTCOVEREDUNDERCLAUSE10CA
IT IS UPTO NIT APPROVING AUTHORITY TO INCLUDE CLAUSE
10CA AND 10CC
IN CASE, ESCALATION CLAUSE IS INCLUDED, THEORETICAL
CHECK (QUANTITY) OF MATERIALS IS REQUIRED TO BE
PREPARED/CHECKED

33. DEVIATION
•EXTRA/SUBSTITUTEDITEMS
•INCASETHEREISCHANGE/MODIFICATIONINDRAWINGSGIVEN
BYTHECONTRACTORAFTERTHEAPPROVALBYTHEENGINEER-
IN-CHARGEDUETOFUNCTIONALORSITEREQUIREMENTSTHE
CONTRACTORSHALLCARRYOUTTHECHANGESINCLUDINGEXTRA
ITEMS,SUBSTITUTEITEMS,DEVIATIONSASPERDIRECTIONOF
ENGINEERINCHARGEFORWHICHNOTHINGEXTRASHALLBE
PAYABLETOTHECONTRACTORONACCOUNTOFSAME,PROVIDED
THEADDITIONALCOSTOFSUCHWORKISUPTO1%(ONE
PERCENT)OFTHEACCEPTEDTENDEREDAMOUNTANDWORKED
OUTONMARKETRATEBASISFORTHEVARIATIONCOSTING
ABOVE1%(ONEPERCENT).
ABOVECLAUSEISASPERCPWDCONTRACTWITHTHEIDEATHAT
SOMEDEVIATIONSMAYBEREQUIREDDUETOLOCALBODY
REQUIREMENTSLATERPROJECTEDORCLIENT’SREQUIREMENTS
ORSTRUCTURALREQUIREMENTSANDTHUSSOMEPROVISIONIS
INCLUDED

34. DEVIATION
•THEREMAYBECHANCESTHAT
•DRAWINGSARESUPPLIEDBYTHEENGINEERTOTHE
CONTRACTOR
•DRAWINGSAREPREPAREDANDAPPROVEDBYTHE
ENGINEER
•DEVIATIONSWILLBEWITHRESPECTTOAPPROVALOF
DRAWINGSACCORDEDBYTHEENGINEERHENCE
DEVIATIONSWILLALSOBEWITHRESPECTTO
DRAWINGSAPPROVEDEITHERSUPPLIEDBYTHE
ENGINEERORTHECONTRACTORHENCEENGINEER
SHOULDTAKEDUECAREBEFORECONVEYING
APPROVALOFTHEDRAWINGSTOAVOIDDEVIATIONS

35. DEVIATION
•NITAPPROVINGAUTHORITYMAYALSO
CHOOSETHEOPTIONOF“NODEVIATION
ALLOWED”INTHECONTRACT

36. FORECLOSURE OF CONTRACT
•DUE TO ABANDONMENT OR REDUCTION IN
SCOPE OF WORK

37. LIFE CYCLE COST
•CLAUSE24
•THECONTRACTORSHALLHAVEOBLIGATIONTO
RECTIFYCONSTRUCTIONDEFECTSMINIMUMUP
TO5(FIVE)YEARSFROMTHEDATEOF
COMPLETIONOFWORK.THEDEFECTSHAVETO
BERECTIFIEDWITHINAREASONABLETIMENOT
EXCEEDINGTHREEMONTHSAFTERISSUEOF
NOTICEBYENGINEER-IN-CHARGE
THECLAUSEISMOREABOUTTHECONSTRUCTION
DEFECTREMOVALPERIODRATHERTHANLIFE
CYCLECOST

38. ARBITRATION
•CLAUSE25ASPERCPWDCONTRACT
•PROVISIONOFDRCWITHOUTREFERENCETOSE/CE
•DRCWILLGIVEDECISIONWITHIN60DAYS
EXTENDABLEBY30DAYSWITHCONSENTOFBOTH
THEPARTIES
•NOPARTYWILLBEREPRESENTEDBYLEGALCOUNSEL
DURINGDRC
•PROVISIONOFARBITRATORFROMGOVERNMENT
ORGANISATIONSORRETIRED.
•SOLEARBITRATORFORWORKS(TENDEREDCOST)
COSTINGUPTO500CRANDTRIBUNALOFTHREE
ARBITRATORSFORWORKSABOVE500CRORES.

39. THANK YOU