CLAUSE 10 CC (Based on the earlier version of CPWD GCC 2008 with Clause 10CC applicable as a Stand alone Clause not linked to Clause 10CA)

12.7.1 This clause provides for compensation in case of increase in price of materials and / or wages of labour required for execution of work (not for the materials supplied or services rendered at fixed price in accordance with clauses 10 and 34 thereof), subject to certain conditions and also downward adjustment in case of decrease in rates in above items.

12.7.2 Clause 10 (CC) may be made applicable only for contracts where the Estimated Cost put to Tender is more than Rs.100 Lakhs, unless otherwise desired by the Client. Whether Clause 10CC is applicable or not should be indicated in Schedule F.

12.7.3 The components of cement, steel, material, labour and POL as percent of total value of work for every work will have to be pre-determined and incorporated in the contract under Schedule 'E' as given below.

XC Cement XS Steel XM Materials Y Labour Z POL

Total of percentages of XC, XS, XM, Y and Z will be 100. If there is any difficulty in working out the percentages of different components, the following may be adopted.

Category of work Cement + Steel + Material Labour POL

1. Buildings 75% 25% —

2. Road Works & Pavements in Air fields 90% 5% 5% 3. External Sewerage 90% 10% — 4. External Water Supply 95% 5% — 5. Bridgework/ Flyover Works 70% 25% 5%

Further break up may be worked out. In case of road works, percentage of component of bitumen may be mentioned distinctly.

The above percentage components are suggested only for normal types of works with ordinary/ hard soil strata etc. Where the soil strata is pre-dominantly rocky, involving heavy cutting or there are other special features, percentages may be fixed by the authorities approving NIT taking into consideration the Detailed Estimate.

12.7.4 In respect of carriage works and for other development works such as leveling etc. as well as sspecialized types of works, the Tender Document approving authority may decide on the details of components to be considered and the percentages applicable for each. In all cases, the components and the percentages as appearing in the Contract will be applicable for working out the amount payable to / recoverable from the Contractor towards Price Variation, irrespective of the variation in components or percentages as observed during the actual execution of work.

12.7.5 The contractor shall be required to prepare the statements of escalation or de- escalation at the end of every three months and submit to the Engineer in Charge. The first statement of escalation shall be prepared at the end of three months excluding the month in which the work was awarded and the work done from date of start to the end of this period shall be taken into account. For subsequent statements, cost of work done during every quarter shall be taken into account. On the completion of work, the work done during the last quarter or fraction thereof shall be taken into account. For the purpose of reckoning the work done during any period, the bills prepared during the period shall be considered. The dates of preparation of bills as entered in the M.B. by the Site Engineer shall be the guiding factor to decide the bills relevant to any period. The date of completion as finally recorded by the competent authority in the MB shall be the criterion for the last quarter or fraction thereof.

12.7.6 The Engineer in Charge will sanction the compensation for escalation or deduction on account of de-escalation and the amount thus sanctioned will be included in the next running account bill or final bill as the case may be. The cost of work for which escalation/ de-escalation is applicable / deductible shall be worked out as indicated in Clause 10CC.

12.7.7 The Engineer in Charge shall ensure before sanctioning any amount under clause 10CC, that such compensation for escalation in prices and wages shall be available only for the work done during the stipulated period of contract including the justified period extended under the provision of Clause 5 of the Contract without any action under Clause 2. For works executed during the period of extension granted with levy of compensation under clause 2, compensation towards price variation will be payable on the basis of indices for materials and labour as applicable on the last date of extension granted without levy of compensation under clause 2 or the indices applicable to such period of extension whichever is lower. Monthly Wholesale Price Index for Grey Cement, Steel (Rebar), all commodities and High Speed Diesel as published by Economic Advisor, Ministry of Commerce & Industry, Government of India as well as Higher amount of Minimum Daily Wage of unskilled adult male mazdoor specified by the Government of India or Local Administration for the periods as stipulated should be ascertained by Engineer in Charge with relevant copies of official documents kept in record. Where final indices / Minimum Daily Wages are not available at the time of preparation of bill for Price Escalation, provisional indices etc may be used initially and the adjustments in amount payable carried out through subsequent bills when the final indices etc are available.

12.8 CLAUSE 12

12.8.1 Under this clause the Engineer in Charge has powers to make any alterations in, omission from, addition to or substitution for the original specifications, drawings, designs and instructions.

12.8.2 The Engineer in Charge is empowered under this clause to give the necessary instructions to the contractor and the contractor is bound to carry out the work in accordance with such instructions but the following three conditions should be satisfied in the issue of such instructions.

i) Instructions must be given before any additional or substituted item is taken up or any BOQ item is to be omitted. This holds good also for Deviation in Quantities of BOQ items beyond the permissible Limits where revision of unit rates may be required to be worked out on the basis of market rates.

ii) They must be given in writing.

iii) They must be signed by the Engineer in Charge.

12.8.3 As regards the extra time for completion of the work due to deviations in agreement items and altered, additional or substituted items, the Engineer in Charge should determine the proportion that the algebraic sum of deviated, altered, additional or substituted work bears to the original contract work and certify for such portion. For substituted items, the additional cost of modified component only is to be taken. In all cases, payment towards Clause 10CC should not be considered. He should extend the time for the completion of the work according to such proportion plus 25% thereof. The proportion so based on Market rate analysis determined by the Engineer in Charge is final and the contractor cannot raise a dispute as to such proportion and demand arbitration. However, if the contractor feels that the period of extension given is, having regard to the proportion so determined miscalculated, it is open to him to request arbitration under the relevant clause about the propriety or otherwise of such period of extension.

12.8.4 Some times while sanctioning rates the Engineer in Charge gives the impression to the Contractor that although he had recommended higher rates, the higher level competent Authority had reduced them. It should clearly be borne in mind that under the terms of the contract it is the Engineer in charge who is the competent authority for according such sanction and it should be so worded as to convey clearly to the other party that the rates have been sanctioned by him and not by or at the instance of the higher authority. Sometimes the Engineer in Charge endorses copies of communication addressed by him to the competent authority for sanctioning rates for certain items, to the contractor concerned. This practice is irregular and is likely to cause legal complications. All communications in connection with fixation of rates etc. should be marked “Confidential” and copies thereof should not be endorsed to the contractors or any other private party. In reply to the communications of the contractors asking for early settlement of rates, where rates are required to be examined and sanctioned by higher authorities and the sanction is awaited, the contractor should not be informed that sanction of the competent authority is awaited. They should only be informed that the matter is under consideration and is receiving attention.

When the contractor insists for a copy of the rate analysis, on which his signatures are being taken, the same can be given without any signature/endorsement of RITES official.

12.8.5 In the case of deviation in quantity of BOQ items beyond the Deviation Limit, Clause 12.2 C of contract lays down that the rate payable for such excess quantity upto the additional limit specified therein, will be 97% of BOQ rate for the respective item. For quantity in excess of such specified limit, the contractor is required to claim revision of his rate supported with proper analysis. On receipt of analysis of rates from the contractor, the Engineer in Charge should arrange to get the same checked and vetted and obtain approval of the Competant Authority. There can be cases where the BOQ rate being high, the Contractor may not be interested in approaching Engineer-in-Charge for revision of rate for the excess quantity. In such cases, the Engineer-in-Charge can take suo-moto action to fix up revised rate. As far as possible, the market rate analysis should be based on coefficients given in the Standard Analysis of Rates of CPWD/Indian Railways/Ministry of Transport etc. as applicable. The market rate analysis is required to be done by the Controlling Site Engineer and checked by Project Coordinator. Where there is likely to be some difficulty in a single individual making out the analysis, SBU Head may consider setting up a two member committee, one from Engineering branch and another from Accounts. In cases where the Contractor does not furnish his analysis of rates, payment should be effected at the rate arrived at by Market rate analysis subject to a maximum of 97% of BOQ rate. Till the rates are fixed with the approval of the Competent Authority, the Contractor may be paid at adhoc rate of 75% of BOQ rate. All out efforts should however be made to obtain the approval of Competent Authority for the Revised rate at the earliest.

12.8.6 Special care should be taken while agreeing to omissions or substitutions. They are potential factors leading to undue benefit to contractors. Hence even if the Client asks for omission or substitution, it should be checked if it will result in undue benefit to the contractor and if so, the Client should be advised accordingly and his approval taken in writing.

12.8.7 For operation of this clause, the following points are to be kept in mind.

i) There should be written order for Deviations in excess of the limit for which rates have been fixed in the contract.

ii) The Contractor is to apply for revision of rates supported by analysis within 15 days after receipt of such communication.

iii) The rates for deviated quantities beyond limits for which rates have been stipulated in the contract, are to be based on market rate

iv) The work shall not be suspended on the plea of non settlement of rate.

v) It should be noted that the whole operation of Clause 12 is for deviation in works which appear necessary in the execution of work specified in the scope of work and not for carrying out major modifications in Scope of Work, which should be taken care of by fresh tender.

12.9 CLAUSE 14

This Clause on “Carrying out Part work at risk and cost of Contractor” had been deleted in RITES GCC 2008 Edition, having been merged with Clause 3 which deals with the subject “When Contract can be determined”.

In the course of execution of work by the Contractor, the following situations may arise.

i) The Contractor defaults in carrying out any or all of his obligations under the Contract resulting in the Employer’s decision to terminate the contract and get the balance works carried out through any other agency.

ii) The Contractor performs his obligations under the contract satisfactorily but the Employer decides to abandon or reduce the scope of the works for any reason whatsoever and hence does not require completion of the whole or part of the works remaining to be carried out by the Contractor, thus foreclosing the balance whole or part work.

iii) The Contractor’s performance is not found to be upto the desired level and the Employer is of the opinion that the contractor will not be able to complete the entire balance work within the scheduled period of completion including extension granted if any. Under these circumstances, the Employer may decide to take away part work / part incomplete work items from the Contractor’s hands leaving him to complete the rest of the work / items of work under the Contract. The Employer gets the part work / part incomplete work items so taken out of the hands of the contractor, completed by any other agency.

In case of Termination of Contract under item (i) above, the procedure to be adopted has been stipulated in Clause 3 of Contract. The Contractor is to be issued a Show Cause Notice as per Proforma at Annexure 12.1, 12.2, 12.3 or 12.4 as applicable and a Notice of Termination as per Proforma at Annexure 12.5.

In case of foreclosure of whole or part of the contract, the procedure to be adopted has been stipulated in Clause 13 of Contract. This clause will be applicable only in case a final decision is taken not to carry out in the near future, the whole balance or part balance work proposed to be foreclosed. In case of such foreclosure, the contractor is to be issued a Notice in the Proforma at Annexure 12.6.

In case it is decided by the Employer to take out part work / part incomplete work from the contractor’s hands for getting it completed through another Agency, the contractor is to be issued a Show Cause Notice in the Proforma at Annexure 12.6A calling for his remarks as to why part work / part incomplete work items should not be taken out of his hands while leaving him to carry out rest of the work. If the explanation of the Contractor is not found to be satisfactory and the Employer decides to

take out part work / part incomplete work items from the Contractor, Notice is to be issued to the Contractor in the Proforma at Annexure 12.6B.

In short, Clause 3 is to be applied for Termination of Contract covering the entire balance work in case of default of the Contractor, with monetary penalty imposed on the Contractor as per a defined procedure. Penalty does not depend on what it costs to the Employer to carry out the balance work. 2The Employer has the discretion to get the balance work carried out through another Agency and the Contractor from whom part work is being taken out is not allowed to participate in the fresh tender.

Clause 13 is to be applied where the Employer decides to foreclose the full or part balance of the work since it is not required to be carried out. Since there is no fault of the contractor, the contractor is monetarily compensated though to a limited extent only, to take care of his loss. Clause 14 is to be applied in cases where the contractor fails partially in carrying out his obligations and the Employer decides that to ensure that the work as per original scope is got completed in a defined time limit, part work / part incomplete work items should be taken out of the hands of the contractor and got completed through another agency. In this case, since there is some default of the contractor, penalty is imposed on the contractor of a defined amount which however is not dependant on the actual cost at which the part work/ part incomplete work is got carried out by the Employer through another Agency. The Contractor is allowed to carry out the rest of works excluding that taken out of his hands. The Employer has the discretion to have such part work / part in complete work taken out if the hands of the first contractor, completed by any other agency. The Contractor from whom part work is taken out, is however not allowed to participate in the fresh Tender for the part work.

12.10 CLAUSE 16

12.10.1Under this clause the Contractor may be required to make good the defects in work at his own expenses or re-execute the work if it is not in accordance with the specifications, designs etc. and the clause authorizes the Engineer in Charge to offer lower rates to the contractor for work done below specification, if the work so done does not compromise structural stability and safety and is otherwise acceptable to RITES. Instructions on payment for substandard work may be seen in Section 14 of this Document.

12.10.2This clause empowers the Engineer in Charge to ask the Contractor to rectify the defective work including during Defect Liability Period and in the event of his failing to do so within the period to be specified by the Engineer in charge in his demand, the contractor shall be liable to pay compensation at the rate specified in clause 2, while his failure to do so continues and in case of any such failure the Engineer in Charge may rectify, remove or re-execute the work at the risk and expenses of the contractor. Notice to contractor, of the intention to recover compensation, is not necessary under this clause.

12.10A CLAUSE 21

Permission to sublet or assign the contract to another party should not be given to a contractor under this clause by Engineer in Charge without prior reference to the authority who accepted the tender. The Tender Accepting Authority should keep the following points in view in case he decides to grant such permission.

i) Sub-letting should be permitted only in exceptional cases and for recorded reasons as to why contractor himself cannot directly run the contract. ii) In all cases, Sublette should be a contractor of the same or higher capacity

or class as the original contractor.

iii) Sanctioning authority must see the terms and conditions of the agreement