6.1 CONTRACTOR’S PROGRAMME AT COMMENCEMENT
GCC Clause 16 requires the Contractor to submit a programme of the Works at the commencement of the Contract. The programme should show clearly the sequence, method and timing of all major activities under the Contract, including allowance for carrying out specialist work by other contractors to be employed by Government and work by utility undertakers.
The programme should normally be in the form of a bar chart. For complex contracts involving a large number of inter-related activities, the programme may need to be in the form of a network diagram. Critical activities and the critical path should be identified on the programme. For contracts with different completion dates for different Sections of the Works, the critical path for each Section of the Works should be identified and shown on the programme.
In addition to the programme to be submitted to the Engineer in accordance with GCC Clause 16, the Contractor shall, in accordance with the GS, submit within a further 14 days a programme showing a detailed breakdown of the work to be carried out in the first 3 months, and an outline for the remainder of the work. A programme showing the work completed to date, a detailed breakdown of the work to be carried out in the next 3 months and an updated outline for the remainder of the work shall be submitted to the Engineer not later than 4 weeks before the commencement of each subsequent 3-monthly period. Programmes submitted in accordance with this paragraph shall be in the form of a bar chart showing the earliest and latest start and finish dates for each activity, and the critical path.
When a programme is submitted by the Contractor, it should be acknowledged, but approval of the programme (or wording conveying approval) should not be given in the letter of acknowledgement as this may be construed as relieving the Contractor of some of his responsibilities or duties under the Contract. However, the programme should be analysed and examined to determine:
(a) Whether details shown on the programme, in respect of sequence, method and timing, conform with the requirements of the Contract,
(b) Whether the programme is over-optimistic in respect of any critical activity or the Works as a whole, and
(c) Whether information provided in the programme is sufficient for the management of the Contract, this being particularly important where activities under the Contract will have major effects on other related contracts.
If the programme does not satisfy (a) above, the Contractor must be asked to re-submit a programme that conforms with the requirements of the Contract.
If the programme does not satisfy (b) above, the Contractor should be asked to explain in writing the basis of his programming, which should include information on the methods of construction and resources he intends to employ on the critical activities. If the Engineer is not convinced of the Contractor’s justification, he should inform the Contractor
of his dissatisfaction with the programme submitted and request the Contractor to re-consider and revise the programme. However the Engineer should not advise or instruct the Contractor on how the programme should be revised.
6.2 PROGRAMME UPDATING AND REVISION
The Contractor should be required to revise the programme described in paragraph 6.1 during the course of the Contract whenever:
(a) An extension of time for completion of the Works or any Section of the Works has been granted by the Engineer;
(b) Progress is too slow to ensure completion by the due date and the Contractor has been so informed;
(c) Progress on critical activities is falling behind the original programme or the latest revised programme, particularly where the Contractor had been informed that his programme was in the opinion of the Engineer over-optimistic, or;
(d) The latest programme is rendered unsuitable by unanticipated events which have occurred since preparation of the programme.
6.3 MONITORING AND REPORTING PROGRESS
A fair copy of the Contractor’s programme should be posted up in the site office and actual progress marked on the programme to monitor progress of work.
If necessary, a monthly progress report should be made. The report should be tailor-made according to the individual situation of the Contract. As a general guideline, the report may include:
(a) Commencement date, original completion date, EOT granted, revised completion date, time elapsed in days and in percentage of the contract period, a realistic estimated completion date based on the actual progress made and the expected time to complete outstanding works;
(b) Original contract sum, predicted final contract sum, estimated percentage of work physically completed, amount and percentage of certified value of works, expenditure to date, yearly forecast expenditure and a predicted/actual cash flow chart;
(c) Dayworks, variations and drawings issued;
(d) Description of progress with a progress table and progress chart;
(e) Claim record;
(f) Safety matters and accident matters;
(g) Record of significant meetings;
(h) Record of hand over of works; and (i) Environmental issues.
6.4 ACTION IN CASE OF SLOW OR VARIABLE PROGRESS
As soon as it is apparent that the progress of the Works or any Section of the Works is too slow or variable to ensure completion by the due date, the Engineer for the Contract should inform the Contractor in writing of the unsatisfactory progress. The Contractor should also be reminded of his obligation under the GCC to inform the Engineer of actions he will take to expedite completion and to submit a revised programme. Care should be taken not to give instructions that may be construed as an order to accelerate the work.
Close monitoring of the rate of progress should continue and further warning letters to the Contractor should be issued if progress has not improved. The Contractor’s response and performance subsequent to the issue of warning letters should be noted in the Quarterly Report on Contractor’s Performance (see Section 15).
If slow progress continues despite repeated warnings from the Engineer, the situation should be reported to the relevant Reporting Review Committee for further appropriate actions, which will include management actions as stipulated in Para. 4.6 of the Contractor Management Handbook. Reference should also be made to Part D of Appendix 4B ( Revision B-1 dated 16.2.2007) of the Handbook for guidelines on assessing the progress of the Contractor.
For a joint venture of several contractors, regulating action will be applied to every constituent party. The lead party’s managing department will co-ordinate and keeps the managing departments of other constituent parties informed.
6.5 MONITORING AND ESTIMATING EXPENDITURE
The ER plays an important role in the financial control of the Contract at site level.
The project engineer (PE) controlling the project vote also plays an important role in the review from time to time of the approved project estimate (APE) and expenditure in the light of progress of the project. Particular attention should be paid to the financial control in contract expenditure and the APE, where the performance of the Contractor is slow or variable and/or where the contractor is in financial difficulties (e.g. where re-entry and/or novation of contract are being considered.) Once the Contractor’s programme is known, it is possible for the ER to produce a detailed curve of expected expenditure. As the Works progress, he should compare actual against expected expenditure, making amendments as required, and drawing the attention of the Engineer and the Employer to any significant changes so that necessary adjustments to the annual expenditure allocation can be made. Any major revision of the Contractor’s programme would require a new expenditure curve.
When producing the curve of expected expenditure the following should be noted:
(a) The rate of expenditure may not be uniform.
(b) It may be possible to assess the rate of expenditure from the Contractor’s programme thus allowing for any “front end loading” in the rates.
(c) The Contractor’s programme and the due date for completion may have to be extended if the work continues through a wet season.
(d) The whole of the contract sum may not be expended and, for the purpose of producing the expected rate of expenditure, the quantities in the Bills of Quantities are to be taken as being correct without further checking. The amount included as the contingency sum is to be shown separately.
It is necessary to recognise that this record will show the value of work done on the date to which the interim statement refers as opposed to the date of actual payment by Treasury. The payment by Treasury will be some time after the date of measurement depending on the period of time taken to receive and process an interim statement, prepare a draft certificate and to effect the payment.
When monitoring expenditure, the ER should give an early warning in liaison with the PE controlling the project vote if it appears that the contract sum will be exceeded and, if so, by how much, to enable action to be taken for the provision of funds. The estimation of the Final Contract Sum can be affected by various circumstances, such as:
(a) Changes in Quantities
During construction, the ER should note any significant changes in quantities that have been identified and should record the additional expenditure or savings accruing as a result. This may be revealed by one or more of the following:
(i) Measurement of completed work being sufficiently advanced to show inaccuracies in original estimates;
(ii) Ground conditions becoming more adverse or more favourable than expected; and
(iii) Errors or omissions in the Bills of Quantities becoming apparent.
(b) Contractual Claims
There are provisions in the GCC for the Contractor to claim additional payment in various circumstances. Should such circumstances occur or appear to be unavoidable, an estimate of the possible additional payment is to be made.
(c) Variation Orders
The effect of all issued and proposed variation orders including all the consequential costs shall be assessed carefully using the best information available. The contract sum and the approved project estimate should be checked before ordering variation. Where the varied work is to be carried out at new rates, estimation will be necessary if the new rates are yet to be agreed.
If the total effect of a variation order is small in the context of the contingency sum then it is acceptable to ignore detailed calculations.
(d) Contract Price Fluctuations (CPF)
An estimate of the likely expenditure/saving due to any CPF can be made by projecting the average rate of increase calculated to date. Should there be insufficient data available to obtain an average rate of increase then the current average factor of a similar contract may be used.
6.6 AUTHORITY TO INCREASE CONTRACT SUM
When any event occurs, which will probably cause the original contract value to be exceeded, approval has to be given by officers designated in Item A.I of Appendix V(B) of the SPR. This shows a schedule of authorities and lists the officers who can authorise increases in contract sums for payments in accordance with the terms of the contract subject to the Approved Project Estimate (APE) not being exceeded. This authority is also applicable to variations essential for the completion of the works as defined in the original contract. Items A.III and A.IV of Appendix V(B) of the SPR also stipulate that prior approval of the appropriate authority is required for an increase in the contract sum for additional works outside the terms of the Contract but within the approved scope of the project, subject to the APE not being exceeded. Where there is a supplementary agreement involved for additional works approved under Items A.III and A.IV of Appendix V(B) of the SPR, it should be treated as a separate contract for the purpose of effecting further variations to these additional works and the schedule of authorities for variation of contract under Item A.I should also be applicable where appropriate. According to SPR 520(f), departments should copy to the Director of Audit correspondences on approved variations and any supplementary agreements consequentially signed.
In no circumstances may a contract sum be increased if such an increase would result in the APE being exceeded, or if the works which necessitate such an increase are outside the approved scope of the project, unless prior approval from the SFST has been obtained for an increase in the project estimate, or for a change in the scope of the project, in accordance with FC No. 23/82.
If the increase in contract sum will exceed the departmental cap of the project, the internal procedure as set out in FC No. 23/82 for securing approval for increase in additional allocations in excess of the departmental cap should apply. However, there is no need for submission to PWSC or Finance Committee if the APE is not exceeded. See the SFST’s memo ref. FIN CR1/6/581/87(02) Pt.65 dated 12 September 2002 for details.
6.7 SECTIONS SUBJECT TO EXCISION (Ref.: LWBTC No. 6/89)
Once the Contract has commenced and within the period of time stipulated in the Appendix to the Form of Tender, the Employer must decide whether he wishes the work contained within the Section Subject to Excision (if applicable) to be carried out or not. If the decision is made to proceed with the work then the Engineer must issue an instruction to the Contractor. If the decision is made not to proceed then the Contractor should be notified accordingly.
(Amendment No. 1/2009 & 3/2009)
6.8 MINOR WORKS
The Director of Audit has conducted an audit review on the administration of minor works/term contracts of a works department. Pursuant to the Director of Audit’s recommendations arising from the review, SDEV has announced the requirement that minor works projects should be controlled as much as other capital works projects for timely completion vide his memo ref. (3) in L/M in DEVB(CR)(W) 1-106/33 (2009) Pt. 1 dated 22.4.2009.
(Amendment No. 6/2009)