Contract adminstration report - Book Report/Review Example

It also explains the reasons why the employer should include them in the contract. Offsite Materials Bonds: Offsite materials include all listed items in the contract which have not been delivered to or close to the site of the project. These materials are insured by offsite material bond. Therefore, the inclusion of this bond in the contract insures the employer against the losses incurred for non delivery of materials. This problem arises when the employer has made full payment to the contractor for procumbent of materials, but the contractor has failed to deliver the materials to or adjacent to the works.

Hence, the bond guarantees compensation for the losses irrespective of the dispute between the employer and the contractor. This also extends to whether no action is taken against the contractor or any extension given to the contractor. Under SBC/XQ rules, the employer pays the amount of listed items in the contract prior to delivery on or next to the works. The contractor then is expected to insure these materials against losses, damages thus protecting the interest of employer. This protection begins from the time the property is transferred to the contractor to the time they are delivered to or close to the site.

The amount of bond only covers the listed items which have not been delivered. Where materials are not delivered, the employer makes a claim in writing to the surety. The surety then pays the claims made by the employer within 5 business days after receiving written demand of pay (Schedule 6 Part 2.5). Supplemental Provisions- Cost Saving and Value Improvement: The supplemental provisions of cost saving and value improvement are included in the contract to accommodate the cost, time, quality and quantity changes that are beneficial to the project.

The contractor under SBC/XQ provisions is mandated to propose modifications to the design, specifications, programme or time that benefits the employer in terms of cost and time (Schedule 8.3.1). In doing so, the contractor is expected to provide in detail the proposed changes, identifying each suggested alteration and an assessment of benefit of the changes to the employer. These benefits must be expressed in financial terms (Schedule 8.3.2). The SBC/XQ provisions give the employer the ultimate responsibility of accepting or rejecting any changes proposed by the contractor.

Therefore, the changes cannot be used by the contractor to circumvent unfavorable details of the contract. In case the employer wishes to implement any of the changes, the SBC/XQ provides that all parties shall negotiate and agree on the value, the benefits in financial terms and changes in the project schedule. If an agreement is reached, the changes in amount caused by the adjustment shall be confirmed by the contract administrator. This shall also include how the benefits shall be shared by the contractor and the employer and any adjustment to completion period.

However, the employer can implement the proposed changes with other contractors after practical completion of the work. Dispute Resolution by Arbitration: The incorporation of dispute resolution mechanism in a contract helps in the settlement of any conflict that arises. These disputes include but not limited to delays in payments, non delivery of materials, differences in valuation of items, non completion of works and non adherence to work schedules. These conflicts can halt the entire work resulting in extensive losses to the contractor an