CONSTRUCTION METHODS

AND
PROJECT MANAGEMENT
CONCEPTS
Infrastructure can be defined as the basic facilities and installation
needed for the functioning of the society
Construction is typically carried out as project
A temporary endeavor undertaken to create a unique product
CONCEPTS
New Construction
Rehabilitation
Retrofitting
Maintenance
Repair
CONCEPTS
Construction is a process that consists of the building or assembling of
infrastructure
Construction Project includes all material and work necessary for the
construction of a finished structure for occupancy by End Customer.
◦ Site preparation
◦ Foundations
◦ Mechanical
◦ Electrical work
◦ Any other work necessary to complete the project
CONCEPTS
Large scale construction is a feat of human multitasking
Managed by a Project Manager
Supervised by
◦ Construction Manager
◦ Design Engineer
◦ Construction Engineer
◦ Project Architect
CONCEPTS
For the successful execution of project, effective planning is essential.
Considerations involves:
◦ Environmental Impact
◦ Scheduling
◦ Budgeting
◦ Construction site safety
◦ Availability of building materials
◦ Construction Delays
◦ Bidding
TYPES OF
CONSTRUCTION
PROJECTS
Residential
Building
Institutional and Commercial
Industrial
Specialized Industrial Constructions
Highway Construction
Heavy Construction
RESIDENTIAL
CONSTRUCTION
Includes houses, townhouses,
apartments, condominiums,
cottages, single unit dwellings and
subdivisions.
The housing designs are generally
done by architects and engineers
and the construction is executed
by builders who hire
subcontractors for structural,
electrical, mechanical and other
specialty work.
RESIDENTIAL
CONSTRUCTION
This type of project must conform
to local building authority
regulations and codes of practice.
Many new builders are attracted
to residential projects because of
its ease of entry in the real estate
market.
Highly competitive market with
potentially high risks as well as
high rewards.
BUILDING
CONSTRUCTION
Building construction is perhaps
the most popular type of
construction project.
It is the process of adding
structure to real property. Most of
the projects are room additions
and small renovations.
BUILDING
CONSTRUCTION
Most new building construction
projects are construction of
sheltered enclosures with walk-in
access for the purpose of housing
people, equipment, machinery or
supplies.
It includes installation of utilities
and equipment.
INSTITUTIONAL AND
COMMERCIAL
Covers a great variety of project
types and sizes such as hospitals
and clinics, schools and
universities, sports facilities and
stadiums, large shopping centres
and retail chain stores, light
manufacturing plants and
warehouses and skyscrapers for
offices and hotels.
INSTITUTIONAL AND
COMMERCIAL
Specialty architects and engineers
are often hired for designing a
particular type of building.
This market segment has few
competitors because of the high
costs and greater sophistication of
institutional and commercial
buildings as compared to
residential construction projects.
INDUSTRIAL
Industrial construction is only a small part of the whole construction
industry nevertheless it is a very important part of the industry.
These projects are generally owned by big, for-profit industrial
corporations such as manufacturing, power generation, medicine,
petroleum, etc.
SPECIALIZED
INDUSTRIAL
CONSTRUCTION
This type of construction project
usually involves very large scale
projects with a high degree of
technological complexity such as
nuclear power plants, chemical
processing plants, steel mills and
oil refineries.
HIGHWAY
CONSTRUCTION
Highway construction involves the
construction, alteration, or repair
of roads, highways, streets, alleys,
runways, paths, parking areas, etc.
It includes all incidental
construction in conjunction with
the highway construction project.
HEAVY CONSTRUCTION
Heavy construction projects
usually involve projects that are
not properly classified as either
"building" or "highway."
Examples of this type of project
would be: water and sewer line
projects, dams, sewage treatment
plants and facilities, flood control
projects, dredging projects, and
water treatment plants and
facilities.
CONSTRUCTION
PROJECT PARTICIPANTS
Owner
Designer
Contractor
Subcontractor
Government agencies
Community
Insurance Companies
Banks
OWNER
Person, company or agency for which a project is being constructed
Pays for the project and specifies the project requirements
DESIGNER
An individual, a single design firm or a group of different firms
Produces plans and specifications for what is to be constructed
Can be single or team
GENERAL CONTRACTOR
Typically not involved with the design but is contracted by the owner to
construct on the basis of the design developed by the designer
Engaged in a wide range of construction activities and execute most
major construction projects
When they enter into a contract with an owner to provide complete
construction services, they are called Prime Contractors
SUBCONTRACTOR
Construction projects can be extremely complex and the prime
contractor may not have the expertise to complete all the required
project tasks
Limit their activities to one or more construction specialties such as
electrical works, plumbing, heating & ventilating or earthmoving
Often employed by the prime contractor
Referred to as Specialty Contractor
GOVERNMENT
AGENCIES
Often the owners of large projects
Necessary for the owners to get permission from government agencies
to proceed with the construction
For large projects, getting permission from government agencies often
take years of planning studies and environmental impact statements
before actual construction can begin
COMMUNITY
Contractors are often asked to find innovative ways of conducting
construction that minimize impacts to the neighboring community since
people are sensitive to traffic delays or noise that caused by
construction project
INSURANCE COMPANY
Contractors are required to have bid bonds as a condition of being
allowed to bid
They must provide insurance, performance bonds and payment bonds
prior to award of the contract
They service the liability and property insurance needs of contractors
BANKS
Provide working capital to contractors so the contractor can pay for
materials, labor, equipment and overhead expenses until the contractor
is paid by the owner
Provide both short – term and long – term financing to the project
owners
CONSTRUCTION
PROCESS
STEPS IN PROJECT DEVELOPMENT PROCESS:
Recognizing the need for the project
Determining the technical and financial feasibility of the project
Preparing detailed plans, specifications and cost estimates for the project
Obtaining approval from regulatory agencies. This involves ascertaining
compliance with zoning regulations, building codes and environmental and
other regulations
HOW CONSTRUCTION IS
ACCOMPLISHED
THE PRINCIPAL METHODS BY WHICH FACIILITIES ARE CONSTRUCTED
ARE:
Construction employing an owner construction force
Owner management of construction
Construction by a general contractor
Construction using a design/build contact
Construction utilizing a construction management contract
CODES AND
REGULATIONS
Building codes
Provides minimum design and construction standards for structural and fire
safety
Zoning regulations
Controls land use, limit the size, type and density of structures that may be
erected at a particular location
CODES AND
REGULATIONS
Environmental regulations
Protect the public and environment by controlling such factors as water
usage, vehicular traffic, precipitation runoff, waste disposal and preservation
of natural resources
Safety Regulations
Designed to protect both construction workers and the public
STATE OF THE
INDUSTRY
Construction Productivity
Reducing Construction Cost
Good working planning
Carefully selecting and training workers and managers
Efficient scheduling labor, materials and equipment
Properly organizing work
Using laborsaving techniques such as prefabrication and preassembly
Minimizing rework through timely quality control
Preventing accidents through good safety procedure
CONSTRUCTI
ON
MANAGEMENT
ELEMENTS OF
CONSTRUCTION
MANAGEMENT
Refer to the contractual arrangement under which firm supplies
construction management services to an owner
Refers to the act of managing the construction process
POOR CONSTRUCTION
PRACTICES
Project delays that increase labor and equipment cost and the cost of
borrowed funds
High material costs caused by poor purchasing procedures, inefficient
handling and/or loss
Increased subcontractor cost and poor contractor – subcontractor
relations
High insurance costs resulting from material and equipment loss or
damage or a poor safety record
Low profit margin or a loss on construction volume
QUALITY MANAGEMENT
Ensuring that all elements of the work have an equal chance of being
included in test samples
Verifying that test samples taken by the contractor and by other
parties come from the same population
Analyzing the variations in the test results of material and processes
sampled
Establishing acceptable levels of variation in sample results
Developing a payment schedule which rewards or penalizes the
contractor depending on the level of quality attained in the construction
product
Construction
Career
CAREERS
Unskilled and Semi-Skilled
General site labor with little or no construction qualifications
Skilled
On-site managers whom possesses extensive knowledge and experience in
their craft or profession
Technical and Management
Personnel with the greatest educational qualifications, usually graduate
degrees trained to design, manage and instruct the construction process
PROFESSIONAL
Architects
Civil Engineers
Building Services Engineers
Project Managers
Quantity Surveyor
Structural Engineers
Planning and
Scheduling
PLANNING and
SCHEDULING
Planning must be done in order to perform any function with a
minimum of wasted time and effort
Schedule is nothing more than time - phased plan
Schedules are used as guides during the performance of an operation
in order to control the pace of activities and to permit completion of the
operation at the desired or required time
PLANNING and
SCHEDULING
Principal uses for schedules
Before Starting
 Provides an estimate of the time required for each portion of the project as well as for the total
project
 Establishes the planned rate of progress
 Forms the basis for managers to issue instructions to subordinates
 Establishes the planned sequence for the use of personnel, materials, machines and money
PLANNING and
SCHEDULING
Principal uses for schedules
During Construction
 Enables the manager to prepare a checklist of key dates, activities, resources and so on.
 Provides a means for evaluating the effect of changes and delays
 Serves as the basis for evaluating progress
 Aids in the coordination of resources
PLANNING and
SCHEDULING
Principal uses for schedules
After Completion of Construction
 Permits a review and analysis of the project as actually carried out
 Provides historical data for improving future planning and estimating
Pre-construction
activities
CONCEPT
Owners, both private and public, plan buildings and other construction
projects to accommodate desired functional and spatial requirements
Planning, designing and completing construction is a complicated
undertaking
Owners most often procure the services of an architect or an
architect/engineering/contracting firm (AEC), to help in the
development of project definition and feasibility, referred to as the pre-
design phase
PRE – DESIGN AND
DESIGN DEVELOPMENT
In this phase, the architect, the other design consultants and the
owner mutually determine the goals and objectives of the project
Early design efforts focus on establishing what is known as the design
intent (statement that defines the anticipated aesthetic, functional and
performance characteristics of the finished project)
 PRE – DESIGN AND
DESIGN DEVELOPMENT
Floor Plan
Is a representation of a building viewed
from above after a horizontal plane has
been cut through it and the top portion
removed
 PRE – DESIGN AND
DESIGN DEVELOPMENT
Building Section
Gives a view of a building after a vertical
plane has been cut through it and the
front portion removed
 PRE – DESIGN AND
DESIGN DEVELOPMENT
Elevation
Shows the exterior façade of a building,
delineating geometries and the materials
of construction
CONSTRUCTION
DOCUMENTS
Consists of two interdependent components:
Construction Drawings
• Referred to as the working drawings, show the dimensional relationships between all aspects of
the building, their form, sizes and quantities
• Usually computer generated
• Basis on which the contractor generates cost estimates and are used to guide the actual
construction of the building on site
• Graphically indicate the relationship between elements
CONSTRUCTION
DOCUMENTS
Specifications
• Describe in writing more detailed information on the exact types of materials to be used and the
ways in which construction processes are conducted.
• Spell out the specific types, qualities and properties of those materials and their installation
Project delivery
process
CONSTRUCTION
CONTRACTORS
General contractors
Assume the responsibility for the construction of an entire project at a
specific cost and by a specified date
Subcontractors
Perform the required work within their technical areas
SELECTING THE
CONTRACTORS
For publicly financed projects construction contractors are generally
sought through a process of competitive bidding
In this method, qualified contractors are invited to the bid (invitation
to bid) on the project on a competitive basis with the contract often
being awarded to the contractor that submits the lowest bid
A variation of this process used more on privately funded projects is
called invitational bidding wherein only preselected contractors are
asked to provide bids on a project
SELECTING THE
CONTRACTORS
An owner may decide on a contractor with whom they have worked on
previous projects without seeking other bids and agree upon a
negotiable contract.
Negotiated contract can have the advantage of bringing a contractor
into the project in the pre-construction phase of the work, encouraging
a team approach that incorporates design, construction and budget
planning with owner involvement in a cooperative and coordinated
effort.
PROJECT DELIVERY
METHODS AND TYPES OF
CONSTRUCTION
CONTRACTS
Three common methods
Design-Bid-Build
Design-Build
Construction Management
DESIGN – BID – BUILD
Traditional method of project delivery that moves sequentially from
conception of a project through its construction
The contract is usually awarded to the most qualified bidder who
submits the lowest cost estimate
Tends to produce longer overall project schedule
Generally result in the lowest construction cost
DESIGN - BUILD
The owner contracts with a single party that completes all portions of
the work from design through construction
Assigns a single entity with full responsibility
The entity may be a construction company that has contracted with an
architect or engineering firm for design services or one that maintains
design professional as permanent members of the staff
CONSTRUCTION
MANAGEMENT (CM)
The owner may hire construction manager to provide input during the
design phase and oversight and administration of the bidding and
construction phases
A successful construction manager needs to have an education in both
the technical and management portions of construction, along with
great deal of field experience.
CONSTRUCTION
PROCESS
Prior to any work commencing on site, building permit must be
secured
This permit is a certificate issued by the local governing authority
having jurisdiction authorizing the construction of a project after a
thorough review of the construction documents to ensure compliance
with local building, safety and fire codes
 SHOP DRAWINGS,
SUBMITTALS AND MOCK
- UPS
Shop drawings gives precise directives
for the fabrication of certain
components such as structural steel
work, concrete reinforcing or pre-cast
concrete components
Shop drawings are substantially
different from architectural drawings in
style and content, including
manufacturing conventions and special
fabrication instruction
SHOP DRAWINGS,
SUBMITTALS AND MOCK
- UPS
Submittal process is an important and time-consuming step at the
beginning of managing any construction project
Product data submittals are drawings, schedules, performance data
and brochures that gives manufacturer’s information on the
characteristics of a material and allow the architect to verify that he
product under consideration will satisfy the requirements listed in the
specifications
SHOP DRAWINGS,
SUBMITTALS AND MOCK
- UPS
Mock-up is a full-size model of a proposed construction system that is
built in order to judge the appearance of an assembly, examine its
construction details and test for performance under actual site
conditions
CONSTRUCTION
OBSERVATIONS
In addition to ongoing inspections by local building department
officials, continuing inspections are conducted by representatives of the
owner to ensure that the completed work complies with the guidelines
set forth in the construction documents
If inspections find either materials or workmanship to be in non-
compliance, the contractor is required to repair or replace the work at
their own expense
CONTRACTOR
REQUESTS FOR
INFORMATION
The request for inspection is used to obtain clarification that the
contractor cannot access through document review or other research
These requests often occur during the bidding phase, as the contractor
examines the documents in detail for the first time.
Request for information must be processed quickly by the architect
since the project schedule may be affected by unforeseen delays
CONSTRUCTION
CHANGE DIRECTIVE
(CCD)
Also known as change order
Changes may be required for a number of reasons, such as previously
unknown conditions, design omissions or errors, or changes in the
scope of work
PROJECT CLOSE - OUT
When the contractor determines that the work is nearing completion,
the architect or construction manager is asked to return to the site and
conduct an inspection of substantial completion
The inspection occurs at a point when all major portions of the work
have been completed but a number of final details have yet to be
finished
Punch list is a listing of the remaining items to be installed or repaired
 CONSTRUCTION SAFETY
The general contractor is responsible
for administering safety procedures on
the construction site
Detailed safety procedures are often
specified in the general requirements
division of the construction documents
CONTRACT
CONSTRUCTI
ON
BIDDING AND CONTRACT AWARD
BID PREPARATION
Construction contracting is a highly competitive business
A construction company must achieve a reputation for quality
workmanship and timely completion while achieving a reasonable
return on its capital investment
PROFIT is the principal motive for bidding on a construction contract
BID PREPARATION
REASONS WHY A CONTRACTOR MAY CHOOSE TO BID ON A PROJECT
Keep their equipment in operation
Prevent the loss of skilled workers and managers
Desire for prestige
Maintenance of goodwill with regular clients
Maintain relationship with an owner
BID PREPARATION
DETAILED COST ESTIMATE
Direct Cost
 Material Cost
 Labor Cost
 Equipment Cost
Indirect Cost (Job Overhead)
 Made of the administrative and management expenses that will be incurred at the project site
BID PREPARATION
DETAILED COST ESTIMATE
Mark-Up
General Overhead
 Covers the cost of all company activities not directly associated with individual construction
projects
 Salaries of headquarters personnel (company officials, estimators, clerks, accountants, etc.)
 Rent and utilities
 Advertising
 Insurance
 Office supplies
 Interest on borrowed capital
BID PREPARATION
Bid price is usually based on an analysis of the expected competition
and the state of construction market in addition to the contractor’s
estimate of the cost to execute that project
BIDDING PROCEDURE
Solicitation
Invitation to bid
Bid Preparation
Eligibility requirements
Technical documents
Financial documents
Bid Submission
Bid Opening
Selection of the Lowest Qualified Bid
Contract Award
BIDDING PROCEDURE
To ensure adequate competition, at least three bids should be obtained
Time allowed for bid preparation should be based on the size and
complexity of the project and has suggested three weeks as a
reasonable minimum time.
CONTRACT AWARD
Qualification of a contractor is the determination that the contractor
possesses both the technical and financial ability to perform the work
required by the contract
Prequalification
only contractors determined to be capable of performing are invited to
submit bids for the contract
require bonding
CONTRACT AWARD
Bonds
Bid Bond
o Guarantees that a contractor will provide the required performance and payment bonds if
awarded the contract
Performance Bond
o Guarantees completion of the project as described in the contract documents
Payment Bonds
o Guarantees the payment of subcontractors, laborers and suppliers by the contractor
SUBCONTRACT
These are contracts between a prime contractor and secondary
contractors or suppliers
Used in building construction such as electrical, plumbing and HVAC
Subcontractors are responsible only to the prime contractor and not to
the owner in the performance in their subcontracts
Bid Shopping is an unethical practice where the contractor attempts to
obtain lower subcontract prices by negotiating with other
subcontractors
CONTRACT
CONSTRUCTI
ON
CONSTRUCTION CONTRACTS
CONTRACT ELEMENTS
Offer
Is normally a bid or proposal submitted by a contractor to build a certain
facility according to the plans, specifications and conditions set forth by the
owner
Acceptance
Takes the form of a Notice of Award
Consideration
Takes the form of cash payment
CONTRACT TYPES
METHOD OF AWARD
Formally advertised contracts and negotiated contracts
Negotiated Contract is the one negotiated between an owner and
construction firm, where all terms and conditions of the final contract are
those mutually agreed to by the two parties
CONTRACT TYPES
METHOD OF PRICING
Fixed – Price Contract
o Firm Fixed – Price Contract
o Fixed Price with Escalations
Cost – Type Contract
o Cost plus percentage of cost
o Cost plus fixed fee
o Cost plus fixed fee with guaranteed maximum cost
o Cost plus incentive fee
CONTRACT TYPES
Firm Fixed – Price Contract
Lump sum contracts
o Provides specified payment for completion of the work described in the contract documents
Unit price contracts
o Specify the amount to be paid for each unit of work but not the total amount
CONTRACT TYPES
Fixed Price with Escalation
Contains a provision whereby the contract value is adjusted according to a
specified price index
Reduce risk to the contractor during period of rapid inflation
CONTRACT TYPES
Cost plus percentage of cost
Pays the contractor a fee that is a percentage of the project’s actual cost
The higher the project cost, the greater the contractor’s fee
Cost plus fixed fee
The most widely used form of cost reimbursement contract
Does not reward the contractor for an increased project cost but still fails to
provide any incentive to minimize cost
CONTRACT TYPES
Cost plus fixed fee with guaranteed maximum cost
Adds some of the risk of a fixed – price contract to the cost reimbursement
contract because the contractor guarantees that the total contract price will
not exceed the specified amount
Contractor’s fee for this type of contract will be increased to compensate for
the added risk involved
CONTRACT TYPES
Cost plus incentive fee
Designed to provide an incentive for reducing project cost
Contractor’s nominal or target fee is adjusted upward or downward in a
specified manner according to the final project cost
The contractor is rewarded by an increased fee if able to complete the
project at a cost lower than the original estimate
CONTRACT
CONSTRUCTI
ON
CONSTRUCTION DOCUMENTS
CONTRACT DOCUMENTS
Agreement
Describes the work to be performed
Required completion time
Contract sum
Provisions for progress payments and final payment
List the other documents making up the complete contract
CONTRACT DOCUMENTS
Conditions of the Contract
Contains those contract provisions applicable to most construction contracts
written by the owner
Special Conditions contain any additional contract provisions applicable to
the specific project
Plans
Specifications
VALUE ENGINEERING
(VE)
Is the analysis of a design with the objective of accomplishing the
required function at a lower cost
When included in a construction contract, a VE clause encourages the
contractor to propose changes in the project without affecting the
ability of the facility to perform its intended function
The cost savings resulting form VE proposals accepted by the owner are
shared between the contractor and the owner on the basis specified in
the contract
CONTRACT TIME
The time allowed for completion of a construction project is normally
specified in the contract along with the phrase “Time is of the essence”
If no completion time is specified, a “reasonable time” is allowed
If the project is not completed within the specified time, the contractor
is liable for any damages (monetary loss) incurred by the owner as the
result of late completion
CONTRACT TIME
Liquidated Damages clause in the contract may be used to simplify the
process of establishing the amount of damages resulting from late
completion
Construction contract normally contain provisions for time extensions
to the contract due to circumstances beyond the control of the
contractor
owner – directed changes
Acts of God
Strikes
CONTRACT
CONSTRUCTI
ON
PLANS AND SPECIFICATIONS
PLANS
Construction plans are drawings that show the location, dimensions and
details of the work to be performed
Site drawings
Detailed working drawings
SPECIFICATIONS
Provide the detailed requirements for the materials, equipment and
workmanship to be incorporated into the project
Two basic ways are method specification and performance specification
SPECIFICATIONS
Method Specification
States the precise equipment and procedure to be used in performing a
construction operation
Performance Specification
Specifies only the result to be achieved and leaves to the contractors the
choice of equipment and method
SHOP DRAWING AND
SAMPLES
Shop Drawings are drawings, charts and other data prepared by a
contractor or supplier which describe the detailed characteristics of
equipment or show how specific structural elements or items of the
equipment are to be fabricated and installed
Samples are physical examples of materials, equipment or workmanship
which are submitted to the owner for approval prior to their
incorporation
CONTRACT
CONSTRUCTI
ON
CONTRACT ADMINISTRATION
PROGRESS REPORTS
AND PAYMENT
Progress billing
Made at an interval specified in the contract
Retention
A guarantee against defective work to ensure that the remaining work can
be completed within the unpaid amount of the contract
CHANGES AND DELAYS
Change Order
Design modification initiated by the owner or designer
Changed conditions
Consequential Cost
Changes or delay in one activity will necessitate changes in resource
allocation or progress on other activities that result in additional project cost
CHANGES AND DELAYS
Delays
Beyond the control of either the contractor or the owner
Those under the control of the contactor
Those under the control of the owner
ACCEPTANCE AND FINAL
PAYMENT
Punch List is a list of deficiencies to be corrected which is prepared at
the final inspection
Issuance of Certificate of Substantial Completion of Work
Request for final payment
Issuance of Final Certificate of Payment
The contract customarily provides a warranty against defective work for
some period, usually 1 year
CLAIMS AND DISPUTES
Claim is a request by a contractor for a time extension or for additional
payment based on the occurrence of an event beyond the contractor’s
control that has not been covered by the change order
Examples of such events include unexpected site conditions, delays in
delivery of owner – provided property and changes directed by the
owner
CLAIMS AND DISPUTES
Claims are the unfortunate result of change orders that cannot be
resolved or changed job conditions
Claims can lead to judicial action, resulting from the inability of the
contractor and owner to reach an agreement
CLAIMS AND DISPUTES
Disputes are disagreements between the contractor and the owner over
some aspect of contract performance
Disputes may involve such matters as substitution for specified
materials, the responsibility for the delays in project completion and the
effect of changes ordered by the owner
ALTERNATIVE DISPUTE
RESOLUTION
Partnering
◦ Philosophy of construction management based on trust
Mediation
◦ System of selecting neutral third party to assist the parties to reach mutually
acceptable agreement
Arbitration
◦ Slightly closer to litigation in philosophy than mediation because the
arbitrator imposes a solution on the parties to the dispute and the parties
agree to accept the arbitrator’s solution
◦ Arbitrator is selected by mutual agreement
ALTERNATIVE DISPUTE
RESOLUTION
Mini trials
◦ Allow each side to present its position in the dispute and then a judge
renders a decision
Project neutral
◦ Used in very large, highly technical projects
◦ A person (or team) that is hired before the construction contract is awarded
and that participates in the project throughout the construction period
LIQUIDATED DAMAGES
AND SUBSTANTIAL
COMPLETION
Paid by the contractor to the owner if such amounts are required by the
contract, and if the contractor exceeds the allowed contract time
period.
The amount is determined before the contract is advertised and it is
based on an estimate of actual costs the owner or the public would
incur by late completion of work
LIQUIDATED DAMAGES
AND SUBSTANTIAL
COMPLETION
In accordance with the RA 9184 and IRR
Payable by the contractor in case of breach thereof, the amount of
liquidated damages shall be at least equal to one – tenth of one percent
(0.10%) of the cost of the unperformed portion for every day of delay.
Once the cumulative amount of liquidated damages reaches 10% of the
contract amount, the Procuring Entity shall rescind the contract,
without prejudice to other courses of action and remedies open to it
CONTRACT
TERMINATION
Most contract contracts are terminated by satisfactory performance
Nonadversary methods of contract termination include mutual
agreement and impossibility performance
CONTRACT
TERMINATION
The principal adversary basis for contract termination is for breach of
contract. Either the owner or the contractor may terminate a contract.
The basis for termination by the contractor based on breach of contract
usually the failure of the owner to make the specified progress
payments or owner – caused delay of the project for an unreasonable
period of time
CONTRACT
TERMINATION
Termination by the owner for breach of contract is most commonly due
to failure of the contractor to make reasonable progress on the project
or to default by the contractor
When termination is due to breach of contract by the owner, the
contractor is generally held to be entitled to payment for all work
performed and the expenses of demobilization and cancellation of
orders plus profit
CONTRACT
TERMINATION
When termination is due to breach of contract by the contractor, the
contract commonly permits the owner to take possession of the work
site and all on – site equipment and tools owned by the contractor and
to complete the project at the contractor’s expense.