9/10/2011

Public Procurement
Satya Narayan Shah
B.Sc. In M h i l E i B S I Mechanical Engineering (India) i (I di ) MS in Manufacturing Engineering & Management (UK)

Procurementcycle,methods, andtypesofprocurementof goodsandworks

What is Public Procurement?

It is the acquisition of goods, public works and consultancy services by procuring entities government ministries and agencies, local bodies, municipalities, state enterprises and private utilities holding monopoly as well as any other entity to whom public funds have been allocated for use in public procurement

Why is it important?
Very large portion of national budget for maintenance and investment is spent for acquisition of works goods and services works, through the procurement. Public Procurement covers

15 to 30 % of the Gross Domestic Product 15 to 70 % of the budget

Includes very large contracts for infrastructure, energy, communication, defense , education

What do the Stakeholders expect?

Tax Payers and general public look for:

What do the Stakeholders expect? Domestic private sector looks for:

Value for money i.e. economy Transparency of process and decisions Non-discrimination in treatment of vendors Accountability of public officials Quality of works/goods/services Responsiveness, efficiency Integrity in use of public money Support to public policies e.g. protection of environment, social equality, minimum wages, balanced development, etc

development of local industry-p y manufacturing, construction and services ( professional and non-professional) reasonable protection against foreign competition

9/10/2011

Growing importance is due to

International development institutions such as the World Bank, ADB etc. Trade Agreements such as: g

Important component of Governance

Public procurement is one important activity of governance with high potential for corruption Public look for integrity and honesty The IMAGE of any government, particularly in the developing world, is largely influenced by the quality and integrity of public procurement

EC (European Commission) common market WTO GPA (Government Procurement Agreement) NAFTA (North American Free Trade Agreement) APEC (Asia Pacific Economic Cooperation)

All the above, require a set of transparent, nondiscriminatory public procurement regime open to all members

Procurement Cycle Procurement Procedure

Formation procuring Unit -PPA -7(3) Formation Evaluation Committee-PPA -71 Preparation of procurement Plan/strategy PPA -6 Preparation of Estimate ( Rs. 25000.00)-PPA (5) p (> ) ( ) Preparation of Bid document
Opening of Bids Evaluation of bids Award of the contract Completion/Termination of the contract
Er. Satya Narayan Shah 9

Procurement is conceived as a series of stages and those stages in logical sequence is known as the procurement cycle l The sequences of activities (cycle) can be presented in a number of ways

10

GeneralProcurementProcess

PROCUREMENT STEPS
GOODS WORKS SERVICES Develop TA program for consultant services Finalize consultant program and budget b d Develop short list TOR and RFP got approved Send out request for proposals. Prepare Procurement Prepare procurement Plan with goods list and Plan with design and cost estimates cost estimate Prepare final equipment Prepare final design list and cost estimates and cost estimate Prepare bidding documents Request prequalification information & Pre qualify Prepare bidding documents

Advertise (Specific Procurement Notice)

Er. Satya Narayan Shah 11

12

9/10/2011

GOODS Issue bidding documents Receive and evaluate bids and select the Lowest Evaluated Bidder Award contract Delivery at port or at site specified in bidding document Install and Commission

WORKS Select qualified firms and issue SBDs Evaluate bids and select lowest evaluated bidder Award contract Give access to site

SERVICES Select best proposal Negotiate with the selected consultant firm Issue contract Give access to site

Procurement Methods and Practices

Types of Procurement Method {PPA; Procurement Method to be Selected: 8(a)}
International Competitive Bidding (ICB) National Competitive Bidding (NCB) Sealed Quotation Direct Purchase/Negotiation Through Consumers Society/Stake holders participation Force account
Er. Satya Narayan Shah 14

Begin construction and complete the work Conduct Project evaluation of work after completion Acceptance

Begin assignment and complete the assignment Assessment after completion

Training at site in O&M

of 13

Conduct project evaluation goods and acceptance

InternationalCompetitiveBidding(ICB)
InternationalLevelBidding:PPA 15

NationalCompetitiveBidding (NCB)
Mediumsizecontract Localproduction,reasonablecost, promptdelivery Availabilityoflocalresources Noticeperiod(30daysminimum) PPA14 (4)(1)

Sizeandscopeofcontractusuallycosting largeamountforwhichdomestic contractors,manufacturersandsuppliers dontpossessesadequatecapabilityand p q p y resources Thegoodsarenotproducedlocally Thegoodsareofcomplicatednature Thejobishighlytechnical Noticeperiod(45daysminimum) PPA14(4)(1)
15

Er. Satya Narayan Shah

16

SealedQuotation
ProvisionsConcerningSealedQuotation: PPR 84

DirectPurchase
ProvisionConcerningDirectProcurement: PPR,85.
IT IS JUSTIFIED WHEN:
WORK INVOLVED CANNOT BE DEFINED IN ADVANCE WORKS ARE SMALL AND SCATTERED OR IN REMOTE PLACES FOR WHICH QUALIFIED CONTRACTORS ARE NOT INTERESTED OR LIKELY TO ASK UNREASONABLE PRICE CRISIS SITUATION NEEDING PROMPT ATTENTION

Smallcontracts Amountupto10Lakh (forgoodsor services)andupto20Lakh (forworks ProcedureofNCB tofollow Noticeperiodissmall(15days) Usedforurgentlyrequiredgoods/small jobs Minimum3Quotationsrequiredonthe firstnotification,nominimumnumber requiredforrenotice.
Er. Satya Narayan Shah 17

DirectPurchasefromlocalshops Di tP h f l l h Upto3Lakh(Goods/Services) Upto5Lakh(works) Upto15LakhsfromDomesticManufacturer.

18

9/10/2011

PPR Schedule3,(RelatingtoSubrule(1)ofRule21)
Contractforsupplyofspecificgoods. FrameworkContract(unitratecontract). Multiyearcontract. Contractfordesign,supplyanderect. Turnkeycontracts. (design,procurementofallinputs,erectionat site,commissioning,testingandeven operationforaninitialperiod)
Er. Satya Narayan Shah 19

Contracttypes

OtherMethodsofProcurement
TwoStageBidding:Wherethepreparationofcomplete
technicalspecificationsinadvanceisundesirableor impractical.

Firststage
unpriced technicalproposalonthebasisofaconceptual designorperformancespecificationsareinvited subjecttotechnicalaswellascommercialclarifications andadjustmentstobefollowedbyamendedbidding documents

SecondStage
submissionoffinaltechnicalproposalandpricedbids

Er. Satya Narayan Shah

20

OtherMethodsofProcurement (contd..)
Limitedbidding.
Whengoods/worksareavailableonlyfromlimited numbersofbidders Directinvitationwithoutopenadvertisement
Solicitbidsfromaminimumof6(minimum3)bidders fromthelistofbidderstoassuredcompetitiveprice Canbeusedstandinglist

OtherMethodsofProcurement.(contd..)
BOO(BuildOwnOperate):InaBOOproject ownershipoftheprojectremainsusuallywiththe ProjectCompany BOT(buildoperatetransfer),BOOT(Build ownoperatetransfer):aformofprojectfinancing, whereinaprivateentityreceivesaconcession from theprivateorpublicsector tofinance,design, h i bli fi d i construct,andoperateafacilitystatedinthe concessioncontract. Performanceoroutputbasedprocurement: paymentonthebasisofoutputnotinputs consideringquality,time,etc involves:provisionofservices,design..facilities,
22

Shopping.
Shoppingisaprocurementmethodbasedoncomparing pricequotations obtainedfromseveralsuppliers/ contractors:minimum3toensurepricecompetition. Appropriateforreadilyavailablegoodsorstandard specificationcommoditiesofsmallvalueorsimplecivil worksofsmallvalue.
Er. Satya Narayan Shah 21

Procurement Planning

DOCUMENTS

Procurement Plan
A Public Entity shall have to prepare a Master Procurement Plan in procuring for a planning or project to be operated for a period of more than one year or in making a procurement of an amount exceeding one hundred million Rupees annually. -PPR (clause 7)

9/10/2011

Procurement Plan
Establishment of the need for Sustainable Procurement. Fix the procurement policy/strategy based on the best purchasing option considering requirements, risk, cost and other q , , management issues.
The Australian Procurement and Construction Councils (APCC) defines sustainable procurement as a process whereby organizations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole of life basis in terms of generating benefits not only for the organisation, but also to society and the economy, whilst minimizing damage to the environment.

Procurement Planning: Need and Importance

Timely completion of the project Cost saving Identification of critical and non-critical activities Monitoring supervision and control Monitoring, Evaluation Resource management: organize people and resource Resource scheduling Theft, damage, loss, out dated, etc Assignments and responsibilities Other issues

26

Procurement Plan
(need analysis)
The following questions should be answered
Do we really need to purchase, or can the need be met in another way? Can the quantity or scale of the goods, works or service be reduced whilst achieving the same service delivery? Can alternative goods or service be used to meet this need? Can the works, goods, service be specified to have improved sustainability outcomes, including being able to serve a useful purpose after its initial use? What information is available regarding sustainably-preferable options for this purchasing requirement? Where can more information be obtained about suitable alternatives?

Specification
The act of specifying, a detailed, exact statement of particulars particulars, especially a statement prescribing materials, dimensions, and quality of work for something to be built, installed, or manufactured.

Specification
Specifications are a part of contract documents It is the document where the level of intended quality is specified. It is clear and concise description of materials and workmanship. d k hi If required the specifications are attached with proper drawings and other related documents They should be non-discriminatory.
Er. Satya Narayan Shah 29

Specifications help to avoid lengthy description in the Bill of Quantities. They guide Bidders about the clients intended quality requirements and to arrive them at fair price. Part of the contract document limiting and describing the risks and responsibilities. Formation of contractual obligations as to what exactly the clients want. Help the supervisors and commissioning and testing team.
Er. Satya Narayan Shah 30

Specification Purposes

9/10/2011

Specification Purposes
It guides to achieve the required total quality and performance of the end product, It helps the Contractor/Supplier to understand what is the requirement of the Employer, It h l th C t t / S helps the Contractor/ Supplier t workout th rates li to k t the t and prices for bidding the contract, It helps the Engineer/ Employer to monitor and control the quality of end product, It provides basis for dialogue between the Contractor and the Engineer to agree or disagree for quality of materials and works. 31

Specification Purposes
It is basis for the Engineer to approve or reject materials or works Clear specifications will result in less Claims, Disputes and Litigation problems

Thats why, the specifications are to be written by an experienced professional.

Er. Satya Narayan Shah 32

Specification Types
There are three main types of specifications: functional specifications which outline outcomes to be achieved; performance-oriented specifications which define the performance but not the methods used to achieve them; and technical specifications which detail physical characteristics, such as size, capacity and type of materials required.
Er. Satya Narayan Shah 33

Preparation of Specification
Before writing the specification the requirements should be clearly worked out. Requirements are often classified as; y q pp 'Mandatory' - essential requirements that suppliers must meet 'Desirable' - requirements that whilst bringing benefits are not essential 'Information' - requirements that request information from the supplier typically for evaluation purposes
Er. Satya Narayan Shah 34

Specifications
Use of standard specifications reduces the chances of ambiguity and also makes easier for preparation of contract documents. Standard Specification- Prepared and published by the organization. They are generally prepared on the basis of reference, e.g. ISI, BSI, NS etc.
Standard Specification needs to be approved by the Cabinet level.
Er. Satya Narayan Shah 35

Preparation of Specification
Language: Simple and clear, same tense Brief: as brief as possible. Standard articles code books specified by references, no need of explanation. Fairness: fair to all parties, proper sharing of risk. Clear Requirement: Express requirement clearly No repetition: Repetition of information should be avoided. Unnecessary text: Inapplicable text should not be included.
Er. Satya Narayan Shah 36

9/10/2011

Preparation of Specification (contd)

Inclusions: Inclusion of proper paragraphs for specification of materials, Major Components, Installations, Tests and Commissioning, After sales service, Guarantee/Warranty. Standard Size: Commercial sizes should be specified as far as possible possible. Brand/Model: Any particular brand or model should not be specified as far as possible. If it is quoted, options and choice should be given.

Specifications and Drawings

Specifications and Drawings are the 2 integral parts of contract, which shows the requirements (needs and expectations) of the Employer. Specifications are referred more in cases of conflict and disputes whereas the drawings are dealt in day-to-day work execution. Notes mentioned in the drawings are also treated as specifications and are effective.

Er. Satya Narayan Shah

37

Er. Satya Narayan Shah

38

Specifications and Drawings

Thats why the Notes written in the drawings are also to be clear, specific, complete, and carefully worded as in the Specification. To minimize the discrepancy it is important to take care in finalizing the drawings and specifications specifications. It is advised to include clauses stating in case of discrepancy in Drawings and Specifications, the Engineer will decide . Such authority to the Engineer may avoid disputes and litigations arising from some small mistakes.
Er. Satya Narayan Shah 39

Preparation of Specification
Example Vehicle
Type General Sedan, Hatchback, - Seating capacity, Engine Power, C.C etc. Spec, Tech T h Transmission 4 speed, 5 speed T i i d d Steering Manual, power Spec, Perfor Options AC, Non AC, mance Warranty - Period to be covered
Er. Satya Narayan Shah 40

Conclusion

Specification to be required to describe the desired p performance, and not to reduce competition.

BID DOCUMENTS

Er. Satya Narayan Shah

41

9/10/2011

Contract and Bid documents

Contract is an offer & an acceptance Contract is an agreement between 2 or more parties t do or not to do ti to d tt d something that is enforceable by law.(Contract Act, 1999)

Contract and Bid documents

Bid Documents provide a Bidder to make an responsive cost effective offer to the Employer considering;
Scope and Quality of works, Conditions (liability and risks of Employer and Bidder), Time for completion, Payment modes etc.

Proper Bid Documents helps an Employer to assess all the Bidders Bid in equal footing and provides a basis for acceptance of Responsive, Qualified and Cost effective bid.
Er. Satya Narayan Shah 44

Er. Satya Narayan Shah

43

Purpose of Bidding documents in Public Procurement

Lay down Rules of the Competition
How to prepare and submit bids What will be the selection criteria What will be the qualification criteria p How to price Technical Specifications Bill of Quantities Delivery/Completion Time Warranty/Service Obligations

Content of Bid Document:

Invitation for Bids (IFB) Section I. Instructions to Bidders (ITB) Section II. Bid Data Sheet (BDS) Section III. Evaluation and Qualification Criteria Section IV. Bidding Forms IV Section V. Schedule of Requirements Section VI. General Conditions of Contract (GCC) Section VII. Special Conditions of Contract (SCC) Section VIII. Contract Forms
45 Er. Satya Narayan Shah 46

Specify Scope of Works & Obligations

Specify Clearly the Conditions of Contract

General, Time, Cost, and Quality Control
Er. Satya Narayan Shah

IMPORTANT NOTES
PREPARATION OF BID DOCUMENTS TO BE DONE IN CLOSE CONSULTATION WITH THE USER. USER USE OF APPROPRIATE STANDARD BIDDING DOCUMENTS ISSUED BY PPMO.
Er. Satya Narayan Shah 47

Bid Security and Performance Security

9/10/2011

Bid Security
Main objective is to seek Reasonable Protection for the Employer, Failure of successful Bidder to sign the Contract would result delay, which is Unacceptable for the Employer,

Bid Securities
Recommended Amount for Bid Security is 2 to 3 % of the approved estimated amount amount. Recommended to use Fixed Amount such as NRs. 100,000 irrespective of Bid Amount.
Er. Satya Narayan Shah 50

IF THE BID SECURITY IS ISSUED BY THE BIDDERS INSTITUTION OUTSIDE EMPLOYERS COUNTRY, IT SHOULD HAVE A CORRESPONDING FINANCIAL INSTITUTION LOCATED IN EMPLOYERS COUNTRY TO MAKE IT ENFORCEABLE

Er. Satya Narayan Shah

49

Bid Securities
To be valid for 30 days beyond Bid Validity, in general (Bid validity to be sufficient to complete evaluation
and approval process)

Bid Security
To be applicable to all Bidders, May be Forfeited, if the Bidder; Modifies/ Withdraws Bid after Deadline for Submission Within S b i i & Withi Bid V lidit P i d Validity Period, Refuses to confirm/agree Arithmetical Corrections, Fails to furnish Performance Security & Sign Contract after issuance of the Letter of Acceptance (within bid validity period)

Request for extension of Bid Validity could be made to all Bidders before expiry date. (also needs
extension of Bid S t i f Security period, i WB/ADB f d d projects it i d in funded j t it needs prior approval from them),

Bid Security not to be very high amount so as to Discourage Bidders Bid Security should be promptly released to Unsuccessful Bidders
Er. Satya Narayan Shah 51

Er. Satya Narayan Shah

52

Performance Security
In procurement, it is difficult for an Employer to assess Ability & Financial position of a Bidder to perform the contractual job. Hence, the Employer demands that the Bidders ability for performance to be secured.

Performance Security
Major instrument of Performance Security is Bank Guarantee 5 to 10% During Defect Liability Period , PS amount could be decreased, Substantially. decreased Substantially Alternative Instruments for PS are:
Security Deposit (cash) Certified checks Standby letter of credit
Er. Satya Narayan Shah 54

Purpose of Performance Security is to ensure the Buyer/ Employer/ Client that the Contracted Job completes within the time specified in the Contract.

Er. Satya Narayan Shah

53

9/10/2011

Bank Guarantee
BG is Obligation of Bank towards the Purchaser/ Employer to pay a Fixed Sum of Money in the event of Non-Performance of Contractual job by Contractor/ Supplier. BG is usually Irrevocable, Unconditional, and Payable on First Demand. BG are, as a rule, subject to Laws of Country of the issuing Bank.
Er. Satya Narayan Shah 55

Unconditional Bank Guarantee

Bank promises UNCONDITIONALLY to pay specified amount to Purchaser/ Employer upon; First Written Demand, Without any Argument, Without Employer needing to prove any reasons for Demand, D d Without Employer needing to notify the Contractor/ Supplier. Contractors / Suppliers Dislike Unconditional Bank Guarantee, Employers/ Purchasers Like Unconditional Bank Guarantee.
Er. Satya Narayan Shah 56

CONTRACTORBANKEMPLOYER RELATIONSHIP

CONTRACTORFOREIGN BANKLOCAL BANKEMPLOYER RELATIONSHIP

BID EVALUATION PROCESS

BID EVALUATION

Examination of Legal Requirements

Completion of Bid

Examination on Substantially responsiveness

Reports & Recommendations

Bid Comparison Technical, Commercial, Financial, and Error correction

Post Qualification

Determination of Lowest Evaluated Bid

60

59

Er. Satya Narayan Shah

10

9/10/2011

Bid Evaluation
Examination of Legal Requirements
Proper issued Bid document Proper Seal and signature of authorized person Bid security, other requirements etc y, q

Examination on Substantially responsiveness (PPR-23, Gha)

Bidsshallbeconsiderednonresponsive,if;

Bid Evaluation

Completion of Bid
Submission of all the required documents

61

Thebidisnotsubmittedinthebiddocumentissuedbythedepartment. ThebidisnotsubmittedinthecompleteBidDocumentissuedinthenameofthe Bidderhimself. Thebidisnotsealed. ThebidisnotsubmittedwiththeBidFormdulyfilledandsignedinthecomplete document. The bid is not submitted within the specified date / time for submission of bids Thebidisnotsubmittedwithinthespecifieddate/timeforsubmissionofbids. ThebidisnotsubmittedalongwiththeBidsecurityasspecifiedinITB19.1. ThebidissubmittedwithouttheinformationasspecifiedinITB17.1(c). ThebiddoesnotcomplywiththeinstructionsasspecifiedintheInvitationforbid. TermsofpaymentandDestinationofDeliveryoftheEquipmentsuppliedare differentformthosespecifiedintheBidDocument. Allpricesquotedarenoteitherfirm(notestimatedone)orconditionalorvalid fortheperiodspecifiedintheBidDocument. Thereisamajordeviationinspecificationoftheequipmentproposedbythe 62 bidderfromthatspecifiedinthetechnicalspecifications.

Bid Evaluation (Technical)

Comparison of Technical Specifications as stated in the Bid Document. Operation and Maintenance Cost (Life Cycle Cost) Warranty If there is any deviation, the evaluation committee shall state in the report. The Evaluation committee shall state if there is any minor/major deviation with justification.
63
63

Bid Evaluation (Commercial) Date of Completion Payment terms Any deviation in Liquidated damages Bonus; if the completion is before time( stated in the Bid) Other responsibilities to be born by the Bidder Any additional conditions imposed by the bidder
64
64

CorrectionofErrors
ifthereisadiscrepancybetweentheunit priceandthetotalpricethatisobtainedby multiplyingtheunitpriceandquantity,the unitpriceshallprevailandthetotalpriceshall unit price shall prevail and the total price shall becorrected,unlessintheopinionofthe Employerthereisanobviousmisplacementof thedecimalpointintheunitprice,inwhich casethetotalpriceasquotedshallgovernand theunitpriceshallbecorrected;
65

CorrectionofErrors
ifthereisanerrorinatotalcorrespondingtothe additionorsubtractionofsubtotals, thesubtotals shallprevail andthetotalshallbecorrected;and ifthereisadiscrepancybetweenwordsand if there is a discrepancy between words and figures,theamountinwordsshallprevail,unless theamountexpressedinwordsisrelatedtoan arithmeticerror,inwhichcasetheamountin figuresshallprevailsubjectto(a)and(b)above.

66

11

9/10/2011

EvaluationCriteria
Deliveryschedule:
Goodstobedeliveredwithintheacceptabletimerangeas specifiedinDeliverySchedule.Nocreditwillbegivento deliveriesbeforetheearliestdate,andbidsofferingdelivery afterthefinaldateshallbetreatedasnonresponsive. ft th fi l d t h ll b t t d i Withinthisacceptableperiod,anadjustmentwillbeadded, forevaluationpurposesonly,tothebidpriceofbidsoffering deliverieslaterthantheEarliestDeliveryDatespecifiedin DeliverySchedule

EvaluationCriteria..
Deviationinpaymentschedule: Ifabiddeviatesfromthescheduleandifsuch deviationisconsideredacceptabletothe Purchaser,thebidwillbeevaluatedby Purchaser the bid will be evaluated by calculatinginterestearnedforanyearlier paymentsinvolvedinthetermsoutlinedinthe bidascomparedwiththosestipulatedinthe SCC,attherateperannumspecifiedinBDS.
67 68

EvaluationCriteria.. Costofmajorreplacementcomponents, mandatoryspareparts,andservice: Forthelistofitemsandquantitiesofmajor assemblies,components,andselectedspare assemblies components and selected spare parts,Anadjustmentequaltothetotalcostof theseitems,attheunitpricesquotedineach bid,shallbeaddedtothebidprice,for evaluationpurposesonly.
69

EvaluationCriteria..

Operatingandmaintenancecosts: Anadjustmenttotakeintoaccount theoperatingandmaintenancecosts the operating and maintenance costs oftheGoodswillbeaddedtothebid price,forevaluationpurposesonly,if specifiedinBDS
70

DomesticPreference
IfthepriceofgoodsmanufacturedinNepal, arehigheruptotenpercentthanthatof foreigngoods,amarginofpreferenceupto tenpercenttothegoodsmanufacturedin ten percent to the goods manufactured in Nepal shallbeprovidedintheevaluationof theBids. (ThisClauseshallbeapplicableonlyforGoN fundedprocurement.)
71

PostqualificationRequirements FinancialCapability ExperienceandTechnical Capacity Goodsofferedmeetstheusage requirement

Lowest Evaluated Substantially Responsive and qualified to perform the Contract
72

12

9/10/2011

BidEvaluationStandardForms,WB
Table1.Identification Table2.BiddingProcess Table3.BidSubmissionandOpening Table4.BidPrices(asReadOut) Table5.PreliminaryExamination Table6.CorrectionsandUnconditionalDiscounts Table 6 Corrections and Unconditional Discounts Table7.ExchangeRates Table8.CurrencyConversion(MultipleCurrencies) Table9.CurrencyConversion(SingleCurrency) Table10.Additions,Adjustments,andPricedDeviations Table11.DomesticPreferenceforGoods Table12.DomesticPreferenceforWorks Table13.ProposedContractAward
73

AwardCriteria
TheEmployershallawardtheContracttothe Bidderwhoseofferhasbeendeterminedtobe substantiallyresponsivetotheBiddingDocument andthe lowestevaluatedbid is,providedfurther thattheBidderisdeterminedtobequalifiedto that the Bidder is determined to be qualified to performtheContract satisfactorily. OnrecommendationofEvaluationCommitteeas perthesubclause8ofclause147PPR

74

Contract form.
Main Agreement document signed by both parties and witness. Contractor/Suppliers commitment to complete the job and remedy the defects in conformity with the provision of contract. Employers commitment to pay the supplier as per the conditions of contract. List of documents to form and be read and construed as part of the agreement.
75

Completion of the Contract

76

Er. Satya Narayan Shah

Inspection & Commissioning Inspection Committee Physical verification Verification & validation of performances Inspection Report
Er. Satya Narayan Shah 77

Employers most contractual obligation Principal source of funds for supplier to discharge his duty Delay or default in release in payment has a negative impact on discharge of obligation by the contractor/supplier Release of excessive payment or advancing of payments may dilute the motivation level of contractor/ supplier in discharging his duty A balance is therefore necessary to be maintained so that the supplier is suitably compensated for works completed and adequately motivated for completion of work
Er. Satya Narayan Shah

78

13

9/10/2011

Final payment:
Acceptance of Goods Extension of the performance security to cover the warranty period. Close LC

Er. Satya Narayan Shah

79

14