Civil Engineering Project Management (4th Edition)
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204 <strong>Civil</strong> <strong>Engineering</strong> <strong>Project</strong> <strong>Management</strong><br />
Some items of cost may be pre-agreed in the contract, or agreed subsequently<br />
as applicable to the whole contract, such as any fee, staff salaries,<br />
insurance, head office costs and use of contractor’s own plant. The coverage<br />
of any such items must be clear to avoid possible duplication. Other costs will<br />
need to be checked in detail to ensure they were expended for the works and<br />
were reasonable in extent. Labour must be checked against wage sheets and<br />
the labour records held by the engineer’s site staff. Hired plant can be checked<br />
against invoices, but the charge for contractor-owned plant, if not agreed in<br />
advance, may need checking by a specialist who has to allow for depreciation,<br />
maintenance and other costs and avoid any duplication of profit. Materials<br />
invoices must relate to actual materials used and discounts must be allowed<br />
for. Sub-contractors’ quotations may need to be agreed in advance of the<br />
award of contract, to satisfy the employer that the prices are competitive and<br />
the terms acceptable.<br />
Where a target cost has been set, it is necessary to keep a rolling check of costs<br />
incurred against the proportion of the target work done, so as to identify any<br />
significant differences and thus allow steps to be taken to investigate cost<br />
increases and look for means of reducing any over-run.<br />
16.10 Retention and other matters<br />
The retention money as stated in the contract (usually 5 per cent in the UK but<br />
subject to some maximum value), must be deducted from the total amount<br />
calculated as due to the contractor in interim certificates for work done. When a<br />
substantial completion certificate is issued, the retention held is halved for that<br />
portion or whole of the works to which the certificate applies, the amount so<br />
released being paid to the contractor. During the defects correction period<br />
(often termed the maintenance period) which is stipulated in the contract, the<br />
contractor undertakes to correct all matters listed by the engineer as needing<br />
remedial action. At the end of this period the remainder of the retention is<br />
to be released although a portion may be held back sufficient to cover any outstanding<br />
defects.<br />
The performance bond which may have been provided by the contractor<br />
is normally not released until all defects have been dealt with, so the employer<br />
has some protection against default of a contractor in this respect. It is<br />
sometimes accepted that, after completion, any retention can be released by<br />
substitution of a retention bond.<br />
The contractor’s insurances will normally lapse once work, including remedial<br />
work, has ended. It should be remembered, however, that after substantial<br />
completion the normal contractor’s insurance cover does not cover the works<br />
themselves since these have become the employer’s responsibility.<br />
The resident engineer must forewarn the engineer when substantial completion<br />
of part or all of the works is likely. If this is later than the contract<br />
period, or any extended period, liquidated damages may apply, as set out in