Civil Engineering Project Management (4th Edition)

Preparing contract documents 55
matters are considered below. For the standard ICE conditions entries will be
required in the appendix to the Form of Tender but for the ECC conditions it
will be necessary to decide which options are to be included as part of the conditions
of contract as well as making appropriate entries in the Contract Data.
The Defects Correction Period must be stated. This is the period during
which the contractor must repair any defects in the works resulting from his
workmanship. The period is usually 52 weeks for major construction but may
be more or less depending on whether there is running plant involved or how
soon defects may become apparent.
A Performance Bond is usually required where the employer feels he needs
financial protection against a contractor failing to complete the works either
due to lack of resources or financial instability. The size of the bond should cover
having to re-tender and any extra costs to complete. The value should thus be
chosen to suit the work but should not generally exceed 10 per cent of the value
of works. Bonds are, however, relatively expensive to supply and thus put up
prices and so may be considered unnecessary if the contractor is substantial,
or part of a large group who can supply a parent company guarantee.
Insurance against third party risks needs to have a value set with reference
to the likely risks of damage. In a rural area this may be small, but works near
a major industrial complex may need a higher level of cover. Normally it is the
contractor who provides insurance cover both for the works and third parties
but sometimes employers prefer to provide these insurances to save costs.
This can lead to problems when the cover provided does not fully represent
the risks which arise.
The Time for Completion of the works should be set at a reasonable period
given a proper level of resources. In many cases there will be a need for sections
of the works to be defined and separate times for completion to be set for
each of these. Sections may be needed if other contractors are to have access to
the site (e.g. for plant installation) or if parts of the works are needed early.
Since the employer will be kept from using his works and may incur other
costs if the contractor fails to complete on time it is usual to set liquidated
damages to compensate him for his loss. These must be calculated as a genuine
pre-estimate of the loss based on the value of the works output and other costs
anticipated.
Most contracts provide that a portion of the money due to a contractor each
month be retained by the employer. This retention has to be set and is usually
a percentage (often 5 per cent) of the value of works certified up to a limit. The
intention is to provide cover for defects and outstanding work but retention
is unpopular with contractors who point out that bonds and money yet to be
certified for payment provide funds should this be necessary.
5.5 Writing specifications
In writing specifications care must be exercised to ensure consistency of requirements
throughout and conformity with what is written in other documents.