Advantages of using project management services

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Independent Consultants play an important role in providing a variety of services – be it a feasibility study, Design or specialized aspects like providing a facility with Facility Management with all the attended features required to run a facility effectively and productively. Consultants also contribute towards Financial, technological or administrative aspects. In larger organizations, there are specialists available to deal with each and every aspect.

2. Procurement: The aim of a procurement strategy is to attain the best balance of risk, control and financial support for a project. For this project it is recommended that the Procurement process is carried out in the following stages.

1st Stage (contract strategy): In choosing a delivery mode for a project, the client must decide what type of contract to employ. As the two projects were delivered late and over budget in last year, consequently it is suggested that to use lump sum contract for all the projects. Since in lump sum contract contractor agrees to give a specified amount of work for an exact sum.

The benefit of this type of contract is that the client knows before the work begins what the ultimate cost of the job will be. Besides each work package can be tendered for the most competitive prices and the Contractor assigns best staff due to utmost fiscal motivation to achieve premature completion and better performance.

2nd stage (contract documentation): Before the tenders are invited, design and preparation of contract documentation is executed by team of consultants on behalf of the client and must be reviewed by qualified lawyers. The contract documents prepared for any contract should accomplish the proposed roles of being the references and guidelines for the rapport between the contracting parties during the project. The following documents should be included in contract documentation.

Background of the project

Contract specifications

Detailed drawings

Instructions to bidders

Conditions of contract

Bill of quantities

Pre-Qualification : The criteria for qualification of contractor must include:

Technical and organisational ability

Health and safety record

Financial status

Previous Performance evidence

Proper insurance cover

3rd stage (Tendering and Contractor selection): After contract documentation, tenders are invited for the selection of contractor by the consultant team on behalf of client. It is suggested that to use an open tendering procedure. This is a one-stage bidding process, where all interested aspirants in the contract are requested to submit a bid in reply to an advertisement.

The advertisement states that, the interested parties can acquire tender documents and sets out details of the proposed contract. Also the last date to submit the tender is mentioned. In this type of tendering maximum competition can be secured and even unknown contractor can bid for the project.

If the contract value is above European Union (EU) threshold then that the advert should also be placed in the Official Journal of the European Union (OJEU).

4th stage (Tender analysis and award of contract): Tenders which are submitted by contractors are evaluated by the evaluation team against pre-qualification criteria, which are mentioned in the tender document. The assessment will balance the offer of the bidder in delivering the contract against the excellence of productivity needed by the specification and balanced against the price. Finally the lowest bidder would be awarded the contract.

2.1 Standard forms of contract: A crucial aspect in the contract documentation is the form of contract. It is a subject about which has previously been written. The Project manager who is appointed by the client for successful deliverance of the project will draft the special conditions and chooses accurate form of contract.

These standard forms intend to improve the quality and cost effective delivery of the project and facilitates to minimize both tendering and contract management costs. It is suggested to exploit FIDIC (Red book) standard forms of contract in this project which will contribute considerably to success. The following arrangements would ensure the performance of contractor in terms of programme, cost and quality.

i) Programme: Time is the essence of the contract. A programme of execution of work will be prepared by the contractor and the same will be reviewed and approved by project manager. This programme will take into account the time of completion period of the contract.

According to Clause 15.2 the contract can be terminated by the client if the contractor fails to execute the work as per the programme and termination can be done only when there is no time extension from the client. Besides, as per the Sub-Clause 2.5 clause the contractor is liable to pay delay damages to the client for the default.

ii) Cost: Contractor shall be responsible for checking levels; foundations, fixtures, etc. well in advance of taking up erection work, and must bring to the notice of project manager if there are any discrepancies. The clause 14.1 states that, the Contract cost shall be the lump sum accepted Contract amount.

As per clause 15.2, if the contractor violates the commitment under the contract and asks for more amount, the client has right to abandon the contract. This clause is valid when there is no anomalous increase in quantity and there should not be any of kind of note on price escalation from the client.

iii) Quality: According to clause 4.9, Quality assurance system procedures of the contractor shall be furnished in the form of a manual. This document covers details of the personnel responsible for the quality assurance, plans to be followed for quality. Details of all plans and acquiescence documents should be submitted to the project manager before the execution stage is commenced.

The Project manager shall reserve right to inspect, review all stages of work as deemed obligatory for quality assurance. In case contractor performs poor quality of work then the payment should not be released unless and until he complies with the instructions to the full satisfaction of project manager.

3. Contractual Arrangement:

Proposal: The contractual arrangement should be superior for both client and consultant for successful delivery of the project and to have a good relationship for an extended period. Therefore it is recommended that the following points are to be agreed by and between client and consultant as given below:

The Job: Consultant concurs for the contemplation under the provisions henceforth, to provide all necessary service required to execute and completely finish in a qualified manner to the contentment and approval of client.

Consultant Responsibilities: The consultant shall employ realistic professional skill and attentiveness in the performance of his responsibilities in provisions of this accord.

Client Responsibilities: The Client shall regularly review the job, and give the consultant punctual decisions and approvals obligatory for methodical progress of the work.

Term: Time is of the quintessence in connection with this accord and each and every condition hereof. It is explicitly understood that Consultant's services shall be executed in accordance with the time plan prepared by client.

Compensation: Consultant shall submit monthly reports for services provided. Payments shall be made by client on report within 40 days of being invoiced for the job.

Disputes within the contract: In the event of any dispute between any sections of this agreement, the provisions contained in this manuscript shall prevail over any attachment.

Termination: Client shall have the right to terminate this accord with 30 days written notice without reason. In the occasion that client terminates this accord without cause, Consultant will be allowed to payment for all services performed and costs incurred to the date of termination.

Governing law: This Agreement and the understanding hereof, shall be governed by the laws of the European Union.

Justification: The above contractual arrangement establishes not only the rapport of the independent consultant services with the client but also their relationships with each other. For instance it ascertains the juncture at which each is to be implicated in the task, the lines of communication and errands for information provision and the outline of synchronization and control. Therefore contractual arrangements have straight and considerable insinuations for all the parties implicated in construction project delivery.

4. Comparsion of Payment Mechanisms:

This section provides the comparison between different types of standard form contracts for payment of the contractor by the client, used in civil engineering works.

FIDIC:

Under clause 14.7, the interim payment is made within 21 days, after the certification by the project manager and the final payment is made within 56 days after the client receives the payment certificate which is approved by project manager.

According to clause 14.9, the Retention amount is paid in two stages. In first stage 40 percent of the estimated final contract amount is waged after taking over certificate has been issued by the project manager. The outstanding balance amount is paid swiftly in final stage, after the end of defects notification period.

JCT:

As per clause 4.3, the interim payment is made within 14 days of the date of certificate, after the practical completion of work which is endorsed by project manager.

The final payment is made after the 28th day as the client receives final certificate from the project manager (per clause 4.6).

The 5 percent retention amount which is held by the client is released in two phases. One half of the amount is paid following the certificate of practical completion and the balance amount is waged in the final certificate issued under clause 4.6.

ICE:

According to clause 60(2) the interim payment is paid after 28 days, as the contractor’s monthly statement gets approved by the project manager.

By Clause 60(4) final payment is paid within 3 months, after the receipt of final account gets verified by the project manager.

As per clause 60(6) the retention amount is released in two stages. One half upon the issue of any certificate of substantial completion. The balance amount is paid after the end of defects correction period. Both the amounts should be paid within 14 days of receipt.

5. Conclusion:

The main purpose of this report was to elucidate the advantages of using project management services and to propose a contractual agreement to obtain the services. To explain the services that would be provided, procurement process for the present project was mentioned keeping in view the client’s value culture and also the information from the previous projects of the client. As a part of the procurement strategy, an appropriate form of contract was suggested so that all the key issues in the project could be managed effectively. Moreover, further justification was done by comparing and contrasting the various forms of contract to ascertain the appropriateness of the contract for the present project.

Furthermore, the project manager represents the client and works in an efficient and an effective manner for the successful project delivery and in turn achieves client satisfaction. Therefore, considering the previous projects executed by the client it is recommended to use the project management services on the present project.

6. ACRONYMS

1. FIDIC FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS

2. JCT JOINT CONTRACT TRIBUNAL

3. ICE INSTITUTION OF CIVIL ENGINEERS