Chapter Four: contract supervision and administration

From Ministry of Water DCOM Manual


1.1 General Requirements for Contract Supervision and Administration

Contract supervision and administration is undertaken by the PM in consultation with the UD. Supervision and administration of works contracts is often a complex task relying heavily on the experience and qualifications of the PM. The basic actions to be undertaken under Contract Administration and Supervision are listed below, namely to:

(a) Maintain close supervision of the Contractor’s performance, work done, materials used, and labour force on the site to ensure that potential problems are identified and solved as early as possible.
(b) Notify the Contractor, in writing, requesting rectification of any deficiencies in workmanship, materials used, safety or environmental standards, or other required performance standards
(c) Hold regular site meetings with the Contractor to identify the causes of any slippage in the schedule of works.
(d) Receive regular progress reports from the Contractor and ensure that written records of any disputes or contact variation orders issued are maintained.
(e) Ensure that any significant problems, variation orders, day work claims, compensation events, cost overruns, or slippage in the timetable are brought to the attention of the PE.
(f) Initiate and supervise any process for claims against insurance or the Contractor.
(g) Conduct detailed checks on the Contractors claims for work performed, re-measure as appropriate, and prepare Interim Payment Certificates, deducting any retention percentage specified in the Contract.
(h) Participate in inspections for Interim and Final Handover of the Works and prepare the Final Payment Certificate releasing retention money to the Contractor.
Contract Administration and Supervision involves six (6) main activity levels and these include: Time Control; Quality Control; Cost Control; Managing Variations; Ensuring compliance with the laws of the country; and Managing project closure.

1.2 Time Control

1.2.1 Importance of Time Control for the Construction Projects

Time control involves implementation and completion of a project within the agreed works programme. Effective time management is essential to successfully and efficiently meet budget and programme targets. Projects can risk incurring unnecessary costs and delays as a result of ineffective time management, either by failing to allow for the full complexity of a project, or by failing to effectively manage scheduled work or unexpected events.

Effective project time management starts with the preparation of a realistic time for completion of the assignment by the PE. Unfortunately, in many situations this is not the case. Many projects are let out with unrealistic completion time thus making it nearly impossible to complete the project in time. Sometimes the so-called extensions of time actually reflect the realistic time that should have been allowed for the completion of a project.

A realistic time for completion of a project needs to be supported by a well-prepared works programme showing the method(s), arrangements, order and timing for all the activities of the Works. It is a requirement that such a programme be prepared by the Contractor for the approval of the PM.

However, experience shows that PMs do not take enough time and effort to scrutinize the so prepared programme to establish its realism. Most often than not Contractors prepare programmes to fit within the provided time for completion without critically considering a realistic time that they will require to carry out various activities and the entire project. As a starting point, the PM should request justification for the proposed programme by the Contractor having due regard to the projected productivity of people and equipment.

From a well-prepared works programme, the PM is required to ensure that the contractor adheres to the programme, and raises queries any time there is slippage by the contractor to follow the approved programme of works. The PM should also check that the revised programme of works which is submitted by the contractor on a monthly basis has included how the contractor is going to recover any lost time.

1.2.2 Checklist of Actions by PM to Ensure that a Project is Completed on Time

The checklist below provides actions that need to be taken by the PM to ensure that the Project is completed in Time or well ahead of time: (a) Ensure that a realistic time for completion of the project is fixed – One should not take just for granted that the time provided in the tender/contract documents is sufficient. Once a PM is appointed for a project he/she first revisit the contract documents to establish their accuracy and realism. Once he/she discovers errors or mistakes he/she has to make request for amendments which have to be approved by TB or if the errors or mistakes are not so serious this will serve as an eye opener of the potential problems likely to occur and therefore the PM can advise ways of overcoming them.
(b) Critically scrutinize the programme of works submitted by the contractor together with its subsequent revisions to ensure that it is realistic and presents a logical sequencing and timing for the execution of the activities.
(c) Ensure that the amount stated in the SCC is deducted for failure of the Contractor to submit a revised programme of works within the time stated in the SCC. This assumes that PE is paying the contractor on time. This amount will be released once an acceptable revised programme of work is submitted by the contractor.
(d) Ensure timely handing over of the site or parts of the site to the contractor. Remember if possession is not given by the date stated in the SCC, the Employer will be deemed to have delayed the start of the relevant activities, and this will be a Compensation Event.
(e) Ensure timely issuance of Drawings, Specifications, or instructions required for execution of the Works.
(f) Ensure timely approval and inspection of works carried out by the contractor, particularly those that require inspection and approval before the IPC is released.
(g) Ensure that any instruction to the Contractor to uncover or to carry out additional tests upon work is backed up with a proof of unsatisfactory work for if the work ordered to be tested is found to have no defects that may amount to a compensation event.
(h) Ensure timely approval of subcontracts proposed by the contractor. If there are reasons for refusal these must be communicated in a timely manner to the contractor as well.
(i) Ensure proper co-ordination of the works of other contractors, public authorities, and utilities companies on the site.
(j) Ensure timely payment to the contractor, of the advance payment including applicable and all monthly or interim payments.
(k) Handle all contractors’ applications for extension of time fairly and expeditiously.
(l) Take time and effort to analyze all early warnings submitted by the contractor and establish their possible impact on completion time for the project and find ways in collaboration with the contractor that will mitigate their adverse effects.
As a matter of fact, there are many causes of projects delay that are within the Client’s/ PM Control. It should be ensured that delays caused by Client’s action or inaction are kept to a minimum, and allow those that are the result of unforeseen conditions.

1.3 Quality Control

1.3.1 The Need for Quality Control for the Construction Projects

In order to enhance Client satisfaction during a construction project, the project must meet the expected quality. This expected quality can be ensured through quality assurance and quality control activities. The quality control process confirms that the project outcome meets the client’s standards. The quality assurance process checks the quality plan (which includes method of construction and quality of materials) and quality control process to confirm that quality standards are implemented on the project site.

To improve the quality of construction, understanding the project requirements and standards is essential. The project quality plan should be part of the project construction management plan. The quality control plan defines how quality should be handled throughout the duration of the project.

The common way of controlling quality is the inspection of the finished parts of the work. The main purpose of quality control through inspections is to minimize the chance of defects before the project is delivered to the owner. Supervision of a construction project is not just as simple as coming up with a construction punch list. Controlling quality means monitoring if the work practice is going as planned or not, examining the quality of the current construction tasks, and providing reports daily for any unsatisfactory work output. In the water supply and sanitation sector quality assurance is to ensure value for money, reasonable time for project implementation, sustainability of water and sanitation services and reduction of O&M costs.

1.3.2 Differentiating Quality Assurance from Quality Control

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steps and ensuring safety with the required methods for each one of them. The main goal of quality control is to ensure that the construction meets standards they specified at the start of the project.

Figure 4.1 shows the difference between quality control and quality assurance. The PM role of ensuring that quality requirements of the contract as specified in the drawings and specifications are met, but for better assurance he may request the Contractor to present to him his Quality Assurance Plan so as to give him confidence that indeed a contractor has clear intentions of making sure that quality requirements of the project are being met.

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1.3.3 Checklist of Actions by PM to Ensure that the Project Meets Quality Requirements

As discussed, before it is the duty of the PM to ensure that the work produced by the contractor is in conformance with the drawings and the specifications provided for the project. The following is a checklist of actions to be taken by the PM in ensuring that the project is executed and completed to the required quality standards:

(a) Before starting the work, critically scrutinize the drawings and specifications to confirm that they are correct and do not contain any omissions, errors or mistakes. If omissions, mistakes or errors are discovered make an urgent request for amendments which have to be approved by TB.
(b) Work together with the Contractor to prepare a Quality Assurance Plan which shall narrate the scope of the works and the expected quality requirements for the project, as well as the role of the participants in ensuring quality requirements, and daily reporting and documentation required to ensure that indeed the executed works conform to the standards and the specifications. A typical Quality Assurance Plan is attached as Appendix 5.
(c) Regularly and on a daily basis, check the work of the contractor to ascertain that it meets the quality requirements as stipulated in the drawings and specifications.
(d) Promptly issue a notice to the Contractor to correct any defects found in the works within a set time. If the contractor fails to correct the defect within the time specified in the Notice, the PM should arrange to have the defect corrected and charge the contractor for the same as provided for in the contract, or decide to treat the failure to correct the defect as a fundamental breach of contract as provided for in the contract, and institute measures required towards the termination of the contract.
(e) Request the Contractor, on a monthly basis to provide a programme of the activities, which require his specific approval before the contractor is allowed to proceed to execute the ensuing activities. A good example is the prior inspections before casting of concrete. Most work specifications would require the PM to (i) inspect and approve the formwork as well as the reinforcement before casting, and (ii) the physical presence of the PM or his representative during the pouring of concrete. In order for the contractor to proceed with these works at a certain date, it is important that the PM is notified well in advance so that he can make necessary arrangements enabling him to be present at the time and date the activity is planned for execution by the contractor.
(f) Where there is proof of or reasons to believe that part of the executed work falls short of the required quality, the PM should instruct the contractor to search for the defect and to uncover and test any works suspected to have a defect.
(g) Before the issuance of the Certificate of Practical Completion, the PM must inspect the works to ensure that they have been executed in conformity with the drawings and specifications. For such inspection a comprehensive check-list of items to be inspected should be prepared well in advance as part of the contract closeout checklist.
The quality of projects is one of the traditional and global measures of project performance. For construction projects, the goal and desire of clients, contractors and consultants is to ensure that projects are delivered according to the acceptable and agreed standards. It is the role of the PM to ensure the project meets specified quality standards.

1.4 Cost Control

1.4.1 Importance of Cost Control

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The underlying challenge in controlling costs stems from the fact that many clients have limited funds, and budgets are often set at the limit of what is affordable. Cost overruns during the construction phase may seriously over-extend the client financially, to the point where the project may not be finished to the expected standards, or may even have to be abandoned. Clients who have to pay more than they expected are likely to be (very) disappointed; this is a poor outcome. Cost control must be focused on preventing this from happening.

Many projects in Tanzania and the world over have suffered from cost and time overruns due to factors stemming from poor cost control during the design and project implementation stages. Most PMs and contractors find difficulty in controlling project costs due to problems which include delays by clients to release money, delays to make decision, lack of materials and equipment, bad weather, overlapping of activities, unclear and incomplete drawings, making good defective works, and generally failure to control the productivity of resources. Others are due to theft and vandalism, interference by clients, high labour turnover, and insufficient knowledge on cost control techniques.

1.4.2 Project Manager’s Role in Controlling Costs of the Project

The PM is mandated to control costs for the project i.e., to ensure that the project costs do not exceed the approved budget which would normally be the contractor’s contract figure and a contingency amount provided to cover for unforeseen works or events that could not be reasonably foreseen at the time of award of the contract.

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(c) Adjusting the rates as appropriate if the final quantity of work executed is different from the quantity in the BOQ by a percentage provided in the contract document. This will entail negotiations with the contractor. Where agreement on adjustment for rates cannot be reached, this matter can be referred to the dispute resolution mechanism applicable.
(d) Ensuring that before ordering variations for items for which no contractor’s rate is included in the BOQ, he must obtain a quotation from the contractor, check its reasonableness, and fix a rate if it is determined to be unreasonable. The fixed rate by the PM may be a subject of a Claim if the contractor is not satisfied with the fixed rate.

(e) Ordering the contractor to prepare a cash flow forecast for the project which shall be updated every time the contractor updates the programme of works. This cash flow forecast shall assist the Client to plan and set aside funds for payment to the contractor for the executed works based on PMs Certification.
(f) Ensuring that Contractor’s submitted monthly statements of the work executed are properly scrutinized to establish the correctness of the executed works. He shall ensure that the certification process is completed within 28 days.
(g) Keeping all documents and records that were used in the valuation of the works executed by the contractor in the process of certifying amounts to be paid to the contractor.

1.4.3 Checklist for PM to Ensure Proper Cost Control for the Project

(a) As discussed above, it is the PM’s responsibility to monitor and control costs of the project. The following is a checklist of actions to be taken by the PM to ensure that the project is executed and completed within the approved budget.
(b) Before starting the work, critically review the allocated budget (estimate) for the works to determine its sufficiency to implement the contract. Cost control starts with a well-prepared estimate of the cost for the project.
(c) Obtain a cash flow forecast from the contractor, and make the Client aware of his payment obligations based on the forecast. This will enable necessary arrangements to be put in place to enable timely payment to the contractor upon presentation of payment certificates.
(d) Keep a close track of all contractors approved claims and adjust the contract prices to reflect increases or decreases in the contract price.
(e) Ensure that the TB approval is obtained for any variations and amendments to the contract price.
(f) Ensure deduction of retention money as provided for in the contract, and recovery of advance payments (if paid) in the approved payment certificates.
(g) Ensure that liquidated damages are deducted from payments due to the contractor for any delay which could not be compensated by the Client.
(h) Follow-up with the Client to ensure timely payment of all certified payments to the Contractor. This will prevent payment of interest which ends up increasing the project costs.
(i) Cost control is at the heart of successful project implementation. It is therefore critical that the PM implements the action described above to ensure that cost objectives of the project are achieved.

1.5 Managing Variation Orders and Contract Amendments

1.5.1 Variations Defined

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projects, variations can be very significant, whereas on small building contracts they may be relatively minor. Standard forms of contract generally make express provisions for the PM to instruct variations. Such provisions enable the continued, smooth administration of the works without the need for another contract. Variation instructions must be clear as to know what is and is not included and at times may propose the method of valuation.

1.5.2 Valuation of variations

Variations may give rise to additions or deductions from the contract sum. The valuation of variations may include not just the work which the variation instruction describes, but other expenses that may result from the variation, such as the impact on other aspects of the works. Variations may also (but not necessarily) require adjustment of the completion date.

Valuations of variations are often based on the rates and prices provided by the contractor in their tender, provided the work is of a similar nature and carried out in similar conditions. If similar types of works to those instructed by a variation cannot be found in the drawings, specifications or bills of quantities, then fair valuation of the contractor's direct costs, overheads and profit is necessary to be made by the PM.

1.5.3 Source of Conflict on Variations

Conflict can arise when work is not mentioned in the BOQ, drawings or specifications. In common law this silence does not mean the contractor has an automatic right to claim for extra payment. The client is not bound to pay for things that a reasonable contractor must have understood were to be done but which happen to be omitted from the BOQs. Where there are items that, whilst they are not expressly mentioned, are nonetheless required in order to complete the works, then the contractor should have included them in their price. For example a conflict can arise when a contractor qualifies that the, 'Supply & Fixing of Door is included' but 'Supply & Fixing of Ironmongery is excluded'. A reasonable contractor should foresee that a door cannot be fixed without hinges – which is a part of the ironmongery. So even if ironmongery is excluded, the contractor cannot expect a variation for any of the items required to fix the doors.

Variations are often sources of dispute, either in valuing the variation, or agreeing whether part of the works constitute a variation at all, and can cost a lot of time and money during the course of a contract. Whilst some variations are unavoidable, it is wise to minimize potential variations and subsequent claims by ensuring that uncertainties are eliminated before awarding the contract. This can be done by: (a) Undertaking thorough site investigations and condition surveys,
(b) Ensuring that the project brief is comprehensive and is supported by stakeholders,
(c) Ensuring that legislative requirements are properly integrated into the project,
(d) Ensuring that risks are properly identified,
(e) Ensuring that designs are properly coordinated before tendering,
(f) Ensuring the contract is unambiguous and explicit,
(g) Ensuring the contractor's rates are clear,
(h) Preparing concise drawings, bills of quantities and specifications, providing for all situations which are reasonably foreseeable.

1.6 Monitoring Compliance with Country’s laws

Construction process in Tanzania is governed by many Laws. Some are expressly stated in the contract document and others are not. It is the duty of the PM to ensure that the execution of the contract is in accordance with Country’s Laws. The notable laws include: (a) The Contractors Registration Act of 1997 as amended in 2008 (The Contractors Registration Amendment Act, 2008), – with regard to Contractor’s registration, construction site boards and registration of projects. In particular the PM must ensure that the eligibility of the contractor is maintained throughout the period of execution of contract by making sure that the contractor is still registered by the CRB.
(b) Relevant Labour Laws – with regard to workers’ employment and working conditions, social security, working hours, welfare and immigration.
(c) Laws relating to taxes and duties.
(d) The Environmental Management Act 2004, together with the Environmental Impact Assessment Audit Regulations, 2005 as amended in 2018. In particular the PM must ensure that contractor’s work methods and the handling of effluents from the construction sites do not have any negative impact on the environment.
(e) To ensure the contractor has an insurance cover for Indemnity against Professional liability and the Occupational Health and Safety Act, 2003 together with the Occupational Safety and Health (Building and Construction Industry) Rules of 2015. The latter is a very important Law which must be observed to ensure health and safety of workers and public. The implementation of this piece of legislation goes with considerable costs on the part of the contract, and there is a tendency of contractors to try to save costs by skipping some of its requirements. It is critical that the PM ensures that the requirements of this law are properly observed and implemented at site.

1.7 Managing Project Closure (Finishing of the Project)

1.7.1 Project Closure Defined

When it comes to project management, closing out a project is not just a matter of executing deliverables. Though the process may seem tedious or overly administrative, a formal closure phase ensures all loose ends are tied up, documentation is signed and approved, contractors are paid, and everyone is on the same page.

The closing phase also gives you the opportunity to review and evaluate the project’s success (or failure), which is crucial for planning and more successfully executing projects in the future.

The closing phase of project management is the final phase of the project lifecycle. This is the stage where all deliverables are finalized and formally transferred, and all documentation is signed off, approved, and archived. The project closure process ensures that: (a) All work has been completed according to the project plan and scope.
(b) All project management processes have been executed.
(c) One has received final sign-off and approval from all parties.
The project management closure process also gives the team the opportunity to review and evaluate the project’s performance to ensure greater success in future projects.

1.7.2 Importance of Closing a Project

Without a formal project closing process, one risks letting crucial details fall through the cracks, which can result in confusion, a never-ending project, dissatisfied clients, and even liability issues. Project closure helps to avoid: (a) Repeating mistakes in future projects and pertinent objectives;
(b) Having final products or deliverables without dedicated support and resources;
(c) Failing to identify the team or individuals who will own and maintain the solution following final delivery; and
(d) Creating liability issues resulting from incomplete payments, contracts, or deliverables

Following a clear project closure plan helps to properly transition the solution to the client or end-user. This process ensures that the final stakeholders have the information, resources, and training to successfully manage and use the end product. The project closure process also ensures that the project is formally completed and is no longer considered a project, allowing one to hand the reins over to the correct team in charge of managing and maintaining the project’s outputs. By officially closing a project, one minimizes risks, increases client satisfaction, and ensures all parties are on the same page. In other words, a project closure is a process one cannot afford to skip.

1.7.3 Steps to Closing a Project

The closing phase of a project involves several steps. Work through the following checklist to ensure the project is successfully completed.

(a) Formally transfer all deliverables: The first step to” closing out’’ a project is to finalize and transfer the project deliverables to the client. The PM should together with the Contractor go through the project plan to identify all deliverables and make sure they have been fully completed and handed over.

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(d) Release resources: Formally release resources from the project, including contractors, team members, and any other partners. Notify them of the end of the project, confirm any final payments or obligations, and officially release them so they are free to work on other projects. (e) Conduct a post-mortem: A post-mortem or project review is one of the most valuable steps of the project closure process. This is the time to review the successes, failures, and challenges of the project and to identify opportunities for improvement in going forward .

As one begins the post-mortem, there is a need to conduct a performance review of the project. In other words, it is necessary to calculate the project’s performance in terms of cost, schedule, and quality.

Next, conduct a survey or hold a meeting with the project management team to get feedback on how the project went. These individual answers will help paint a more comprehensive picture of the project’s performance. The team should consider the following questions:

  • What went well?
  • What were the challenges or failures?
  • How well did the team communicate?
  • Did the team follow the outlined processes and plan?
  • Was the client satisfied with the results?
  • What would one change or improve for future projects?

With the project performance and feedback in mind, one can then identify lessons learned and opportunities for the future. One needs to keep in mind that the goal of a post-mortem is not to assign blame for any mistakes. Instead, it is a learning opportunity for everyone to improve in future projects. It is good to document the project review with the performance measurement, feedback, and improvement plan.

  • Archive documentation: Once a project post-mortem is completed proceed to finalize all documentation (contracts, project plans, scope outline, costs, schedule, as built drawings etc.) and index them in the Organization archives for later reference. Keep clear notes on the project’s performance and improvement opportunities so that can be easily referenced and implemented in similar projects in the future.
  • Celebrate: Finally, do not forget to celebrate! The end of a project is a big accomplishment and represents the culmination of many hours of hard work and dedication from a team of contributors. An end-of-project party is a great way to acknowledge your team’s hard work and increase morale to perform better in future projects

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