Final Exam.
Final Exam.
Final Exam.
Faculty of Technology
School of Engineering & Information Technology
Department of Civil Engineering & Architecture
Postgraduate Program in
Construction Management
Model Examination
III. Case Study Exam. Questions; in relation to water & road projects
hypothetical cases.
2. Under each part, you are instructed to choose & attempt certain exam.
questions.
3. The type of examination is open book. You are allowed, however, only to
consult your course material, the relevant standard conditions of contract,
the Civil Code & other directly relevant reference materials.
4. Please, also consider other instructions under each part of the examination.
5. Please, submit your answer type or computer written on Wednesday,
February 18, 2009 at 9: AM.
6. We will discuss on your answers during our class sessions on the same day
but in the afternoon.
7. Please, attempt the model exam. questions individually.
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I. General Course Knowledge Exam. Questions
1. Please, identify & discuss (in detail) the possible types or categories
of business services required both for the construction business &
construction project & their content & practical significance in
respect thereof.
2. Please, define, and discuss (in short) the basic features & distinctions
between Project Delivery Systems, Contract Types (Forms of
Contract) & Methods of Procurement by providing three pertinent
examples for each of them under the Ethiopian & the international
context.
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II. Comparative Analysis Exam. Questions
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47.2 Reduction of Liquidated Damages
If, before the Time for Completion of the whole of the Works
or, if applicable, any Section, a Taking-Over Certificate has
been issued for any part of the Works or of a Section, the
liquidated damages for delay in completion of the remainder
of the Works or of that Section shall, for any period of delay
after the date stated in such Taking-Over Certificate, and in
the absence of alternative provisions in the Contract, be
reduced in the proportion which the value of the part so
certified bears to the value of the whole of the Works or
Section, as applicable. The provisions of this Sub-Clause shall
only apply to the rate of liquidated damages & shall not
affect the limit thereof.
NB: Please, also refer & discuss the effects of Sub-clause 43.1 of the PPA
in your comparative exercise.
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III. Case Study Exam. Questions
Instructions:
Please, choose & attempt only one from the following two cases.
Please, do not assume any extra facts but rely on given facts of the
case.
The total claims of the Contractor are amounting to ETB 88, 000,
000. 00.
The Contractor has first submitted its claims to the Engineer by
fulfilling all requirements for the valid claim. The Engineer by
considering the merits of the case has declined to accept the whole
claims by stating its reasons.
The project has been completed.
The Contractor has submitted a Statement at Completion by
including the final value of the executed works.
The Contractor has, however, neither submitted its claims for the
Engineer’s determination and nor included in its claims, as per
their contract in the said Statement at Completion.
The very reason of the Contractor is to submit its claims directly
to adjudication & then to arbitration.
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The Employer has, after the Engineer certified the Final
Statement, effected all the payments due, under the Final
Statement, to the Contractor.
As planned, the Contractor has submitted its claims (ETB 88
Million) to the agreed adjudication by requesting the Employer,
as follows:-
the payment of the said claims; (i.e. ETB 88, 000, 000, 000 .
00)
the payment of interest with respect to the claims; (i.e.
ETB 4, 000, 000, 000. 00) and
The costs of arbitration; (i.e. ETB 1, 000, 000, 000. 00)
(i.e. the payment that has been made to the Claims
Engineer, Legal Advisor, Adjudicator’s fee, for two
Expert Witnesses…).
You have been appointed, both by the Contractor & the Employer, as
a sole Adjudicator since you are a highly qualified Adjudicator in the
field.
The Claims of the Contractor has been sent to the Employer.
The Employer has submitted its Response to the Claims of the
Contractor.
The Employer requests the Adjudicator to reject the whole of the
Claims of the Contractor due to the following reasons.
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The Contractor has attempted, in its Counter Defense, to refute
the Statement of Defense of the Employer. Specially, the
Contractor further argued, as follows.
Exam. Questions
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2. The Road Project Case
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You have been approached by the Contractor, before the next
court day, to advise him with respect to issues raised by the
Employer.
You are instructed to analyze the exam. Questions under the
MDB Harmonized FIDIC Conditions of Contract.
Exam. Questions
Good Luck!
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Question No 2
1. Project Delivery Systems
Definition
Contract or Project Delivery System is the way Project Owners together with
Project Regulators and Financiers determine the assignment of
responsibilities to Project Stakeholders along the Construction Process.
Outsourcing
Most of the project delivery methods/systems are found under the category
of outsourcing.
The following are some of them.
Design-Bid-Build (D-B-B);
Design-Build (D-B);
Construction Management (CM At Free & At Risk);
Design –Build- Operate (D-B-O);
Design-Build-Operate-Maintain (D-B-O-M);
Design-Build-Finance-Operate (D-B-F-O);
Full Delivery or Program Management;
Build-Own-Operate (B-O-T);
Build Own Operate Transfer(B-O-O-T);
Categories
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The criteria for such category are based on: segmentation,
integration & financing.
These are:
Integrated Process Delivery Methods
o Design-Build-Operate;
o Design-Build-Operate-Maintain;
o Design-Build-Finance-Operate;
Segmented Delivery Methods
o Design-Bid-Build;
o Design-Build;
o Construction Management;
o Pure Operations & Maintenance (O&M)
External Financing Methods
o Design-Build-Finance-Operate;
o Build-Own-Operate;
o Build-Own-Operate-Transfer;
Design-Bid-Build
After Project Owners did prepare the Basic Planning that identifies
construction project programs, they call upon the participation of
Design and/or Supervision Consultants.
This Consultant will carry out the design together with the necessary
tender documents which will be the basis for tendering to select
Contractors.
This process is called Design-Bid-Build and hence the name for such
delivery system.
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Design-Build
In this arrangement both the design & construction liability rests with the
Contractor.
These are;-
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o There is no architect or contract administrator to settle
differences.
o There is no independent quantity surveyor responsible for
preparing the basis up on which contractors tender.
Limiting competition;
High tendering costs;
New method & unfamiliarity;
Client needs quicker decision making;
Clients bringing design requirements(30%)(reduces design innovation);
Construction Management
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This is a form of CM under which the Construction Manager
acts as an agent of and advisor to, the Owner.
The Owner enters in to multiple trade contracts with the trade
contractors & suppliers.
The Construction Manager is retained on a fee for services
basis & acts on the Owner’s behalf in managing &
coordinating the trade contracts in the best interests of the
Owner.
The Owner retains all of the contracting risks inherent in
each of the trade contracts.
It essentially involves the Owner acting as its own general
contractor, with the assistance of a Construction Manager.
This form of CM is sometimes also referred to as the “CM as
Advisor” or “owner contacted form of CM”.
CM At Free
o Provides a managing & administering for all phases
of a project;
o Treats planning, design, construction as an
integrated tasks;
o Some costs & schedule control;
CM At Risk
o Good for clients with insufficient staff;
o Owner flexibility;
o Responsible for time & cost overrun;
o Holds & manages the trade contractors;
o Constructability design review;
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o Same legal position as a General Contractor;
o Provides a GMP;
o Works closely as a teaming effort & encouraging
partnering & trust;
Disadvantages may include;
CM At Free
o No contractual relationship with trade contractors;
o No contractual responsibility for outcomes of a project;
o Client retains the risks;
CM At Risk
o Duplication of administration & additional paperwork;
o More paper work for the client;
o Some duplication of administration;
o Fast tracking difficult to control with designer & CM;
o Sometimes difficult to manage all phased packages with
costs, changes & schedules;
Design-Build-Operate
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Under full delivery method the selected contractor shall under take
the whole range of activities from thought to finish & operation
inclusive of maintenance.
The possible activities include:
Planning & acquisition;
Finance;
Design;
Construction;
Operation;
Maintenance;
Upkeep & Improvements;
Advantages may include;
Shorter time to project competition;
Fully integrated process from project inception;
Maximization of planning & reduction of problems during
execution;
Knowledgeable alternative funding sources;
Good for large & complex projects;
Single source expertise;
Build-Operate-Transfer
2. Forms of Contract
Definition
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Form of contract means the type of conditions of contract used for the
procurement of ex. construction works.
Form of contract shall suit to the selected project delivery system.
Based on the method of pricing & payment, the following types of contracts
are identified.
Re-measurement Contract;
Cost-reimbursable Contract; and
Lump Sum Contract;
Re-measurement
Cost plus percentage fee contracts;
Cost plus fixed fee contracts;
Cost plus fluctuating fee contracts;
Target price contracts;
The contractor is reimbursed for the actual cost of carrying
out of the work plus an additional amount of money in respect
of profit.
In all these contracts, very detailed and extensive day-to-day
professional administrative services are required to check the
quality and quantity of work done.
Lump Sum
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Function Responsibility
3. Method of Procurement
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Definition
Formal tendering
Less structured
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Competitive negotiation
The word negotiation may be used to refer to a competitive
request for proposals type procurement.
Competitive negotiation may refer to a very informal and
unstructured competitive process.
The meaning is therefore different in different countries.
Requests for quotations/shopping
Typically used for commercial or “off-the-shelf” items of
low financial value.
Single source
Question No 4
Core principle
If disruption is caused by the employer, it may give rise to a right to compensation
either under the contract or as a breach of contract.
Guidance
The Protocol states that disruption has a different meaning to delay. In the context of
a construction contract, disruption is the loss of productivity, disturbance, hindrance
or interruption to the progress of a contractor. Unlike delay, the disruption may not
lead to late completion of the work. Generally, the contractor is only able to recover
disruption compensation to the extent that the employer causes the disruption.
Although many standard contracts do not deal expressly with disruption, a contractor
should maintain good site records to assist the CA to make proper assessments of
disruption.
Commentary
The Protocol does not provide that a contractor should be compensated for disruption,
it states only that a contractor may be compensated. From a contractor's perspective,
this principle does not provide a firm basis upon which to claim compensation.
Further, the Protocol's position that float is not for the exclusive use of the employer
or the contractor and that the contractor is only entitled to an EOT if the Employer
Delay is critical to achieving completion by the completion date., has been criticised
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for having the effect that a contractor will not be entitled to an EOT for an Employer
Risk Event that delays its progress or prevents it from completing the work earlier
than the completion date.
Question No 5
Types of sub contract and Legal Relations
The legal effects of Sub-contract could be seen in light of the doctrine of the
privity of contract or relative effects of contract.
The subcontract concluded between the Main Contractor & the Sub-contractor
only binds the Main Contractor & the Sub-contractor (see also Article 1731(1) of
the Civil Code).
The Sub-contract may not create a contractual relationship between the Sub-
contractor & the Employer (see Sub-clause 4.3 of the FIDIC Conditions of Sub-
contract). See also Article 1952(1) of the Civil Code.
This legal position may be seen in specific circumstances, in case where a specific
sub-contractor may resort, by way of right, against the Employer, to enforce some
remedial rights ex, payment.
The Employer may have a direct relationship to the Sub-contractor under the doctrine of
assignment of contractual rights, in case where the Main Contractor assigns its rights
under the Sub-contract to the Employer (see, for ex. Sub-clause 4.2 & 63.4 of the FIDIC
Main Contract.)
Nominated Sub-contractor is a subcontractor nominated by the employer which the
contractor is obliged to appoint as a subcontractor.
Question No 6
The role of the ‘Engineer’ in the international field has come under attack from
Both employer and contractor on the question of bias. On the one hand, the ‘Engineer’
Has been accused by the contractor of being biased in favor of the employer
Because:
— His fee is paid by the owner or developer, referred to as employer under the Red
Book;
— He has acted as adviser to the employer prior to construction and may wish to
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Continue this role upon completion of the construction stage;
— He is required to consult with the employer prior to making certain decisions.
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