Case Study on Ambiguities in Conditions of Contract

STUDY OF CONTRACT CONDITIONS: CASE STUDY OF AMBIGUITIES & DISCREPANCIES

Rahul N.Sompura (UC2905) Kenan V.Viramgami (UC3205) , SBST , CEPT University , Ahmedabad 1

CASE STUDY ON CONTRACT AMBIGUITIES & DISCREPANCIES

INTRODUCTION

Project Name : Adani Thermal Power Plant (Coal Based) Total Capacity : 4620 MW Type of Project : Infrastructure/Industrial End Use of the Project : Generation of Power and thereby meet the demands of various sectors Package under Study : Phase III & IV (5 x 660 MW) Super-critical units Total Cost of Packages : Rs.1500 Billion Type of Contract : Engineering, Procurement & Construction Contract (EPC) Project start date : 1st January 2008 Project Duration : 36 months Project completion date : 1st January 2011 Total Site Area : 735 acres (2.975 sq.km) Notable Feature : Asia’s Largest & World’s 3rd Largest Coal Fired Power Plant.

PROJECT Adani Thermal Power Plant

CLIENT: Adani Power Limited

FEASIBILITY STUDY & DPR:Desein Pvt. Ltd,Delhi

PLANT DESIGN:NWEPDI,China

PHASE I & II (4X330 MW)Sub Critical Units

PHASE III & IV (5X660 MW)Super Critical Units

BTG CONTRACTSCMEC,China

EPC CONTRACTSEPCO III,China

UNIT 5,7,9 SUB-CONTRACTGannon & Dunkerley

UNIT 6,8 & CHIMNEY(EPC) SUB-CONTRACTSimplex Infrastructures

STRUCTURAL & DESIGN CONSULTANTS:Lahmeyer International India

STEEL ERECTION SUB CONTRACTLarsen & Toubro, ECC Division

COOLING TOWER SUB CONTRACTPaharpur Cooling Towers Ltd

UNIT 5,6 SUB CONTRACT(C.W.PIPELINE)Jagdish Engineering Limited

UNIT 7,8,9 SUB CONTRACT(C.W.PIPELINE)Rukmani Infra Projects Pvt. Ltd

TRAINEE :Rahul N.Sompura

Figure 1: Project Breakdown Structure

CONTRACT DETAILS

DOCUMENTS FORMING PART OF THE CONTRACT

• Invitation for Bids

• Instruction to Bidders

• Pre-qualification Information, and other forms

• The final accepted bid of the bidder after modifications, changes, additions and alterations after mutual agreement with Employer.

• General Conditions of Contract

• Special Conditions of Contract

• Contract Data

• Technical Specifications



STUDY OF CONDITIONS OF CONTRACT: CLAUSE NO.1

CONTRACT CLAUSE

Instruction and Guidance The Contractor shall, without any additional consideration from the Employer, provide instruction and guidance to Employer's Personnel in the operation and maintenance of the Goods to the extent specified in the Employer's Requirements The Contractor is required to provide an instruction plan for all operation and maintenance procedures within a period of 30 months from the Commencement Date which shall after the approval by the Employer form the basis of the instruction and guidance program. AMBIGUITY

The Period of Boiler Startup of the Power Plant is 36 months from the Commencement Date and the Operation and Maintenance department gets into execution 12 months before the Boiler Startup Date. Hence it is necessary for the Supplier to provide an instruction plan for all O&M procedures atleast before the O&M department begins their work.

REDRAFTED CLAUSE

Instruction and Guidance The Contractor shall, without any additional consideration from the Employer, provide instruction and guidance to Employer's Personnel in the operation and maintenance of the Goods to the extent specified in the Employer's Requirements The Contractor is required to provide an instruction plan for all operation and maintenance procedures within a period of 24 months from the Commencement Date which shall after the approval by the Employer form the basis of the instruction and guidance program.

FIDIC CLAUSE

Instruction and Guidance The Contractor shall, without any additional consideration from the Employer, provide instruction and guidance to Employer's Personnel in the operation and maintenance of the Goods to the extent specified in the Employer's Requirements The Contractor is required to provide an instruction plan for all operation and maintenance procedures within a period from the Commencement Date which shall after the approval by the Employer form the basis of the instruction and guidance program.


CONTRACT CLAUSE

Fossils All fossils, coins, articles of value or antiquity, and structures and other remains or items of geological or archaeological interest found on the Site shall be placed under the care and authority of the Employer and the same shall be the property of the Employer. The Contractor shall take reasonable precautions to prevent Contractor's Personnel or other persons from removing or damaging any of these findings. AMBIGUITY

As per the Antiquities & Art Treasures Act 1972,Government reserves the right of anything of geological or archaeological or other interest or articles of value or antiquity discovered from any part of the state. So, it is not the absolute property of the Employer

REDRAFTED CLAUSE

As per the Antiquities & Art Treasures Act 1972All fossils, coins, articles of value or antiquity, and structures and other remains or items of geological or archaeological interest found on the Site shall be the absolute property of the Government . The Contractor is to notify the Employer of such discoveries and carry out the Employer’s instructions for dealing with them without damages, thefts etc.



FIDIC CLAUSE

Fossils All fossils, coins, articles of value or antiquity, and structures and other remains or items of geological or archaeological interest found on the Site shall be placed under the care and authority of the Employer and the same shall be the property of the Employer. The Contractor shall take reasonable precautions to prevent Contractor's Personnel or other persons from removing or damaging any of these findings.


CONTRACT CLAUSE

Testing The Contractor shall promptly forward to the Employer duly certified reports of the tests. When the specified tests have been passed; the Employer shall endorse the Contractor’s test certificate, or issue a certificate to him, to that effect. If the Employer has not attended the tests, he shall be deemed to have accepted the readings as accurate.

AMBIGUITY

This would be an act of neglect from the Employer’s side as it will motivate the Contractor to manipulate the final results and might cause dire sequences.

REDRAFTED CLAUSE

The Contractor shall promptly forward to the Employer duly certified reports of the tests. When the specified tests have been passed; the Employer shall endorse the Contractor’s test certificate, or issue a certificate to him, to that effect. If the Employer has not attended the tests, he shall cross check the results before assuming it to be accurate.

FIDIC CLAUSE

TESTING

The Contractor shall promptly forward to the Employer duly certified reports of the tests. When the specified tests have been passed; the Employer shall endorse the Contractor’s test certificate, or issue a certificate to him, to that effect. If the Employer has not attended the tests, he shall be deemed to have accepted the readings as accurate.


CONTRACT CLAUSE

Document error If errors, omissions, ambiguities, inconsistencies, inadequacies or other defects are found in the Contractor’s Documents, they and the Works shall be corrected at the Contractor’s cost, notwithstanding any consent or approval, under this Clause.

AMBIGUITY

No Point is mentioned as if to bring the errors to the Employer’s Notification if the Contractor is aware of the faults in the documents

REDRAFTED CLAUSE

If errors, omissions, ambiguities, inconsistencies, inadequacies or other defects are found in the Contractor's Documents, they and the Works shall be corrected at the Contractor's cost, notwithstanding any consent or approval under this Clause .

The Contractor shall promptly inform the Employer of any error, omission, fault and other defect in the design of, or specifications for, the Works, which he may discover in the Contractor’s Documents, or in the process of execution of the Works.

FIDIC CLAUSE

Document error If errors, omissions, ambiguities, inconsistencies, inadequacies or other defects are found in the Contractor’s Documents, they and the Works shall be corrected at the Contractor’s cost, notwithstanding any consent or approval, under this Clause.




CONTRACT CLAUSE

Health Safety and Environment Within 28 days of signing the Service Contract, the Contractor shall prepare health, safety and environment policy (HSE Policy) for the execution and completion of the Works, including the HSE Policy for the safety and wellbeing, of workers. In case of non submission of this HSE Policy, the Employer shall inform the concerned authorities for initiating necessary penalties against the Contractor.

AMBIGUITY

The Submission of HSE Policy was already a part of the Pre-qualification criteria & Tender Evaluation Criteria hence it is not again required to Submit a fresh copy of the HSE Policy.

REDRAFTED CLAUSE

The Contractor shall follow health, safety and environment policy (HSE Policy) for the execution and completion of the Works,including the HSE Policy for the safety and wellbeing, of workers same as that submitted by him in the Tenders. In case of certain additional points that were unforeseen by the Contractor which are necessary to be added to the HSE Policy, the Contractor shall inform the Employer within 14 Days before the initiation of Application of that Policy.

FIDIC CLAUSE

Health Safety and Environment Within 28 days of signing the Service Contract, the Contractor shall prepare health, safety and environment policy (HSE Policy) for the execution and completion of the Works, including the HSE Policy for the safety and wellbeing, of workers. In case of non submission of this HSE Policy, the Employer shall inform the concerned authorities for initiating necessary penalties against the Contractor.