Project Contracts from POME by Gautam Koppala VT

8/9/2019 Project Contracts from POME by Gautam Koppala VT

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1

1

Kanaka maha lakshmi Thalli

Be bold when you loose and be calm when youBe bold when you loose and be calm when you

win.win.

POMEPOMEPOMEPOMEPOMEPOMEPOMEPOME0707070707070707

"Changing the Face" can change nothing."Changing the Face" can change nothing.

But "Facing the Change" can change everything.But "Facing the Change" can change everything.


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22


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2007,POME,Gautam_Koppala,AllRightsRe

served

KANAKAMAHAL

AKSHMITHALLI

THIS

BOOKISD

EDICATED

TOTHEALMIGHTY,WHO

A

LWAYSSH

OWERSHE

RBLESSIN

GSONHER

CHILD

REN.


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2007,POME,Gautam

_Koppala,AllRightsReserved

PROJECTSAND

OPERA

TIONS

MANA

GEMEN

TEXPO

SED

(POM

E)

P

artPROJECTCON

TRACTS

ACOLLECTIONAMELI

ORATEDBY

GAUTAMKOPPALAV.T.


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2007, POME, Gautam_Koppala, All Rights Reserved

You are the only person who can revolutionise your life.

You are the only person who can influence your happiness,

your realisation and your success.You are the only person who can help yourself.

Your life does not change, when your boss changes,

when your friends change, when your parents change,

when your partner changes, when your company changes.Your life changes when YOU change,

when you go beyond your limiting beliefs,

when you realize that you are the only one responsible for your life.


8/177

88

WhatPeop

learesayingab

outGautamKoppalasPOME:

Wort

halifetimeofkno

wledgeforProjec

tPersonnel.Bin

oyKoshy,Regional

Mana

ger,SiemensLt

d,2006

MyP

roductiveandeffe

ctivenesshavebe

enincreasinginm

ydailyprofessional

life.-

KrishnaPrasad,AreaManager,

HoneywellLtd.,

Bangalore,2007

Am

m

orerelaxedasm

yproductivityevidentlyincreased,asmanyofthedo

ubts

arebeencleared,after

goingthroughPOME.-VenuGopa

l,OperationsManager,

MajeesTechServices

,Muscat2008

Exceptionallywelltailo

redanditsthebestbookonOpera

tionsthatevermade.

Krish

naRao,Branch

Manager,HSBC,

Dubai,2008


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Copyright2007POME

Allrightsreser

ved.Nopartofthisp

roductmaybereprod

ucedorutilizedinan

yform

orbyanymeans,

electronicorm

echanical,includingphotocopy,recording,

broadcasting,orbyanyinformationstorageor

retrievalsystem,withoutpermissioninwritingfrom

theauthorGautam

Koppa

la.

Allknowledge

inPOMEbookisservicemarksand/ortrad

emarksoftheauthor

Gautam

Koppala.

Exceptasothe

rwisespecified,name

s,marks,logosandthelikeusedintheed

ucational/teachingco

ntentof

thesematerialsareintendedtobe,

andtothebestofLic

ensors[Gautam

Koppalas]knowledgeandbelief

are,fictitious.

Noneofthenames,m

arks,orlogosusedhereinisintendedtodepictanypastorpre

sent

individualorentity,oranytrademark,servicemark,oro

therprotectablemarkofanyindividualor

entity.

Anylikeness,s

imilarityorsamenessbetweenanyname,

mark,orlogousedhereinbyLicensorand

the

name,mark,o

rlogoofanyindividu

alorentity,pastorp

resent,ismerelycoin

cidentalandunintentional.

Anysuchnames,marks,andlogos

usedintheeducation

al/teachingcontento

fthesematerialsare

used

onlytoprovide

examplesforpurpos

esofteachingtheed

ucationalcontentoft

hematerials,andare

inno

wayintendedtobeusedinanytrad

emarksenseormanner.

Thenamesofactualpastorpresentindividuals,entities,

trademarks,servicemarks,logosandthe

like

(otherthanthoseofLicensorusedintheeducational/tea

chingcontentofthesematerialsareusedonlyto

provideexamp

les(includinginsomeinstancesactualcas

estudiesbasedupon

factualeventsor

circumstances

involvingtheindividu

als,entities,marks,orlogos)forpurposes

ofteachingtheeduc

ational

contentofthe

materials.Anysuchn

ames,marks,andlogosusedintheeduca

tional/teachingconte

ntof

thesematerialsareintendedandus

edsolelyforthepurp

oseofprovidingexam

plesandcasestudie

s,and

areinnowayintendedtobeusedinanytrademarksens

eormanner.


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VITA:FROMTHEAUTHOR:

Academically,Iam

acum

laudegra

duatewithaBachelorofTechnologydegre

einElectricalandEle

ctronics

Engineering(B

-TechE.E.E.)andap

ostgraduateinMastersinHumanResourc

esManagement(M.H

.R.M

.)

andMastersofForeignTrade(M.F.T

.),allfrom

India.

MyengineeringcompletedinaremotevillageinIndia,Srikakulam,anditsbeenalongjourneyfrom

there,

andjourneyst

illcontinues.Ifeelthisbookdemonstratesmyabilitytomainta

indedication,motiva

tionand

enthusiasm

foraprojectmanageme

ntoveralongperiod

oftime.Ibelieveth

atincombinationwithmy


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extensivebroa

d-basedoperationsw

orkexperiencealong

withmydrive,resourcefulnessanddeterm

ination

wouldmaketh

isbook,anexcellent

opportunityforanyjuvenile/experiencedo

neinProjectsindustr

y.

Istartedmycareerasasmalltime

engineerandgraduallystilldevelopingint

heOperationsDomain.

Withovernine

yearsofProfessionalExperience,am

awe

ll-roundedfunctionalManagerwithexcelle

nt,

documentedre

cordofaccomplishmentandsuccessintheelectronicSecuritya

ndBuildingSystems

TechnologyFie

ld.

Thereasonbehindwritingthisbook

,isthatwhenam

new

tothisfield,Idont

haveanyonetosay,

whatis

allaboutthep

rojects,whattodo,a

ndwhentodo?Hence,thedetailedinform

ationthatIgainedth

rough

theages,thou

ghttoputinanorder

lyfashion,sothatitwouldbevitallymilke

dbyfuturesuccessfu

l

managers,avo

idingthetimelags.

Highlightsofm

ybackgroundinclude

Supplychain,Comm

ercialwithamagnificentexperienceinPro

jectand

Operationsma

nagement,technicallyorientedtowardsAu

tomationandSecurit

ySystemsinIndustrialand

Buildingsector

s.

Mysuccessinthepasthasstemmedfrom

mystrongcom

mitmentandsenseo

fprofessionalism.Ik

eephigh

standardsform

yworkandam

know

nformypersistentn

atureandabilitytofollowthrough.

Ifthisbookfac

ilitatesyouingetting

adjustedandgrowinthisdomain.Iwould

feelreallysuccessfu

l.

GAUTAMKOPP

ALAVT


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POMECo

ntents

TenderingCo

ncepts:...............................................

..............................

..............................

........16

Anarrangem

entbetweentwoormorepeople,coun

triesetc;contract.

..............................

........20

Additionalor

supplementaryma

terialatendofcon

tract,booketc.......

..............................

........20

Settlemento

fadisputebyaper

sonchosenbyboth

parties-toarbitra

tev...............................20

Procurement

/ContractingPhases:.........................

..............................

..............................

........26

ContractTypes:.......................................................

..............................

..............................

........34

ContractsMa

nagement:..........................................

..............................

..............................

........41

ContractLoopholesManagemen

t:..........................

..............................

..............................

........58

Additionalco

ntractingconsidera

tionsforlargeprojects:......................

..............................

........76

TermsandConditions:............................................

..............................

..............................

........84


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_Koppala,AllRightsRes

erved

PRO

POSA

L-

CONT

RACT

UAL

INTE

RACTION

116

ProposalCo

ntractualInteraction........................................................

..............................

......117


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erved

ChangeOrder&Claim

Managem

ent......................................................

..............................

......123

ManagingChangeRequests................................................................................................

......157

AcceptingandHandlingLegalProcessDocuments:..............................

..............................

......164


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erved

TENDE

RING

C

ONCEPTS


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2007,POME,Gautam


erved

TenderingConcepts:

Weshouldn

everwouldhaveProjects,ifweexpec

ttofindthem

with

outfaults.

TendersandContracts:

WhatisaTender?

TendermeanstheLetterofTend

erandallotherdocu

mentswhichtheCon

tractorsubmittedwit

hthe

LetterofTender,asincludedintheContract.

Atenderisaninvitationtosupplie

rstobidonaclearly

specifiedstatemento

frequirements,andincludes:

arequestfortender;

anexpressionofinterest;

arequestforproposal;and

arequestforinformation.

Tenderisagen

eraloffermadebya

companyorapublic

sectoragencyforthe

purchaseofspecificgoods

andservices.T

hepotentialsuppliers

respondtothetendernoticeorinvitation

bysubmittingtheir

proposals,whichspecifythetechnical,commercialandfinancialaspectsofhow

theywouldcarryou

twork.

CommonusecontractswillbereportedbyTreasury.

WhatisaContract?

Acontract

isalegallybinding

arrangementbetwee

naState-ownedCompanyandasupplierforthe

supplyofg

oodsand/orservices

(includingbuildingandconstructionproj

ectsandconsultancies)fora


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erved

specificperiod.Contract

meanstheContractAg

reement,theLetter

ofAcceptance,theL

etterof

Tender,the

seConditions,theS

pecification,theDrawings,theSchedules

,andthefurtherdocuments

(if

any)whicharelistedintheC

ontractAgreementorintheLetterofAcceptance.

ContractAgreementme

ansthecontractagreementreferred[ContractAgreement].

Letter

ofAcceptance

meanstheletterofformalacceptance,sig

nedbytheEmployer,ofthe

Lettero

fTender,includinganyannexedmemoran

dacomprisingagreem

entsbetweenandsignedby

bothPa

rties.Ifthereisnosu

chletterofacceptanc

e,theexpressionLetterofAcceptancemeansthe

Contrac

tAgreementandthe

dateofissuingorreceivingtheLetterofAcceptancemeans

thedate

ofsignin

gtheContractAgreement.

Letter

ofTendermeansthedocumententitledletteroftender

orletterofbid,wh

ichwas

complet

edbytheContractor

andincludesthesign

edoffertotheEmploy

erfortheWorks.

Specification

meansthe

documententitleds

pecification,asinclud

edintheContract,andany

addition

sandmodifications

tothespecification

inaccordancewitht

heContract.Suchdocument

specifies

theWorks.

DrawingsmeansthedrawingsoftheWorks,a

sincludedintheCon

tract,andanyadditionaland

modifieddrawingsissuedby

(oronbehalfof)the

EmployerinaccordancewiththeContract.

Sched

ules

means

the

document(s)

entitled

schedules,

completedby

the

Contractor

and

submittedwiththeLettero

fTender,asincluded

intheContract.Suchdocumentmayinc

ludethe

BillofQuantities,data,lists,a

ndschedulesofrates

and/orprices.

Contract

Data

means

the

pagescomplete

dby

the

Employer

entitledcontractdatawhich

constitu

tePartAoftheParticularConditions.

PartymeanstheEmployer

ortheContractor,as

thecontextrequires.

Emplo

yer

meansthepersonnamedasemployerintheContract

Dataandthelegalsu

ccessors

intitlet

othisperson.


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erved

Contractor

meansthep

erson(s)namedasc

ontractorintheLetterofTenderaccepted

bythe

Employerandthelegalsucce

ssorsintitletothisp

erson(s).

Engineermeansthepers

onappointedbythe

Employertoactas

theEngineerforthep

urposes

oftheC

ontractandnamedin

theContractData,o

rotherpersonappointedfrom

timetotimebythe

Employe

randnotifiedtotheC

ontractor

Contractors

Represen

tative

means

the

person

named

by

theContracto

rinthe

Contractorappointedfrom

timetotimebytheCon

tractor,whoactsonbehalfoftheContractor.

Emplo

yers

PersonnelmeanstheEngineer,theassistantsandallotherstaff,labourandother

employeesofthe

Engineerand

ofthe

Employer;and

any

othe

rpersonnelnotified

to

the

Contractor,bytheEmployer

ortheEngineer,asEmployersPersonnel.

Contra

ctors

Personnel

meansthe

ContractorsRepresentative

and

allpersonnelwh

om

the

ContractorutilisesonSite,wh

omayincludethestaff,labourandotheremployeesoftheContra

ctorand

ofeachSubcontractor;andan

yotherpersonnelassistingtheContractorintheexecutionofthe

Works.

Subco

ntractor

means

any

person

name

din

the

Contract

as

asubcontractor,orany

personappointedasasubcon

tractor,forapartoftheWorks;andthele

galsuccessorsintitle

toeach

ofthese

persons.

DBm

eansthepersonorthreepersonsAppointm

entoftheDisputeBo

ard

Bank

meansthefinancing

institution

(if

any)

nam

edintheContractData.

Borrower

meansthepe

rson(if

any)named

astheborrowerin

theContractData.

BaseDatemeansthedat

e28dayspriortothelatestdateforsubm

issionandcompletio

nofthe

Tender.

Comm

encementDatem

eansthedatenotifiedfortheCommencementofWorks.

TimeforCompletionme

ansthetimeforcompletingtheWorksoraSection(as

thecasem

aybe)[


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erved

TimeforCompletion],asstatedintheContract

Data(withanyextension

[

ExtensionofTimefor

Completion]),calculatedfrom

theCommencement

Date.

DefectsNotification

Per

iodmeanstheperio

dfornotifyingdefectsintheWorks

or

a

Section

(asthe

case

may

be)

[

C

ompletionofOutstandingWorkandRemed

yingDefects],which

extends

overtwelvemonthsexceptif

otherwisestatedint

heContractData,calculated

from

the

date

on

whichtheWorksorSection

iscompletedascer

tified[TakingOverof

theWorksandSections].

Tests

afterCompletion

meansthetests(if

any

)whicharespecified

intheContractandw

hichare

carriedoutinaccordancewiththeSpecificationaftertheWorksoraSec

tion(asthecasemaybe)are

takenov

erbytheEmployer.

Taking-OverCertificate

meansacertificate

issued

bytheemployerTakingOver,afterth

e

completion

ofthecontract.

Tests

onCompletionme

ansthetestswhichar

especifiedintheContractoragreedbybothParties

orinstru

ctedasaVariation,an

dwhicharecarriedo

ut[TestsonCompletion]beforetheWorksora

Section

(asthecasemaybe)

aretakenoverbythe

Employer.

Contractors

Equipment

meansallapparatus,machinery,vehicles

andotherthingsrequiredfor

the

exe

cution

and

completionofthe

Worksandthe

remedying

o

f

any

defects.

H

owever,

Contractors

Equipmentexc

ludesTemporaryWor

ks,EmployersEquipment(if

any),

Plant,Materials

andany

otherthingsintendedtoform

orformingp

artofthePermanent

Works.

Goods

meansContractorsEquipment,Materials,PlantandTempora

ryWorks,oranyofthem

as

appropr

iate.

Materialsmeansthingsofallkinds(otherthanPlant)intendedto

form

orformingpartofthe

Permane

ntWorks,includingthesupply-only

materi

als(ifany)

tobesuppliedbytheContractorunder

theContract.

PermanentWorksmean

sthepermanentwor

kstobeexecutedby

theContractorunderthe

Contract.

Plant

meanstheapparatus,machineryandv

ehiclesintendedto

form

orformingpartofthe

Permane

ntWorks,includingvehiclespurchasedfortheEmployerandrelatingtotheconstru

ctionor

2


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2007,POME,Gautam


erved

operatio

noftheWorks.

Sectio

nmeansapartoftheWorksspecifiedin

theContractDataasaSection(if

any).

Agree

ment

Anarrangeme

ntbetweentwoormorepeople,countries

etc;contract

Appen

dix

Additionalorsupplementarymaterialatendofcontract,

booketc

Arbitr

ation

Settlementof

adisputebyapersonchosenbybothpart

ies-toarbitratev.

clause

aparticularst

atementorstipulationinacontractetc;ar

ticle

condition

Anythingnece

ssarybeforetheperf

ormanceofsomethingelse

forcemajeure

Superior,pow

er;unforeseeableeventexcusingonepartyfrom

fulfillingcontract

Fulfil

tosatisfyaco

ndition;tocompletetherequiredtask;tofulfillUS

herein

inhere;inthis(documentetc)

herein

after

inthefollowin

gpart(ofthisdocum

entetc)

hereto

tothis(docum

entetc)[eg:attache

dhereto]

Heretofore

upuntilnow;

untilthepresent;bef

orethis

inbeh

alfof

intheinterest

sof(personetc);for

(personetc);onbehalfofUK

nullandvoid

invalid;withoutlegalforce;notbin

ding

onthe

onehand

ononeside-ontheotherhandon

theotherside

party

thepersonor

personsformingone

sideofanagreement

stipulate

2 TTI1234567891111GN


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2007,POME,Gautam


erved

tospecifyasa

nessentialcondition

-stipulationn.

terms

conditionsorstipulations

warra

nt

togiveformalassurance;toguarantee

Where

as

conj:itbeing

thecasethat;inview

ofthefactthat[inin

troductiontocontrac

ts]

Tendertocon

tractperiod:

Theperiodoftimerangingbetween

thesubmissionofatenderandtheactualsignatureofthecontr

act.

Informationt

hattobecollected

from

thebidder,du

ringthetendering

process:

1.FullNameu

nderwhichBidderis

trading.

2.AddressofBidder

3.PhoneNo.

&FaxNo.

4.Constitution

ofBidder(Proprietorship/Partnership/Pv

t.Ltd./Ltd.)

5.NameoftheProprietororpartne

rsorDirectors(asthecasemaybe)

6.Partnership

isregistered?Furnishparticularsofregistration.

7.HowlongBidderisinthisbusiness?

8.Name&addressofregularcusto

mers/clients

9.BankerNam

eandaddress

10.Incometax

permanentaccountn

umber(PAN)

11.SalesTaxregistrationNo.(TIN)

12.ServiceTax

RegistrationNo.

13.Declaration

bytheBidder:

Generaltermsandconditionsin

thetenderingprocess

Note:Thebelowwontbeapplicable

inallthecases,butistheconventionalmo

del

2 1234TThA


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2007,POME,Gautam


erved

1.Tender:Du

lywaxsealedenvelope;superscribedwithtendershouldbedroppedintheTenderb

ox

whichshall

beopenedonthesam

edayatcertaintime,inthepresenceofs

uchBidderortheir

representat

ivewhomaywishtobepresentatthetimeofopeningoftenders.Howeverapplicabletaxes

likeSalesTaxorVATandservice

s,othertaxesanddu

tiesmaybequoteds

eparately,depending

upon

thetendere

r.Nocondition(s)sh

allbementionedinte

nder.Noraterevisionwillbeallowedfora

ny

reasonsdur

ingtheperiodofcontract/extendedperiod

.Itshallbeopentoa

ccept/rejectanytend

erwith/

withoutassigninganyreason.Thetendererreservestherighttoforfeitthe

EarnestMoneyandthe

securitydepositiftheBidderafte

racceptancethecontractorfailstocomply

withanyoftheterm

s&

conditionse

thereinoranycontract/agreementwhich

maybedrawnupas

consequencesofacce

ptance

oftender.Insuchcasestherighttocancelthetender/contractisreserved

withthetendered.Fo

rthe

settlementofanydisputearising

outofthistender/contract,onlythecourtsshallhavejurisdiction.

2.Eligiblebidder:-ThebiddershouldfurnishEMD(EarnestMoneydeposit)

ofcertainamountincashor

bankdemanddraftinfavorofthetendersbank.Auth

enticatedcopyofPartnershipDeedincase

of

partnership

firm

withaclearindicationaboutthepersonauthorizedforsign

ingthetenderdocum

ents

otherwisea

llthepartnersshould

signthetenderdocu

mentorthepersonsigningthetenderdocument

shouldhave

a"PowerofAttorney"forsigningthetend

erdocument.Tender

documentshallbesignedon

eachpageb

ythebidderwithhis

seal.CopyofOrigina

lPowerofAttorneyIn

caseifapersonotherthan

theBidderhassignedthetender

documents.Abovedocuments,alongwith

dulyfilledoriginaltender

form,areto

bekeptinthesubmittedenvelope.

3.Security:-

InadditiontoalreadydepositedEMDofcertainamount(thusm

akingtotalSecuritydeposit),

extracertainamountprescribed

bythetendererwillb

edepositedbytheCo

ntractorasperforma

nce

securitydepositintheForm

ofcashorbankdemandd

raftorBankGuarant

eeinfavoroftendere

rfora

period

4.Incasethe

successfulbidderfailstodepositperformancesecurityorfailstosubmittherequired

documents

atthetimeofagreem

entordoesnotturn

upforagreementthe

EMDofthebiddersh

allbe

forfeitedan

dthetenderapprovalisliabletobecancel

led.

Tenderdataitemsanddescriptio

ns:ofthedata:

Thefollowingd

atashouldbecollecte

dbythebidderforth

econstantfollowup,

ortototrackthepro

gressof

hisbid,andthe

others.

Tender

/ContractNo.

Auniquealpha,numericoralpha/nu

mericalidentifier.

2 AInsTTTAc

thTCTT


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2007,POME,Gautam


Alltendersand

theresultingcontractsmustbeprovidedw

iththesameunique

identifier.

ncaseswhere

multiplecontractsareawardedfrom

asingletenderprocess,eachcontractshouldhavethe

ametender/co

ntractno.

Tender

/ContractTitle

Thetitleoraverybriefdescriptiono

fthetender/contrac

t.

Datete

ndercalled

Thedatethatthetenderwasadvertisedorthemarketwa

sapproached.

Datete

ndercloses

Theadvertised

datethatthetenderclosed,orthatbidsw

eretobesubmittedb

y.

Estimatedvalueoftender

Anestimateof

thecostofthecontra

ct(s)thatresultfrom

thetenderprocess,fortheentireperiodo

fthe

ontract(s).

Dateco

ntractawarded

hedatetheco

ntractwasawarded.

Thedatethatthecontractisawarde

d,isthedatethatan

agreementissigned

bytheState-owned

Companyandt

hesupplier.

Period

ofthecontract

Thedurationof

thecontractinmonths.

Valueo

fthecontract

Thevalueofthecontractfortheentireperiodofthecontract.

24

T

Th

ORwNpr

en

InP


24/177

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2007,POME,Gautam


enderingPro

cessTypes:

hereareanumberofdifferenttend

erprocesses,butasperPOME:

OPENProcess

-Allpotentialcontra

ctors/supplierscanbidforacontract.

RESTRICTEDProcess-Atwoorth

reestageprocessallowsonlythosepotentialcontractors/supp

liers

whosatisfyanumberofcriteriatobeshortlistedandallo

wedtobid.

NEGOTIATED

Process-Usedforcomplexpurchases.Ca

refulconsiderationis

giventotheuseofthis

rocess.When

tendersareinvited,b

idsmustbesubmitte

dbythetimeanddateinsealed,unmarke

d

nvelopes(usuallysuppliedwiththe

InvitationtoTenderdocumentation)totheaddressspecifiedin

the

nvitationtoTe

nder.

OMEPrescribe

Loveyour

selffirst

andm

ost.L

POMEPrescribe

25


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P

ROCU

REME

NT/

CONTRACTI

NG

PH

ASES

26

PPr

pr

pr

m

pr

co

Al

ba

Pr

av

pu

so

Pr

An

en

inf

an

hir

us

un

Th

impr


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rocurem

ent/ContractingPhases:

rocurementca

nbedefinedasthea

cquisitionofgoodsor

services.Procurement(andcontracting)isa

rocessthatinvolvestwopartieswithdifferentobjectives

whointeractinagivenmarketsegment.G

ood

rocurementpr

acticescanincreasecorporateprofitability

bytakingadvantage

ofquantitydiscounts,

inimizingcashflowproblems,andseekingoutqualitysu

ppliers.Becauseprocurementcontributes

to

rofitability,procurementisoftencentralized,whichresultsinstandardizedpra

cticesandlowerpaperwork

osts.

lprocurementstrategiesareframe

worksbywhichanor

ganizationattainsits

objectives.Thereare

two

asicprocurementstrategies:

Corporateprocurementstrate

gy:Therelationshipofspecificprocurementactionstothecorporate

strategy

Projectprocurementstrategy:Therelationshipofs

pecificprocurementactionstotheoperating

environmen

toftheproject

rojectprocurementstrategiescand

ifferfrom

corporatep

rocurementstrategie

sbecauseofconstrai

nts,

vailabilityofcriticalresources,andspecificcustomerrequirements.Corporate

strategiesmightpromote

urchasingsma

llquantitiesfrom

sev

eralqualifiedvendors

,whereasprojectstrategiesmaydictatesole

ourceprocurement.

rocurementplanningusuallyinvolvestheselectionofoneofthefollowingast

heprimaryobjective:

Procure

allgoods/servicesfro

masinglesource.

Procure

allgoods/servicesfro

mmultiplesources.

Procure

onlyasmallportiono

fthegoods/services.

Procure

noneofthegoods/services.

nothercriticalfactoristheenvironm

entinwhichprocure

mentmusttakeplace.Therearetwo

nvironments:macroandmicro.The

macroenvironment

includesthegeneralexternalvariablestha

tcan

fluencehowa

ndwhenwedoprocu

rement.Theseinclud

erecessions,inflation

,costofborrowingm

oney,

ndunemploym

ent.Asanexample,

aforeigncorporation

hadundertakenalar

geprojectthatinvolv

edthe

ringofsevera

lcontractors.Becauseofthecountry'shighunemploymentrate

,thedecisionwasma

deto

seonlydomes

ticsuppliers/contract

orsandtogivefirstp

referencetocontractorsincitieswhere

nemployment

wasthegreatest,eventhoughtherewere

othermorequalified

suppliers/contractors.

hemicroenvir

onmentistheinterna

lenvironmentofthe

firm,especiallythep

oliciesandprocedures

mposedbyeith

erthefirm,project,orclientinthewayth

atprocurementwilltakeplace.Thisinclud

esthe

rocurement/co

ntractingsystem,wh

ichcontainsfivecycles:

27

ThTh

Th

ref

Preacc

on

we

ab

an

pe

Sp

ite


27/177


Requirementcycle:Definition

oftheboundariesof

theproject

Requisitioncycle:Analysisof

sources

Solicitationcycle:Thebidding

process

Awardcycle:Contractorselec

tionandcontractawa

rd

Contractadministrationcycle:Managingthesubcontractoruntilcomplet

ionofthecontract

ereareseveralactivitiesthatarepartoftheprocureme

ntprocessandthato

verlapseveralofthe

cycles.

esecyclesca

nbeconductedinparallel,especiallyrequisitionandsolicitation.

REQUIR

EMENTCYCLE

efirststepin

theprocurementpro

cessisthedefinition

ofproject,specifically

therequirement.Th

isis

ferredtoastherequirementcycle

andincludesthefollo

wing:

Defining

theneedfortheproject

Developmentofthestatemen

tofwork,specificatio

ns,andworkbreakdownstructure

Performingamakeorbuyanalysis

Layingo

utthemajormileston

esandthetiming/schedule

Costestimating,includinglife

-cyclecosting

Obtainin

gauthorizationanda

pprovaltoproceed

eviously,wediscussedthestatementofwork.TheSOW

isanarrativedescrip

tionoftheworktobe

complishedand/ortheresourcestobesupplied.Theide

ntificationofresourcestobesuppliedhas

taken

paramountimportanceduringthe

lasttenyearsorso.

Duringthe1970sand1980s,smallcompa

nies

erebiddingon

megajobsonlytosubcontractoutmorethan99%ofallofthe

work.Lawsuitswere

undantandthesolutionwastoputclausesintheSOW

requiringthatthecon

tractoridentifythenames

dresumesof

thetalentedinternalresourcesthatwould

becommittedtothe

project,includingthe

rcentageoftheirtimeontheproje

ct.

pecificationsa

rewritten,pictorial,o

rgraphicinformation

thatdescribe,define

,orspecifytheservic

esor

emstobeprocured.Therearethreetypesofspecificatio

ns:

Designs

pecifications:Thesed

etailwhatistobedo

neintermsofphysic

alcharacteristics.The

riskof

performanc

eisonthebuyer.

Performancespecifications:Thesespecifymeasura

blecapabilitiestheen

dproductmustachie

vein

termsofop

erationalcharacterist

ics.Theriskofperfor

manceisonthecontractor.

Function

alspecifications:This

iswhenthesellerde

scribestheenduseo

ftheitem

tostimulat

e

competition

amongcommercialitems,atalowerover

allcost.Thisisasubsetoftheperformanc

e

specification,andtheriskofperformanceisonthecontractor.

28

The

inc

crit

are

The

Co

day

poi

The

toRE


28/177


erearealway

soptionsintheway

theenditem

canbeobtained.Feasiblepro

curementalternatives

cludemakeorbuy,leaseorbuy,buyorrent,andlease

orrent.Buyingdome

sticorinternationalisalsoof

ticalimportance,especiallytothe

UnitedAutoWorkers

Union.Factorsinvolvingthemakeorbuya

nalysis

eshownbelow:

Themak

edecision

o

Lesscostly(butnotalways!!)

o

E

asyintegrationofoperations

o

U

tilizeexistingcapacitythatisidle

o

M

aintaindirectcontrol

o

M

aintaindesign/productionsecrecy

o

A

voidunreliablesupplierbase

o

S

tabilizeexistingworkforce

Thebuy

decision

o

Lesscostly(butnotalways!!)

o

U

tilizeskillsofsuppliers

o

S

mallvolumerequirem

ent(notcosteffectiv

etoproduce)

o

H

avinglimitedcapacityorcapability

o

A

ugmentexistinglaborforce

o

M

aintainmultiplesources(qualifiedvendor

list)

o

Indirectcontrol

eleaseorrentdecisionisusuallyafinancialendeavor.Leasesareusuallylon

gerterm

thanrenting.

nsiderthefollowingexample.Aco

mpanyiswillingtore

ntyouapieceofequ

ipmentatacostof$100per

y.Youcanleasetheequipmentfor$60perdayplusao

ne-timecostof$500

0.Whatisthebreake

ven

int,indays,whereleasingandren

tingarethesame?

erefore,ifthefirm

wishestousethisequipmentformo

rethan125days,itw

ouldbemorecostef

fective

signaleaseagreementrathertha

narentalagreement.

EQUISITION

CYCLE

29

Onc

pro

The

mo

fiel

StaOS

Qu

oft

Bid

has

que

gov

ma

con

SO

Sel

me


29/177


cetherequir

ementsareidentified,arequisitionform

is

senttoprocurement

tobegintherequisition

ocess.Therequisitioncycleinclude

s:

Evaluating/confirmingspecific

ations(aretheycurrent?)

Confirmingsources

Reviewin

gpastperformanceo

fsources

Producin

gsolicitationpackage

esolicitation

packageispreparedduringtherequisition

cyclebututilizeddur

ingthesolicitationcy

cle.In

ostsituations,thesamesolicitation

packagemustbesenttoeachpossiblesu

ppliersothattheplaying

dislevel.Atypicalsolicitationpackagewouldinclude:

Biddocu

ments(usuallystandardized)

Listingo

fqualifiedvendors(e

xpectedtobid)

Proposalevaluationcriteria

Bidderconferences

Howcha

ngerequestswillbemanaged

Supplier

paymentplan

andardizedbiddocumentsusually

includestandardform

sforcompliancewith

EEO,affirmativeaction,

HA/EPA,min

orityhiring,andsoon.Alistingofqualifiedvendorsappearsinordertodrivedownthecost.

iteoften,onevendorwillnotbido

nthejobbecauseitknowsthatitcannotsubmitalowerbidthanone

theotherven

dors.Thecostofbiddingonajobisanex

pensiveprocess.

dderconferen

cesareusedsothatnosinglebidderhasm

oreknowledgethan

others.Ifapotentialbidder

saquestionconcerningthesolicitationpackage,thenit

mustwaitforthebid

ders'conferencetoa

skthe

estionsothatallbidderswillbepr

ivilegedtothesameinformation.Thisisparticularlyimportantin

vernmentcontracting.Theremaybeseveralbidders'co

nferencesbetweensolicitationandaward.

Project

nagementm

ayormaynotbeinvolvedinthebidders'conferences,eitherfromthecustomer'ssid

eorthe

ntractor'sside.

OLICITATIONCYCLE

ectionofthe

acquisitionmethodisthecriticalelement

inthesolicitationcycle.Therearethreeco

mmon

ethodsforacquisition:

Advertising

Negotiat

ion

Smallpu

rchases(i.e.,offices

upplies)

30

Adv

forc

Neg

may

The

tech

neg

pro

On

neg

con

pro

Neg

Ify

min

inte

refe

Hyg

orr


30/177


vertisingisw

henacompanygoes

outforsealedbids.T

herearenonegotiations.Competitivemar

ket

cesdetermin

ethepriceandtheawardgoestothelowe

stbidder.

gotiationisw

henthepriceisdeterminedthroughabargainingprocess.Insu

chasituation,thecu

stomer

ygooutfor

a:

Request

forinformation(RFI)

Request

forquotation(RFQ)

Request

forproposal(RFP)

eRFPisthem

ostcostlyendeavor

forthevendor.Large

proposalscontainseparatevolumesforco

st,

hnicalperfor

mance,management

history,quality,facilities,subcontractorm

anagement,andothe

rs.The

gotiationprocesscanbecompetitiveornoncompetitive.Noncompetitiveproc

essesarecalledsole-source

curement.

largecontra

cts,thenegotiationp

rocessgoeswellbeyo

ndnegotiationofthe

bottom

line.Separat

e

gotiationscanbemadeonprice,q

uantity,quality,andtiming.Vendorrelatio

nsarecriticalduring

ntractnegotiations.Theintegrityo

ftherelationshipand

previoushistorycan

shortenthenegotiation

cess.Thethreemajorfactorsofn

egotiationsare:

Comprom

iseability

Adaptability

Goodfaith

gotiationsshouldbeplannedfor.A

typicallistofactivitieswouldinclude:

Develop

objectives(i.e.,min-maxpositions)

Evaluate

youropponent

Defineyourstrategyandtactics

Gatherthefacts

Perform

acompleteprice/costanalysis

Arrange

"hygiene"factors

youaretheb

uyer,whatisthemaximumyouwillbewillingtopay?Ifyouaretheseller,whatisth

e

nimumyoua

rewillingtoaccept?Y

oumustdeterminew

hatmotivatesyouro

pponent.Isyouropponent

erestedinprofitability,keepingpe

opleemployed,developinganewtechnolo

gy,orusingyournam

easa

erence?This

knowledgecouldcertainlyaffectyourstrategyandtactics.

gienefactors

includewherethene

gotiationswilltakeplace.Inarestaurant?

Hotel?Office?Squaretable

roundtable?

Morningorafternoon

?Whofacesthewind

owsandwhofacesth

ewalls?

31

The

post

losin

whe

Bid

AW

The

neg

The

The

The

such

perf

prep

then

apr


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2007,POME,Gautam_Koppala,AllRightsRese

rved

reshouldbe

apostnegotiationcritiqueinordertoreviewwhatwaslearned.

Thefirsttypeof

tnegotiation

critiqueisinternalto

yourfirm.Thesecon

dtypeofpostnegotiationcritiqueiswithallofthe

ngbidderstoexplainwhytheydidnotwinthecontract.Losingbiddersmay

submita"bidprotest"

erethecusto

mermayhavetopre

pareadetailedreportastowhythisbidde

rdidnotwinthecontract.

protestsare

mostcommonongo

vernmentcontracts.

WARDCYCLE

awardcycle

resultsinasignedcontract.Unfortunately,thereareseveralty

pesofcontracts.The

otiationprocessalsoincludesthe

selectionofthetype

ofcontract.

Important

Conclusion:Theobjectiveofthea

wardcycleistonegotiateacontracttypeand

pricethatwillresultinreasonablec

ontractorriskandprovidethecontractorw

iththe

greatestincen

tiveforefficientandeconomicperformance.

rearecertainbasicelementsofm

ostcontracts:

Mutuala

greement:Theremustbeanofferandacc

eptance.

Consideration:Theremustbe

adownpayment.

Contract

capability:Thecontr

actisbindingonlyifthecontractorhasthe

capabilitytoperform

the

work.

Legalpu

rpose:Thecontractm

ustbeforalegalpurpose.

Formprovidedbylaw:Theco

ntractmustreflectth

econtractor'slegalobligation,orlackof

obligation,todeliverendproducts.

twomostcommoncontractform

sarecompletioncontractsandterm

contracts.

Completioncontract:Thecontractorisrequiredtodeliveradefinitiveen

dproduct.Upondeliv

eryand

formalacce

ptancebythecustom

er,thecontractisconsideredcomplete,an

dfinalpaymentcanbe

made.

Termcontract:Thecontractisrequiredtodelivera

specific"levelofeffo

rt,"notanendprodu

ct.The

effortisexp

ressedinwoman/ma

n-days(monthsorye

ars)overaspecificp

eriodoftimeusingsp

ecified

personnelskilllevelsandfacilities.Whenthecontractedeffortisperformed

,thecontractorisunderno

furtherobligation.Finalpayment

ismade,irrespective

ofwhatisactuallyaccomplishedtechnically.

finalcontra

ctisusuallyreferredtoasadefinitivecont

ract,whichfollowsno

rmalcontractingprocedures

hastheneg

otiationofallcontrac

tualterms,conditions

,cost,andschedulepriortoinitiationof

formance.Unfortunately,negotiatingthecontractandpreparingitforsignaturesmayrequiremo

nthsof

paration.Ifthecustomerneedstheworktobeginimm

ediatelyoriflong-lea

dprocurementisnecessary,

nthecustom

ermayprovidethec

ontractorwithalette

rcontractorletterof

intent.Thelettercon

tractis

reliminarywritteninstrumentauthorizingthecontracto

rtobeginimmediatelythemanufactureof

32

supp

begi

cont

The


32/177


rved

pliesortheperformanceofservic

es.Thefinalcontract

pricemaybenegotia

tedafterperformance

ins,butthe

contractormaynotexceedthe"nottoexceed"facevalueofthe

contract.Thedefinit

ive

tractmuststillbenegotiated.

typeofcontractselectedisbaseduponthefollowing:

Overalld

egreeofcostandsch

edulerisk

Typeandcomplexityofrequir

ement(technicalrisk)

Extentofpricecompetition

Cost/pric

eanalysis

Urgency

oftherequirements

Performa

nceperiod

Contract

or'sresponsibility(an

drisk)

Contract

or'saccountingsystem

(isitcapableofearnedvaluereporting?)

Concurre

ntcontracts(willmy

contracttakeaback

seattoexistingwork?)

Extentofsubcontracting(how

muchworkwillthec

ontractoroutsource?)

33


33/177


rved

C

ONTR

ACT

TYPES

34

Con


34/177

2007,POME,Gautam_

Koppala,AllRightsRese

rved

ntractTypes:

DivisibleCont

ract:Supply,Installa

tionandCommissioning

Purchaseordersareseparated,i.e,thestorageisinthescopeof

theclient.

IndivisibleContract:Supply,InstallationandCommissio

ning

Purchaseordersarewhollyone,i.e,thestorageisinthes

copeof

thecompany.

TakeandPay

Contract/TollingC

ontract:Acontract

thatthebuyerwouldbetakingandp

ayingforgoodsor

services

onlyifdelivered.

Takeor

PayContract:Acontractualterm

wherebythebuyerisuncon

ditionallyobligatedto

take

anyprod

uctorservicethathe

isoffered(andpayt

hecorrespondingpur

chaseprice),ortopa

ya

specified

amountifherefuses

totaketheproducto

rservice.

CPPCContract:CostPlusPe

rcentageofCosts,Bu

yerassumesrisk,providesforreimbursem

entto

thecontractorforallowableco

stsduetocontractperformance.Additionally,thecontractorreceives

anagree

d-uponpercentageoftheestimatedcosts

asaprofit.Althoughprohibitedforinfederal

governm

ent,usedinprivate,particularlyconstructionindustry

CPFFCo

ntract:CostPlusFix

edFee,Buyerhighrisk;Sellermoderater

isk,Providesthatthe

seller

bereimb

ursedforallowablecostsforperformingth

econtract,andinadditionthesellerreceiv

esa

profitaf

ixedfeepaymentusu

allybasedona%of

estimatedcosts,ford

ifficultandlongresearch

projects.

CPIFCo

ntract:CostPlusIncentiveFee,Sellerispaidforallowableper

formancecostsalong

witha

predeterminedfeeandanincentivebonus,Longpe

rformanceperiodwithhardware&develop

ment

testrequ

irements;computein

centivebasedonsav

ings.

Inthiscontract,thecontracto

risreimbursed100%

ofthecosts.However,thereisamaximum

fee

(i.e.,pro

fit)of$1,350andam

inimum

feeof$300.

Thefinalallowableprofitwillvarybetweenthe

minimum

andmaximum

fee.Becausethereappear

smorefinancialriskforthecustomerina

CPIF

35


35/177

2007,POME,Gautam_


rved

contract,thetargetfeeisusuallylessthaninanFP

IFcontract,andthecontractor'sportionofthe

sharingr

atioissmaller.

FPIFCo

ntract:FixedPriceIncentiveFee,Themo

stcomplextypeofco

ntract,whichiscomp

osedof

atargetcost,targetprofit,targetprice,ceilingprice,andshareratio,us

uallyusedwhencontracts

areforsubstantialsum

andin

volvealongproductiontime.Thisenables

thesellertodevelop

productionefficiencyduringth

eperformanceofthe

contract.targetcost

100,000,targetprice

110,000,targetprofit10,000,ceilingprice12,000,

shareratio70/30;if

costabove120,000n

o

profit.

Toalleviatesomeofthepreviouslymentionedprob

lemareas,clients,es

peciallythegovernment,

havebee

nplacingincentiveobjectivesintotheirco

ntracts.Thefixed-price-incentive-fee(FPIF

)

contract

isanexampleofthis.Theessenceoftheincentivecontractisth

atitoffersacontractor

morepro

fitifcostsarereduce

dorperformanceisimprovedandlesspro

fitifcostsareraisedorif

performa

ncegoalsarenotme

t.Costincentivestak

etheform

ofasharin

gformulagenerally

expresse

dasaratio.Forexam

ple,ifa90/10formu

lawerenegotiated,t

hegovernmentwould

pay

for90ce

ntsandthecontracto

r10centsforeveryd

ollarabovethetarge

tcost.Thusitbenefitsboth

thecontractorandthegovern

menttoreducecosts,becausethecontrac

tormustconsidertha

t10

percentofeverydollarmustb

espentbythecompany.Expectedprofits

canthusbeincreased

by

makingm

aximum

useofthec

ontractor'smanagerialskills.

IntheFP

IFcontract,thecontractoragreestoperfo

rmaserviceatagive

nfixedcost.Iftheto

talcost

islessth

anthetargetcost,th

anthecontractorhas

madeaprofitaccord

ingtotheincentive-fee

formula.

Ifthetotalcostexceedsthetargetcost,thenthecontractorlos

esmoney.

Whenthecontractiscomplete

d,thecontractorsub

mitsastatementofc

ostsincurredinthe

performa

nceofthecontract.T

hecostsareaudited

todetermineallowab

ilityandquestionable

chargesareremoved.Thisdeterminesthenegotiat

edcost.Thenegotiatedcostisthensubtra

cted

from

the

targetcost.Thisnum

beristhenmultiplied

bythesharingratio.Ifthenumberispos

itive,it

isadded

tothetargetprofit.I

fitisnegative,itissubtracted.Thenewnumber,thefinalprofit,is

thenadd

edtothenegotiatedcosttodeterminethe

finalprice.Thefinalpriceneverexceedst

he

priceceiling.

FFPCon

tract:Firm

FixedPri

ce,Itisanagreemen

twherethecontracto

ragreestofurnishsu

pplies

orservicesataspecifiedprice

thatisnotsubjectto

adjustmentbecause

ofperformancecosts

.Itis

bestsuitedwhenreasonablyd

efiniteproductionspecificationsareavailableandcostsarerela

tively

certain.Lumpsum

-usedmostoften;Sellerhasmostrisk

36


36/177

2007,POME,Gautam_


rved

T&MContract:TimeandMaterials,Hybridtypeof

contractualarrangem

entthatcontainsaspectsof

bothcost-reimbursableandfixed-price-typearrang

ement.Baseduponp

erformingaprescribe

d

amountofwork,previouslyag

reeduponbybothth

esellerandbuyer,w

herethesellerispaid

for

amountoftimeittakestoacc

omplishthework.Theselleralsoprovides,butisreimbursed,fo

rthe

materialstocompletethewor

k.

Turn-Ke

yContract:Aterm

usedinaconstructioncontract,wherebythecontractorhasa

contractu

alresponsibilitytobuildandhandoverto

aclientacompletedandtestedplant,operating

tospecification.Thecontracto

risthustotallyrespo

nsibleforallactivities

from

designthrough

tofinal

completionoftheproject.

EPSCCo

ntract:ContractisofEngineering,Procurement,SupplyandCo

nstruction

EPSCCC

ontract:Contractis

ofEngineering,Procu

rement,SupplyandC

onstructionand

Commiss

ioining.

FrameW

orkContract:Afra

meworkcontractisa

contractconcludedb

etweenaContracting

Authority

andaneconomicoperatorforthepurposeoflayingdownthee

ssentialtermsgoverninga

seriesof

specificcontractstobeawardedduringagivenperiod,inpartic

ularasregardstheduration,

subject,prices,conditionsofp

erformanceandthequantitiesenvisaged.

TheContractingAuth

ority

mayalso

concludemultiplefra

meworkcontracts,w

hichareseparatecon

tractswithidenticalt

erms

awarded

toanumberofsuppliersorserviceproviders.

WorksC

ontract:Workscontractscovereithertheexecution,orboththedesignandexecution,of

worksor

therealisation.

37


37/177

2007,POME,Gautam_


rved

SupplyContract:Supplycon

tractscoverthepurchase,leasing,rentalo

rhirepurchase.

MixedC

ontract:Acontractb

etweentheContractingAuthorityandase

rviceprovider,supplieror

constructionfirm

coveringtwo

ormoreofthefollow

ing:works,supplies

andservices.

EPC/De

sign-BuildContract:Acontractualagree

mentbetweenthecli

ent(i.e.theowning

company

whichhasissuedthe

contract)andtheco

ntractor,whichoutlin

esthetermsofthe

contracto

r'sresponsibilityfortheEngineering,ProcurementandConstruction(EPC)activitieslinked

totheproject.

38

POME


38/177

2007,POME,Gautam_


rved

EPrescrib

e

39


39/177

2007,POME,Gautam_


rved

Makeith

appen.

MPOMEPrescribe

40


40/177

2007,POME,Gautam_


rved

CO

NTR

ACTS

MA

NAGE

MEN

T

41

Cont

Note:

toconc

lifeope

Ingene

bidsiss

importa

contrac

thecon

sinceo

andlow

Prospe

thanth

forthe

contrac


41/177

2007,POME,Gautam_

Koppala,AllRightsReserved

tracts

Management:

Thischap

terissomewhatdifficult,whencompared

totheotherchapters

andIrequestthereaders

centratem

oreonthis,thought

hechapterismorein

tothesis,butmoret

owardsapragmaticinreal

erations.

eral,companiesprovideservicesorproductsbasedontherequirementso

finvitationsforcomp

etitive

suedbytheclientortheresultsofdirectcontractne

gotiationswiththeclient.Oneofthemost

antfactor

sinpreparingaproposalandestimatingth

ecostandprofitofa

projectisthetypeof

ctexpecte

d.Theconfidenceby

whichabidisprepar

edisusuallydepende

ntonhowmuchofa

risk

ntractorw

illincurthroughthec

ontract.Certaintypesofcontractsprovide

reliefforthecontrac

tor,

onerousrisksexist.Thecostmu

stthereforeconsider

howwellthecontracttypecoverscertainhigh-

w-riskare

as.

ctiveclien

tsarealwaysconcernedwhen,duringacompetitivebiddingprocess,onebidismuchlower

heothers.

Theclientmayquestionthevalidityofthe

bidandwhetherthe

contractcanbeachie

ved

lowbid.Incasessuchasthis,

theclientusuallyimp

osesincentiveandpenaltyclausesinthe

ctforself-protection.

42

Becaus

typeof

ofthec

becare

recogni

Onerou

negotia

Contrac

transac

Inthed

limited

intoan

supplie

means

line.

Thecon

conditio

adminis


42/177

2007,POME,Gautam_


eofther

iskfactor,competitor

smustnegotiatenot

onlyforthetargetco

stfigures,butalsofo

rthe

fcontract

involved,sinceriskp

rotectionisthepredo

minantinfluentialfactor.Thesizeandexperience

client'sow

nstaff,urgencyofcompletion,availability

ofqualifiedcontracto

rs,andotherfactors

must

efullyevaluated.Theadvantagesanddisadvantages

ofallbasiccontractualarrangementsmustbe

izedtose

lecttheoptimum

arrangementforaparticularproject.

usrisksar

eunfairrisksthatthe

contractormayhave

tobear.Quiteoften,thecontract

ationsmaynotreachagreemen

tonwhatisorisnot

anonerousrisk.

ctsmanagementisanimportantpartofthebusinessmodelforcompanie

sthatengagein

ctionbase

dprocesses.Superiormanagementofyou

rcontractscanimpro

ve

operation

alefficiency,

improveprofitability,

Andmakecontractsmorevisib

leintheorganization

.

daytodayoperationsofcompanybusiness,manpowershortages,pricec

ompetition,and

capitalre

sourcesallcompeteforattention.Implementingacontractsma

nagementframework

organizationtohelpmanagea

ndstreamlinetheprocessesinvolvedinprocuringcontracted

sandlaborcanamplifyoperat

ionalefficiency.Contractmanagementcan

beanimportant

forachievingorganizationalgo

alswhichultimatelyresultsinanimprovementinyourbottom

ntractadm

inistratorisresponsibleforcomplianceby

thecontractortothe

contract'stermsand

ons,andformakingsurethatthefinalproductisfit

foruse.Thefunctionsofthecontract

stratorinclude:

Changem

anagement

Specificationinterpretation

Adherenc

etoquality

Warranties

Subcontractormanagement

Productio

nsurveillance

Waivers

Contract

breach

Resolutio

nofdisputes

43

Thelarg

contrac

precede

contrac

A.

B.

C.

(C

D.

E.

T

Genera

Howeve

T

orc

T

con

am

Perhaps

definitio

A

sub

cha

prio

S

par


43/177

2007,POME,Gautam_


Projectte

rmination

Payment

schedules

Projectcloseout

gerthecontract,thegreatertheneedforthecontra

ctadministratortore

solveambiguityinth

e

ct.Sometimes,largecontracts

thatarepreparedby

teamsofattorneyscontainanorderof

enceclause.Theorderofprecedencespecifiesthatanyinconsistencyint

hesolicitationofthe

ctshallbe

resolvedinagiveno

rderofproceduresuchas:

Specifications(firstpriority)

Otherins

tructions(secondprio

rity)

Otherdocuments,suchasexh

ibits,attachments,ap

pendices,SOW,cont

ractdatarequirementslist

CDRL),etc.(thirdpriority)

Contract

clauses(fourthpriority)

Theschedule(fifthpriority)

llyspeaking,anambiguouscontractwillbeinterpre

tedagainsttheparty

whodraftedthedocu

ment.

er,thereisanoffsettingrulecalledPatentAmbiguity.Thisincludesthefo

llowing:

Theofferorina"bid"situation

isexpectedtobeknowledgeableaboutordinaryandnormalind

ustrial

constructionpracticespertinen

ttoitswork.

Thepresumptionismadethat

theofferorhasmade

reasonableandcompletereviewofthe

ntractualdocumentsbeforepre

paringandsubmittingthem.

Failureto

notifyofpatentamb

iguityworksagainsttheofferoriftheclaim

islatersubmittedbasedon

biguity.

sthemajorityofthecontracta

dministrator'stimeis

spenthandlingchan

ges.Thefollowing

onsdescr

ibethetypesofchanges:

Administrativechange:Aunila

teralcontractualchange,inwriting,thatd

oesnotaffectthe

bstantive

rightsoftheparties(

i.e.,achangeinthepayingofficeortheap

propriationfunding).

Changeo

rder:Awrittenorder,signedbythecontra

ctingofficer,directingthecontractortomakea

ange.

Contract

modification:Anywrittenchangeinthetermsofthecontract.

Undefinitizedcontractualaction:Anycontractualactionthatauthorizesthecommencementof

work

ortotheestablishmentofafin

aldefinitiveprice.

Supplementalagreement:Acontractmodificationthatisaccompaniedbythemutualactionofboth

rties.

44

C

pers

requ

Typical

D

E

O

F

A

L

F

I

M

Basedo

contract

prepara

Thefollo

E

T

B

R

A

Thefollo

C

C

C

Ifacon

inprogr

thecont

liablefo

Boardo


44/177


Constructivechange:Anyeffectivechangetotheco

ntractcausedbythe

actionsorinactionof

sonnelin

authority,orbycircu

mstancesthatcause

acontractortoperformworkdifferentlyth

an

uiredbywrittencontract.The

contractormayfilea

claim

forequitableadjustmentinthecontract.

causeso

fconstructivechange

sinclude:

Defective

specificationwithimpossibilityofperformance

Erroneousinterpretationofcontract

Overinspectionofwork

Failureto

disclosesuperiorkno

wledge

Accelerat

ionofperformance

Lateorunsuitableownerorcu

stomerfurnishedproperty

Failureto

cooperate

Improper

lyexercisedoptions

Misusing

proprietarydata

onthetypeofcontract,terms,

andconditions,thec

ustomermayhaveth

erighttoterminatea

tforconvenienceatanytime.

However,thecustom

ermustcompensate

thecontractorforhis

tionsand

foranycompleteda

ndacceptedworkrelatingtotheterminate

dpartofthecontract.

owingarereasonsforterminationforconvenienceofthecustomer:

Eliminatio

noftherequirement

Technologicaladvancesinthe

state-of-the-art

Budgetarychanges

Relatedrequirementsand/orp

rocurements

Anticipatingprofitsnotallowed

owingarereasonsforterminationfordefaultdueto

contractor'sactions:

Contracto

rfailstomakedelive

ryonscheduleddate.

Contracto

rfailstomakeprogresssoastoendanger

performanceofthecontractanditsterms

.

Contracto

rfailstoperform

any

otherprovisionsofthecontract.

tractisterminatedduetodefa

ult,thenthecontractormaynotbeentitle

dtocompensationof

work

ressbutnotyetacceptedbyth

ecustomer.Thecustomermayevenbeentitledtorepaymentfrom

tractorofanyadvancesorpro

gresspaymentsapplicabletosuchwork.A

lso,thecontractormaybe

oranyexcessreprocurementc

osts.However,contra

ctorscanseekrelief

throughnegotiations,

a

ofContractsAppeals,orClaims

Court.

45

Thecon

breacho

administ

R

A

A

Ingover

backto

arethen

appropr

Projectm

problem

calledba

ofgoods

Contract


45/177


tractadm

inistratorisresponsibleforperformancec

ontrol.Thisincludesinspection,acceptance,and

ofcontra

ct/default.Ifthegoods/servicesdonotcom

plywiththecontract,thenthecontract

tratorha

stherightto:

Rejecttheentireshipment

Acceptth

eentireshipment(ba

rringlatentdefects)

Acceptpa

rtoftheshipment

rnmentc

ontracts,thegovernm

enthastherighttohavethegoodsrepairedwiththecostscha

rged

thesupp

lierorfixthegoodst

hemselvesandchargethecostofrepairst

othesupplier.Ifthe

goods

naccepta

bletothegovernmen

t,thenthegovernme

ntmayreducetheco

ntractamountbyan

iateamo

unttoreflectthereducedvalueofthecontract.

manager

softendofinancialcloseoutoncethegood

sareshippedtothecustomer.Thisposes

a

m

ifthegoodsmustberepaired.Billingthecostofrepairsagainstafinanciallyclosedoutproje

ctis

ackcharg

ing.Mostcompanies

donotperform

financialcloseoutuntilatle

ast90daysafterdelivery

s.

Fig:Sales

OpportunitiesandContractsSub-System

tsmanagement,contractsdev

elopmentandsourcingmanagementgoalsinclude

46

s

c

s

tr

m

a

fo

a

a

Tryingto

efficienc

Fig:co


46/177


upplieridentification,

ontractnegotiation,

erviceordering,

rackingvendorequipment,

monitorin

g

ndanaly

sisofvendorperform

ance,

orecastin

gneed,

ligningp

rocurementswithbusinessobjectives,

ndsecuringadvantageousratesforproductsands

ervices.

oaccoun

tfortheseusingman

ualsystemsovergeo

graphicdistancecan

dampenoperation

yifsystemsandsoftwareare

notdesigned,alignedandimplementedco

rrectly.

ntracta

pprovalprocessstakeholders

ContractApprova

lProcess(CAP)System

Metrics,M

etrics,

&m

oreM

etrics

Pro

ject

Man

agement

Administra

ti

on

Sales

En

gin

eering

Leadership

B

ookin

g

Estimating

Con

tract

Man

agement

47

fiu:cont

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pos

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eview

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47/177


tractapprovalprocesssinglelinediagram(co

nventionaltype)

Isea

dytoissu

e

sal/Bid

Admin

callsR

epin

case

of

an

ymissin

gform

s

2222

3333

4444

7777

8888

8888

Repfills

outtheform

s

Admin

.R

eceives&Sorts

thro

ughP

aperwork

Rep

mak

escopies

&distrib

utes

mergetscon

firmation

Admin

book

sjob

10101010

Repgiv

es

totheA

ppro

ver;

Con

tactsthem

Adminfiles

all

SalesD

ocum

en

ts

heldvia

ference

Action

sA

ssign

ed,F

orm

s

FilledOut&Sign

ed,

Apro

vals

Gathered

6666

11111111

48

Fig:con

Repr

Pro

po

11116666

Appro

vals

d

Review

part

all

pertinen

Pro

posals,

e

CAP

4444

4444


48/177


tractapprovalprocesssin

glelinediagram(evolvedtype)

eadytoissu

e

osal/Bid

2222

3333

4444

8888

Review

sh

eldvia

Teleconferen

cew/

etMeeting

-Action

sA

ssign

ed

don

eon-lin

e

Repcom

ple

tesCAP

Summ

ary

&

otherR

equ

iredD

ocum

entson-lin

e&

indica

tesR

eadyforR

eview

Email

oticesareA

UT

OM

ATICALLY

disp

atchedtoa

ll

requiredR

eview

ers&Sign

atories

CAP

Adminfilesh

ard

copies

of

CSR

,Pro

posal/C

on

tract,

andE

stimate

CAP

ticipan

tsm

aydownlo

ad

tfiles

(Estimates,

etc.)fromP

MIS

5555

Admin

book

sjob

7777

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book

sthejob

49

Fig:Alte

PMISfor

largegeo

provides

expiration

accountin

business

managem

locations

Acompre

negotiate

Globalizat

tradingre

thathave

efficientm

thatarea


49/177

2007,POME,Gautam_Koppala,AllRightsReser

ved

ernativeProcess

Contrac

tsisbecomingincrea

singlyimportanttocompanieswhomanag

eoperationsover

ographic

areasandforcontractsadministration.Ce

ntralizedContractMa

nagementsoftware

acentralizedrepositoryforserviceagreements,a

system

ofalertsforp

endingcontract

ns,theabilitytotrackdocum

entationandtheflexibilitytorunreportsforrevenue

ngandm

anagerialbenchmarking.PMISContracts

oftwaremodulehelps

business-to-

trading

partnersdefine,adm

inister,andtracksale

sandpurchases.Wit

helectroniccontract

mentsoftwareacompanycan

providebetterandm

oreequalserviceto

itsofficesatdifferent

andindifferentcountries.

ehensive

suiteofcontractsmanagementtoolsprov

idesthehighestlevelofcontrolto

econtractsagreements,manageandtrackallofyourcontractsandbus

inessagreements.

tionisincreasingthetypesa

ndcomplexityofcont

ractsaswellastherisksinherentin

elationships.Proactivecontra

ctmanagementinvolvesriskmanagingthekeystrategicareas

ethelar

gestimpactonyourbusiness.Systematicreportingoncontractsinanorganizedand

manner

providesthecompan

ywiththeflexibilitytoanticipateandrenegotiatekeycontracts

aboutto

expireandmakepla

nsforperformanceim

provement.

50

Whethery

andwork

operation

betweenh

administe


50/177


ved

youasmall,medium

orlargeorganization,develo

pingcontractsmanag

ementprocesses

ingtowardsperformanceimp

rovementshouldbeakeyobjectiveofeverycompanies

almandate.Intheageofincreasingcostandcom

petitionitcanmeanthedifference

havingasustainablebusines

sorsuccumbingtobusinesswhotakethe

timetodefineand

ersuper

iorcontractsmanage

mentpractices.

51

Essential

Beforesta

someform

moreindiv

parceloft

Contracts

contracts,

beforemo

Acontract

erformanc

parties.U

andcondit

agreedob

hastothe

areverba

Agovernm

businessf

areusuall

Profitgen

governme


51/177


ved

lInformationonGovernm

entContracts

artinga

nyjob,work,transac

tionorbusiness,everyindividualororganizationissubjectto

m

ofcontract.Thisisbecauseacontractreflectsthemutualagreement

betweentwoor

viduals

forconsiderationora

specificperformance

.Governmentcontra

ctsarealsopartand

thispro

cess.

canbe

ofdifferenttypes.Th

erearegovernmentcontracts,commercia

lcontracts,legal

,busine

sscontracts,employmentcontracts,etc.I

tisimportanttodefin

ewhatacontractis

ovingfo

rward.

tisthe

legalagreementorp

romisebetweentwoormorepersonsfora

considerationor

ceofatask.Itmaybeinwritingtoreflectthemu

tualconsentoragree

mentbetweenthe

sually,

theparties,individua

lsororganizationssig

nthecontractaftera

cceptingtheterms

tionsoftheoffer.Onceacontractissigned,itser

vesasalegalproofo

fthemutually

bligation

.Everycontractlays

downcertainprincipleswhichareinviolable.Therefore,one

efollow

allrulesandregulationsuponenteringintoacontract.Someco

ntracts,however,

landnotinawrittenform.

mentalsosignscontracts.Th

egovernmentcansig

nacontractwithano

thergovernment,

firm,or

individual,dependinguponitsobjective.T

hosewhosignthego

vernmentcontract

yinvolvedinperformingorsupplyinggoodsands

ervicesforthegovernmentdepartment.

eration

isnotalwaystheprimarymotivatingfacto

ringovernmentcont

ractsalthough

entsoperatewithinthesame

commercialframewo

rkasotherindividualsandorganizations.

52

Manycont

process.T

contracts.

requiredto

priceandt

Theovera

governme

Acontact

wherethe

priceofre

conditions

Anexamp

andtheac

paythebi

CONSORT

INTRODU

Ifacomp

enteringin

Suchteam

JointBidd

purposeof

SomeCon

allorpart

Thepurpo

Agreemen

AllConsor

deviations


52/177


ved

tractsthatareavailablewith

governmentdepartm

entsaresubjecttoa

tenderbased

Thispro

cessappliestostate

governmentcontractsandfederal/centralgovernment

Comm

ercialpartiesthatare

interestedinperform

ingtheworkorsupp

lyingtheserviceare

osubm

itaproposalknowna

satenderdocument

.Thisdocumentisjudgedaccordingto

therelevantqualifyingcriter

ia.Thewinningbiddoesnotalwaysgotothelowestbidder.

llproposalisexaminedand

judgedaccordingtothestatedgovernmentcriteriabeforethe

ntcontractisawarded.

canbe

signedasanexpress

edorimpliedcontrac

t.Expressedcontractsarethosecontracts

terms

andconditionsarest

atedopenlyatthetim

eofmakingthecontractsuchasthe

ealesta

tewhenthesettleme

nttakesplace.Witht

heimpliedcontract,c

ertaintermsand

areno

texpressedinwords

butaredeemedtobeinherenttothenatu

reofthecontract.

leofth

isisacheckupwithy

ourlocaldoctor.You

arenotchargedpriortotheconsultation

ctofmakingthebookingandsubmittingtoexaminationconstitutesan

impliedconditionto

llatthecessationoftheapp

ointment.

TIUMAGREEMENTSPOLICY

UCTIONPROBLEMSTATEMENT

panym

aywanttoteam

upwithothercompan

iesinview

oftende

ringforand,ifsuccessful,

ntoand

performingacustom

ercontract.

mingagreementmayhave

variousformsanddenominationsucha

sConsortium

Agree

ment,

dingAg

reement,TemporaryAssociationofEnte

rprises,JointVentu

reAgreement,etc.Forthe

fthisP

olicy,suchteaminga

greementsarecalled

Consortium

Agreements.

nsortium

Agreementsmaystipulatethatallorse

veralpartnersarejointlyandseverallylia

blefor

ofthe

Consortiumsobligatio

ns.

oseofthisPolicyistodefine

theconditionsunder

whichthecompanym

ayenterintoaCons

ortium

t.

TEMPL

ATECONSORTIUMAGREEMENT

rtium

Agreementsneedtobe

ontheStandardTem

platesoftherespectiveorganisations.An

y

soram

endmenttotheStand

ardTemplatemustb

eapprovedbyContra

ctsManagement.

53

1.Before

thepro

Counse

perbus

Followi

det

own

the

nam

nam

with

2.Afterth

contact

Region

Agreem

Region

3.IftheC

musto

Region

Team)

decide

4.Aftert

Conso

approv

DISTRIBU

INTRODU


53/177

2007,POME,Gautam_K

oppala,AllRightsReser

ved

APPROVALPR

OCESS

einitiatinganycontactw

ithapotentialCon

sortium

partner,th

eSalespersoninchargeof

ojecttobetenderedmustcontacttheRegion

alContractsManage

rforelevation

toG

eneral

el.The

GeneralCounselwillinitiatetheapprovalprocessapplicableto

allConsortium

partnersas

siness

CorporatePolicies.

nginfo

rmationwillberequiredfrom

theSalespe

rsoninordertostart

thePolicy

process:

ails(fu

llname,address)ofthepotentialConsortiumpartners;

ners/sh

areholdersuptoale

velofaprivateindiv

idual(notnecessary

ifitisalistedcompa

nyand

major

ityofsharesaretradedonastockexchange);

mes,detailsofdirectors;

mes,detailsofpotentialcon

sortium

partnerspe

rsonnelresponsiblef

orthebusinessrelationship

hthec

ompany.

hepotentialConsortium

par

tner(s)hasbeenclea

redundercompanyPolicy,theSalespers

oncan

tthep

otentialConsortium

partner(s)andstart

negotiatingthespecificsofthetransaction.The

nalCo

ntractsManagerm

ustbeinvolvedan

dapproveanydev

iationtotheConsortium

ment.

Ifanychangepropo

sedtosuchtemplateinvolvesapossible

infringementtoPolicy,the

alContractsManagermustimmediatelyelevatet

heissuetotheGeneralCounsel.

Consor

tium

Agreementrelatestoaprojectwith

avalue>$5M,theRegionalContractsM

anager

organiz

eaBid/NoBidrevie

wwiththefollowing

individuals:GeneralCounsel,ContractsLeader,

alGen

eralManager,Regio

nalOperationsLeaderandRegionalSalesLeader(theBid/NoBid

).Nocommitmenttothe

Consortium

partnersmaybemadebeforetheBid/NoBid

Team

edtop

ursuetheopportunityconcerned.

the

ne

gotiationswith

the

Consortium

partners

are

finalized

butbeforeentering

intothe

rtium

Agreement,thefina

ldraftofsuchagreementmustbesubmittedtotheGeneralCo

unsels

val.

UTION

AGREEMENTSPOL

ICY

UCTIONPROBLEMSTATEMENT

54

Company

alternative

Usually,D

directlywit

andtheirc

resaleprice

Thepurpos

represent

controls.

Thispolicy

AllDistribu

totheCom

5.Before

Regiona

the

Re

applica

Followin

a.

b.

c.

d.

e.


54/177

2007,POME,Gautam_K

oppala,AllRightsReserved

regularlyfacesthechoice

ofsellingitsproduc

tsandservicesthroughitsownemployeesor,

ly,by

engagingdistributors

orresellers(Distributor(s)).

istribu

torsindependentlyd

eterminetheprice,

termsandcondition

softhesaleandcontract

ththe

customer.Theytake

legaltitletoproductspurchasedfrom

Companyandthenresellthem

compensationforsuchsales

consistsofthedifferencebetweenthepricepaidtoCompanya

ndthe

e.se

ofthisPolicyistoesta

blishproceduresfor

theselectionandretentionofpersonsw

howill

Com

panybutwhoarenotemployedbyCompanyandnotdirectly

subjecttoitspoliciesand

applie

stonewdistribution

agreementsandtoth

erenewalofexisting

distributionagreeme

nts.

TEMPLATEDISTRIBUTI

ONAGREEMENT

utionAgreementsneedtobe

ontheCompanySta

ndardTemplate.Any

deviationsoramendment

mpanyStandardTemplatem

ustbeapprovedbyC

ontractsManagement.

APPROVALPR

OCESS

einitiatinganycontactwith

apotentialDistributor,theSalespersonconcernedmustcontactthe

alCon

tractsManagerforelevationtotheRegionalGeneralManager

andGeneralCounsel.After

egionalGeneralManagers

approval,the

Gene

ralCounselwillinitiate

the

approvalp

rocess

bleto

allsalesagentsandD

istributorsasperCompanyCorporatePolicy

nginfo

rmationwillberequiredfrom

theSalespe

rsoninordertostart

thePolicyprocess:

details

(fullname,address)

ofthepotentialdistributor/salesagent;

owner

s/shareholdersupto

alevelofaprivateindividual(notnecess

aryifitisalistedco

mpany

andth

emajorityofsharesaretradedonastock

exchange);

names

,detailsofdirectors;

names

,detailsofpotentia

ldistributors/sales

agentspersonnelre

sponsibleforthebusiness

relatio

nshipwithCompany;

discou

nttheSalespersonw

ouldliketonegotiate

withthepotentialDistributor/Salesagent.

55

6.Afterth

Distribu

beinvo

propose

mustim

7.

Aftert

Agreem

POMEPresc

POMELIG

High

Ama

down

"Exc

don'

The

this


55/177

2007,POME,Gautam_K


hepotentialDistributorhas

beenclearedunderP

olicy,theSalespersoncancontactthepo

tential

utoran

dstartnegotiatingthespecificsofthetransaction.TheRegion

alContractsManage

rmust

lveda

ndapproveanydeviationtotheCompany

TemplateDistributionAgreement.Ifanychange

edtosuchtemplateinvolvesapossibleinfringe

menttoPolicy,theRegionalContractsManager

mmediatelyelevatetheissuetotheGeneralCoun

sel.

the

negotiationswith

the

Distributorare

finalized

butbefore

ent

ering

into

the

Distr

ibution

ment,thefinaldraftofsuchagreementmustbes

ubmittedtotheGene

ralCounselsapprova

l.

cribe

Practicem

akes

perfect.

PPOMEPrescribe

GHTE

RVEI:

hFlyingProjectManager

anisflyinginahotairballo

onandrealizesheis

lost.Hereducesheig

htandspotsaman

nbelo

w.Helowerstheballoonfurtherandshout

s:

cusem

e,canyouhelpme?Ipromisedmyfriend.Iwouldmeethim

ha

lfanhourago,butI

tknow

whereIam."

manb

elowsays,"Yes,you

areinahotairballoo

n,hoveringapproxim

ately30feetabove

field.Youarebetween40a

nd42degreesNorth

latitude,andbetween

58and60degrees

56

West

"You

"Iam

"Wel

idea

Them

"Iam

"Wel

apro

fact


56/177

2007,POME,Gautam_K


tlongitude."

must

beaprogrammer,"s

aystheballoonist.

m,"repliestheman."Howd

idyouknow?"

l,"saystheballoonist,"eve

rythingyouhavetold

meistechnicallycor

rect,butIhaveno

what

tomakeofyourinfor

mation,andthefactisIam

stilllost."

manb

elowsays,"Youmustbeaprojectmanage

r"

m,"repliestheballoonist,"b

uthowdidyouknow

?"

l,"saystheman,"youdon'tknowwhereyouareorwhereyouarego

ing.Youhavemade

omise

whichyouhavenoid

eahowtokeep,and

youexpectmetosolveyourproblem.The

isyou

areintheexactsam

epositionyouwereinbeforewemet."

57


57/177

2007,POME,Gautam_K


CO

NTRACTS

LO

OPH

OLES

MANAGE

MENT

58

Contrac

ThePOMEs

contracts,a

providesadd

theContract

customerne

Foranydev

policies,and

Unlessspeci

LegalCouns

mustberev


58/177

2007,POME,Gautam_K


ctLoopholesMan

agement:

uggestedfewPolicieswhichsetsforththebasic

conditionalcontractl

oopholesofcustomer

swellastheguidelinesfor

approvalofcontacts

withnon-standardte

rms.ThisPOMEmaterial

dition

alinsightandexplanationregardingtheba

sictermsandconditi

onsthatmustcontain

in

tingP

olicies.Italsooffers

potentialsolutionsan

dnegotiatingtipsfor

useinconjunctionw

ith

egotia

tions.

Fig:ContractsSub

-System

iation

s,therespectiveorganizationscouldfreetofollowmakingchan

gestothePOMEassigned

dasp

erthebusinessstrategicrequirements.

ificex

emptionisgranted,anycontractthatisnotapre-approvedform

mustbereviewedby

selor

theappropriateContractManager.AnyPr

ojectcontractvalued

athigheramountormore

viewedbytheGeneralCounselandtheDirectorofContracts.

59

Fig:FIDIC


59/177

2007,POME,Gautam_K


Guid

elines

60

1.BASI

a.

POMEComm

1.

"C

notflowdire


60/177

2007,POME,Gautam_K


ICCO

NTRACTINGPOLIC

IESRECOMMENDEDBYPOME:

Lim

itationofLiability.

ments:

Cons

equentialDamage"

meansanydamage,

lossorinjuryofwhatsoevernaturewhichdoes

ctlyfrom

theactoromissioninquestionbutfro

maconsequenceor

resultofsuchactor

61

omissionincl

revenue,Proj

opportunitya

2.

Un

possibilityof

approvecont

3.

W

attempttoob

withTopman

andconseque

directandind

aconsiderati

4.

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customerwil

provisionsuc

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articulatethe

5.

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customersre

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contractwith

6.

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whichitisco

arecoveredb

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todosowill

7.

In

Organization

imposedforc

serviceprovi

isanunfavor

unboundedlo

takingonthe


61/177

2007,POME,Gautam_K


uding,butnotlimitedto,

anylossoranticipate

dlossofprofit,losso

ranticipatedlossof

jects

interruption,lossofuseofanyequipment,lossofanycontract

orotherbusiness

anda

nyotherindirectloss

ofasimilarnature.

nless

acontractexpressly

excludesliabilityforindirectandconseque

ntialdamages,the

incu

rringsuchliabilityexists.TheProjectshea

d,togetherwithProjectsgeneralcounsel,

must

tractsthatdonotexpresslyexcludeliabilityfor

indirectandconsequentialdamages.

here

thecustomerwillnotagreetoexcludeliab

ilityforindirectandconsequentialdamage

s,

btain

ano